Capitalism Revisited: The Case For Free Markets Without Corporations
Michael Hartke
1

This entire essay of your’s is poorly thought out and factually wrong on numerous accounts.

To begin with, You use the word “corporation” throughout your essay yet your issues all revolve around a tiny subset of corporations.

This is primarily due to the corporation’s ability to grow exponentially, sometimes overnight. And then continue to grow, unchecked, for decades. This starts with the initial public offering (IPO) in which any person can buy a small piece of the company (a share) for whatever the going rate is (the stock price).

There are some 18 million active for-profit corporations in the U.S. along with another 1.5 million non-profit corporations and ~19,300 municipal corporations. Just over 4,300 of those have ever had an IPO.

It is not unusual for companies to get a cash influx of tens, sometimes hundreds, of millions of dollars from an IPO. A “healthy” company will then see its stock price increase over the years. This, in turn, gives them a greater amount of operating income.

Well, no. A company that goes public gets a cash infusion from the IPO by selling shares but after that the stock’s value provides little, if any, further income to the corporation.

If I own a company and take it to an IPO and sell 49% of the shares I get a cash infusion based on the sale price of those shares. If the value of the stock goes up, the cash value of my remaining shares goes up but that’s meaningless from an income perspective.

To get additional income I’d have to sell more of my shares. If I sell another 2% of the total shares I (along with my corporate officers and board of directors) no longer control my own company. That would be a pretty stupid business move.

Most companies will sell 25%-30% of the total shares at an IPO but that still leaves them with a limited number of shares they can sell before they lose control of the company.

Formerly accountable only to his customers, the business owner strikes a Faustian bargain and, in return for mounds of cash, sells his sovereignty to “the shareholders”. Now he and “the board” must listen not just to the customers but also to the expectant and demanding hoard of people waiting for their dividend check. If he makes a decision the shareholders don’t like or the “financial projections” don’t “meet expectations”, shareholders start to sell their stock and, as a result, the stock price takes a tumble. Therefore, he goes to great lengths (some legal, some, perhaps, not) to appease the shareholders. Meanwhile, the customer has become a secondary concern. What is this situation if not a blatant conflict of interest? As Jesus observes in Mathew 6:24, “No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other.”

There aren’t two masters here. The corporation creates those “financial projections” sets those “expectations”. In the business world it’s called “forward looking guidance”. That guidance is usually sales and/or revenue projections.

If I’m running a company and announce projected revenue growth of 4% for the following business year, the entire idea is that growth will come from meeting customer needs. Those customers will then buy more of my products. An increase in sales means an increase in revenue. If I meet those customer’s need and increase revenue growth by the 4% that I projected then I “met 
expectations” and the stockholders are appeased.

The corporation, on the other hand, tends towards immensity.

If that’s true then they fail horribly. Of the almost 20 million active corporations in the U.S., less than .4% have more than 250 employees. Only .08% of for-profit corporations have more than 1,000 employees. Compare that with the 52% of corporations that have 10 employees or less.

This is the solution that was proposed by tax reform committees during both the Bush and Obama administrations. In both cases, the idea was smothered on all sides by big business lobbying.

And by small business lobbying. And by individual’s lobbying… You lay all of the failed tax reform proposals at the feet of “big business” yet they weren’t the people screaming about child care tax credits, mortgage interest deductions, medical expense deductions, IRA/401k deductions, etc…

Around 70 percent of the population made their living by agriculture and animal husbandry. These days that number has dwindled to just two percent. As you might expect based on this number, the surviving farms are large, corporate operations.

This is apples and oranges. while the number of people working on farms has decreased significantly, the vast majority of current farms are not large, corporate operations.

In 2012 there were 2.1 million operating farms in the U.S. and less than 4% of those farms had total sales in excess of $1 million. 75% had sales of less than $50,000. The overwhelming majority of farms are small corporate operations.

Life without corporations would be slower but more sustainable. It would return a healthy amount of accountability and ownership to the population.

Life without corporations would be deadly for most people. Who do you suppose would provide that “healthy amount of accountability”?

Police and fire departments wouldn’t exist. There would be no courts, no jails and no one to prosecute any crimes. Schools wouldn’t exist. Hospitals wouldn’t exist. There would be no more immunizations or drugs to treat medical conditions. Half of us would probably die within 5 years. Life expectancy (for those that make it through being born) would plummet back to 30–35 years. We would revert to transportation by foot or animal. You’d get your drinking water from a dug well in your back yard (everyone has a yard, right?) or a stream and have an outhouse for your bathroom. You’d heat your home with wood, coal, peat or dung (depending on your location) and you’d barter your awesome skills (how are you at blacksmiting? Pottery? Weaving?) for food and necessities.

Within 20 years we’d revert to the way the American natives lived prior to the arrival of Europeans. While that might seem idyllic to a handful of people at first blush, I doubt there are more than a few hundred people currently living that could manage to survive that.

Consider this; There is a reality television program called “Naked and Afraid”. People volunteer for the show. These are almost all people between 20 and 35 years old. They undergo rigorous physical and mental screening before being selected. Anyone with any medical or mental health conditions is screened out so only the “healthy” make it on the show. And these are people that practice primitive survival skills so they are all (supposedly) prepared to survive on their own. Many are military vets that have been through military survival schools.

They take 2 people at a time and set them off in their own little world where there are no corporations. Despite their good health and prior training, only about half of them manage to survive 3 weeks living like that.

If some of the most prepared and healthiest people we have can’t make it 3 weeks, how long do you figure the rest of us would last?

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