Coop vs Corp
Worker cooperatives work for the benefit of their members and the community, while corporations are legally bound to maximize profit for their shareholders. Corporations often maximize profits by reducing wages, cutting worker benefits, moving jobs to locations workers rights are least protected, the environmental regulations are lax or unenforced, taxes can be avoided, and costs can be transfered the local government.
In 1919 the John and Horace Dodge sued the Ford Motor Company of which they were 10% owners to distribute dividends. The Michigan Supreme Court ruled that corporations exist primarily for the profit of the stockholders and not for the benefit of the community or the employees and ordered the dividends to be distributed. This set the precedent that when legally challenged, corporate charity is not permissible.
A shareholders lawsuit against Ben and Jerry’s forced its sale to Unilever in 2000. The lawsuit alleged a breach of fiduciary responsibility to its shareholders by considering socially responsible alternatives which would have resulted in lower shareholder returns.
Corporations are granted some leeway for charity and good social behavior for public relations purposes, but frequently profit by transfering costs to society. Corporate legal obligations which insist on shareholder profits above all else can result in pathological entities with an inherent tendency towards social irresponsibility.
From three decades General Motors, Firestone Tire, and Standard Oil bought up electric public transportations systems in cities across the United States, and shut them down. For this conspiracy General Motors was fined $5000 in 1949, hardly a punitive amount. The corporations gained immense profits, while society was burdened with pollution and wasted time in traffic. Similar instances corporate abuse with tremendous impact are not hard to find. However, the issue is not about the level of corruption of if the benefits outweigh the costs, but whether the corporate structure is intrinsically flawed.
