So your faith extends to the market. — Banno
If you didn't notice it, the specific question was about what a private corporation/company can do about inflation. — ssu
If Friedman were to be consistent he would have to argue that the corporation's agency is equally a legal fiction, resting on the agency of the stockholders. It is only by ignoring this that he is able to pretend that the only interest of the corporation is profit. — Banno
Which amounts to: we don't know what to do, so we should do nothing. Friedman goes on for the remainder of the article to repeat this in various ways. It's indeed a dumb idea. — Banno
Seems like you are referring to two different articles or? — ssu
1) What is the incentive for the owners of a corporation to form a corporation? — ssu
No; indeed, that is the point that the counterargument in the article cited above makes. A corporation is free to take on whatever incentives the owners choose; including those that do not lead directly to profit.2) Do you genuinely think that the incentives in forming a corporation are the ONLY incentives for the owners in their life? — ssu
3) What do you mean by the "interest of the corporation"? A corporation is only a legal entity, not a physical entity with it's own interests. — ssu
4) Do you have problems in understanding what Steve Denning is saying in his article? — ssu
And those incentives to choose to form a company, a corporation, are things like the limited liability of a corporation, the tax incentives, the ease to coordinate and operate the business. Let's the remember that the other option is simply to buy services without using the contract called a corporation.Why would one think that there was one common incentive for all of them? They are many and various. — Banno
Yet isn't then the issue really about the people, the owners and managers of the corporation, and how they act in the society and what is their role in the society?No; indeed, that is the point that the counterargument in the article cited above makes. A corporation is free to take on whatever incentives the owners choose; including those that do not lead directly to profit. — Banno
It’s not merely the application of new technology or a set of fixes or adjustments to hierarchical bureaucracy. It involves basic change in the way people think, talk and act in the workplace. It involves deep changes in attitudes, values, habits and beliefs.
The new management paradigm is capable of achieving both continuous innovation and transformation, along with disciplined execution, while also delighting those for whom the work is done and inspiring those doing the work. Organizations implementing it are moving the production frontier of what is possible.
...but that doesn't change them from existing to make a profit. — ssu
You haven't actually explained why a corporation must make a profit. — Banno
A business enterprise has to make a profit or at least to cover the costs in order to exist in the long term. A business that covers only it's running costs can make no investments, which can create problems later. — ssu
you want to have limited liability and not prefer to make a profit, there are then options that I already mentioned open for you: non-profit organizations, an association, foundation even a co-operative. Corporation, or basically a company, isn't the only way. — ssu
Hint: the other forms are not businesses. They doin't have a business model. Associations don't have business models, they have some agenda or some idea, issue or thing that they promote. It's not called a business. You know, the difference like .com and .org?This doesn't seem to make sense. In the first part you say that a business which doesn't make profits is in trouble. In the second you say there are other business models available if you want to avoid profit. — Isaac
Business = commercial activity.
What is commercial activity, then you ask? Well, something done to make or done intended to make a profit. — ssu
A business enterprise has to make a profit or at least to cover the costs in order to exist in the long term. A business that covers only it's running costs can make no investments, which can create problems later. — ssu
They will legally cease to exist when they file for bankruptcy. So you might say that is something close to your 2). — ssu
There's no inconsistency. And they are called not-for-profit organizations. As I said before, there's a differnce between .com and .org, just to give one example. Commercial activity usually intends to make profits.But that leads us back to the fact that not-for-profit companies exist and are not bankrupt. — Isaac
So what?A business enterprise has to make a profit or at least to cover the costs in order to exist in the long term. — ssu
If Friedman were to be consistent he would have to argue that the corporation's agency is equally a legal fiction, resting on the agency of the stockholders. It is only by ignoring this that he is able to pretend that the only interest of the corporation is profit. — Banno
The simple fact is that if you want to have limited liability and not prefer to make a profit, there are then options that I already mentioned open for you: non-profit organizations, an association, foundation even a co-operative. Corporation, or basically a company, isn't the only way. — ssu
A corporation that is not "not for profit" would generally aim to make a profit, if only to give something back to investors, who otherwise would be better off putting their money in the bank or in government bonds; so it would seem that the aim to make a profit is necessarily one, if not the main aim of any such corporation. — Janus
More likely Friedman is arguing that companies should not be obliged by the government to have other goals, like being actors that have to deal with inflation (especially when inflation doesn't happen because of them, but is a monetary phenomenon). Yet if their actions have externalities (like they produce pollution), naturally they have to oblige with the laws.The Friedman article argues that the sole aim of a corporation is to make a profit; that they ought have no other goal.
That is the bone of contention here. — Banno
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