The death of business?
29/10/2012 § Leave a comment
Why don’t companies have a lifespan? They used to, in the 1800s when the first limited companies were formed in England. They were created by Acts of Parliament and had a lifespan of a defined number of years – 10 years or 20 years was typical. They had a particular purpose (to build a bridge or a railroad for example) and the idea was that once their purpose was achieved, the company would end. Yet in the 19th Century that requirement was dropped. Of course most companies do disappear in time through bankruptcy, or some other form of liquidation. But there are companies that have been going for more than 100 years.
A company then, theoretically at least, may live for ever. We have created something rather unnatural, a sort of monster, since everything in life has a lifespan – even planets. It’s impossible to imagine a forest with plants that didn’t die. Yet a company, and its capital, continue even when its activities change drastically (3M, which produces medical and office supplies, started life as Minnesota Mining and Manufacturing Company).
In part, it just feels strange. Death is part of life. It is one of the ways that the universe uses to press the “Refresh” button, to break down old structures that have out-lived their time. Without death, life wouldn’t be worth living. Immortality, often presented to humans as a dream, is really a nightmare.
It seems to me that one of the consequences of this unlimited lifespan is that the original purpose of the business is often lost as time passes and the business resorts instead to focusing on making money. How often have I heard it said: “Business is about making money”. It always makes me sad. How low we set our sights. To me business is about serving the community through producing and exchanging goods and services, about satisfying our deep human needs to serve, to connect, to give, to work. Business is about life.
Unlimited life for companies can also result in accumulation of wealth in just a few hands, leading to inequality and social tension. As a Yorkshireman once said, “Money is like muck, it’s only useful when it is spread”.
I suppose I am not arguing for a fixed lifespan for companies. This would be rather a blunt instrument – you can’t know in advance what the right lifespan is. But I would like it if we were able to come up with another way of re-invigorating companies now and then. There is for example the ancient Israeli practice of having a Jubilee every 50 years where all debts are forgiven. What if a company had to redistribute its assets amongst the community every 30 or 50 years? This would have a powerful invigorating and re-balancing effect on society.
A last thought. There is something in nature that, like many companies, has the urge to grow and grow, irrespective of their impact on the host body. It is called cancer. Cancer is of course associated with death, sooner or later, of the host body and the cancer itself. You see, you can’t escape death in the end. It will claim us all, like it or not.