Capitalism's Moral Imperative

[Valjean]

Sometimes today's climate of unabashed corporatism is reflected in some surprisingly candid admissions.
This article caught my eye yesterday:
Pharma chief defends 400% drug price rise as a ‘moral requirement’ | Financial Times

“I think it is a moral requirement to make money when you can . . . to sell the product for the highest price.”

It's not the price gouging that I find surprising, but the admission of a 'moral obligation' to make the most money possible for shareholders, regardless of social consequences.

There was a time when corporate charters mandated corporations serve the public good, but today's neoliberalism seems to have turned that relationship on its head.

Thoughts?

 

[Regiomontanus]

Sometimes today's climate of unabashed corporatism is reflected in some surprisingly candid admissions.
This article caught my eye yesterday:
Pharma chief defends 400% drug price rise as a ‘moral requirement’ | Financial Times

It's not the price gouging that I find surprising, but the admission of a 'moral obligation' to make the most money possible for shareholders, regardless of social consequences.

There was a time when corporate charters mandated corporations serve the public good, but today's neoliberalism seems to have turned that relationship on its head.

Thoughts?

Hello. @sun rise started a thread on this yesterday.

IMHO this news item points to another symptom of the evil that is capitalism.

 

[tytlyf]

Hello. @sun rise
IMHO this news item points to another symptom of the evil that is capitalism.

Not all capitalists are greedy. The corrupt/greed part comes when a capitalist reaches a certain level. Warren Buffett is a good example of a capitalist that hasn't lost his way.
The republican party supports this greed and increased division of the 99% and 1%. Why anyone in the middle class votes republican is beyond me. Just another example of how powerful propaganda is.

 

[metis]

No country today uses laissez-faire (hands off) capitalism because if is simply way too unstable plus immoral as it provides no safety net and charity has never shown to cover all that's needed in a large society. All countries today have what's called a "mixed economy", namely some sort of mixture of capitalistic and socialistic components.

 

[Nakosis]

Sometimes today's climate of unabashed corporatism is reflected in some surprisingly candid admissions.
This article caught my eye yesterday:
Pharma chief defends 400% drug price rise as a ‘moral requirement’ | Financial Times

It's not the price gouging that I find surprising, but the admission of a 'moral obligation' to make the most money possible for shareholders, regardless of social consequences.

There was a time when corporate charters mandated corporations serve the public good, but today's neoliberalism seems to have turned that relationship on its head.

Thoughts?

The government is free to regulate this but chooses not to.

Everyone is free to act according to their moral values, whatever they happen to be except were restricted by government.

 

[Revoltingest]

Raising prices isn't a moral imperative.
It's just what some do at times.

 

[Sunstone]

The notion that maximizing shareholder value is the sole moral and business duty of corporations comes from two Harvard Business School professors in the 1980s. Prior to that CEOs and senior executives saw their role as balancing the needs of several "constituencies", such as shareholders, managers, workers, the communities the corporation had a presence in, customers, etc.

 

[Regiomontanus]

Not all capitalists are greedy. The corrupt/greed part comes when a capitalist reaches a certain level. Warren Buffett is a good example of a capitalist that hasn't lost his way.
The republican party supports this greed and increased division of the 99% and 1%. Why anyone in the middle class votes republican is beyond me. Just another example of how powerful propaganda is.

Yes, I agree there are some good eggs in the lot. Even Bill Gates has committed himself to give away most of his money. My criticism of capitalism is more structural. It is a wasteful system that is destructive by its very nature. It is not sustainable long-term.

 

[icehorse]

Yes, I agree there are some good eggs in the lot. Even Bill Gates has committed himself to give away most of his money. My criticism of capitalism is more structural. It is a wasteful system that is destructive by its very nature. It is not sustainable long-term.

I'm not so sure of that. But I'm interested in hearing what you'd propose instead?

 

[icehorse]

The notion that maximizing shareholder value is the sole moral and business duty of corporations comes from two Harvard Business School professors in the 1980s. Prior to that CEOs and senior executives saw their role as balancing the needs of several "constituencies", such as shareholders, managers, workers, the communities the corporation had a presence in, customers, etc.

Interesting - who were those two professors?

 

[icehorse]

I will offer again, Nick Hanaeur's take on this question. In summary, any capitalist who's actions don't support a financially healthy middle class, is - long term - destroying his own company:

 

[Sunstone]

Interesting - who were those two professors?

I sorry. I got it all wrong. Either a bad memory on my part, or a good memory and bad information. When I googled around to find their names, I came up with a Forbes article that places the two at the Simon School of Business, rather than at the Harvard Business School:

In 1976, Finance professor Michael Jensen and Dean William Meckling of the Simon School of Business at the University of Rochester published their paper in the Journal of Financial Economics entitled “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.”​

Furthermore, their 1976 paper was predated by an article written by Milton Friedman for the New York Times in 1970 that introduced the concept, shareholder value, as the sole legitimate concern of corporate executives. So while I was right that the idea -- in its academic form -- dates back to two professors, I had both their school wrong and also the fact they did not actually coin the notion, just gave it mathematical expression.

Here's the Forbes article. Interesting reading. Incidentally, when I was in business, Drucker was a huge influence on me.