Although normalized, upon closer inspection, the corporation concept seems to be a strange development. Over the years, they have been given legislative rights of individuals, without a need to be accountable to stakeholders. The corporation is a faceless entity that owns a significant amount of global wealth, decides where a large chunk of national GDP goes in and does it in a totalitarian fashion. The main aim of this entity is to maximize the value of share prices and satisfy shareholders—enormous power, with no requirement to disclose information. To further understand this entity, we have to trace its development briefly.
The earliest form of corporation in Europe can be traced to a date before the 17th century when a corporation meant a group of individuals who incorporate to build public goods such as bridges and roads and building institutions such as hospitals and universities. The state oversaw their duties. Glossing over the details, during the 17th century and onward, due to European colonial expansion, corporations came to play a more significant role. At that time, they maintained control of the colonial trades of enslaved people and goods. During this stage, the famous East India Company came to be the first commercialized corporation. The most significant development here is that corporations didn’t require a single defined purpose as they did before, and profit became a considerable motivation. Later on, during the 19th century, corporations started gaining the rights of individuals or what is called “personhood.” The most obvious development was the 1886 case of Santa Clara County v. Southern Pacific Railroad, wherein the US Supreme Court recognized the corporation as a natural person and, according to the US constitution, “'no state shall deprive any person of life, liberty or property.” The power structure of later corporations developed to revolve around shareholders, whereby management’s sole aim and responsibility was to maximize shareholders’ wealth. In recent times the formation of global trade institutes has further given rights to multinational corporations, such as deregulated market access.
As can be seen, the corporation's formation is a modern development that has gained its power through social and legislative action. During a time when corporations hold a large amount of the world's wealth (36% in the USA) and dictate where a large amount of GDP is distributed, it is time to question whether they should be treated as individuals with liberty or should be treated as a new entity in which it must account to the public. Furthermore, when the motive of profit maximization has been rapidly destroying the environment, the primacy of shareholders over all else should be questioned.
Having soulless social institutes with no moral obligation seems extremely dangerous. To create more ethical institutions, corporate social responsibility shouldn’t be a voluntary action but instead embodied in the law to the same extent as the primacy of shareholders. Furthermore, corporations shouldn’t only have an obligation to society and the environment, but they also have a role to play in developing society by distributing an amount of their wealth to socially dictated areas.