|
The
Divine Right of Capital
Book excerpt points the way to a more democratic economy
By Marjorie Kelly
Minneapolis Resident
From a world once dominated by monarchy and aristocracy,
civilization
in the 20th century crossed a great divide into a new
world of democracy. But we have democratized only government — not
economics. Our corporate worldview remains rooted in the
predemocratic age, for it is
a world devoted to wealth privilege,
which is the hallmark of aristocracy. Wealth privilege means serving
the wealthy few and disregarding the many. It is a bias built into
the design of the corporation, particularly into
its central mandate
to maximize returns to shareholders. This is a mandate out of step
with both democratic and market ideals.
We are often told stock ownership is being democratized
today.
But the truth is, of all financial wealth held by households,
the 10 percent wealthiest hold 90 percent. And wealth is not being
spread democratically today. It is concentrating in fewer and fewer
hands. The 1 percent wealthiest in the last two decades have doubled
their share of national household wealth, from 20 percent to close
to 40 percent.
This massive concentration gives the wealthy virtual
sovereignty over both our economic and our political systems. We may
have done away with the divine right of kings, but we find ourselves
in the grip of a new Divine Right of Capital — which is the title
of my new book, published by Berrett-Koehler.
The democratic ideals of America’s founding fathers show
the way out. That way leads to economic democracy, to a new economic
order that respects the workings of the market, while reclaiming its
gifts for the many rather than for the few. Calls for economic
democracy may be painted as anti-business, but that’s a bit like
painting George Washington as anti-government. In truth, an economic
democratizing process means extracting aristocratic bias from
business institutions, while leaving the institutions themselves
substantially intact, and healthier.
I myself am a small business owner, as were my father and
grandfather before me. As a business publisher and journalist, I
have seen that a democratic evolution in business has been trying to
happen for some time — with growing attention to environmental
stewardship, employee profit sharing, family-friendly policies, and
good corporate citizenship. Fourteen years ago, I cofounded the
publication Business Ethics to support this rise in corporate social
responsibility, believing that voluntary change by progressive
businesspeople would transform capitalism. I no longer believe that.
The turning point in my thinking came at a seminar years ago,
when author David Korten and I argued off and on, for three days —
with me insisting businesses were becoming more humane, and David
insisting that change at the company level wasn’t enough, that we
needed systemic change.
David’s premise is one I’ve come to accept. For in the
years since, I’ve often seen the failure of voluntary change by
individual companies. I have seen corporations announce
family-friendly policies, only to lay off tens of thousands. I have
seen companies pursue environmental stewardship, but only if it
enhances the bottom line. I have seen companies create
profit-sharing incentives, but at the same time cut benefits. I have
seen corporations become generous citizens, only as they demand more
in tax concessions.
After more than a decade of advocating corporate social
responsibility and seeing its promise thwarted, I asked myself: What
is blocking change? The answer is the mandate to maximize returns
for shareholders, which means serving the interests of wealth before
all other interests. It is a systemwide mandate which cannot be
overcome by individual companies. It is a legal mandate with which
voluntary change can’t compete.
This mandate is a form of discrimination: wealth
discrimination. It is rooted in an ancient, aristocratic worldview
that says those who own property, or wealth, are superior. It is a
form of entitlement out of place in a market economy.
We can move to a true market economy, where all are equally
empowered to pursue self-interest, and where the public good is
protected as the ultimate economic right. We can design new economic
structures—stakeholder financial statements, broadened concepts of
fiduciary duty, ways for employees to impeach CEOs, new property
rights in public property — that embody both democratic and market
ideals.
If changing economic structures in this way seems impossible,
an opening for change can come. It may already be coming, if share
price volatility dampens our stock market hysteria. Financial powers
may still seem omnipotent, but we should remember that the power of
kings was once as great.
The institution of kingship dominated the globe for
millennia, as a nearly universal form of government, stretching back
to the dawn of civilization. The very idea of monarchy once seemed
eternal and divine, until a tiny band of revolutionaries in America
dared to stand up and speak of equality. They created an unlikely
and visionary new form of government, which today has spread around
the world. And the power of kings can now be measured in a thimble.
Excerpted from The Divine Right of Capital: Dethroning the
Corporate Aristocracy, by Marjorie Kelly, published November
2001 by Berrett-Koehler Publishers. www.divinerightofcapital.com
Marjorie Kelly is the cofounder and publisher of Business
Ethics, a national publication on corporate social
responsibility based in Minneapolis. Kelly’s writing has appeared
in many publications, including the Utne Reader, the Progressive
Populist, Lapis, Tikkun, Earth Island Journal, and
Hope magazine, as well as in a weekly column in the Minneapolis
Star — Tribune. Her work has been anthologized in a half-dozen
books, including The New Entrepreneurs and The New Paradigm in
Business. Kelly is a regular speaker and commentator on business
ethics and corporate social responsibility. She has been featured in
the Wall Street Journal, quoted in the New York Times,
and interviewed frequently on National Public Radio and other radio
networks.
|
