Sunday, December 09, 2007

Public-Benefit vs. Private-Benefit

On December 8, David Korten, in wrote an article titled, "Only One Reason to Grant a Corporate Charter." He explores the differences between the commonly practiced Private-Benefit Corporation and a logical, more environmentally and socially sensitive alternative, the Public-Benefit Corporation.

"The private-benefit corporation is an institution granted a legally protected right—some would claim obligation—to pursue a narrow private interest without regard to broader social and environmental consequences. If it were a real person, it would fit the clinical profile of a sociopath." Korten also states that this type of institutionalized corporation design benefits "wealthy investors far removed from the social and environmental consequences. That design has ever since proven highly effective in advancing the private interests of the world’s wealthiest people at enormous cost to the rest."

Explaining the public-benefit alternative, Korten states that "The only legitimate reason for a government to issue a corporate charter giving a group of private investors a legally protected right to aggregate and concentrate virtually unlimited economic power under unified management is to serve a well-defined public purpose under strict rules of public accountability. This defines a public-benefit corporation, which can be chartered as either for-profit or not-for-profit.

Please read the Korten article for a more detailed explanation.

Given the wide range of environmental and social justice problems all nations in the world are experiencing, it seems logical to put a huge and immediate individual and societal public effort into a restructuring of our understanding of long range effects that are caused by economic decisions we are making today. Fortunately, in my opinion, the Internet is providing social networking opportunities that "can" make a difference in this effort. We should use these tools to insist that Public-Benefit Corporations are supported by our friends, neighbors and elected leaders, and that Private-Benefit Corporations adopt this different and more responsible design for the good of all citizens of the world.

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