Dear Dr GPTPlease write a 2000 words argumentative essay on an ethical debate about Limited Liability and the Corporation In your essay you shouldi defend a specific thesis about the debate ii referen

Introduction

The concept of limited liability is a crucial aspect of modern business corporations. It shields the owners and shareholders of a corporation from personal liability for the debts and obligations incurred by the business. However, the ethical implications of limited liability have been the subject of intense debate among scholars, policymakers, and the public. This essay focuses on the ethical debate about limited liability and the corporation. The thesis of this essay is that limited liability is an ethical practice for corporations, as it enables entrepreneurs to take risks and innovate, which ultimately benefits society.

The debate about limited liability is often framed as a conflict between the shareholder and stakeholder perspectives. According to the shareholder view, the primary goal of corporations is to maximize shareholder value, and limited liability is justified because it incentivizes investors to take risks and invest in corporations. In contrast, the stakeholder view holds that corporations have a broader social responsibility to consider the interests of all stakeholders, including employees, customers, suppliers, and the environment. This essay will reference two journal articles, “Stakeholder Theory of the Modern Corporation” by Freeman and “The Social Responsibility of Business is to Increase its Profits” by Milton Friedman, to substantiate the arguments for and against the thesis.

Literature Review

Freeman’s (1984) “Stakeholder Theory of the Modern Corporation” argues that corporations have a social responsibility to consider the interests of all stakeholders, including shareholders, employees, customers, suppliers, and the environment. According to Freeman, a corporation is a complex system of interdependent relationships, and the interests of stakeholders are interconnected and interdependent. Therefore, corporations must balance the interests of stakeholders to create long-term value and sustainability. Freeman argues that limited liability is an ethical practice when it is used to enable corporations to create value for stakeholders. However, when limited liability is used to shield corporations from their responsibilities to stakeholders, it becomes an unethical practice.

On the other hand, Friedman’s (1970) “The Social Responsibility of Business is to Increase its Profits” argues that the primary responsibility of corporations is to maximize shareholder value. According to Friedman, limited liability is justified because it incentivizes investors to take risks and invest in corporations. Friedman argues that the only social responsibility of corporations is to increase profits within the rules of the game, which are set by the government. Friedman contends that corporations should not engage in social responsibility activities that are not in the interest of shareholders, as this would amount to a tax on shareholders.

Argument for the Thesis

Limited liability is an ethical practice for corporations because it enables entrepreneurs to take risks and innovate, which ultimately benefits society. Limited liability is a crucial aspect of modern capitalism because it incentivizes entrepreneurs to invest in new ventures and create new products and services. Without limited liability, entrepreneurs would be discouraged from investing in new ventures because they would be personally liable for the debts and obligations of their businesses. Limited liability enables entrepreneurs to take risks and innovate, which leads to economic growth, job creation, and increased prosperity for society.

Moreover, limited liability is consistent with the ethical principles of autonomy and freedom. Entrepreneurs should be free to take risks and pursue their economic interests without fear of personal liability. Limited liability is an essential aspect of economic freedom because it enables entrepreneurs to invest in new ventures without fear of personal bankruptcy. By enabling entrepreneurs to pursue their economic interests, limited liability promotes the autonomy and freedom of individuals in society.

Furthermore, limited liability is consistent with the stakeholder perspective of corporate social responsibility. Corporations have a social responsibility to create value for stakeholders, including employees, customers, suppliers, and the environment. Limited liability enables corporations to take risks and pursue innovative strategies that create value for stakeholders. For example, a corporation may invest in research and development to create new products that benefit customers and society. Limited liability enables corporations to take these risks while balancing the interests of stakeholders, which ultimately creates long-term value and sustainability.

Finally, limited liability is necessary for the efficient functioning of modern capital markets. Capital markets enable entrepreneurs to raise capital from investors to fund new ventures and create new products and services. Limited liability is a necessary aspect of capital markets because it enables entrepreneurs to attract investors by offering them limited liability. Without limited liability, investors would be reluctant to invest in new ventures, which would ultimately stifle economic growth and innovation.

Conclusion

In conclusion, the ethical debate about limited liability and the corporation is complex and multifaceted. This essay has argued that limited liability is an ethical practice for corporations because it enables entrepreneurs to take risks and innovate, which ultimately benefits society. Limited liability is consistent with the ethical principles of autonomy and freedom, the stakeholder perspective of corporate social responsibility, and the efficient functioning of modern capital markets. While there are valid arguments against limited liability, the benefits outweigh the costs, and limited liability remains a crucial aspect of modern capitalism.

References

Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston, MA: Pitman.

Friedman, M. (1970). The social responsibility of business is to increase its profits. The New York Times Magazine, 13, 32-33, 122-124.