Saving Capitalism From Itself

For all the talk about the rise of socialism, both as a term of endearment among the young, DSA, and now winning politicians such as Ocasio-Cortez, what is striking for a lot of historians on the left is the moderation of all the political ideas coming out of this. In short, Ocasio-Cortez has the domestic politics of Hubert Humphrey or Ed Muskie, updated for modern progressive beliefs about race and gender. The supposedly socialist ideas of today that right-wingers are freaking out about are basically reiterations of the standard liberal policy agenda of the 1970s. All of this is a sign of how far right politics moved in this nation after 1981.

What people such as Ocasio-Cortez and Bernie Sanders are arguing for, at least through their policy proposals, is to save capitalism from itself rather than actually overthrowing it. And there’s nothing wrong with that. After all, that was the point of the New Deal. FDR was no revolutionary. He was a rich elite who saw plenty of space in the nation for himself and his friends. But he recognized that the revanchist politics of his fellow rich elites were going to destroy them if they didn’t change. So he and his allies sought to save capitalism by making it more equitable and less predatory. That succeeded and lasted for a long time. Now we are heading back to the era of the 1920s, albeit with a left far less developed and far less radical than that time. Once again, capitalism needs to be saved from itself.

That is what Elizabeth Warren is trying to do, as she lays out in her Wall Street editorial about the bill she is introducing to significantly transform shareholder rights to force corporations into having the social responsibility of personhood as well as the personhood rights the Supreme Court has given them.

That’s where my bill comes in. The Accountable Capitalism Act restores the idea that giant American corporations should look out for American interests. Corporations with more than $1 billion in annual revenue would be required to get a federal corporate charter. The new charter requires corporate directors to consider the interests of all major corporate stakeholders—not only shareholders—in company decisions. Shareholders could sue if they believed directors weren’t fulfilling those obligations.

This approach follows the “benefit corporation” model, which gives businesses fiduciary responsibilities beyond their shareholders. Thirty-four states already authorize benefit corporations. And successful companies such as Patagonia and Kickstarter have embraced this role.

My bill also would give workers a stronger voice in corporate decision-making at large companies. Employees would elect at least 40% of directors. At least 75% of directors and shareholders would need to approve before a corporation could make any political expenditures. To address self-serving financial incentives in corporate management, directors and officers would not be allowed to sell company shares within five years of receiving them—or within three years of a company stock buyback.

For the past 30 years we have put the American stamp of approval on giant corporations, even as they have ignored the interests of all but a tiny slice of Americans. We should insist on a new deal.

Yglesias has a good explainer on this as well. It’s a great and necessary bill. It’s totally nuts that corporate propaganda, created in this case of shareholder rights by the utterly vile Milton Friedman, a cancer on this nation that continues to have tremendous say long after his death, has so totally transformed the nation. People are finally starting to wake up. But it will take a very long time for this to be fixed. At the very least, Warren continues to set much of the agenda for whoever wins the 2020 Democratic nomination, which may very well be her.