The Corporation and the Market

In a recent series of articles on this site, Michael Black argued that the Corporation can only be understood theologically – further, that the modern economic crisis is a crisis of the Corporation. But what about the "Market", which is the other big player in the economic game, along with the State and the Corporation?

In economic theory the corporation is a monstrous, if only temporary, aberration. It stops the march of contractual transactions and therefore is by definition “inefficient”. And economic theory is quite correct: the corporation always costs more than a set of equivalent markets. The market, after all, has no overheads, no supervisory management, no administration. If this is all that we see, we can only bemoan the fact, as many managers as well as corporate critics do, that the corporation continues in existence at all. What ever the Corporation is for, it is not for providing lower-cost products and services. So what is it for, in economic terms?

The Corporation creates economic value. Markets establish prices, not value. The Corporation determines what constitutes value – speed, precision, beauty, harmony, or any of an infinite number of other criteria – and persuades the participants in the Market
to price available commodities accordingly. If enough of the Market agrees with the Corporation, price tends to approximate value. You could say that the Corporation creates the Market though its promotion of specific criteria of value.

If the Corporation is about value, then we can describe it as a constant search for the Good; i.e. for those criteria of value that transcend what have been articulated in the past. A positive ethic of the Good is thus an inherent part of the logic of corporate relationship. It cannot be imposed from the outside, as a moral code might be, but only discovered for what it is: a vehicle for receiving grace and passing it on. The “vertical” dimension in which grace operates throughout the Corporation is the dimension of bestowal, of gift. The secret of management has something to do with allowing this gift to flow, and letting the Corporation be energized and transformed – made more alive – by its effects.

We appreciate this better as soon as we realize that the truly good is also the truly expedient. There is in fact no difference between what is good for us as individuals (what provides for our happiness), and what is good for us as a corporate group and what is good for humanity – indeed, what is good for the cosmos and all of creation. In Christian terms, God is that Good to which the whole creation points, and who alone can fulfil all natural desires. At any rate, the Corporation as an institution demands that we decide our destiny. It forces our hand about what constitutes the Good – or at least the “good” with a small "g". We are compelled within the Corporation not only to make a judgment about the criterion of the good, but to make this judgment public and therefore subject to negotiation with others who also share our corporate destiny.

This is the point at which the logic of the corporation becomes burdensome to many corporate members (and not just to managers and executives). It becomes a burden not because they must make a judgment about the Good – a decision about value – but because they are subject to corporation-wide criticism for this judgment. Unlike a judgment about action, the judgment about value cannot even be assessed by results. The value-judgment itself is the outcome. The only measure of correctness we can apply to this judgment is an aesthetic one: is it the best criterion for the whole?

And yet the fact that this judgment is aesthetic does not imply that it is either arbitrary or without foundation – that it is some sort of personal, entirely subjective decision. Beauty is not entirely subjective ("in the eye of the beholder"). It is in fact, as the medieval philosophers realized, one of the objective dimensions of being, along with unity, truth, and goodness. It has a lot to do with proportion and harmony, both of which have a direct bearing on the structure and conduct of business.

Illustration from Wikimedia Commons.