Date: Mon Oct 23 2000 - 15:26:53 PDT
like the (profligate) propaganda from slippery-side economists, it gets
harder to swallow the more you chew on it. i give you instead chateaubriand.
WHO OWNS CAPITALISM?
Has democracy at last caught up with the corporation?
by Jack Beatty, June 15, 2000
Humanity is becoming ever more profoundly dependent on the corporation, not
only for the means of production (that has been true since the Industrial
Revolution), but also for the technology of communication, the ganglia of
social connection. A letter through the post connects one to government. A
message conveyed by e-mail connects one to a corporation. The gain in
convenience comes at a price in autonomy, perhaps not payable for decades
and then only imperceptibly. In America's commercial civilization, Madison
wrote in The Federalist Papers, the power of government might prove a lesser
threat to liberty than the excesses of freedom. The "cookies" planted by
Internet companies to spy on our purchases as we click from site to site are
just that kind of excess. If this subversion of individual liberty by
economic freedom tokens the future, then the American political imagination,
so long fixated on government's threat to private life, must change with the
times. Madison's system of checks and balances protects us from government,
but in the "privatized" society of power without accountability toward which
we seem to be heading, what will protect us from the corporation?
Government intervention to restore a balance of power between the
corporation and society is rarely the model for today, when nation-states
whose authority stops at their borders have neither the power nor even the
jurisdiction to check globalizing corporations. Moreover, should its journey
from Rotarian lubricity to real-world trend continue unimpeded,
"privatization" will weaken governments' hold on the levers of
countervailing power within their borders and jurisdictions (a point well
made by Benjamin Barber, a Rutgers political theorist, in an as yet
unpublished paper). Will it take Henry Adams's nightmare -- some form of
world government -- to create transnational countervailing power? History is
a poor guide to the unprecedented.
* * *
The difficulty of establishing international standards for the corporation
in the absence of international authority was the crux of the debate over
granting normal trading status to China, recently concluded in the House and
about to begin in the Senate. The debate has raised a fundamental question:
Why, through the China deal and the WTO do we export only part of our
economic system? The right to collective bargaining is part of our system.
Prohibitions on child and slave labor are part of our system. Regulations of
the hours and conditions of work -- these are not exogenous filigree, but
part of our system. American capitalism has evolved to include them. Yet we
export the kind of "wild capitalism" we have not seen in this country for a
hundred years, leaving CEOs free to project their laissez-faire fantasies
onto the blank page of the global economy.
You're to blame for this. Your pension fund drives corporate behavior.
Corporations seek to break the carapace of domestic regulation and so earn
greater returns for you by opening plants in the union-free, low-wage,
hard-governed developing world.
The promise of the twenty-first century is to move from ownership -- already
nearly 50 percent of us own stock -- to control. More and more the system is
truly becoming "ours." The democratization of investment is fast bringing us
to the point where we can begin to take responsibility for capitalism, which
for the past two hundred years has been happening to humankind like fate.
Countervailing power, that is to say, may arise not through political
intervention from outside the economic system, as it did in the New Deal,
for example, but from within the economic system itself, through the
democratization of ownership.
The managerial revolution of the mid twentieth century effectively separated
ownership of the corporation from its control. But the hostile takeover
movement of the 1980s, when the owners began to rise up against
underperforming managers, signaled the end of that separation and the
beginning of something new -- the replacement of managerial with
pension-fund capitalism. A contradiction haunts pension-fund capitalism: in
its restless drive for higher returns it undermines the jobs of the men and
women who hold the pensions. The twenty-first century will test whether that
contradiction will stand.
* * *
The end of the separation of ownership from control of the corporation has
had a political echo. A President of the United States notorious for setting
policy by the polls put forward a plan in his 1999 State of the Union
Address that would have instantly made government the biggest single
investor on Wall Street. Clinton suggested investing surplus money from the
federal budget in the stock market, and using the proceeds to save Social
Security. Conservatives attacked as Bolshevism the idea of using a fraction
of Social Security money for public investment in the private sector, and
the Clinton Administration has said little about it since. But the cat was
out of the bag. Government investment, as conservatives rightly fear, would
almost inevitably introduce government influence or -- why not admit it? --
even government participation in control. Decisions fraught with public
consequences about where to locate plants, about the effects of production
on the environment, about wages, benefits, hours, health insurance, product
quality and safety, pensions, and prices -- hitherto private decisions like
these would now be made with public participation. Democracy would at last
have caught up with capitalism.
This was not utopianism. This was very nearly practical politics. Fearing
Republican caricature -- "Imagine the folks who run the Post Office running
Wall Street" -- the Gore campaign has said nothing about Clinton's plan. But
the issue will come up again should the corporate grip on our
investor-driven politics -- its results measured in jobs lost to free trade
and downsizing, in health and pension benefits cut back, and in wages
lagging increases in productivity -- grow intolerable. Pension funds,
whether private or public, are a latent force for world-historic change.
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