The Trusted Corporation: A Remedy for the Crisis of Trust
Contemporary capitalism is facing a profound crisis of meaning, resulting from the dominance of the Friedman doctrine. Colin Mayer proposes a revolutionary shift: transforming the corporation from a profit machine into a trustworthy institution. In a world of scarce natural and social resources, the trusted corporation becomes not only an ethical postulate but a technical necessity for stabilizing the system.
The Friedman Doctrine: A Category Error in the Theory of the Firm
Mayer identifies Friedman’s postulate—profit as the sole purpose of business—as a fundamental category error. It reduces the manager to a mere agent of the owner, ignoring the fact that the corporation is a legal fiction established for public purposes. The solution is the primacy of purpose: profit as a result, not a foundation. Mayer defines purpose as creating profitable solutions to the problems of people and the planet, rather than profiting from creating them.
Six Eras of the Corporation: The Evolution of Public Character
History shows a transition from royal chartered companies to today’s mindful corporation. In this sixth era, company value is built on algorithms and trust, which means traditional balance sheets hide real value and social costs. Mayer reminds us that the corporation exists by virtue of the law; therefore, the law has an obligation to define the conditions of its social legitimacy.
Fake Profits vs. Fair Profits: Technical Criteria
Mayer introduces a technical distinction between fake profits, generated through the destruction of resources, and fair profits. Fair profit is the surplus remaining only after the full restoration of Mayer’s six capitals: human, intellectual, material, natural, social, and financial. To ensure this, company law as a commitment device must enforce the fulfillment of the corporate purpose.
The Trusted Corporation: Pillars Protecting Against the Betrayal of Purpose
The foundations of the trusted corporation are mechanisms that block opportunism: stable ownership structures, a redefinition of fiduciary duties, and rigorous profit measurement. Mayer proposes a dividend block until a company proves its profit was not achieved at the expense of capital degradation. Purpose must become an inconvenient legal obligation rather than a marketing slogan.
Tax Neutrality Strengthens Capital Resilience
Systemic resilience is built through the tax neutrality of debt and equity, ending the preferential treatment of debt. Mayer also calls for purposeful regulation and the principle of functional equivalence: any institution performing banking functions must be subject to adequate rigors. This is crucial, as the NBFI sector (shadow banking) has grown to a size that threatens stability by externalizing risk to the entire community.
Anchor Owners Stabilize the Investment Horizon
The long-term vision is protected by anchor owners and industrial foundations, which hinder hostile takeovers by short-term capital. While critics of Mayer’s concept point to the risk of "purpose washing," the author responds: if a company cannot demonstrate the fairness of its profit, it cannot pay out dividends. This is the language of financial restriction that the stock market must accept to survive.
Scenarios for the Evolution of Capitalism in Business Opinion
Global business recognizes that the era of shareholder primacy is coming to an end. However, will the corporation resist the temptation of short-term gain? True change requires a revaluation of success: profit must become a metric of a duty well-fulfilled toward the world. As citizens, we must regain the ability to distinguish between real value and the accounting artifacts that shine at the expense of our collective future.
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