The Corporation and its Stakeholders: putting it into practice

We have long pleaded for the major corporations that dominate our business world to somehow reflect their responsibilities to a wider range of stakeholders than just their shareholders, and to somehow share out more fairly the rewards of their activities. The stakeholders include the employees, the suppliers and even the customers - all those who make the business work. Yet despite the reasonableness of this demand, little has changed.And a good thing, too, say the business and investor community - for they argue that this is because the existing corporation works. It delivers the goods, while the arguments of the activists are dismissed as ’worthy waffle’. But the business community is wrong too.The whole issue needs to be taken out of the realm of politics and sociology and into a more businesslike approach to creating wealth and rewarding effort. There’s nothing wrong with business enterprise and economic activity - it’s what generates the economic success that we all need. And yet it is patently absurd for the fruits of all our efforts to be gathered solely by those who possess capital. Such a corporation is as outdated an economic model as the idea of owning slaves, or of having a colonial empire. It is concerned with the benefits of an activity solely and exclusively for a single participator - the party with capital or power - rather than the overall interests of the community as a whole. High levels of taxation and regulation, or worker control, are one response: but if we want enterprise and economic activity - and it is difficult to see how we are going to get greater shares in economic success without them - then the answer cannot be to stifle business but to encourage it while reorganising it in a way that shares its benefits more equitably. There is only one way of reducing economic inequality while at the same time promoting the vitality of business activity, and that is to make the framework for enterprise - the structure of the corporation - fit for purpose in the twenty-first century. We need to restructure it without capitalism. We need a practical, workable mechanism for including a wider range of stakeholders, thereby reducing economic inequality: and that is precisely what this book offers.It proposes a businesslike framework for the corporation to make it work better for all those involved in it, by removing the dominance of capital as the sole source of enterprise and the owner of economic activity, and instead promoting the opportunity and incentive for all types of contribution to economic activity to participate in the corporation and share in the benefits it brings.The existing Victorian corporation is undoubtedly failing, and failing in many directions - with the disinterest of the shareholders, ineffective supervision of the directors, weaknesses in auditing and in corporate governance, the lack of recognition of the input and interests of a wider range of stakeholders, and short-termism resulting from an obsession about share price, quite apart from the ever-rising and unjust inequality. So this book starts at the beginning, and asks how and why we humans do business in the first place. The idea that all economic activity and enterprise is solely the result of idle spare wealth, with other contributors relegated to the role of economic servants, is rejected. We need a dynamic model of business entity that responds organically to changing circumstances. Instead of regulatory impositions upon the present model, we bring free market economics to the heart of corporate activity. We seek an elegant, integrated solution for which the dynamics are fully explored and argued to their conclusion: thereby devising an essentially practical model which should achieve automatically much of what the present model is acknowledged to lack.The aim of this imaginative analysis is to make business work better for everyone involved in it, as well as for the community as a whole.

Godfrey Rehaag is an experienced professional who has spent many years in business and as a business adviser. He has two master’s degrees, in philosophy and in accountancy. His professional experience includes acting as the principal in numerous capacities - as a chartered accountant, chartered tax adviser, business adviser, company director, trustee, registered auditor, receiver/administrator, liquidator and forensic accountant. He was elected as a member of the Academy of Experts as an expert witness in legal trials, and was on the Law Society’s ’checked’ list. He has also been the treasurer of a national learned society and innumerable smaller charities. Godfrey offers professional experience of business, an independent and unconventional mind, and academic rigour, as well an instinctive feel for both business and for impartiality. Despite having been a full-time professional adviser, Godfrey has spent much of his spare time over the last twenty years working on this book.