Prosperity

What is a corporation for? In this ambitious and urgent argument, Colin Mayer reframes your understanding of business institutions. He contends that the corporation’s true task is not to maximise shareholder value—a creed traceable to Milton Friedman’s 1970 doctrine—but to fulfil a public and corporate purpose that delivers prosperity across generations. Profits are necessary, but they are outcomes, not objectives. The moment you reverse this order, corporate life changes: governance, ownership, measurement, and regulation all realign around the mission of sustaining human, social, and natural capital alongside financial returns.

A history and a reversal

Mayer begins with history: from Roman collegia and medieval guilds to chartered companies and industrial foundations. Corporations were originally public instruments serving common purposes—building roads, financing exploration, educating citizens. The modern corporation’s narrowing into shareholder primacy, he argues, is a historical glitch, not an evolutionary destiny. You therefore inherit an institution that is meant to create and preserve mutual prosperity, but has been trained to exploit short-term private gain.

Reclaiming purpose requires a second reversal: to think of corporations as living systems rather than machines. They are organisms capable of consciousness, culture, and moral choice. As cells and symbiotic species evolve through cooperation and feedback, so do corporations through governance, values, and structures. When values such as honesty or kindness become institutional norms—"saintegrity" in Mayer’s phrase—the firm generates trust and participation. When greed and deceit dominate—"sintegrity"—the same system amplifies harm at scale.

Systems of trust and commitment

A core theme you trace through the book is that trust, not enforcement, enables long-term wealth creation. Trust must, however, be institutionalised: through law, ownership forms, and governance that can sustain commitments over time. Family ownership, industrial foundations (Bosch, Carlsberg, Bertelsmann, Tata), and employee trusts (John Lewis Partnership) illustrate this. Unlike dispersed shareholders, these owners accept bounded autonomy to safeguard mission. Their companies typically last far longer—60 versus 20 years for typical firms—and are less prone to opportunistic takeovers.

In parallel, Mayer wants law to evolve from contract to commitment. Contracts protect transactions; commitments protect relationships. When you bind a company to its stated purpose within its articles of association—as benefit corporations now do—you make that purpose legally operational. Directors become fiduciaries of corporate purpose, not merely agents of capital.

Measurement and fair profits

Purpose only matters if you can measure it. Conventional accounting hides the cost of depleting nature, people, and social infrastructure. Mayer introduces the five capitals framework—financial, material, human, social, and natural—to expose ‘fake profits’ that appear when firms ignore maintenance or remediation costs. A company reporting record earnings while exhausting forests or workforce health is not profitable; it is liquidating its productive base. True or ‘fair’ profit means income after maintaining all forms of capital at sustainable levels.

He offers practical steps: record investments in people and ecosystems as real assets; charge for their maintenance as depreciation; and recognise that risk management, not monetisation of the priceless, is the goal. The National Trust’s natural capital pilot at Wimpole Hall, which valued both private and social returns from organic farming, shows how this approach alters strategy and investment priorities.

Finance and regulation for the long term

Finance must serve purpose, yet the modern system rewards liquidity and short-term gains. Tax incentives for debt and quarterly bonus cycles reinforce a culture of impatience. Mayer argues for neutral policy: treat equity and debt symmetrically, reward long holding periods, and permit ownership structures that support idiosyncratic purpose. Case studies such as Sweden’s Handelsbanken illustrate how stakeholder-oriented banking and profit-sharing foundations can align incentives for stewardship rather than speculation.

Regulation, too, must evolve. Instead of institution-based oversight that fuels shadow banking and arbitrage, regulators should apply functional equivalence—same rule for same risk—and purposeful regulation—design rules around public aims like inclusion or stability. Kenya’s mobile payments platform MPesa shows what happens when regulators pursue function (payments) and purpose (inclusion) rather than rigid form (bank licences).

From principles to practice

The culmination of all these threads is a blueprint for mindful corporations—firms that consciously balance private enterprise with public contribution. They embed purpose in charters and law, finance it through patient capital, measure it through multi-capital accounts, and govern it through structures of trust. Infrastructure partnerships and utilities become testbeds: if a company’s licence obligations are written into its articles, its directors must run it as a public trust as well as a business.

For Mayer, this is not idealism but realism. The corporation is humanity’s most powerful cooperative invention. By reintegrating law, ownership, finance, and measurement around authentic purpose, you can turn it from a machine for extraction into an organism for regeneration—an agent of long-term prosperity that lives well within planetary and social boundaries.

Governance is the process by which purpose becomes operational. Mayer redefines the board’s duty: not to police managers on behalf of shareholders but to govern purpose. As he puts it, the purpose of governance is the governance of purpose. Without this shift, mission statements remain cosmetic declarations rather than binding commitments.

From aspiration to accountability

True governance of purpose involves three linked elements. First, articulation: companies must specify measurable targets, not poetic slogans. Formica Group’s sustainability aims or Unilever’s social visions are meaningful only if anchored in articles of association and strategy. Second, accountability: performance must enter the accounts. If diversity or carbon reduction are objectives, firms must record related costs and liabilities. Third, attribution: identify who is responsible when obligations conflict—whether board committees, trustees, or external adjudicators.

Governance devices that sustain commitment

Mayer distinguishes governance designed for transactions (typical of listed companies) from that designed for commitments (seen in foundation-owned or employee-owned firms). In the latter, boards exist to perpetuate a mission rather than to maximise residual claims. The John Lewis Partnership’s employee council and the Tata Trusts’ oversight boards create internal accountability loops. Benefit corporations go further by legally hardwiring purpose, giving directors defence when balancing stakeholder interests.

When governance achieves this alignment, it allows long-term trade-offs—investing in workforce skills, environmental restoration, or technological transitions—that conventional fiduciary rules might discourage. Without it, purpose collapses under market pressure or leadership turnover.

Purpose and culture

Culture operationalises purpose when no one is watching. Mayer calls for institutionalising kindness—not as sentiment but as a system property. Acts of organisational kindness multiply trust, engagement, and reputation, creating resilience. Companies embodying this principle, like foundation-owned Bosch or Handelsbanken with its lifetime-oriented incentive scheme, demonstrate how governance systems nurture virtues that financial systems alone cannot enforce.

In short, purpose-centred governance replaces compliance checklists with stewardship. It transforms the firm from a nexus of contracts into a community of commitment, regulated by shared ideals and measurable results.

Who owns a company shapes what it can promise and how long it can keep those promises. Mayer’s analysis shows how ownership structures serve as commitment devices that either support or undermine purpose. The longer the owner’s horizon, the broader and more credible the corporate purpose can be.

Family firms and foundations

Family-controlled companies like Mars and foundation-owned enterprises such as Carlsberg and Bosch illustrate sustained orientation to people and product quality rather than quarterly profit. Evidence shows foundation-controlled firms survive about three times longer than publicly traded peers. Their trustees act as custodians of purpose, with reputational liabilities replacing short-term financial incentives. This continuity allows investment in human, natural, and social capital over decades.

Dual-class shares and anchor blockholders

Founders often use dual-class share structures to preserve control over purpose after listing. Google’s founders and Zuckerberg at Meta use these mechanisms to retain voting rights. While critics fear entrenchment, Mayer notes such structures preserve innovation and long-term orientation. Germany’s family blockholders and Japan’s cross-shareholdings historically played the same anchoring role.

What matters is not concentration or dispersion per se, but the alignment between ownership horizon and corporate purpose. Anchor owners who act as trustees—families, banks, or institutional funds—create trust-based ecosystems allowing idiosyncratic missions to persist.

Different models, shared lesson

Internationally, ownership histories reveal distinct commitment equilibria. The UK’s dispersed model promotes liquidity but short-termism; Germany’s co-determination supports communal commitment; Nordic foundations and co-ops create social commitment; Japan’s relational networks maintain corporate families. Each arrangement balances flexibility and continuity differently. Mayer’s policy conclusion is pragmatic: allow legal plurality so firms can choose forms that fit their purpose, but remove incentives that privilege any single, myopic model.

Ownership, in essence, is not a legal afterthought—it is the architecture of trust. Firms endure and contribute when they are owned by those willing and able to care for their long-term purpose.

Law, Mayer reminds you, creates the corporation itself—it is not merely a referee of existing relationships. Legal frameworks can empower or suppress corporate purpose. If law defines the company only as a profit-maximising agent, it preordains behaviour. If law instead embeds purpose as fiduciary duty, it redefines the possible.

Embedding purpose

Mayer recommends a direct reform: require every corporation to declare its purpose within its articles of association and make directors legally accountable for pursuing it. That approach turns mission statements into binding obligations. Benefit corporations and Europe’s foundation companies already provide working templates. This shift also remedies the chronic trust deficit between business and society by giving legal credibility to corporate promises.

Commitment through legal design

Law can enable new forms (e.g., cooperatives, benefit corporations), empower stakeholders (e.g., employee representation), and enforce purpose (through remedies and disclosure). It can even require minimal standards—much as environmental law sets boundaries for pollution. These levers determine how wide and deep a company’s commitments can reach.

Historical episodes—from the East India Company’s dual role as trader and governor to modern charter reviews—show that law has long mediated between public duties and private interest. The challenge now is to redesign corporate law so that public purpose is not an exception but a defining feature of corporate identity.

When law aligns with purpose, it enables credible corporate commitments to future generations, ecosystems, and societies—not through moral appeals but through enforceable architecture.

Accounting determines what counts as success. The modern ledger, Mayer argues, is morally neutral but practically pernicious: it records only what is easy to price, not what matters to sustain life and livelihoods. The result is systemic blindness to the depletion of natural, human, and social capital—an accounting illusion that legitimises 'fake profits.'

Five capitals and fair profits

The five-capitals framework—financial, material, human, social, natural—expands the definition of corporate wealth. Your task as a manager is to measure inflows and outflows from each, estimate the cost of maintenance, and report net profits after sustaining all five. Fair profits then reflect what can be earned without eroding the productive base of future prosperity.

If deforestation costs exist, they must be booked as depreciation of natural capital; if training enhances employee capability, it must be treated as an investment asset. The goal is not perfect valuation but recognition of responsibility. The Inclusive Wealth Report’s findings—that financial and produced assets represent only about one-third of global wealth—demonstrate how much traditional accounting leaves invisible.

Practical reforms

Mayer urges pragmatic reform over theoretical pricing. When data are uncertain, focus on costs of maintenance and replacement rather than hypothetical market values. The Natural Capital Committee’s collaboration with the National Trust at Wimpole Hall showed tangible effects: recording ecosystem services revealed £14 million in private value and £12 million in social benefits, altering land-use strategy and public perception.

By adopting this approach, firms and nations can distinguish between growth that draws down capital and wealth creation that renews it. Accounting therefore becomes not an administrative afterthought but a moral and strategic guide to sustainable prosperity.

Finance exists to connect your short-term savings with long-term productive enterprise. Today, that channel leaks. Mayer diagnoses multiple distortions that reward speculation over stewardship: tax systems that favour debt, performance metrics tied to quarterly returns, and institutional investors rotating portfolios faster than companies can innovate.

Aligning horizons

His remedy is to match influence periods—how long investors can affect strategy—with realisation periods—how long investments take to mature. Pension funds like Ontario Teachers’ and sovereign funds like Norway’s GIC exemplify success: evaluating performance over five- to twenty-year horizons supports investments in R&D, infrastructure, and education that quarterly-fixated markets cannot sustain.

Tax neutrality and debt bias

Corporate tax systems’ asymmetry—deductible interest but non-deductible dividends—encourages over-leverage. This bias not only magnifies crises but also diverts resources from patient equity finance. Mayer highlights national reforms (e.g., Belgium’s notional interest deduction and Italy’s ACE) as evidence that removing this asymmetry leads banks to increase equity and lending more responsibly.

Sweden’s Handelsbanken provides a model financial intermediary: local decision authority, collective profit-sharing, and endurance without bailouts. This structure demonstrates how design choices in incentives can replace short-term speculation with lifelong stewardship.

Functional and purposeful regulation

In finance regulation, Mayer demands parity of oversight across functions, not institutions. Shadow banking—securitised credit and money-market funding—arose precisely because regulators focused on banks, not on functions like liquidity transformation. Functional equivalence eliminates such arbitrage. Purposeful regulation—like Kenya’s approach to MPesa—encourages innovation serving social aims, proving that flexibility and safety can coexist.

Rebalancing finance thus requires both policy and practice: tax neutrality, long-term mandates, and regulation that rewards sustainable investment rather than transaction speed.

Infrastructure—broadband, transport, energy, water—is where public good meets private enterprise. Mayer argues that systemic under-investment stems from flawed accounting and misaligned incentives on both sides. Public accounts undervalue infrastructure because they record neither depreciation nor future benefit, while private investors avoid it due to long horizons and diffuse returns.

From projects to systems

Infrastructure cannot be treated as isolated projects but as components of interdependent systems. Short-term procurement contracts and public–private partnerships often fail because each stage—design, build, operate—faces different risk and finance needs. Mayer advises matching ownership and financing structures to each phase and embedding public purpose into private governance.

Aligning licences and purpose

His central innovation is legal rather than financial: make a utility’s regulatory licence conditions part of its corporate charter. That way, boards and investors are legally bound to deliver the public service obligations alongside shareholder returns. This prevents the adversarial dynamic in which regulators push for low prices and shareholders resist.

Mayer’s proposal would transform privatised utilities into hybrid entities—public in purpose, private in capacity. Measurement of social value, transparent accounting, and mutual accountability yield better outcomes than competitive bidding alone.

If you want lasting infrastructure, you must institutionalise joint commitments between states and corporations. Only then can large-scale systems deliver long-term prosperity without sacrificing accountability or innovation.