In the simplest meaning of the term, an American corporation is a legal entity formed in compliance with "statutory requirements." The entity is distinct from its shareholder-owners. It can consist of one person or many shareholders, combining to become identified under a single name. In the corporation, there is a board of directors, entrusted with the responsibility of the firm's overall management. The shareholders select the members of the board.

The advantages:

  • There is limited liability of the shareholders. The owners of the corporation are not responsible for debts or liabilities incurred by the corporation. In most cases, only the assets of the corporation itself will be used to pay off debts and obligations.
  • The corporation has perpetual existence, meaning that the death of a shareholder or a selling of ownership rights does not terminate the existence of the corporation.
  • The shares of stock are transferable, so that owners can sell off their ownership rights to other people.
  • There is a tremendous opportunities for growth because corporations have more access to public capital markets.

The disadvantages:

  • The corporation is more difficult to form than other forms of organization. A corporation requires statutory authorization. That means that the firm requires the state which they are based in to approve the existence of the entity. Because corporations are bound by state law and the liberality of Delaware's corporation laws, many corporations base themselves in Delaware, even though they do business in other places.
  • There is double taxation. This is perhaps the greatest disadvantage of a corporation. The corporation itself pays income tax on net profits and shareholders pay income tax on the dividends they receive.
  • Corporations are required to pay organizational fees, annual fees, and give annual reports.
  • To do business in other states, the corporation must obtain a certificate of authority for that state, qualifying them to do business there.

Back to Business Organizations.


At present the majority of consumption in the world is superfluous at best and destructive and oppressive at worst. We live in a society focused on the consumer; where both advertising and media tell us how to act, what to wear, and where to buy. This Friday is what has been called ‘Buy Nothing Day’; this Friday is the day after the American Thanksgiving and has become the biggest shopping day of the year. Buy Nothing Day serves to educate consumers about the extent to which we focus our lives on products, and hopefully has created some discussion and thought, and perhaps may even have changed buying habits. However, Buy Nothing Day gives us a false sense of charitable action. We can easily give up one day each year to not go into the stores, but has it made a difference in the behaviour of corporations, or do we stop to think during the rest of the year where our products come from? For the most part no, understanding the way that corporations work causes profound ethical problems next time we go out to the store, and perhaps can lead to a change in the way products are manufactured.

The first step to changing corporate mentality is for us to know what we buy. This does not involve much work, but it can have wonderful implications on the profits of corporations that continue to disregard human rights, the environment, and society at large. For example, Philip Morris Inc. is the biggest producer in the world right now, we may not be familiar with his name but we know his products. Over the years Philip Morris has bought such companies as Kraft, Post, Nabisco, Starbucks, Miller, Molson’s, and Toblerone, each company earning profits of over one million dollars each year. However, Philip Morris is not known as a food producer, he is known as perhaps the world’s largest tobacco company, reaching into every country on this planet. Morris is well known for covering up the harmful effects of tobacco for decades, targeting children in his advertising in North America, and actively encouraging the addiction of children in the Developing countries. Using the profits from his many companies Morris can easily afford to hand out free cigarettes in the schoolyards of Developing nations. What if we were to take the profits away?

Morris also has the monopoly on corporate donations in the United States, for instance in the recent federal elections Philip Morris Inc. donated 1.2 billion dollars to Bush’s campaign. Many politicians refuse to accept tobacco money as part of his fundraising, and rightfully so, but will eagerly take money from Kraft. Morris can easily control the laws those politicians propose by threatening to pull donations, he can do the same with the editorial content, and even the articles of magazines that advertise Morris’ products. It is not too surprising, then, when we see tobacco-regulating bills being struck down in Congress, and rarely do we read editorials condemning smoking in newspapers.

These sorts of problems exist with so many of the products available in stores. Human rights organizations and labour unions have recently exposed the actions of Nike, the Gap, McDonald’s, and Chiquita, among others. The increasing Globalization of corporations has led to countries promising the corporations relaxed labour standards, environmental disregard, and destruction of the local economy, with no guarantee that the corporation will remain in the country long enough for a second generation to find work.

Perhaps what are less spoken about here is the Developed world are things like the continued use of the pesticide, developed by Monsanto, and commonly known as DDT. DDT was banned in all European countries and in North America by the year 1968; however, most Developing nations have not issued such a ban. Consequently, many of the imported fruits and vegetables in our grocery stores have come in contact with some levels of DDT. But these chemicals are causing problems for many people who have to work daily covered in pesticides; birth defects and cancer are now linked with continued exposure to many of the pesticides, herbicides and fungicides that are sprayed on our food crops.

Other products made by Monsanto are Agent Orange, used during the Viet Nam war; the Terminator Gene, designed to prevent species from reproducing; Bovine Growth Hormone, which has been banned in Europe because of its link with cancer; and Nutra-sweet/Aspartame both of which were banned in North America at one time (before Reagan decided they were safe again), and are still banned in many European countries. Monsanto is also one of the biggest developers of Genetically Modified Organisms.

As we begin to consider where our foods and other products come from we will develop into, by definition, more conscious consumers, something the corporations would rather not see. However, it is this knowledge that can be implemented to create protest and eventually change the way that goods are produced. Refusing to buy from companies that will not respect our communities and our environment is the answer. The corporations make their money from us, if we make it clear that we will not tolerate gross injustices and pollution then they will have to change. There is a social cost involved with manufacture that is to be expected. However, we can diminish this cost as long as we understand where our products come from and refuse to allow unethical business practices to continue.

With references from:,,, and

Every system has rules, and every system has those who exploit the rules. There's the guy at work who kisses ass to get promotions, the kid who beats up other kids to take their lunch, and the duke who lures all the knights to subsequently crush the neighboring duke.

Capitalism is a system to allow people to get the goods and services they need to live by providing goods and services to other people. It is a system of commerce designed to facilitate a lifestyle. And there are those who abuse this system by amassing credit far in excess of what they could ever need. Perhaps they see it as a game to win, perhaps they like the challenge, but their underlying motivation is irrelevent because what they are comitting is greed. When people do this in capitalism, they are taking away something from people who, for whatever reason, are unable to provide for their own lifestyle. They are subverting the goals of capitalism by excessive consolidation of resources.

A successful system is one that suppresses exploiters, prevents abuses in the name of avarice. But classic Western capitalism doesn't do this: it encourages conspicuous consumption. It rewards it. It allows the invention of entities whose entires existence is the perpetuation of greed: yes, the corporation.

No man embodies pure greed, but corporations do, because that is the only goal they can have. They have no conscience outside of getting as much money as quickly as possible. And the men that constitute a corporation are no longer working for themselves, they are working for demanding, soulless entity. In return, the soulless entity protects them from responsibility for their actions, so that men may be cruel to each other with a clear conscience.

Until around the late nineteenth century, a "corporation" was just an agreement between people to accomplish a particular end. If the signers operated illegally in the name of the corporation, they were responsible for their actions. But then the United States Congress allowed the creation of these abstract things, these corporations in the legal sense, that had all the rights of a man: they could own, and employ, and carry debt, and sue, and be sued. They let the men operating them act with impunity to the law, because if they were caught, only the corporation could be held responsible. And corporations don't go to jail, or get shot: they just get fined.

And moreover, the corporation was vastly more greedy than any of its constituents. It demanded ceaseless work, more than would be necessary just to live, because the only goal that a corporation, a collective, knows is money.

Please read the politics of Noam Chomsky. While you're at it, read his linguistic works too.

At a time when reckless irresponsibility by executives at many high-profile coporations in the United States has made corporation-bashing more popular than ever, it is easy to dismiss the entire notion of incorporation and limited liability as merely vehicles for personal gain, as Wicker808 has shown. But arguments presented in this node that all corporations are inherrently evil and socially irresponsible because one of their primary goals is to accumulate money are specious and unfounded.

First off, I agree with Wicker (and I hope that everyone reading this does as well) that it is possible to accumulate vast amounts of wealth within the rules of the American economic system, sometimes with great ease. But I am not sure that doing so violates the "goals of capitalism" (though I don't believe such goals exist), even if we use hir definitions of these "rules". If person A realized capital gains of $1 billion in a year, a huge percentage of that amount (IAMNAA), at least 20%, is going to be taken in taxes by the Federal Government alone. The same holds for the year after that. The "people who, for whatever reason, are unable to provide for their own lifestyle" will be enriched to an enormous degree by person A's wealth when the government spends his tax money on them.

But on a less technical level, is it really the case that all people who accumulate vastly more wealth than others are inherently, provably greedy and acting only out of self-interest? To put it in Wicker's words,

"Perhaps they see it as a game to win, perhaps they like the challenge, but their underlying motivation is irrelevent because what they are comitting is greed."
Is this statement true? I contend that it is absolutely false, and present the following counterexample. Bill Gates is currently the wealthiest man in the world. At the high-water mark of the tech boom of the late 90's, his worth was estimated to be as much as $80 billion dollars. While that figure is not nearly as much now as it was then, he still has net worth of at least $40 billion. Does he enjoy a good lifestyle? Absolutely, as anyone who has seen his enormous mansion will attest. But does he take away from society by concentrating so much wealth in one person? The charitable foundation which he established, currently named the "Bill and Melinda Gates Foundation", which was founded to research and cure infectious diseases, especially those of third world nations, has an endowment of more than $28 billion, nearly all contributed by him. He has repeatedly stated that he will leave to each of his children a trust fund of $10 million each, a miniscule amount when compared to his worth, and donate the rest of his enormous fortune to his foundation. Think about it: By conservative estimates that involve him living to old age, he will donate at least $60 billion to a foundation whose goal is to save the lives of people who live in places where there still might not be running water or electricity, let alone a health care system that provides for them. How exactly does trying to save these peoples' lives harm society?

While I could go into great detail in refuting Wicker's second point about coporations embodying "pure greed, because that is the only goal they can have", I will bring up only one counterexample in the interest of brevity. Bertlesmann, one of the three largest media companies in the world, has written into its charter that its goal is first to provide for the community, and that the goal of making profits is only to provide funds to do so. I am not saying the executives at Bertelsmann are not well-paid, but their corporation clearly has admirable altruistic goals. And the charter statement is not mere rhetoric; Bertlesmann contributes millions of dollars of aid to not-for-profit organizations every year. These two examples clearly illustrate that greed is not always as one-dimmensionaly self-interested a motivation as Wicker claims.

Cor`po*ra"tion (k?r`p?-r?"sh?n), n. [L. corporatio incarnation: cf. F. corporation corporation.]

A body politic or corporate, formed and authorized by law to act as a single person, and endowed by law with the capacity of succession; a society having the capacity of transacting business as an individual.

Corporations are aggregate or sole. Corporations aggregate consist of two or more persons united in a society, which is preserved by a succession of members, either forever or till the corporation is dissolved by the power that formed it, by the death of all its members, by surrender of its charter or franchises, or by forfeiture. Such corporations are the mayor and aldermen of cities, the head and fellows of a college, the dean and chapter of a cathedral church, the stockholders of a bank or insurance company, etc. A corporation sole consists of a single person, who is made a body corporate and politic, in order to give him some legal capacities, and especially that of succession, which as a natural person he can not have. Kings, bishops, deans, parsons, and vicars, are in England sole corporations. A fee will not pass to a corporation sole without the word "successors" in the grant. There are instances in the United States of a minister of a parish seized of parsonage lands in the right of his parish, being a corporation sole, as in Massachusetts. Corporations are sometimes classified as public and private; public being convertible with municipal, and private corporations being all corporations not municipal.

Close corporation. See under Close.


© Webster 1913.

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