Attempts to reform capitalism at the margins are never-ending and generally never fully effective, for a simple reason. Telling a profit-maximising corporation not to prioritise profit over all else is like telling a cat not to pounce on a mouse.
Like a cat’s instinct to hunt, the corporate instinct to maximise profit is in the DNA of extractive capitalism. It’s a feature, not a bug. The consequences we all know well – suppressed wages, environmental costs imposed on society, communities and nations giving away precious tax revenues for meagre job gains – all while billionaires grow and flourish.
But cracks are showing in the neoliberal edifice. One sign is the Business Roundtable ‘statement on the purpose of a corporation’ released in August 2019, in which 181 CEOs of major corporations declared that the purpose of corporations is no longer simply to maximise returns to shareholders but to enhance the wellbeing of all stakeholders, including employees and the communities in which they operate.
That kind of talk is great. But that sort of approach won’t come about merely through regulatory reforms or additional sentences in a mission statement. Concern for the public good has to become part of the DNA of enterprise. We need a moral revolution rooted in structural change.
This is more than a pipedream. There are enterprises and institutions that have been modelling this way forward for years – such as the century-old bank of North Dakota, the US’s only state-owned public bank. It acts as a mini Federal Reserve, financing and sustaining a healthy ecosystem of community-owned banks that invest in local communities. This structure worked so well it insulated the state from the shenanigans of the big banks that nearly toppled the global economy in the 2008 financial crash. Its success has inspired a nationwide movement for more state- and city-owned banks across the US, from California to New Jersey.
Similarly, a movement is rising for employee ownership, which is being promoted by cities such as New York and Madison, Wisconsin, and states such as Colorado. Leaders of these efforts envision more businesses like Recology, the San Francisco-based waste hauling and recycling firm, and Cooperative Home Care Associates (CHCA) in the South Bronx, both wholly owned by their employees. Recology’s vision of a ‘world without waste’ drives it to prioritise recycling over landfill disposal, and its rubbish truck drivers can earn more than $100,000 a year, because without absentee shareholders extracting company wealth, there is more to go around for workers. CHCA has created more than 2,300 well-paid home healthcare jobs fora workforce largely comprised of women of colour; its success has inspired efforts to create 15 other worker-owned home care companies.
How can we get more such enterprises? A lot is already happening. Federal legislation signed into law in 2018 mandates support for establishing worker-owned businesses through the US Small Business Administration. State centres for employee ownership are being created, most recently in North Carolina and Massachusetts. A half-dozen new investment funds to advance employee ownership are in the works. Employee ownership was also a topic on the presidential election circuit, with Bernie Sanders and Elizabeth Warren proposing multiple ways to advance employee ownership, including requirements that large businesses give workers more ownership and governing power and adopt charters that codify their obligation to operate for the public good.
We stand at a historical turning point. The struggles of the 20th century were about making real the promise of political democracy. In the 21st century, the struggle is to extend democracy to the economy. That means structural redesign so that all aspects of the economy– companies, investments, economic development, employment, purchasing, banking, resource use – are designed from the inside out to serve the common good. Anything less will fail to see us through the tumultuous era ahead.
Marjorie Kelly is executive vice president of the Democracy Collaborative and author, with Ted Howard, of The Making of a Democratic Economy. This article was originally published in our Winter 2019 issue. Subscribe here
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