I recently re-read Charles Mackay's classic Extraordinary Popular Delusions. It contains perhaps the best-known account of the Dutch tulip mania of the early 17th century, but the section I found most interesting described the somewhat later "South-sea bubble" in England.
The South-sea Company was royally chartered for the purpose of effecting trade between England and the Spanish colonies of Central and South America. With the exception of a single voyage, the entire trading scheme was illusory, but the company gained great temporary success (meaning, it sold a whole lot of stock at very high prices) as what Mackay refers to as a "monetary corporation".
By that term, he's referring to a company that doesn't really do much of anything, but issues a lot of securities, manipulates a lot of monies (public and private) and eventually fails like the house of cards it is. The South-seas Company made its directors piles of money, lost its investors (which is to say, its only customers) piles of money, and significantly weakened public confidence in the government with which it was associated.
I know that all sounds dreadfully familiar, but there is a difference. Back in 18th Century England, the malefactors were arrested, tried and fined heavily. As I recall, a few were imprisoned. Nobody just went back to the activities which had caused the problem in the first place.
All of this comes to mind as I listen to the current political cant about how the only creators of jobs and economic prosperity are private corporations. I'm not anti-business (although I've been accused of it from time to time). In fact, I've worked in the private sector all of my career, in the for-profit sector most of it, have owned three different businesses, own and operate a part-time business now, and have an additional business plan in development. I'm not anti-business. What I am against is what Mackay referred to as "monetary corporations" which, to my mind, now includes most big business.
It's often pointed out that businesses exist to create profits, not jobs. But that's only true of large businesses. Small businesses (and I don't mean what the Dept. of Commerce calls "small firms" -- those with fewer than 500 employees -- I'm thinking of firms with no more than 10 or 20 employees) do exist to create jobs. The smallest of these are established specifically to create a job -- a job for the owner/operator/laborer/sole employee. If the one-person shop is successful, it often expands by creating another job and additional capacity. But, at least in my experience, until the operation involves a couple dozen people or so, what the owner gets out of the deal is mostly payment for his/her labor, not any form of economic profit (what Marx called "surplus value"). Small businesses focus on delivering goods or services to customers by creating opportunities for employment. Large "monetary corporations" focus on creating value for passive investors, which is dependent on neither.
I relate this topic to all three legs of the sustainability stool -- economic, social and environmental. Economic sustainability means creating sustainable livelihoods and a sufficiency of the necessities of life -- employment and goods/services, the natural foci of small businesses. Social sustainability requires a wide-spread sense of equity and participation -- similar to Tocqueville's "happy mediocrity", but the exact opposite of the bifurcated society (the "hourglass market") current corporate activity is creating. And environmental sustainability requires that we decrease our resource utilization rates, which means extracting less from the earth (in many ways) and filling in the gap with materials we reuse, recycle, recapture from the waste stream. To my mind, the sort of circular product flow (old product becomes material for new product rather than "waste") is easiest to implement on a relatively local scale, and so with relatively small (product-focused, not profit-focused) companies.
Provide sustainable livelihoods. Create a sufficiency of goods and services. Do it without raping the planet or the ecosphere. If those were the things that big business typically focused on, we'd all be better off. Popular (and academic) delusions about the criticality of economic growth and shareholder value (neither of which, I would point out, the current state of affairs seems able to deliver with any reliability) aside.
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