You might think that I, as a die-hard capitalist, would praise corporations. You might be wrong.
Capitalism is founded on the principle (among others) that the purpose of business activity is to maximize profit. Corporations, lacking the capacity to experience non-monetary utility (as people do), ought to be the absolute expression of this principle. Unfortunately, corporate structure has twisted the goals of the corpration: instead, executives are charged with the task of increasing shareholder value.
Often, the two ends are strongly linked together. But this is not always the case. Consider the chemical company BASF. BASF advertised itself on television a while back: "We don't make a lot of the products you buy; we make a lot of the products you buy better.™" Which products? Can I, a hypothetical viewer who was profoundly influenced by this advertisement, seek out and purchase some of these products which BASF has upgraded? No! Did BASF gain any customers by advertising to the public? Doubtful! Nay, what BASF must have in fact been advertising is its stock!
Call me inexperienced in the world of business (which I am), but this seems like a massive perversion of capitialist philosophy. And I don't doubt that it causes massive inefficiencies. Like hundred-million dollar executives ("Wow! that company pays a ton of money to its CEO. He must be good, so I'm gonna buy stock!").
True: I don't know all the details, and I'd really appreciate some education in the matter. My thesis is this: the corporation as it exists today is an entity at odds with capitalism. As much good as corporations have done for this country (which I don't even begin to question), they could do better, if they/we could find ways to prioritize profit over value.
Any suggestions?
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Many managers of corporations, put into place either by the president or the stockholders themselves, seek to increase the size of the company, rather than just maximizing profits. This is because middle management gets paid better in large companies than in small companies. However, said firm cannot expand beyond the point of market efficiency, because then obviously it would lose to competition.
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