the purpose of business: the liberal perspective

Brian writes:

I had the following get stuck in my brain like a kidney stone, so here it is:

Q: What is the primary function of a business?

Liberal: To give jobs to employees.
Conservative: To make money for the stockholders.
Free-Floating Whatever: To create goods & services.

These answers are only accurate if you accept cartoonish stereotypes for the labels. But it's a great question.

The actual answer to the question is that the purpose of a business is to make a profit. Not for stockholders, not for employees, not for anyone else except teh person who started the business.

Liberals believe that it is possible to pursue the profit motive with an enlightened sense of self-interest. For example, if you treat your employees like chattel, pay them rock bottom minimum wage, begrudge them benefits, deny them maternal leave, etc, then you will (1) attract only the most desperate employees, and (2) have poor productivity of those dregs of employees you do retain. Note that there is also a parallel moral imperative, drawn from multiple philosophical and religious sources, that states that exploitation of the poor and abuse of the human spirit is wrong in a fundamental sense. For a true liberal, the moral imperative drives the enlightened self-interest, not the other way around.

Note that NPR had an excellent profile of a company called Mission Control that has a policy of no employee layoffs. Regardless of whether you disagree with enlightened self-interest or not, you should give it a listen. You'll at least find it stimulating for debate.

The label "Liberal" above in Brian's formulation is really "Marxist" (not Communist). And the label "Conservative" above is really "Corporatist", not Conservative. Maybe I can convince Tacitus to lend his opinion on the Conservative perspective...

Superimposed on these issues is the problem of the Commons. There are certain public domain resources such as clean water, mineral wealth, spectrum, etc that are collectively owned by the people. Businesses often make use of these resources to derive their profit. They have no self-interest whatsoever in attempting to preserve these resources - there is no enlightened argument that can justify (from a purely self-interested POV) things like air scrubbers in smokestacks or water treatment for effluent. However, the price of doing business with public resources is that you aree then subject to regulation in the self-interest of the owners of that resource (the People).

Capitalist arguments that businesses will Do the Right Thing with regard to the various Commons that they are priveleged (not entitled) to utilize are dishonest, since Capitalism is the pursuit of the profit motive alone, without consideration of the self-interest of any entity larger than the business itself. Enlightened self-interest such as a nolayoff policy are in accord with Capitalism, but environmental regulations are not. Therefore there is a conflict of interest, and Capitalism cannot be trusted to safeguard the Commons.

I greatly favor small-business. I think that small business shoudl be taxed less, given incentives to hire, freedom to fire, and a whole bunch of other advantages to enable them to pursue the profit motive, and assisted with the cost of enlightened self-interest (including partial sibsidy of benefits for employees).

I think large businesses need to assume correspondingly greater responsibilities since they on the whole utilize and rely on the Commons more for their success.

I think that employees who have decent wages, have reasonable vacation, retirement security, and health care will be more productive, helping the profit motive. I also think that they will be economically more productive to society, able to raise healthy children, contribute to society and charity, get involved in the community, etc. in ways that a wage slave slaving under unpaid overtime to barely keep food on the table, cannot.

I think that health insurance keeps health costs and premiums down for society at large. I think that healthy children mean healthy adults, and more productive and healthy workforces.

My belief in enlightened self-interest is what makes me a liberal, even though I profoundly agree with conservatives on the benefits of capitalism. And I'm proud of that label.

No comments: