In a 1919 case entitled Dodge vs. Ford Motor Company, the Michigan Supreme Court ruled that A business corporation is organized and carried on primarily for the [financial] profit of the stockholders. The powers of the directors are to be employed to that end. This is what is known in business circles as the shareholder primacy or the profit motive. This judicial decision gives license for corporations to justify putting the pursuit of financial profits above concern for the common good. For example, a coal power plant could believe that switching to carbon emission free energy supplies would make society healthier and safer - but if they could not show that they can continue to make comparable profits after the switch, their shareholders could sue them and would likely win. This is why corporations must be regulated and privatization of traditional government services like education, prisons and healthcare must always be viewed with suspicion. For business, profit will always trump the common good.
Posted on: Mon, 10 Feb 2014 19:42:58 +0000
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