Large corporations dominate the headlines of today's business news. Beginning in the early 1980s, corporate growth has outperformed almost all expectations. The long-term effects of corporations are noticeable in daily business activity. Bank mergers, franchise expansions and takeovers are all examples of corporate growth. Today, corporations control 33 percent of the world's total wealth. They employ around 1 percent of the world's population. Some corporations are wealthier than entire nations. For example, General Motors is financially wealthier than Denmark. Wal-Mart is financially wealthier than South Africa. Corporations provide both the goods and services and the financing that make consumption possible.

CS Question 1: What are some other examples of corporate growth in the U.S. economy?

In the past, corporations were very small. They were legally limited to specific business activities. England's Queen Elizabeth I created some of the first corporations. Companies like the Massachusetts Bay Company and the Hudson Bay Company were created to fund the exploration of newly discovered North America. After the Revolutionary War, Americans generally distrusted these corporate structures because of their association with Britain. Corporations were created to perform a specified business need. In addition, they had to serve the public good. The government could dissolve a corporation if it failed to meet the standards agreed upon. Corporations were strongly regulated by the government. Laws restricted them from buying stock in another corporation. This made mergers and growth nearly impossible. The corporation was expected to operate on a fixed amount of capital to achieve certain goals.

CS Question 2: How were corporations restricted from expanding?

Corporations won a legal victory in 1886. The case was Santa Clara County v. Southern Pacific Railroad. The Supreme Court ruled that a corporation had the same rights as an individual. Though only existing on paper, corporations had the same constitutional rights as any American citizen. This ruling changed the effect of corporations on society. Corporations were no longer responsible for serving public needs. Instead, they became responsible to the shareholders. This allowed corporations to purchase or merge with other companies. It also permitted them to expand into new markets and encouraged open competition. After this court decision, the influence of corporations on the economy changed dramatically.

CS Question 3: How did the 1886 Supreme Court decision encourage corporate growth in the economy?

Today, there are two different views of large corporations in the United States. Some individuals believe that the growth of large corporations has created a positive effect on society. They contend that corporations have focused on production for profit. This has brought economic prosperity and security to the nation. Corporations produce the goods and services that consumers want and need. Most Americans have a car and a television and enjoy clothes and foods from all over the world. In addition, by employing so many Americans, corporations make the consumption of such goods and services possible.

On the other hand, many individuals believe that large corporations are not being held responsible for damages they inflict on society. Modern corporations are accused of exploiting third world workers. Some corporations have damaged the environment by producing harmful wastes. Others have used up scarce resources. Some individuals hold corporations responsible for creating a "mono-culture." They believe that cultures today lack diversity or individuality because the members of each culture are turned into marketing demographics.

Both sides must agree that corporations have evolved throughout the history of the United States. Good or bad, they are firmly entrenched in the American economy.

CS Question 4: How have corporations benefited society? How have they been detrimental?

Further Thought:

1. In what ways do today's corporations serve public needs?
2. What are some ways that society would benefit from the absence of large corporations?
3. Some people think that corporations promote competition by using their size to produce products that meet consumer demand. Others feel that corporations reduce competition by purchasing smaller, competing companies and reducing the number of alternatives for consumers. What do you think? Do corporations promote or reduce competition? Explain your answer.