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The Dangers of Free Enterprise

A business is defined by Wikipedia as a commercial activity or organization carried on by individuals or groups for the purpose of earning a profit. The profit may be direct or indirect and comes mainly from the sale of products or services. Businesses may be for profit organizations or they may be non-profit organizations which function to meet a social objective or further a religious belief. Other than these businesses may also be socially or culturally motivated organizations and their activities may also include a range of activities such as fund raising, providing assistance to the poor, supporting education, promoting awareness and alternative energy solutions and so on.

Although many people are of the opinion that businesses thrive on providing income to its stock holders, this is not how businesses actually work. They accumulate profits through the sale of products or services and depending on the type of enterprise, the profits may come in the form of dividends paid to the stock holders, a share of the profits earned through the operation of the enterprise or some other form of payment. All these forms of payment to the stock holders are called dividends and all businesses are dependent of their revenue to pay these dividends.

Most business leaders believe that capitalism is best implemented by a flexible entrepreneur with a vision and a willingness to accept new ideas that could potentially help their business be more profitable. There is one aspect of the business world that business leaders should never forget – namely, that the stock market does have a way of manipulating potential entrepreneurs against the will of the latter. In fact, if you were to look into the track record of numerous American business leaders, you would quickly discover that most of them started their careers either as penny stock brokers or salesmen and sales women who attended expensive business schools where they were taught that the only way to make it big in the business world was to pump up the share price of their companies in order to raise the capital required to launch their ventures.

Today’s European businessmen are also used to having to pump up the share prices of their companies in order to raise enough capital to launch their businesses. What they do not understand is that this very concept of investing in the stock market capitalism has caused many of these same corporations to lose billions of dollars. The stock market is basically a mechanism that forces businesses to compete with each other for the same consumers. However, the European business culture, although it appears to be relatively free from corporatization, is actually riddled with corruption.

Many businesses are formed for the sole purpose of earning as much profit as possible and to maximize their own personal profits at the cost of their clients. The more profit that a company earns, the more money that the managers and board members get. Often times, some of these managers and board members actually live in separate countries and are paying tax of a faraway country for the privilege of being a part owner of the business entity. This is a clear case of the accumulation of wealth at the expense of the clients.

The excessive greed that pervades American corporate culture and the way that American business leaders view their clients are leading the way towards an extremely unstable and dangerous situation. Corporations are using their own shareholder base to siphon money for themselves, and using their own workers to do the same. The only way that this can continue is if the system itself becomes rigged. As long as corporate managers continue to see their profits as God’s gift, and believe that the money will continue to come flooding in regardless of what they do, they will continue to fire their workers in the hopes of gaining even more profits. In the end, this inevitably leads to the death of a business that has been trying to make things better for its clients.