Capitalism and the Corporation

Powerful Essays
Capitalism and the Corporation

The problem to be investigated is what role business has within society with regard to social democracy, corporations and capitalism. In the book, Business Ethics, Case Studies and Selected Readings, case study 3.5 Michael Novak on Capitalism and the Corporation, Michael Novak states that, “Business corporations have transformed the world. They were indispensable in making it free and prosperous.” (Jennings, 2012, p. 105)

Britain vs. America

Business corporations have existed since the middle ages. The initial corporations were burial societies; then monasteries, towns and universities emerged as new corporations. With the birth of America, the older British world and the new world were at variance. The primary difference between the British and the U.S. Corporation was the ability of the Americans to create new corporations without considering the stodgy British laws that were undermining entrepreneurial activity throughout Europe. (Miller, 1998)

With the creation of the English railways a movement toward limited liability was spearheaded. The U.K. regards each corporation within an affiliated group as a separate legal entity, subject to piercing of the corporate veil only in exceptional circumstances generally involving intentional acts of deception or efforts to avoid a legal duty. The U.K. courts have demonstrated reluctance to pierce the corporate veil. Under the entity liability approach embraced by the U.K., the general rule is that the parent company is liable only for its own individual liabilities. (Miller, 1998, p. 80)

In Britain, people within corporations were seen as an exclusive group of people who were privileged but tightly controlled by the government. The strong desire for ...

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