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<nettime> MAX (corporation sidebar)
Ian Dickson on Fri, 23 Jan 2004 07:47:44 +0100 (CET)


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<nettime> MAX (corporation sidebar)


In message <200401192052.i0JKq8J05631 {AT} bbs.thing.net>, Alan Sondheim 
<sondheim {AT} panix.com> writes

>MAX
>
>the purpose of a corporation is to maximize profits for its officers.

Really?

There are normally two schools of thought, (which are not mutually 
exclusive):-

1) The purpose of a corporation is to maximise the profit for it's 
shareholders (and the conflict between shareholders and their agents, 
typically the officers) has been understood since the days of Adam 
Smith.

Recent scandals have shown that this divergence of interests between 
owners and agents is still with us.

2) To maximise the income of the workforce. This sounds odd, but in 
essence the argument is that for most people their maximum income is 
obtained by working for an organisation because this removes the 
friction costs of seeking revenue.

Evidence that this is true can be seen in the cycle of the corporation 
over the past few centuries.

Initially they were very small, because people didn't need an 
intermediary. Then in the first round of globalization (Victorian 
period) they grew because while distant markets could be reached, they 
were expensive and needed economies of scale.

Now that communications have improved corporations are, generally, 
shrinking down to their core competencies.
-- 
ian dickson                                  www.commkit.com
phone +44 (0) 1452 862637                    fax +44 (0) 1452 862670
PO Box 240, Gloucester, GL3 4YE, England

           "for building communities that work"

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