**6. Considering possible legal incentives**

As I noted at the outset, we live in a business civilization. Governments have extended to businesses a license to operate for several reasons, including especially the productive capacities of businesses to add economic value to society in multiple ways. Over the years, governments have taken steps to protect and promote the productivity of business enterprises in many ways. They have established laws

#### *What is the Business of Business? Time for Fundamental Re-Thinking DOI: http://dx.doi.org/10.5772/intechopen.94482*

identifying and protecting diverse forms of property, contractual relations, currencies, as well as reliable systems of credit. They have funded and arranged for the development of physical, social, and economic infrastructures, good for societies as a whole and also necessary for business operations to develop and grow. They have used their good offices to facilitate trade. They have both developed system of education, so businesses can hire competent workers, and social insurance schemes to help workers who can no longer work. In order for business enterprises in the contemporary world to maintain their productivity, and thereby add greater value than they erode, it has been and it will continue to be necessary for governments to take appropriate actions. For example, in order to reduce GHG emissions, it has been necessary and useful for governments to institute carbon taxes and offer subsidies and tax credits to encourage the development of alternative sources of energy. In order for them to remain competitive and to keep retail food prices from excessively climbing, in some areas governments have already demonstrated their willingness to offer subsidies and tax credits for some agricultural businesses. Given the seriousness of the climate crisis, many observers think much more must be done to address these problems. In order to foster lively and open competition, it has been necessary and useful for governments from time to time to reduce the monopolistic influence of particular firms within specific industries. These measures have functioned in small ways to limit factors which otherwise would have acted to aggravate inequalities in wealth and economic power. Given the dominance of several firms in the information system sector, many people feel government action is long overdue to foster more lively competition in these industries. With these examples in mind, we can see that there is much evidence that publics have supported governments when the latter have taken actions affecting business activities in order to further societal purposes, to facilitate productivity broadly understood, and limit the adverse effects of particular business practices. In the following paragraphs I propose a number of additional actions governments might take so that businesses operate productively to promote the wellbeing of their enterprises as a whole, limit or reduce their adverse impacts, and thereby maximize the value they add to society.

With respect to overall governance of business enterprises, just as governments (or their agencies) require business to conduct annual financial audits, so they should also be required as well to undertake annual audits of the costs incurred and values added with respect to their uses of natural resources, including air and water, and their uses of human and social capital. So that governing boards are well-informed, some governments now require these kinds of audits. Further along and in keeping with comments I have already made, I will elaborate on the fitting metrics for assessing productivity with respect to labor, viewed not from a financial perspective as is usually done today but regarding human and social assets as intrinsically valuable. Also, with respect to governance of enterprises, a strong case can be made for following the examples of countries like Germany and Japan and require that the governing boards broaden their membership to include people who are well able to know and represent the interests and concerns of the most strategically important stakeholder groups, such as, for example, employees, major suppliers, relevant environmentally oriented groups, creditors, and government agencies.

With regard to efforts to foster responsible environmental practices by businesses, governments have established a number of relevant initiatives in addition to subsidies and tax credits for developing alternative sources of energy and taxes on carbon emissions to reduce GHG emissions. Many governments have been taxing or fining businesses for excess water pollution. Because all businesses involved in extracting non-renewable resources are depleting valuable resources, some countries like Norway are effectively taxing these operations in order to establish huge public funds that can in turn be used to further other public purposes.

For some time many governments have de facto recognized that dysfunctions in labor markets. They have, accordingly, established minimum wage standards as well as employment offices to help enterprises find suitable employees and worker find positions of employment. Partly in response to the expansion in the use of temporary workers, some government, like the United States, offer payments in the form of tax credit to workers whose annual income falls below recognized poverty lines. This has become a huge public transfer program that functions to reinforce the practices of many businesses to hire workers part time and/or part year rather than full time. Given the slow but steady replacement of workers by smart technology, governments face in the future several options. They will be forced either to expand these kinds of tax credit programs; develop some form of basic income initiatives; re-establish the kind of employment generating programs like the Public Works Administration, the Works Progress Administration, and the Community Conservation Corp that were so effective in the United States during the 1930s; and/ or they must think seriously about initiatives that would foster greater employment within existing businesses.

Because in this essay I am calling for a re-thinking of the business of business, I will elaborate on the last alternative. The United State government has spent hundreds of billions of dollars supporting the housing industry and related employment opportunities by means of tax credits for mortgage costs. Correspondingly, I think governments must now consider initiatives that would operate to retain or expand employment opportunities in business enterprises in general. Basic to these initiatives would be a re-thinking of productivity and labor, not from a financial perspective but, from the perspective of all working age adults seeking remunerative employment opportunities and the vast and valuable stock of human capital they represent. Accordingly, finding feasible ways for businesses to retain useful workers and to expand the hours of employment would be regarded as fostering forms of productivity associated with uses of human labor. During slow periods, business enterprises might direct some of their employed workers to invest greater amounts of time learning and upgrading their skills, exploring new lines of business activity, and/or engaging in community projects. Because adding these hours of employment would in turn represent added costs to enterprises, then governments in recognition might be called upon proportionately to reduce business taxes and/ or offer tax credits. These added costs to governments would in turn be balanced by reduced costs for programs like employment tax credits and unemployment insurance. This kind of initiative would be in the interest both of enhancing wellbeing of workers as well as enterprises as a whole.

We must also consider what kinds of initiatives governments might take to reduce the way current business practices tend to aggravate inequalities in wealth. I am not at this point proposing particular initiatives. Rather, I refer to several actions that might be taken in order to indicate that possibilities for re-thinking the purposes of business enterprises with respect to their influence on aggravated inequalities in wealth that do exist. Obviously, the kind of government incentives just discussed to encourage businesses to retain workers, hire more employees full time rather than part time, and expand employment hours might indirectly function to influence firms to decrease the share of business earnings allocated to reward investors and increase the share used for labor expenses. At the same time, if governments increase the tax rates for the highest incomes and introduce even small taxes on wealth, then business might be less inclined to use their earnings to increase executive stipends and returns on investors, knowing that a significant portion of these increases will be taxed. Clearly, if the governance practices are altered to represent better the interests of stakeholders other than investors, then it is more likely that earnings of businesses will be more broadly distributed to the

advantage all stakeholders in ways that both serve the interests of enterprises as a whole and benefit particular stakeholders proportionate to contributions they make and the risks to which they are exposed.
