Michael Novak - Capitalism and the Corporation

Topics: Federal government of the United States, Corporation, Alexis de Tocqueville Pages: 5 (1870 words) Published: December 31, 2012
Case study: Michael Novak: Capitalism and the corporation
The problem investigated is the growth of corporations and capitalism to the extent that they become unavoidably inseparable in order to maintain a cohesive, civil society. Corporations have been with humanity since the beginning of organized government. Capitalism can be loosely defined as the economic freedom to allow for the building of wealth, both individually and corporately. In order to provide for that freedom, governments must be in one accord with corporations to that end. Adam Smith’s writings tell us in the course of history that countries may finally become a “Nation of Commerce” as part of a natural progression. He further suggests an individual’s economy is inevitably woven into the fabric of society and that fabric should be allowed to grow without the interference of politics, which we can fairly judge as governments of all kinds (Smith, 1776). To this point, both Smith and Novak concur that, “sources of private capital and private wealth, independent of the state, are crucial to the survival of liberty”. (Novak, 1997, p. 32)

The American corporation faces the responsibility of creating a social good beyond the four reasons given by Michael Novak. First, it creates jobs. Second, it provides desirable goods and services. Third, through its profits it creates wealth that did not exist before. Fourth, it is a private social instrument, independent of the state, for the moral and material support of other activities of society. (1997, p. 32) An emphasis on the fourth reason is essential as it is a significant role of the corporation. It is a critical part of the trustworthiness placed upon it by the affected society.

One must take issue with Novak’s statement, “Absent the financial resources of major corporations, civil society would be a poor thing indeed” (1997, p. 32). He presents this in a condescending, arrogant notion that societies cannot be separate from corporations. When viewing the corporate-wide flow of money, he would rather the corporation decide where the money for the betterment of the society be spent rather than the employees of the corporation for which they are working. Today’s concerned, discerning, culturally responsible employees are taking a much closer look at who they want to work for as the corporation makes as much of a statement to society on behalf of the corporation as well as advancing which issues the employee wants to promote regardless of the employees intentions and desires, i.e., the corporation is a supporter of abortion, then is the employee is a promoter of that same issue by association. Additionally, why then is it necessary for the creation of organizations such as the United Fund, if corporations were tending to the needs of the “poor thing”? (Novak, 1997, p. 32). It stands to reason therefore, that corporations are not doing their level best and falling behind on their duties to support those organizations that promote the better good if the organizations have to approach the common working person to meet their reasonable goals.

Even though some of the largest holders of stocks and bonds are the pension plans of workers, it is the explicit role of the corporation to keep those funds healthy. As a retiree of the United States Postal Service, the Department of Social Security of the United States government borrowed from the retirement funds of the postal service workers. The intention was that these funds would become part of the national debt. Because of legal action brought by the unions of the postal workers, the law changed in 1983. This emancipated both the Department of Social Security and the United States Postal Service from the national budget, as they were still agencies of the government but now considered off budget with their individual governing agencies responsible for their own financial health (Penner, 2007). This is clearly not an example of a corporate role, but that of a...
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