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Capitalism and Crises

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Capitalism and Crises

How to Fix Them

Oxford UP,

15 min read
8 take-aways
Audio & text

What's inside?

The aim of companies should be to solve problems — not just to make profits.

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Editorial Rating

8

Qualities

  • Analytical
  • Innovative
  • For Experts

Recommendation

Companies play a massive role in society, and it’s well-accepted that they operate purely for profit. But professor Colin Mayer’s central premise is that corporate profits should come from solving problems, not creating them. The implication is that businesses should address those actions that produce negative externalities and consider positive social contributions in their investment or allocation decisions. Mayer’s concepts are thought-provoking and inspiring, but could the business world ever move from financial self-interest to agree on altruistic and diverse goals? Whatever the answer, Mayer’s book shows that there is definitely a place for more purposeful thinking within companies.

Summary

Companies should have to justify their existence, as they have had to at certain times in history.

It has become the accepted norm that companies are entitled to form and operate businesses in any area they choose, and to seek to maximize their profits. The only condition is that they follow relevant laws and regulations. But because companies are so crucial to society’s well-being, they should be made to consider wider goals than just profit. In Britain, for example, the first companies needed permission from government to even form. By the 19th century, firms had to provide “object clauses” that specified their line of business, an obligation from which they predictably sought to free themselves.

By then, most companies were small, and there were few multinationals, so market power was not such a concern. In the mid-20th century, many saw companies as too influenced by the personal desires and whims of their executives. Since the 1980s, companies have more and more been run in the interest of shareholders’ returns.

Profits should only come from solving problems; creating problems should not be profitable.

The ...

About the Author

Colin Mayer is an emeritus professor of management at the University of Oxford. His books include Prosperity: Better Business Makes the Greater Good.

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