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Corporations are important actors in our societies, says Edward Hadas. They organise much of our labour, produce much of what we consume, own lots of property, and shape or reinforce many of our social attitudes. But what, in essence, are they? And just what can or should we expect from them?
You could answer in two fundamentally different ways, depending on whether you side philosophically with Aristotle or Thomas Hobbes. For Aristotle, the human being is a “political animal” – that is, people form organisations and groups (such as companies) because we are social and organised by nature.
For Hobbes, on the other hand, we are essentially individualists, each concerned with our own gain, and hence can’t help but come into conflict. But because our desire for stability is just as strong, we agree to submit to political rulers in exchange for social peace. There is a similarity here with modern theories of the firm – that we give up autonomy and submit to collective discipline in order to create something of more value over time. If there is one thing economists could do to understand corporations better, though, it would be to “forget Hobbes and embrace the Aristotelian tradition”.
The notion of “stakeholder capitalism” – that the role of firms is to serve not just shareholders, but also all ‘stakeholders’”, such as employees, customers, suppliers, affected communities, and so on – goes some way towards that end. But even here the stakeholders a
