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Jack Santa Barbara's avatar

lots to comment on here; 1. an argument can be made that profit is not good for the environment, as any expansion of means to make more claims on resources (which are already overstretched) is adding harm to harm. 2. profit is not necessary for a business to operate successfully. The baker doesn't need to make a profit. The baker needs to cover their expenses, including their labour, and perhaps some reserve for a rainy day. Covering such costs allows the baker to continue contributing to the community and provide a meaningful role, and livelihood, for him or herself. For the baker to make a profit they would have to cover all these legitimate costs, and still make more - unnecessary to operate successfully. Profit only comes into play if the business wants to expand or reinvest (or be greedy). Degrowth requires reducing business activity, not expanding it. Yes, in a planned degrowth, some business activities may legitimately expand while others contract, as long as there is a reduction in total material throughput. But even in such circumstances, profit is not necessary, just increased prices to cover the increased costs of expansion. Part of planned degrowth is also about decentralizing production, relocalizing and downscaling. There will be few if any real needs for corporations which evolved to do grand things beyond what a small operation could accomplish. 3. there are already corporate models that do not require the prioritization of profit for shareholders: cooperatives, B-Corps, and privately owned businesses that see their role as serving their communities, and in return, having a livelihood. Having a clear understanding of the scope, scale and speed of ecological destruction we are currently doing, along with the social disruption that goes along with it, helps us understand the need for degrowth, and eliminating profit from the way we operate an economy.

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Jan Steinman's avatar

I agree that a corporation that does not make enough profits to keep its shareholders happy faces class-action suits from its shareholders. But there is no "corporate police force" going around, arbitrarily enforcing this.

However, there are a number of ways around the investor dilemma.

Many states have different forms of incorporation that do not put "investor profit first". For example, the activewear company Patagonia is a California "Class B" corporation, which allows things like employee benefits and environmental concerns to supersede investor profit as a business motive.

Another form of incorporation that subsumes investor profit is the cooperative. I'm most familiar with British Columbia's Cooperative Associations Act, having personally formed two of them and being closely involved with two more. This is wonderfully flexible mechanism, supposedly separating control (membership shares) from financing (investment shares). In BC, investors have only limited influence as a super-majority in matters involving significant asset liquidation.

But such laws are full of holes, and letting investors have *any* control is a slippery slope.

Our co-op was sued by an investor using the obscure and vague "oppression of shareholder" clause in The Act.

A more infamous case is the "sale" of BC's Mountain Equipment Cooperative, which sold itself to a California private equity company by selling all its investor shares, while redeeming NONE of its member shares, stiffing its five million members of $25 million. This decision was made by the cooperative's board, and was never presented to members. (https://gripped.com/news/mec-sold-the-death-of-an-ideal/) Afterward, they had the nerve to attempt to keep "Cooperative" in their name, which took a court order to change!

To show the depth of this hole, if such a decision were made by the members rather than the investor-heavy board — say, for the purpose of formally becoming a non-profit — it would have required the approval of 75% of investment shareholders.

You can take investor profit out of the organization, but you can't remove it from today's zeitgeist.

The "investor mind-set" has infected retirement. Virtually everyone who has non-state retirement income participates in corporate investment income of some kind.

Case in point: my brother, an avowed liberal Democrat, limited his involvement in politics to voting. But when his retirement income went down 10% due to Trmp tariffs, he got out on the protest line! Paradoxically, it may be investor rights that bring Trmp down.

In a world of nature-forced degrowth, this may change, but the whole reversal of the growth curve is going to cause a lot of pain and suffering before the downward slope stabilizes.

"Profit is not a bad thing."

I'd be careful of that. The zeitgeist is that "profit" means "passive income". I've come to view passive income (beyond interest related to inflation) as immoral, and the cause of most of humanity's problems, and have divested of everything but co-op shares and interest-bearing credit union accounts. This means my retirement is much less, but it is "enough".

That's going to be a tough nut to crack for the general public.

For one thing, the downslope of the growth curve is likely to result in widespread deflation. Cash may become king, and banks may begin charging *you* interest for holding your money.

Interesting times ahead!

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