For Profit: A History of Corporations

For Profit is a useful reflection on the corporation and its role within society. Corporations are of course not new and the author highlights their role from early in civilization until the modern day noting the similarities and differences. The author focuses on the corporation as a means to coordinate human activity and when done with larger social goals in mind, the corporation is an almost unparalleled source of productivity growth. Despite that potential, the profit motive can easily and often inevitably will corrupt the social benefits and lead to an eventual detrimental side of the corporation where the entity adjusts the rules of the game to pursue monopoly power and becomes a squeezing force. For Profit analyzes corporations through time highlighting these properties of corporations with a number of case examples from the East India Company to Ford to Facebook. It is an entertaining read as well as a much needed reflection on what we should expect of the corporation and what is worthy of fearing and pushing back on.The book starts by reviewing corporations as they existed in Rome and how they helped the state organize its tax collecting apparatus. As the empire grew it became a larger and larger administrative task to develop infrastructure and collect taxes. As these activities can be organized in principle by groups of motivated individuals, early forms of corporations began to be chartered by the state. In particular the government auctioned off roles like tax collection to the highest bidder leading to a framework where the government privatized money collection to the person most capable of collecting tax. One could easily see how such a license to collect tax could be the source of eventual resentment and corruption, this unsurprisingly happened. The author then looks at Venice and the rise of banking. Usury laws somewhat prevented the emergence of traditional banking but the Medici's developed a framework of banking that avoided usury and provided a useful service to aid the growth of loan making and as such economic vitality. Their clever techniques in accounting and facilitating trade led them to become the dominant family in Italy. The author describes their philosophy of engaging in philanthropy and believing they had to give back to society, though these values changed in time as generations changed. The message was that early corporations had social purposes as part of their core rather than pure profit motives, this eventually became in conflict and these became the seeds of tension. The author then moves into the days of railroad construction, an industry who's nature is to construct monopoly routes. It is fundamentally inefficient to build competing railroads and also incredibly capital intensive to organize big railroad projects. The trans-american railroad was a project that required government legislation. The author describes the chaotic robber Barron capitalists of the day with examples like Jay Gould coming into the picture. Eventually the construction of the railroad closed the gap in time to cross the country thus opening up the continent to cross state immigration, it also let to monopoly pricing schemes, games on manipulation of the stock market and multiple forms of greed that were destructive to society. The next case to be discussed was the assembly line and Ford's role. The author being a law professor highlights the case where Ford was sued for not only considering the shareholder when it came to dividending profits and lost, effectively solidifying the concept in law that the management is responsible to the shareholder not to all stakeholders (like labour). This is the sort of tragedy that has come from forgetting the true benefits of a corporation are that they organize human activity to drive forward human productivity, not to be organized under strict legal principles about where the excess value derived should be automatically distributed. This led Ford to want to privatize and the author also spent time on his paternalistic view of management which was not always reasonable. The author also highlighted that the nature of automated work, and to some extent the drive towards specialization, led to a lower interest in ones work and a lack of meaning in one's life. This is a tougher question to have a decisive view on as it forces the bigger reflection on the use of framing productivity growth in terms of output which if that grows, labour income does too, but specialization was needed for that so what is the cost benefit. The author then moves into the era of globalization and the multinational. In particular standard oil/exxon is analyzed and the vast scale of oil exploration is described and one sees the growing conflict between the benefits of the corporation to the country which founded it to the greater economic opportunity from the global capital opportunity set. Clearly these issues are a precursor to the race to the bottom on tax sheltering and adjustments of accounting to minimize payments to tax authorities. Nonetheless the accomplishments of global oil companies to react the shock of the 70s and start building a foundation to make supply chains more adaptable shows the benefit of the corporation in problem solving. The author then moves into PE and the LBO, this is an easy target but the author starts with KKR and their original idea in taking over companies and improving them for win-win outcomes. The internal frictions that came with whatever dynamics that a PE fund might be able to improve upon was a starting point for beneficial financial engineering that could unlock value for all stakeholders. This shifted to schemes of tax arbitrage through different treatment of debt and equity, firing of labor to cut costs with goals of short term performance improvement at the expense of longer term R&D. All of these issues highlighted that good ideas in corporations led to their logical extreme of what is in the benefit of the shareholder should be pursuable became very very bad ideas. The author finally tackled the start up with a focus on Facebook, the story is remarkable, the dangers of it more remarkable. The fact that a company which ended up being able to influence things to an extent that was almost unparalleled in history without facing any consequences for mal-effects goes to show how unbridled regulation can be in the US for corporations. Nonetheless within Facebook was an exceptionally powerful innovation that for a time served a great social purpose that engaged a generation and is a reminder that both great and terrible things can come from the same place.For Profit is a great overview of corporations and what they can do. They certainly have been a source of enormous improvement to people's livelihood over our history, they also have often morphed from being beneficial to being oppressive. Corporations are self serving though they need not be, this is always a conflict but the degree to which they are mandated with having more stakeholders interests in their calculations the outcomes can be different. The dangers of unchecked corporations are in plain sight too, both with the author's examples as we as mere common sense. Unfortunately the perfect framework to use to both use corporations for their benefits but also prevent them from migrating to monopoly capital who squeeze their customers is a balance that still needs much work. Recognizing that is the perpetual problem is the key insight and made for a great read.

The book is worth reading for the case studies or stories selected. There is a lot to dislike from what is omitted (every knowledgeable reader will have a long list of examples that should have been included), a rather negative tone (except for the positive message in the last paragraph of the book), a lack of comparative analysis, rather cliched suggestions at the end, and a lot more.The author does an excellent job narrating half a dozen historic examples. These well-written episodes provide a lot of good, relevant information that will help readers see the arc of how today's corporates came into being. Even while the author does not explicitly talk about what happened in communities that adapted to this route of doing collective work late, the examples are clear enough to help readers see the changes wrought themselves.A quick, easy, and unique read for what is offered.

Very well-written and it moves along far more quickly than one would think a book on this subject could. You will learn a lot and also collect some great nuggets to drop into your next cocktail party conversation.

Magnuson shows his usual gift for weaving together entertaining stories into a comprehensive analysis of his topic–in this case the history of corporations.The book well deserves the widespread praise it's received and the place it's earned on annual "best of" lists from the Economist ("a magnificent history of corporations") and Financial Times ("puts current debates on the role and behaviour of corporations in a historical context").This book is perfect for anyone looking for a page-turner to teach them about how corporations built the modern world. After the first chapter on the early Roman corporation, each chapter explores an iconic corporation, from the Medici bank, to the East India Company, the Union Pacific Railroad, Ford Motor, Exxon, KKR, and, finally, Facebook.Professor Magnuson's colorful and well-paced style gives each chapter the impact of a separate magazine article or radio episode, but they are woven together by common themes that are further explored in the introduction and conclusion. Bravo!

Highly recommended for those seeking an accessible, scholarly account of the history of corporations.

Wonderful perspective on the history of man working together for profit and the failures along this road. Great insights into corporate and human history. Seems like it might be a boring title but was an easy read.

I bought this book following a recommendation in The Economist. Usually, I share its recommendations. Not this time. The book reviews the history of several companies from ancient Rome till our time. I found interesting content in chapters about old times, but the contents about the 20th and 21st-century are already well known. These chapters also include many pages devoted to the managers' personal life. This is a somewhat not relevant gossip. In the last chapter, the author concludes that the managers of companies should improve the world rather than maximize profit. The argumentation in this chapter is weak. The author ignores the obvious question: what motivates people to purchase public companies’ shares, and what is the role of the government in determining the purpose of cf companies?The first four chapters are interesting

Revisam de 2.000 anos de história de empresas. Vale ler para ter uma perspectiva de como grandes empresas evoluíram, o que elas fizeram muito bem, e seus erros e dicas de como evitar cometer estes erros de novo.

I give this book a low rating cos it's crap. Not because of any other particular reason except I could've done without the book yet I bought it, I was sucked into it and now it's sitting on the shelf doing bugger all. Buying it was a waste of the the environment.. but that's just how I feel now, perhaps one day I will sit down and read it and appreciate what it has to say because it may find a space where the info could be used positively. I put it down because I sensed the author had no other intention than capitalizing on information.. for profit!

Dla mnie to odkrycie. Znakomita synteza napisana klarownie, autorytatywnie i przekonująco

It is often said that the concept of the limited liability corporation and double entry accounting are the two biggest inventions in human history. The concept of limited liability enabled pooling of enormous financial savings and also the dichotomy between the ordinary shareholders and the professional managers of a company. In addition, the principles of efficiency, specialization and profit motive guided by Adam Smith’s ‘invisible hand’, the corporation was a means of promoting the common good. This book traces the origin, glory, their rise and fall of great corporations since the Roman empire in 215 BC. The Roman Republic created ‘Socitetates’ or companies that specialised in supplying goods to the army during war effort. Subsequently there were companies called ‘Societas Publicanorum’ which is a form of a company of private citizens who negotiated with the government to perform public duties – collecting taxes and for executing public works like roads, buildings and other facilities.This book provides excellent insights into the past, that can be a guide for our future. Corporations have thus existed for thousands of years in different social contexts, often created by the state to serve its interests. There are separate chapters, each very representative of an era, or an unique feature of the corporations that changed the world. The Medici Bank in Florence ingeniously starts a bank by innovative instruments of commission and gifts to overcome the Vatican’s ban on ‘usury’, or banking as we know it today. The economic progress of the United States of America was heralded by the gilded age of two great railroad companies – The Union Pacific and The Central Pacific Rail Road companies. These would grow significantly in size to what we now know as ‘monopolies’ that are bugaboos of all modern economists. The birth of the stock exchange, creation of a capitalistic society, the manipulation of stock prices by unscrupulous elements is also an element handed down the ages. The East India Company was perhaps the most ambitious of them all, a hotbed of greed, corruption and inhuman exploitation. Ford Motors, that changed the face of America in the twentieth century through the mass production of automobiles, is an example of a paternalistic promoter, with a visionary zeal.The chapter on ‘Startups’ is actually a story of Facebook. Startups of the twenty first century are about growth, internet, mobile phones and sharing. ‘The typical employee is young and computer savvy, and perhaps not so socially adept. The whole affair is likely being subsidized by a venture capital firm or two.’ They create ‘platforms’, give it away for free, and are ‘cool’ places where users congregate – Facebook, Airbnb, Uber, Twitter etc being the successful ones till date.In all the above examples, there is a common story, from Roman Empire till date. Many corporations in their greed to grow and in the selfish interest of the directors, have unholy alliances with political powers to influence public policy in their favor. Such unethical conduct, unbridled expansion and excessive debt, is the beginning of the end of mighty corporations, where the common good is thrown to the wind. The last chapter is a befitting list of Guiding Principles – Ethical, Social, Political and Environmental – to guide corporations in the right direction – In Pursuit of Common Good.'Remember that all through history, there have been tyrants and murderers, and for a time, they seem invincible. But in the end, they always fall. Always.' — Mahatma Gandhi.

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