Social Significance of Corporate Functions

Social Significance of Corporate Functions

Social Significance of Corporate Functions

Capitalism developed in the eighteenth and nineteenth centuries as the leading way to organize industrial society. The classical economists led by Adam Smith developed a theory of capitalism as the capitalistic system triumphed in one country after another.

The primary unit of analysis in the theory is the individual. He is viewed as a reasoning being who is primarily motivated by a desire to maximize his individual welfare. Competitive markets are used to spur businessmen to greater efficiency and also to dispense a stern but equitable justice to investors, workers, and resource owners. Reliance is placed on regulated self-interest to maintain social order.

There is no elite which runs the capitalistic system, according to the theory, because one is not needed. The invisible hand of the competitive market assures attainment of social goals and group welfare. Organizations which concentrate power, particularly economic and political organizations, are viewed with suspicion. This theory has been an interpretation of the open society, to which the Western world has been dedicated for a century and a half.

Fascism, socialism, and communism have developed in the twentieth century as ways to organize industrial society that are alternatives to capitalism. They differ in certain respects, but all three emphasize the state as the basic social and economic unit rather than the individual. Fascism is the totalitarian organization of government, economy, and society by a single-party dictatorship which is militarist, nationalist, and imperialist. It has virtually disappeared as a worldwide movement with the defeats of Germany, Italy, and Japan in World War II.

During its period of greatest vigour, it professed to offer a novel method of organizing economic relationships in autonomous corporations that were the administrative agencies of their industries. But in point of fact, the fascist corporations were merely part of the economic apparatus of the state, and they were used to coerce individuals and suppress the free interplay of the competitive open society.

Socialism has been adopted in considerable degree in countries like England and Sweden which have mixed economies. Social economic planning, which has come to be the basic principle of socialism, seems capable of operating side by side with a largely capitalistic market system.

Communism, of course, is the leading adversary of capitalism today. The Russians have demonstrated that a communistic economy can operate at a high level of output and growth. Many of the underdeveloped nations in the world are attracted to communism rather than capitalism because they have neither the political system nor the values which are essential to make capitalism work, whereas they do have the strong central government which is the essential characteristic of communism as it is found in the world today.

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