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Forum Post: Profits Are Socially Responsible

Posted 2 years ago on Jan. 26, 2012, 4:16 p.m. EST by darrenlobo (204)
This content is user submitted and not an official statement

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The Wall Street Journal reports that in seven states companies can register as benefit corporations, allowing the firms to pursue social and environmental goals without the worry of shareholders suing them for not maximizing shareholder value.

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The idea at the root of benefit corporations is that profit should be abolished. But the results of that would be disastrous. Mises points out that if profits were given to the customers (or, in other words, if prices could not exceed costs), this maximum-price decree would paralyze markets and require goods to be rationed.

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For instance, environmentally conscious CEOs can try explaining to shareholders that using more expensive materials or processes to create goods is beneficial to the earth and thus more worthy than using less environmentally friendly but less expensive materials and earning a higher profit, but the net benefit is impossible to measure. The CEO and board are merely asking shareholders to subsidize their worldview.

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A free society cannot survive without entrepreneurial action as well as entrepreneurial profit and loss. Entrepreneurs adopting benefit corporation charters may be well-intentioned, but they should heed the words of Mises:

The elimination of profit, whatever methods may be resorted to for its execution, must transform society into a senseless jumble. It would create poverty for all.

http://mises.org/daily/5884/Profits-Are-Socially-Responsible

3 Comments

3 Comments


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[-] 1 points by gestopomillyy (1695) 2 years ago

what has that got to do with giving the profit to the workers i can see all your other points but giving the profit to workers makes good sense.

[-] 1 points by toukarin (488) 2 years ago

Make profit yes. Exploit the consumer no.

"A free society cannot survive without entrepreneurial action as well as entrepreneurial profit and loss."

I think he mentions something about loss in there... so... he was against the bailouts then?

"For instance, environmentally conscious CEOs can try explaining to shareholders that using more expensive materials or processes to create goods is beneficial to the earth and thus more worthy than using less environmentally friendly but less expensive materials and earning a higher profit, but the net benefit is impossible to measure. The CEO and board are merely asking shareholders to subsidize their worldview."

Right... so that means Mises wont mind if I dump toxic wastes in his backyard then? Perhaps shove some chips of lead paint down his throat? Spike his drink with some heavy metals?

"The idea at the root of benefit corporations is that profit should be abolished. But the results of that would be disastrous. Mises points out that if profits were given to the customers (or, in other words, if prices could not exceed costs), this maximum-price decree would paralyze markets and require goods to be rationed."

I dont think I have heard ANY OWS member say that profits should be banned... and if they did... then theyre not the ones I stand with...

"The Wall Street Journal reports that in seven states companies can register as benefit corporations, allowing the firms to pursue social and environmental goals without the worry of shareholders suing them for not maximizing shareholder value."

Too bad its just seven... this is a free country right? So let the people who want profits invest their money elsewhere... no one is FORCING them to give the benefit corporations their money... So run along now Mises... go invest in big oil... and their ilk...

[-] 1 points by EricBlair (447) 2 years ago

Von Mises is a n00b

http://www.infoshop.org/page/AnarchistFAQSectionI1#seci11

Austrian school = Religion