DON'T blame companies that win and cash in on government tenders to provide essential public services, says Terry bell in his latest Labour Wrap. They are merely doing what they are legally compelled to do.
And corruption, he says, is endemic to the system, not just in South Africa but globally. He maintains evidence for this goes back to 1720, when more than 500 members of the British Parliament and House of Lords were involved in a massive fraud that saw the then finance minister jailed. Today, the situation is much worse.
In a world dominated by shareholder companies and transnational corporations, the maximisation of profits and dividends to shareholders rules supreme, irrespective of the damage it does to society at large. Such behaviour by any individual, says Bell, would be regarded as “psychopathic”.
But he points out that companies - regarded in law as legal persons - are not crazy. They behave as they do because they have to and are legally compelled to.
Bell quotes the “classic example” of the Dodge vs Ford case heard in the Michigan supreme court in 1919. The Dodge Brothers before the made their own cars were, at the time, 25% shareholders in the Ford motor company. And when Henry Ford as a “goodwill gesture” decided to lower the price of Ford cars in a virtual monopoly market, the Dodge brothers took him to court.
The brothers argued that it was the fiduciary duty of the company to maximise rewards to the shareholders, not the consumers. They won. And, despite some latter day legislative tinkering, says Bell, that ruling remains basically the legal duty of companies.
And he adds that anyone who thinks the system is not in need of transformation should recall that Adam Smith, the father of modern laissez faire capitalism, supported the 105-year ban on shareholder companies imposed by the British government in the 18th century. Smith did so because such companies were regarded as inherently corrupt.
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