The influence and control enjoyed by corporations over the body politic (Our bullying corporations are the new enemy within, 8 October) is an inevitable consequence of the 1844 Joint Stock Companies Act, a piece of legislation effectively marking the birth of modern capitalism. Followed by the Limited Liability Act of 1855, it established that the fiduciary duty of a director is to act in good faith for the benefit of the company as a whole, ie all shareholders. In practice, this means that what is referred to as the shareholder primacy norm obliges companies to maximise their profits without regard to other considerations. So claims by companies that they are driven by values enshrined in concepts of corporate social responsibility or fair trade should be seen for what they are public relations exercises designed to attract custom that will ultimately enhance their bottom line.
Even the Tories favourite economist, Adam Smith, denounced the size, nature and privileges associated with corporations, and we should heed what he said. Nothing less than a dismantling and revision of the legal framework underpinning private enterprise will serve to alleviate the exploitation, abuses and environmental degradation that it brings but, as Mr Monbiot says, the political class and our so-called democracy is part of the problem rather than the solution. And if charities are too frightened or compromised to challenge this iniquitous system, it falls to other popular organisations like trade unions to oppose its worst manifestations such as the proposed Transatlantic Trade and Investment Partnership, a deal that would give the transnational corporations unprecedented power to run the global economy for the further enrichment of their institutional shareholders at our expense.
Bert Schouwenburg
International officer, GMB