The Existence of Socially Legal firm

People like to do business to earn a living. It had been dated back from the earliest era of human civilization, business has existed, whether in a form of exchange or trade. Then the questions arises whether a Socially legal business existed or all forms of businesses is not-socially-legal?

Socially Legal business(SLB) in this context, is a business that truly do not absorb, in every of its actions, any surpluses from the environment or customer or animal. From this definition we can see that it is almost not possible for the existence of this kind of businesses.

Because every firm that existed in this world is divided into markets, Monopolistic, Monopolistic Competition, and Oligopoly Competition.

For a monopoly market, we knew that it obvious that the firm absorbs the consumer surplus by setting its price to MC= MR taking a surplus off from consumer because it has the right to set their own prices in the absent of competition. but how about monopolistic competition market? In monopolistic competition also, firm can set MC = MR and take away an amount of surpluses which would have belong to the customer in a perfectly competitive market. In oligopolistic? we do not need to asked again. They, of course, are not SLB. They can even co-operate to set a mutually agreed price.

We can also look from the environmental issue. There no firm in this world that is really paying back to the environment in efficient manner. They are efficient in producing but not in paying back to the environment. An company decided to used some of its profit to conserve or "return" back the damaged it has caused to the environment is because of govermental rules or marketing technique. The pay out for the environment will always lesser than what they take. For example, MNCs in oil mining. Their environmental payback is for the research of how to mine oil so that the mining do not destroyed the environment, or so called a more effective and efficient ways in mining. It seems that they are taking responsibility by trying not to destroyed the environment. But wait, they do not "pay" for each oil they take from the earth. it is just like learning how to rob without killing or harming the victim.

before i close this post, i want to take back to the paragraph two above about surplus. You might argued that in perfectly competitive market, there is no surpluses taken off from consumer. You are right but do a perfect competitive market existed in this world or is it just an ideal type of market? We all knew that perfectly competitive market is a myth, at least until now. Even if it existed, it still faced problems of environmental reponsibility. Because they are perfectly competitive, their main objectives is to lower cost. and to be socially responsible, it need a committment to the environment, which mean a long term increase in cost. Using the prior assumption in the consumer in perfectly competitive market that they are all rational and only want the cheaper goods because all the goods in the market are homogenous. Firms in this case must targeting to lower the cost as their main objectives so that they can compete with others.

Even if firms in perfectly competitive market all agreed to be socially responsible, it is still questionable whether the returned for the environment is equal to what they take from the environment.