Theory of Value Vs Theory of the Corporation : The difference between life and death

My work shares nothing in common with the maximize shareholder profits mantra that has dominated corporate law, management and governance for the best part of fifty years.

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The profits before purpose movement led by Jensen, Meckling and Friedman, believes value equals profit and corporations have no existence and therefore nothing to strive for other than money.

I don’t argue the opposite. That’s what stakeholders do. Edward Freeman (and others) locked in a stakeholder vs shareholder debate that he just might win. But not because stakeholder theory is better at predicting success or failure. If stakeholder first supersedes shareholder first it will be because it’s the last theory standing. And it’s still not much of a theory.

For two decades I’ve been thinking on a different plane all together.

My work is based on connecting the science of energy to the legal concept of the corporation to open the door to new ways of thinking. Value is energy in its social forms and corporations need value because, like all things that are thermodynamically alive, without energy they die. I’m on the side of life.

The combination of value is objective (though relative) and corporations are real (though artificial) provides a theoretical foundation for great optimism.

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If you’re wondering what the difference is between a thermodynamically alive corporation and a dead one read “Social Purpose Without Social Responsibility”. It’s a good gateway to ideas touched on here.

The one thing you will learn is that treating corporations as a fiction whilst simultaneously believing in the assumptions of neo-classical economics is a deadly combination. Turning things that can do more work than money into money is fools alchemy. More money in the hands of shareholders but less value throughout society to do the work of thriving.

Statement on the Purpose of a Corporation: Better but not Excellent

The Decapitalist’s Dictionary