5 shocking things I've learnt recently

1. Directors of companies with shareholders are legally obliged to do whatever it takes to maximise profit for their owners (the shareholders) even if that means damaging or destroying the world around them (even including the shareholders themselves!) in the process.

The legal principle was set by Dodge v. Ford (1916), and all law has since followed its lead.

This is why BP and other oil companies are forced to knowingly damage the areas where they extract oil (the damage done to the Niger Delta is particularly well documented), and cut down on safety programmes (this is well documented in their Alaskan fields), in order to keep up profits for their shareholders.

This is why companies manufacturing asbestos were forced to go on doing so, even when the terrible ill-effects were well known (ditto tobacco companies).

This is why companies are forced to make huge political donations in return for regulations which allow them to continue to destroy the environment. (Enron is the best-known - what is less well known is the damage the Enron made to the environment.)

This is why listed companies 'green' statements & claims are mostly 'greenwash' - i.e distortions of the truth or outright lies. Company directors realise that they have to pretend that they are environmentally friendly. otherwise their profits will fall. This is very different from actually doing anything about the damage they do, which usually ends in lower profits - a big no no. Luckily for us the internet means that some of this is exposed by independent commentators.

It is beginning to happen, for instance in the crashing fish stocks worldwide. Even though soon there will be no business, companies are forced to catch more and more fish to make more and more profit. This is simply because companies, as they are constructed at the moment, are ruthlessly self-interested and unable to stop themselves inflicting damage to anything which gets into their way - because their only raison d'etre is to make money.

The same process led the Easter Islanders to cut down the last tree, knowing that this would mean the end of their society, but unable to stop themselves because of cut-throat competitiveness (Jared Diamond has made a fantastic study of this in Collapse).

As soon as an executive director does something which goes against the 'bottom line' (i.e. maximising profit at all costs), they are not doing their job properly.

The company who, having completely destroyed the world around it, was able to give the biggest bonus to its shareholders, would be the most successful company around. Sounds mad? Well, as far as I can see, that's the system we've got at the moment.

Shouldn't we do something about it?

Surely we need to change the law so that companies have to pay for the damage they cause during their activities. Voluntary measures are a waste of time as long as the legal compulsion is to make profit at all costs.

Thanks to Joel Bakan for explaining this in The Corporation. Has he got his facts right? Has anyone got counter-arguments? If you do, please post them, citing sources for your claims as I have done where possible, and we can work out whether this nightmare scenario really is reality or not.

2. - 5. to come