HREQ1760October29,2009-YorkUniversity.docVIP

HREQ 1760 October 29, 2009 The Corporation Investment and Growth Corporate Cooperation and Competition The Corporation A defining feature of capitalism is that most production is undertaken to generate private profit. In order to generate and collect that profit, a specialized institutional form has emerged: the private company. Today private firms dominate the economy: their decisions about investment, production, and employment are the most important factors determining whether and how the economy grows, and how people work. The actions of these private corporations are far more important on a day to day basis than things that governments do. Not exactly accurate for government to claim responsibility for economic growth based on their economic management. Similarly, it can be inaccurate to assess blame on govt for short-term economic difficulties. Companies come in all kinds of sizes, but the largest corporations rival countries in size (corporate revenues vs. GDP). All companies have two crucial features in common: Somebody owns them and obtains the profit (if generated). The owners must ensure that the company is governed in accordance with their wishes. Usually of course, the goal is to maximize profit. The most common business form today is the corporation. A corporation is a private firm which has been granted the legal rights and responsibilities of a person, but in a manner which keeps the corporation itself separate from the real people who own it. It has its own legal identity, separate from its owners. The principle of limited liability, limits the extent to which individual owners are liable for losses or damages resulting from a corporation’s activities. A corporation may be owned by a large number of individual investors. This is through share ownership, usually these shares can be bought and sold on stock markets. Corporations which publicly issue shares are called publicly-traded corporations. Through this form, investors can place bets on the su