One of the greatest fallacies and errors of modern economic and political times is the concept of a corporation. This concept has been developed and promoted by the ruling elite of the United States: those very rich individuals who dominate and control the US economy and government. This concept defines a corporation as an artificial person (an oxymoron) with legal rights and privileges and whose owners are immune from liabilities associated with the corporation. This concept is wrong for many reasons some of which show the concept to actually be absurd. One might challenge the claim that the above notion of a corporation is absurd given that the government, academia, the media, and almost everyone accept this notion as true. A response to such a challenge involves the moral tale by Hans Christian Andersen called the “Emperor’s New Clothing.” In this tale, two tailors run a scam on the emperor where they promise to make the emperor a splendid new set of clothing but instead steal the expensive yarn which they were given to sew the clothing. These tailors did not make any new clothing for the emperor but made the claim that the clothing was invisible to anyone who was stupid or incompetent. The emperor, his royal court, and almost all of the people dared not to claim that he the emperor was walking around in his underwear because none of them wanted to be considered stupid or incompetent based on the marketing of the two scam artist tailors. This tale parallels the development and promotion of the modern concept of a corporation as an artificial person with rights and privileges and whose owners are immune from liabilities associated with the corporation. The people who have developed and promoted this concept are like the tailors in the story. The US economy and the government are like the emperor. And the academics, the media, the judiciary, and the vast majority of Americans are like the royal court and people in the story. While the concept of an artificial person is absurd, no one dares to say so lest they be called stupid, incompetent and uneducated.
Another absurd aspect of this notion of corporation has to do with the corporation owner’s immunity from liabilities associated with the corporation. The so-called owners of the corporation manage and direct the corporation. Because the owners want to maximize the profits of the corporations and because the corporation itself is amoral, the owners can and do often perform actions which impact the health and welfare of workers and consumers knowing that they are immune from the liabilities associated with such actions. Even though it is the deliberate actions of the owners which are the cause of the harm to the people affected, the laws hold them blameless. Unethical business practices, harmful drugs, dangerous or unsafe products and environmental pollution are some of the harmful actions which the owners of the corporation are immune from. Even though it is the action of the owner which causes the harm, the law considers the corporation not the owner as responsible. It is like a person with a glove who strikes another person and claims that it is the glove and not he who is responsible for the blow. The owner of the corporation is like the person wearing the glove and the glove is the corporation. It is truly absurd to consider the corporation defined as an artificial person to be responsible and liable rather than the owner even though the corporation cannot act on its own since it is inanimate and the actions of the corporation are in fact the actions of the owners. This safeguard from liability is the reason why the very rich developed and promoted this false notion of a corporation. These owners want the rights, privileges, and benefits of the corporation without the liabilities and responsibilities of the corporation. That is wrong. To purposely hide one’s actions behind the corporation to prevent liability for the consequences of those actions is wrong.
The definition of a corporation needs to be changed and the laws surrounding corporations need to be changed as well. A corporation needs to be defined as a social organism, an organization of people (real people, living human beings) working together for personal, common and US economic objectives. The owners of the corporation are all those who enliven the organism, that is, those actively involved in managing, directing and operating the corporation. Owners can only be human beings. The owners of the corporation, as owners, must bear the responsibilities and liabilities of the corporation. The corporation needs to be chartered by the government in which it will operate and the charter needs to specify its purpose, its constitution, and how it elects its directors and managers. Changing the definition of a corporation and changing the laws affecting corporations is a critical component of restructuring and rebalancing the US economy and political system.
The Great Depression which started in approximately 1929 lasted twelve years and had devastating effects on the majority of Americans. The working class experienced extremely high levels of unemployment, homelessness, depression, suicide, high school dropout rates, divorce, malnutrition, and illness. The Great Depression—why did it happen? People wanted to consume, businesses wanted to sell, and companies wanted to produce. People wanted and needed to buy goods and services: food, clothing, housing, furniture, appliances, healthcare, transportation, etc. But they did not have the money to buy these things. They did not have the money to buy because they had either no income or a greatly reduced income. Companies wanted to manufacture. People wanted to work. There was no lack of natural resources. So, why did factories close? Why did stores close? Why did banks close? Why were people laid off from work? Why couldn’t people find work? Why did so many people have to suffer, especially children and older people?
The primary cause of the Great Depression which started in 1929 and lasted for twelve years was the imbalanced distribution of wealth and income between the working class and the capitalist class. This imbalance was caused by the low tax rate for the upper income group, big corporations realizing enormous profits because of high prices and not sharing those profits with workers in terms of higher pay, unregulated lending, high interest rates, unregulated speculation in the stock and exchange markets, and the intentional and contrived movement of income and wealth away from the working class to a very select capitalist class. These same factors are the causes underlying the current economic environment?
One of the main principles of any national economy is the correct relationship between labor and capital. Labor and capital are partners in an efficient and effective economy, and their mutual respect and collaboration are critical to the proper functioning of the economy. Because labor and capital are equal and essential elements of an economy, they must share power equally, both economically and politically.
In order not to appear vague, perhaps it would be best to think of capitalists as the individuals comprising the top 1% of the income/asset hierarchy and labor as those individuals comprising the lower 99% of the income/asset hierarchy. Capitalists use capital to generate an income, while workers use their labor (physical, intellectual or both) to generate an income.
The basic dynamic of an economy is the continuous cycle of demand, production, sale, consumption. The economy is driven by consumption and jobs are created because of consumption. When consumption is down, jobs are lost. When consumption is up, jobs are created. Businesses only create jobs in response to demand or consumption, both forecasted and actual.
A production or productive system is any system that produces goods or services. There are obviously a wide range of such systems. Some of the more common productive systems are manufacturing organizations, distribution and sales organizations, banking organizations, construction organizations, entertainment organizations, educational organizations, consulting organizations, software organizations, telecommunication organizations and health care organizations.
There are two basic components to a productive system: capital and labor. Capital can either be land (and the natural resources on the land), buildings, equipment, material, intellectual property, technology or cash/funds which can be used