Elizabeth Warren and Accountable Capitalism

“As much as Warren’s proposal is about ending inequality, it’s also about saving capitalism.”

“Elizabeth Warren Has a Plan to Save Capitalism”, Vox, Matthew Yglesias, April 15,2018

Well, well, well, well. Someone is going to try to broaden corporate America’s mandate from serving just shareholders to considering the good of the larger society. Elizabeth Warren has come out with Accountable Capitalism, an effort to return us to the days when chief executives ran companies for the benefit of everybody, not just shareholders. Now, whether it will get anywhere, I don’t know. Hopefully it will start a much needed conversation about what corporation’s responsibilities really should be.

The second piece of the Accountable Capitalism is that no real monetary outlay will be involved. Instead, the intent is to drive the direction of the money flow from the shareholders back to the workers, much like it was during the period after WWII. Since the ‘70’s, or thereabouts, money have been flowing from the workers to the shareholders, via wage suppression, rationalization, outsourcing, offshoring, automation, etc. I’m not sure exactly how this is to work but I think it will be done via the reservation of 40% of the governance board seats for the workers, much like the corporate structure found in Germany today.

This approach is an attempt to keep the good parts of capitalism but tweak the bad parts so that capitalism serves all people, not just for the few. Instead of going all in on socialism, which it looks like parts of the Democratic Party is moving towards (or maybe it is social democracy in the vein of Denmark and not pure socialism in the vein of Venezuela), Elizabeth is attempting to retain the aspects of capitalism that has given us a lot of innovations today but get rid of those aspects that are driving inequality.

For the full explanation of what Elizabeth Warren’s Accountable Capitalism entails and what has been the history of shareholder capitalism, please read this Vox’s article. Please pay attention to the idea that if corporate executives were to also consider other goals such as taking care of the environment, taking care of their workers, etc., it would be a form of theft from the shareholders. That paragraph outlines starkly the moral implications of such an appalling theory.

I would also want to add an act or law that affects the Harvard Business School and all of its MBA ilk because they play a huge role in indoctrinating corporate executives and investors in the concept of shareholder primacy. In order to truly change the culture, we would also need to do something about the business schools.

What’s really interesting is the fact that sharing profits with the rank and file is extremely popular, even amongst the Republicans. Even. The. Republicans. So let’s bring it on. It’s time for a new conversation.

“But the bigger ideas about corporate governance would be a revolution in American business practice to undo about a generation’s worth of shareholder supremacy.”

“Elizabeth Warren Has a Plan to Save Capitalism”, Vox, Matthew Yglesias, April 15,2018