23 January 2014

Firms and Freedom

Some time ago I posted here on the four "causes" of a corporation. Utilizing Aristotle's four-fold understanding of the notion of cause (material, efficient, formal, and final) I wrote:
The material cause of a corporation is that which it does--build cars, produce drugs, clean carpets, or stream internet porn. The efficient cause of corporate activity is capital, which turns the “stuff” of corporate activity, its material cause, into what folks buy. Capital lasts only so long, however, if the corporate activity doesn’t yield a profit. So it’s here, at the level of efficient cause, that profits fit in an Aristotelian account. Then it’s on to the formal cause, the stuff of law school courses in business associations, like Articles, By-laws, resolutions, minutes, and so on.
I punted a bit when it came to a corporation's final cause: "An entity without a final cause or goal is like a powerful chainsaw spinning out of control: it can do a lot of damage. Corporate profitability alone, like breathing alone, is not good. Only profit directed toward an end that is good is profit worth earning." (Emphasis added.) Thankfully, however, Brian McCall published an entire article on the subject that I recapped here, and McCall concluded that "'efficiently producing economically useful products [or services].'" In other words, the customer and not the shareholder is the end/purpose/goal of the corporate enterprise.

These posts nonetheless left me wondering about the relationship, if any, between a ontologically "thick" notion of the corporation (something beyond shareholder wealth maximization) and modern liberal democracy. After all, I had held up the tenets of classical liberalism as sufficiently similar to the the understanding of human nature taught in premodern Christian thought as to justify human rights. (Download my article here.) But is there a meaningful connection between the notion of political liberty and corporations?

I now think so and you can form you own opinion by going here and reading the LRN Freedom Report: "Why Freedom is the Competitive Advantage." Coping from the press release, the Report "demonstrates that companies who give stakeholders both 'Freedom From' superfluous rules and 'Freedom To' pursue a values-based mission have a competitive advantage."

Political liberty writ small is profitable, in other words. Not only do we understand why corporations seek to operate in politically stable polities that observe the rule of law, we now see that corporations should adopt the same policies internally as well.

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