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davidtrump

The rise of corporations and ending labor shortage

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According to author Greg MacLeod, the concept of the corporation originated in Roman times. However, "the modern business corporation evolved radically from its ancient roots into a form with little relation to the purpose as understood by historians of law." John Davis, a legal historian, noted that the precursor of the business corporation was the first monastery, established in the sixth century, the purpose of which was to serve society. Most business corporations before 1900 developed in Great Britain, where they were established by royal charter, with the expectation of contributions to society. Incorporation was a privilege granted in return for service to the crown or the nation. MacLeod goes on to say:

A corporation is considered by the law to exist as a legal person. In the Middle Ages it was called a "persona ficta". This is a very useful way of looking at a business corporation, because it suggests correctly that the corporate person has a certain personality. It has duties and responsibilities vested unto it by the legitimate government or society that fostered it. The corporate person receives great benefits from society – and, in return, it must exercise great responsibilities. One of the most basic responsibilities is job creation, a fundamental need in any society.

By the mid-nineteenth century, corporations could live forever, engage in any legal activity, and merge with or acquire other corporations. In 1886, the U.S. Supreme Court legally recognized corporations as “persons”, entitled under the Fourteenth Amendment to the same protections as living citizens. Unlike average citizens, large corporations had large flows of money at their disposal. With this money they can hire lobbyists, donate copiously to politicians, and sway public opinion.

But, despite Supreme Court rulings, the modern corporation is not a real person. Rather, the publicly traded stock corporation is what Barnes terms an "automaton", explicitly designed to maximize return to its owners. A corporation never sleeps or slows down. It externalizes as many costs as possible, and never reaches an upper limit of profitability, because no such limit has yet been established. As a result, corporations keep getting larger. In 1955, sales of the Fortune 500 accounted for one-third of U.S. gross domestic product. By 2004 they commanded two-thirds. In other words, these few hundred corporations replaced smaller firms organized as partnerships or proprietorships. Corporations have established a homogeneous global playing field around which they can freely move raw materials, labor, capital, finished products, tax-paying obligations, and profits. Thus, corporate franchise has become a perpetual grant of sovereignty, including immortalityself-government, and limited liability. By the end of the twentieth century, corporate power—both economic and political—stretched worldwide. International agreements not only lowered tariffs but extended corporate property rights and reduced the ability of sovereign nations to regulate corporations.

David Schweickart submits that such "hypermobility of capital" generates economic and political insecurity. "If the search for lower wages comes to dominate the movement of capital, the result will be not only a lowering of worldwide wage disparities (the good to which some economists point) but also a lowering of total global income (a straight-out utilitarian bad)." Jack Rasmus, author of The War At Home and The Trillion Dollar Income Shift, argues that the increasing concentration of corporate power is a cause of the large-scale debt, unemployment, and poverty characteristic of economic recession and depression. According to Rasmus, income inequality in contemporary America increased as the relative share of income for corporations and the wealthiest one percent of households rose while income shares declined for 80-percent of the United States workforce. After rising steadily for three decades after World War II, the standard of living for most American workers has sharply declined between the mid-1970s to the present. Rasmus likens the widening income gap in contemporary American society to the decade leading up to the Great Depression, estimating "well over $1 trillion in income is transferred annually from the roughly 90 million working class families in America to corporations and the wealthiest non-working-class households. While a hundred new billionaires were created since 2001, real weekly earnings for 100 million workers are less in 2007 than in 1980 when Ronald Reagan took office".

According to economist Richard D. Wolff, the 1970s brought an end to the labor shortage which had facilitated more than a century of rising average real wages in the United States. Wolff says Americans responded to the resulting deficiency of effective demand by working more hours and excessive borrowing; the latter paving the way for the financial crisis of 2007–08.

wikipedia.org

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