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Argument: In Capitalism, businesses must put profit before everything else

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Parent Debate

Debate: Capitalism vs socialism

Extended Argument

In a system (capitalism) with a built in need for growth and expansion (on every level) based on profit and on a level of competition such that every company that fails to achieve a level of growth and expansion on par with its competitors will go out of business, it is entirely intuitive that businesses can ONLY be about making profit and expanding - everything else is secondary to that goal. This is especially compounded by the fact that social costs are excluded from prices in capitalism (since they affect third parties) and so creating negative social costs is (practically) free and thus better for profit, while creating positive social costs or dealing with negative social costs is expensive and thus detracts from profits, and thus expansion and growth. In fact, corporations (the dominant business institution in modern capitalism) were designed (very consciously) to this end. They were first designed by monarchs to assure that they (and their chosen merchant quislings - the origins of the capitalist class) would gain enough profit and power to contain the rising power of the peasants and the merchant class that was offshooting from this. To achieve this, the monarchs created the corporate structure in such a way that if it didn't expand and gain profit and power for its owners (while sucking wealth out of local peasant communities) it would collapse from the inside. This same structure holds and these same institutional biases remain. In fact, that corporations must put profit before everything else is written into law! "In running the company, directors are bound by common law ‘fiduciary duties [duties of faith]’, the most important of which is to ‘act in good faith (bona fide) in the best interests of the company as a whole’. This duty has generally been interpreted by the courts to mean acting in the interests of the shareholders; in turn, these interests are assumed to be maximising profits in order to pay dividends" (cited from Corporate Watch, "Corporate Law and Structures: Exposing the Roots of the Problem"). This provision, that shareholders can take the management of a corporation to court if they feel that the managers are not trying hard enough to provide them with sufficient returns on their investment (profits), was also written into the companies law of 1985 - which states that this duty ‘to the company (and the company alone) and is enforceable in the same way as any other fiduciary duty’. Information on the causes and effects of this is scattered around this debate (you can easily find it), but particularly relevant for the effects are the discussions on how capitalism fosters imperialism, how profit is made through exploitation, the relationship between capitalism, militarism and war, and on the destruction of the ecosystem.

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