Economics

 

Three’s Company

You'll see that life is a ball again,
laughter is calling for you...
Down at our rendezvous
Three's company too!

Three may be important for every company

Three is a powerful number.  The strongest polygon is a triangle.  The minimum number of legs for  a stable stool is three.  There are trinities in Christianity (Father, Son, and Holy Spirit), as well as in Hinduism (Brahma, Vishnu, Shiva) and Greco-Roman Mythology(Zeus/Jupiter, Poseidon/Neptune, Hades/Pluto). There are three primary states of matter ( solid, liquid, gas).  There are three primary particles ( electrons, protons, neutrons),  Quarks come in triplets.  We live in a world of three dimensions of space.  Third time is the charm.  Economics is not only about two components: capital and labor. There is an implicit third party: society. The popular name for the system of economics practiced in the United States is Capitalism, but that name places an emphasis on only one of those components.  A name which is more inclusive of all three components is Free Markets.

Labor and Capital are basic components of any production equation.  In classical economics, price is determined by the law of supply (producers) and demand (buyers).  The production equation makes it clear that this is NOT just capital.  There are no goods for buyers to purchase without labor. For producers who are sole providers, the source of the capital may also be the source of the labor. Most corporations (producers) are different.  Society limits the liability of those providing the capital and labor in the production functions.  Without those protections, lawsuits could also go after the assets of those supplying the labor as well as the capital.  (I would however fire my lawyer if, in a lawsuit against an unprotected corporation, he went after the assets of the janitor rather than the president or the stockholders.  Willie Sutton robbed banks, not because he had a grudge against banks, but because “That was where the money was”).  Society also regulates the production functions ( e.g. no harmful materials are used, etc.).  However except for employee-owned corporations, Boards of Directors typically represent only the interests of the capital of corporations and not the interests of its labor (i.e. employees), nor the interests of society. Since corporations can own assets, pay taxes, and can exercise free speech, they need some one to direct them.  Currently only capital  shareholders are typically represented, but it is not clear why society or labor are not also represented as directors of corporate boards.