Between 1880 and 1930, the United States experienced an economic revolution fueled by technology, booming productivity, and urbanization. These dramatic shifts in material life brought forth a new type of corporation, one that was larger in size and more powerful than the early models from the market economy of mid-nineteenth-century America. In fact, though the name “corporation” was the same, the form and content of this new economic institution was quite different from its predecessors. Whereas before even the largest economic enterprises were dwarfed by the size of the total marketplace, the late nineteenth-century corporations were large and powerful enough to dominate their industries, and to wreck competition. Corporations of old had been seen as public bodies, serving some larger purpose. Although this designation did not disappear entirely, the late nineteenth-century corporation was conceived, legally and politically, as much more of a private entity – a vehicle strictly for profit. Yet at the same time, the corporation as a profit-making private body was also becoming something more than the sum of its parts. The “owners” or shareholders receded from day-to-day management; the corporation as a distinct entity, with rights and responsibilities similar to a natural person, emerged from the rulings and pronouncements of judges.
As a result, new questions surfaced about “to whom and for what” this new corporate entity was responsible. Whereas earlier business behavior could be identified with individuals – with real people, even when they formed corporations – now it was the corporation itself that was subject to scrutiny about the roles of business and commerce in society. The issue of social responsibility did not have to be raised when corporations were small, personal, and clearly affected with a sense of public duty and purpose. But large, impersonal, and purely private corporations were different. Their public purpose could not be presumed; at the same time, their size and power, and important role in the economy gave them tremendous influence over the lives of citizens. The very success of the corporation as an economic entity called attention to questions of social responsibility and required that they be addressed.
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