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Case Study: Michael Novak: Capitalism and the Corporation

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Case study: Michael Novak: Capitalism and the corporation The problem investigated is the growth of corporations and capitalism to the extent that they become unavoidably inseparable in order to maintain a cohesive, civil society. Corporations have been with humanity since the beginning of organized government. Capitalism can be loosely defined as the economic freedom to allow for the building of wealth, both individually and corporately. In order to provide for that freedom, governments must be in one accord with corporations to that end. Adam Smith’s writings tell us in the course of history that countries may finally become a “Nation of Commerce” as part of a natural progression. He further suggests an individual’s economy is inevitably woven into the fabric of society and that fabric should be allowed to grow without the interference of politics, which we can fairly judge as governments of all kinds (Smith, 1776). To this point, both Smith and Novak concur that, “sources of private capital and private wealth, independent of the state, are crucial to the survival of liberty”. (Novak, 1997, p. 32) The American corporation faces the responsibility of creating a social good beyond the four reasons given by Michael Novak.
First, it creates jobs. Second, it provides desirable goods and services. Third, through its profits it creates wealth that did not exist before. Fourth, it is a private social instrument, independent of the state, for the moral and material support of other activities of society. (1997, p. 32)
An emphasis on the fourth reason is essential as it is a significant role of the corporation. It is a critical part of the trustworthiness placed upon it by the affected society. One must take issue with Novak’s statement, “Absent the financial resources of major corporations, civil society would be a poor thing indeed” (1997, p. 32). He presents this in a condescending, arrogant notion that societies cannot be separate from corporations. When viewing the corporate-wide flow of money, he would rather the corporation decide where the money for the betterment of the society be spent rather than the employees of the corporation for which they are working. Today’s concerned, discerning, culturally responsible employees are taking a much closer look at who they want to work for as the corporation makes as much of a statement to society on behalf of the corporation as well as advancing which issues the employee wants to promote regardless of the employees intentions and desires, i.e., the corporation is a supporter of abortion, then is the employee is a promoter of that same issue by association. Additionally, why then is it necessary for the creation of organizations such as the United Fund, if corporations were tending to the needs of the “poor thing”? (Novak, 1997, p. 32). It stands to reason therefore, that corporations are not doing their level best and falling behind on their duties to support those organizations that promote the better good if the organizations have to approach the common working person to meet their reasonable goals. Even though some of the largest holders of stocks and bonds are the pension plans of workers, it is the explicit role of the corporation to keep those funds healthy. As a retiree of the United States Postal Service, the Department of Social Security of the United States government borrowed from the retirement funds of the postal service workers. The intention was that these funds would become part of the national debt. Because of legal action brought by the unions of the postal workers, the law changed in 1983. This emancipated both the Department of Social Security and the United States Postal Service from the national budget, as they were still agencies of the government but now considered off budget with their individual governing agencies responsible for their own financial health (Penner, 2007). This is clearly not an example of a corporate role, but that of a governmental one. In this case, corporate agencies created out of a need for financial separation and responsibility with clear roles defined legally. Creating government corporations of this type is in essence the reversal of escheatment as they have the potential to become profit-making corporations on their own accord and should be free to operate on their own. It is not the role of the government to operate profit-making corporations, but rather by this legal emancipation from the budget, they no longer hold the role of ownership. They retain the role and responsibility to keep these two entities operational, as it is a function of the common operations of enterprises. For the United States government to abdicate this role would be irresponsible. Numerous attempts made to privatize these two particular departments have not been successful. No reasonable, equitable solution has yet to surface that will satisfy all of the parties concerned. When addressing the roles and responsibilities of corporations, it is not only important to consider all of the necessary provisions to make the coverage complete, it is also necessary to examine when the corporation has overextended its reach. A relatively new concept in schooling now addresses “learned helplessness”. In this case, the student, as well as the citizen learns to depend upon someone else or something else to do things for them that they could otherwise do themselves (Craske, 2011). Generally, this is not a healthy and productive model for the person, the corporation, or the government. It is the very antithesis of the corporate good and bleeds the economy by enabling dependence upon those of strength and stature, whether person or institution. Alexis de Tocqueville (1966) addresses this point from the aspect of socialism, but when applied to the social responsible role of a corporation it appears as an adequate fit.
It gladly works for their happiness but wants to be sole agent and judge of it. It provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, makes rules for their testaments, and divides their inheritances. Why should it not entirely relieve them from the trouble of thinking and all the cares of living? (p. 692)
We see the wanting and the need. Here they may both possibly be applicable, but when Tocqueville states they approach serfdom, he would be correct in a sense, but in this scenario, the people are predisposed to everything given to them without having to work for it. For the corporation and indeed for the government to give out any assistance without requirement seems to be without accountability, and thereto exacerbates the issue causing further liability whether it is warranted or not. The American government might be able to raise taxes or borrow without regard to repayment; the corporation will not and cannot stand, especially in the eyes of stakeholders as well as investors. They will not tolerate such irresponsible actions due to their returns will reduce to nil and possibly incur the loss of the investment entirely. No doubt, the role of the corporation and the government become intertwined when it comes to creating and maintaining the role of responsibility for the social good. As an American institution, the corporations and government agencies have become the ever-hated hydra from Greek mythology. Where does the responsibility begin and who is responsible or culpable answered in planned obfuscation? I.e., when drug companies lobby congressman and senators with under the table bribes, or open gifts, the drug is approved and the retiring drug manufacturer is assigned a seat on the Food and Drug Administration’s review board which is assigned by the congressman who is lobbied for their vote. The inevitable vision is where each has a hand in each other’s pocket while pointing at someone else. As a matter of this course or others that are far better, they are ‘building of the chief alternative to government: civil society.” (Novak, 1997, p. 32)
Corporations have, “changed often in history and, by its very self-discipline, inventiveness, and creativity, has surmounted even greater threats than it faces today”. (Novak, 1997, p.32).
If corporations are fighting for their very lives, then it is fitting and just because they have knowingly turned their backs on their role as having a social responsibility. Their responsibilities define their roles. These responsibilities grow as their reach increases because their effect is more far reaching than the corporation itself is, as we see in stakeholders.
1. Corporations have existed since the Middle Ages as burial societies.
2. While those corporations founded across the sea where based upon furthering the continuance of the business beyond the current founding generation, U.S. corporations were founded upon industry that spread farther and covered more land than was possible in Europe. The corporation became synonymous with industry and not as social democracy frequently with singly owned enterprises. As well, the stakeholders of Europe adhered to a position of entitlement without responsibility, while the U. S., citizenry staked their hard work upon their livelihoods that may or may not yield a profitable result.
3. When the Homestead Act came about, Americans would stake out a plot of land, register that claim and holding on to that claim gave them protection to have and to hold that land. Another definition lies in the context of social democratic meaning of one that relies on entitlement that is entitled to make demands. Making demands in and of itself without a work ethic or work performed is baseless. A bottomless pit becomes a reality, when this demand is met. It is never satiated. Alternatively, the first definition of stakeholder requires risk.
4. Social democracy, while trying to appease the desires of all peoples with one united solution, it falls short as dissatisfaction sets in, as people become malcontents or dispensers of unwanted judgments. The nature of human beings if left to their own devices will create a better way, make a suggestion, or promote something to save time, energy, and resources. This accomplishment is however, not out of dissatisfaction with the system. This result is by obtaining something that results in a positive outcome.
5. Novak is using a metaphor when he refers to the cold meteor. It is not something that just happened out from the middle of nowhere, as meteors do have their origination. . A hot meteor may have a different effect on the landscape. Rather, the corporations are man made, moldable, and changeable as a cold meteor is not affected nor directed by humankind.

References
Craske, M. (2011, May 13). Learned helplessness, self-worth motivation and attribution retraining for primary school children. Educational Psychology, 58, 152-164.
Jennings, M. (2012). Business ethics: Case studies and selected readings 7th Ed. Mason, OH: South-Western Cengage Learning.
Novak, M. (1997). Michael Novak on Capitalism and the Corporation The Fire of Invention: Civil Society and the Future of the Corporation, p. 32.
Penner, R. (2007). The tax policy briefing book: A citizens’ guide for the 2012 election and beyond. Entry 7. Urban Institute and Brookings Institute. Retrieved from http://www.taxpolicycenter.org/briefing-book/background/taxes-budget/off-budget.cfm
Smith, A. (1776). The wealth of nations. Book IV Chapter II. New York: Modern Library.
Tocqueville, A. (1996). Democracy in America. New York: Harper and Row.…...

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