From the Archives: Reforming Our Version of Capitalism – Is It Possible?  (Issue #19)

by Bob Gerecke

Have we reached the tipping point where corporations and the wealthy have acquired permanent power, where we are helpless to make changes in our economic system for the common good?

To allow innovation and to motivate effort, we need an economic structure which creates independent for-profit businesses.  I worked for government, and the governing principles of my superiors were to avoid risk and do only what's demanded or approved by those who have political power.  This resulted in mediocre and unimaginative service to our customers, the public.  Therefore, I'm not inclined to discard capitalism entirely, but it needs reform.  

There is no shortage of ideas.  In some European countries, corporate boards of directors must include representatives of labor.  I don't know if they also include representatives of consumers or the general public.  Some commentators have proposed that CEOs be ineligible to nominate or chair their corporate boards, thus removing them from control over their supposed supervisors.  No one has yet proposed that corporate boards exclude CEOs of other corporations, or subordinates of such CEOs, all of whom have an interest in boosting CEO pay and power.  In Brazil, the law requires corporations to distribute a percentage of their profits (I think 35%) as dividends to stockholders, which somewhat retards industry consolidation and the concentration of market share and of political power.  Laws could just as well require profit-sharing with employees or with affected communities.  Estimates exist of the environmental effects of various kinds of businesses, so it is possible to charge environmental costs to their sources.  Political spending by corporations and the wealthy could be capped, and corporate as well as individual income tax rates could be progressive.

Our biggest problem is not so much how to design the legal structures which will subordinate the power of corporations and the wealthy to the common good.  It's how to get them passed into law, now that corporate CEOs and billionaire investors already can informally but effectively veto legislation and have outsized influence on the political process.  We have a chicken and egg problem.  We can't change the laws until we reduce the influence of money in politics, and we can't reduce the influence of money in politics until we change the laws, including the Constitution.  As long as the majority of Americans are politically apathetic or intellectually lazy about their political views, the financiers of propaganda will own the minds of many or even most voters.  I doubt that this will end until most of the public are miserable.  Even then, the propagandists have proven repeatedly that they can persuade the public to blame the powerless rather than the powerful, can promote a diversionary war, and can distract the public's attention with entertainments or cultural issues.  I have little hope that we will escape our vicious circle, but it's an intriguing intellectual game to think of what we would do if we were king. 

Meanwhile, we keep working for the good cause, whether we make a real difference or not, since it's natural for us humans to act out -- or at least talk out -- our beliefs.  I sometimes do think that I am merely indulging myself, but I haven't yet found anything equally interesting to pass the time.