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The Divine Right of Capital |
by Marjorie Kelly |
Link to the Progressive Living Book Review
Berrett-Koehler Publishers, Inc.
ISBN 1-57675-237-2
Link at Powell's Books: http://www.powells.com/s?kw=Divine+Right+of+Capital&x=0&y=0
Some Representative Quotations
Mission Statement
There is outrage today about the illegitimacy of CEO gains. But nowhere will you find outrage about the illegitimacy of shareholder gains, for that is the sun around which the system revolves. To question this is to question the divine right of capital.
Which is precisely the aim of this book. It questions the idea that the needs of wealth holders come before the needs of all other persons. It questions the idea that achieving a 15 percent return for a billionaire is more important than paying employees a living wage or protecting a community's water.
This is a book about wealth privilege, which is the hallmark of aristocracy. Wealth privilege means serving the wealthy few and disrgarding the many. In the age of kings, wealth privilege was deeply woven into both political and economic institutions. Civilization crossed a great divide into a new world of democracy in the twentieth century. But we have democratized only politics, not economics.
Wealth privilege remains embedded in the ancient institution of the corporation. It is a privilege out of step with market ideals, which has led to wealth disparities that threaten our political ideals. We can never really have political democracy without economic democracy.
It begins with imagination. We begin by using the one territory that we the people still control: our own minds. We simply see that wealthy supremacy is illegitimate. For once we see it and name it as illegitimate, we undermine the ground on which it stands. And we pave the way for its transformation.
Samples
Where does wealth come from? More precisely, where does the wealth of public corporations come from? Who creates it?
To judge by the current arrangement in corporate America, one might suppose capital creates wealth - which is strange, because a pile of capital sitting there creates nothing. Yet capital providers - stockholders - lay claim to most wealth that public corporations generate. Corporations are believed to exist to maximize returns to shareholders. This is the law of the land, much as the divine right of kings was once the law of the land. In the dominant paradigm of business, it is not in the least controversial. Though it should be.
What do shareholders contribute, to justify the extraordinary allegiance they receive? They take risk, we're told. They put their money on the line, so corporations might grow and prosper. Let's test the truth of this with a little quiz:
Shareholders fund major public corporations - true or false?
False. Or , actually, a tiny bit true - but for the most part, massively false. In fact, most "investment" dollars don't go to corporations but to other speculators. Equity investments reach a public corporation only when new common stock is sold - which for major corporations is a rare event. Among the Dow Jones industrials, only a handful have sold any new common stock in thirty years. Many have sold none in fifty years.
* * *
When we say that a corporation did well, we mean that its shareholders did well. The company's local community might be devastated by plant closings. Employees might be sholdering a crushing workload. Still we will say, "The corporation did well."
One does not see rising employee income as a measure of corporate success. Indeed, gains to employees are losses to the corporation. And this betrays an unconscious bias: that employees are not really part of the corporation. They have no claim on wealth they create, no say in governance, and no vote for the board of directors. They're not citizens of corporate society, but subjects.
We think of this as the natural law of the market. It's more accurately the result of the corporate governance structure, which violates market principles. In real markets, everyone scambles to get what they can, and they keep what they earn. In the construct of the corporation, one group gets what another earns.
* * *
Why have the rich gotten richer while employee income has stagnated? Because that's the way the corporation is designed. Why are companies demanding exemption from property taxes and cutting down three-hundred-year-old forests? Because that's the way the corporation is designed. "A rising tide lifts all boats," the saying goes. But the corporation functions more like a lock-and-dam operation, raising the water level in one compartment by lowering it in another.
The problem is not the free market, but the design of the corporation. It's important to separate these two concepts we have been schooled to equate. in truth, the market is a relatively innocent notion. It's about buyers and sellers bagaining on equal footing to set prices. It might be said that a free market means an unregulated one, but in today's scheme, it really means a market with one primary form of regulation: that of property rights.
* * *
It wasn't necessary to throw out government in order to do away with monarchy - instead we changed the basis of sovereignty on which government rested. We might do the same with the corporation, asserting that employees and the community rightfully share economic sovereignty with capital owners.
What we have known until now is capitalism's aristocratic form. But we can embrace a new democratic vision of capitalism, not as a system for capital, but a system of capital - a system in which all people are allowed to accumulate capital according to their productivity, and in which the natural capital of the environment and community is preserved.
Where Next? |
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