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Vox: Here’s How to Save Capitalism

Matthew Yglesias, a writer for Vox, tried to make the case for the Accountable Capitalism Act [1] in a piece Friday, headlined, “Top House Democrats join Elizabeth Warren’s push to fundamentally change American capitalism” – subhead: “Co-determination would transfer huge sums of wealth to the middle class.”

The story focused on the news four members of the U.S. House introduced companion legislation to Warren’s bill, which, when it was introduced in August, Vox wrote [2], would “make corporate governance great again.”

Warren’s legislation, which “starts from the premise [2] that corporations that claim the legal rights of personhood should be legally required to accept the moral obligations of personhood,” calls for creation of an Office of United States Corporations inside the Department of Commerce. This office would require any corporation with revenue of $1 billion or more to obtain a federal charter of corporate citizenship.

The charter would order directors [2] to “consider the interests of all relevant stakeholders – shareholders, but also customers, employees, and the community in which the company operates – to obtain a federal charter of corporate citizenship.”

The new charters would “leave executives accountable” not only to shareholders, as Yglesias said [2] they are now, but to “human beings for the rights and wrongs of their own decisions.”

On a policy level, Warren called for [2] requiring workers to elect 40 percent of corporate boards, limits on executives’ ability to sell shares of stock they receive as pay and to require corporate political activity to be approved by 75 percent of shareholders and 75 percent of board members “to ensure that corporate political activity truly represents a consensus among shareholders, rather than C-suite class solidarity.”

Without evidence or even a guess at how it would happen, Yglesias asserts [1] the “proposal would have drastic consequences, redistributing trillions of dollars from rich executives and shareholders to the middle class – but without involving a penny in taxes.”

It’s not about confiscating the property or rights of those who build companies. It’s about [1] altering “that balance of interests in corporate decision-making” and addressing the trend in recent decades of corporate managers having “a singular devotion to enriching shareholders.”

The principle idea of the legislation, he wrote [2], “is that if corporations are going to have the legal rights of persons, they should be expected to act like decent citizens who uphold their fair share of the social contract and not like sociopaths whose sole obligation is profitability – as is currently conventional in American business thinking.”

Yglesias wrote [1] that Warren’s proposal – ordering companies to elect workers to their boards, retain shares paid to executives for periods of 2-5 years, win acceptance from workers and shareholders before undertaking any political activity and prove they are government-approved corporate citizens – represents an attempt at finding a middle ground and enriching workers without another taxpayer-funded program.

“Much of the new energy on the left over the past several years has been about making government bigger and bolder, an idea driven by a burgeoning movement toward democratic socialism,” he wrote [1]. Warren’s proposal is designed to leave businesses “as the primary driver of it.”

The hope “is that this will spur a return to greater corporate responsibility and bring back some other aspects of the more egalitarian era of American capitalism post-World War II: more business investment, more meaningful career ladders for workers, more financial stability, and higher pay.”

But it’s about more than confiscating the rights of one person or corporation and granting it to another in the name of forced corporate citizenship.

More is at stake. “As much as accountable capitalism is about curbing inequality,” he wrote [1], “it’s fundamentally about saving capitalism itself.”