Private-Benefit Corporation

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David Korten proposed to replace the Private-Benefit Corporation with a new structure that is for public benefit.


David Korten:

"The private-benefit corporation is an institution granted a legally protected right--some would claim obligation--to pursue a narrow private interest without regard to broader social and environmental consequences. If it were a real person, it would fit the clinical profile of a sociopath.

The basic design of the Private-Benefit Corporation was created in 1600 when the British crown chartered the British East India Company as what is best described as a legalized criminal syndicate to colonize the resources and economies of distant lands to benefit wealthy investors far removed from the social and environmental consequences. That design has ever since proven highly effective in advancing the private interests of the world's wealthiest people at enormous cost to the rest.

The private-benefit corporation uses its economic power to privatize (internalize) gains and socialize (externalize) cost. The resulting concentration of wealth creates an illusion that wealth is being created, when the actual consequence is a net destruction of real wealth. It is an institutional form best suited to achieving outcomes exactly the opposite of those we humans must now pursue.

The only legitimate reason for a government to issue a corporate charter giving a group of private investors a legally protected right to aggregate and concentrate virtually unlimited economic power under unified management is to serve a well-defined public purpose under strict rules of public accountability. This defines a public-benefit corporation, which can be chartered as either for-profit or not-for-profit. The private-benefit corporation is an institutional anomaly, a creation of monarchy that properly shares monarchy's historic fate." (