The Purpose of Corporations

A corporation, by strict legal definition, is any group of people acting as if one for whatever their stated purpose. This definition is broad enough to include non-profits or NGOs. In practical terms, however, it refers to a an organization which makes something and hires people to do it.

But what is the purpose of them? Recently, it’s become very popular to assume that the main purpose of a corporation is to maximize shareholder value. That is, to grow and reward those who put their money down to make it all happen in the first place.

There are many reasons to see this need for constant growth as dangerous. Most generally, it’s not sustainable outside of the rate of population increase and productivity gains, at least once the entire planet reaches a similar level of development. But more important, the view of what a corporations is, or at least why it exists, is extremely damaging to its own stated purpose.  And it’s easily shown to not actually be true in practice.

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The Failure of Money

Economics is all about money, right? It’s all about theories on how to distribute it, use it, make it, or protect it, yes? This is a common perception, and the focus on money dominates the area of political and personal understanding of all things related to important concepts like markets and wealth.

Yet there is substantial evidence that this is simply inadequate at best, wrong at worst. The purpose of money, according to a rigid definition, is to be a medium of exchange and a store of value. But there is quite a lot of evidence that as a store of value, a representation of accumulated wealth, it often fails horribly.

Money only works in a dynamic sense. There are several ways to read that statement, and they are all valid points.

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What is “Productivity?”

Nine years ago, January 2010, was the bottom of what I’ve come to call the Managed Depression.  Here is a piece from that time which is still relevant.  At that time, we were awaiting a “recovery” and hoping for productivity gains to get us out of it.  But they didn’t.  And the core issues outlined here remain.

What would make a recovery sustainable?  If you ask an economist, they’d tell you that what makes any economy grow and prosper is, ultimately, what they call “productivity gains”.  That’s the ability to make more with less that allows a people to prosper.  During the 1990s this was given as the reason why interest rates could remain low and we could have one Hell of a party – a sloppy, hazy bender.  We live in the hangover that resulted, but have we really learned how intoxicating this one, simple idea is?

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What is a Bear Market?

We recently stated that this is a “Bear Market.” So what does that mean?

It’s not all that scary, at least not once the market really settles into bear territory. In fact, it can be a great time of opportunity for many investors, particularly away from stocks. It’s worth spending a moment contemplating what a bear market is and why it’s important.

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It’s a Bear Market

I hope everyone had a good Christmas. I’ve been slow to write about the stock market for two reasons. The first is that it would ruin the holiday cheer, and the secondly this is a long developing story that I have written about for a year now and will probably write about for the next year.

But we’ve reached an important threshold. It’s now down 20% off the peak, meaning that we are in a Bear Market. We haven’t been in one for a decade, and there hasn’t been a nasty one for at least two decades, so let’s run down what that means.

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In the movie Star Trek: First Contact, the Enterprise if flung back in time to the year 2063 and has to return home. They quickly realize that this is a very important time because it is the moment that the Earth made first contact with Vulcan, setting up the entire universe as they would all come to know it. The great abundance, the wonder, the adventure all hinged on this one moment.

There was one problem, however. Earth, at that time, still used this thing called “money.” The great abundance had not yet kicked in and the crew of the Enterprise had a lot to learn about how to get things done if they wanted to get home.

It’s a great movie for many reasons, generally starting with Patrick Stewart as Captain Picard. But this vision of the future, made at that moment, is particularly compelling. Abundance so great that money isn’t necessary? It’s one vision of the future, certainly. But is such a thing possible?

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People’s Economics – The Definition

Futurists and economists often spend a lot of time contemplating the systems and hardware of the world unfolding around us. The promises of the information age, quantum computing, Industry 4.0, and many other well laid plans are expounded on at great length by enthusiasts with imagination. Yet in all of this, there is something usually missing, something incredibly important:

How is the world that is coming going to work for people? How will it help us all have a better life?

We can see fractures already. Economic systems which bring prosperity do so at a large cost in nature and workers. Families are under strain from changing times, yes, but largely due to demands for more and more work at greater distances. Automation takes away much of that work, bringing more misery than comfort. And the prophesy of abundance is a chimera.

Correcting this is what People’s Economics is all about.

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