Black day for capitalists
A Delaware judge unwittingly exposes, yet again, the venal corruption at the heart of American free enterprise

Will Hutton
Sunday February 29, 2004

…Historically, culturally and economically this is only a recent doctrine. Companies were originally invented as a group of companions sharing risks in order to discharge a vital economic and social function from which they maximised profits. They would petition the crown for a licence to trade, promise that their intent and vocation was to do X and accept reciprocal obligations in return. The company thus accepted that society imposed obligations along with the right to trade and placed that above the quest for profits. For example, the East India Company in 1600 was granted a licence to trade with the proviso that it carried its cargoes in English vessels and paid duties to the crown. It then set out to maximise profits for its shareholders. It built a great business around a central vocation, accepted reciprocal obligations, and additionally made a lot of money.

This classic conception of the company, at the heart of Anglo Saxon capitalism at its best, has been wrecked by the pernicious notion, incubated by the American Right, that a company is no more than a network of contracts that maximises returns for its shareholders. The idea that it should have an organisational purpose, earn a licence to trade or accept obligations to the society of which it is part is 'socialist'. Yet a capitalism run along these allegedly purist principles soon loses its bearings and its companies degenerate. At their worst, like Black's Hollinger or Enron and WorldCom, they collapse under the weight of individual greed.