Foreword

THE UNASKED QUESTION that hovers over American politics and smothers public life is this: Do corporations have too much power in our society? As a younger reporter covering political campaigns, I occasionally asked this of candidates, mainly to watch them squirm and duck for cover. But during the 2000 Presidential campaign, I had an opportunity to ask the question of Senator John McCain, a conservative Republican in most respects but a man blessed with an incautious nature. Do corporations have too much power in America? “Without a doubt, without a doubt,” he answered without hesitation. “I see it every day in Washington.”

So I think it is possible now that many more Americans of all stations are ready to listen to Marjorie Kelly and her insistent, probing questions and arguments. Her book is intended as a free-spirited provocation—a gloriously incautious and intelligent plea to think anew and to act. It reads not like another gloomy recital of familiar economic complaints but more like an enthusiastic tour of a far horizon—a time when Americans find the will and the way to correct the systemic failures of economic institutions.

What Kelly offers in the first half of her book is a diagnosis of why corporations spin off so many social ills. In her view, problems such as wealth inequality, corporate welfare, and industrial pollution are like the fevers and chills of the economy. The underlying illness is shareholder primacy, the corporate drive to make profits for shareholders, no matter who pays the cost. Corporations do indeed hold too much power in the world today, but Kelly says the more invisible problem is that the wealthy hold too much power over corporations. In the interest of making the rich richer, corporations are in effect levying absurd private taxes on the rest of us (to paraphrase Adam Smith, as Kelly does). Financial powers have become an economic aristocracy.

The solution is economic democracy, and in the second half of the work, Kelly draws on ancient radical thinkers like Thomas Paine, as well as more contemporary theorists, to assemble a menu of fundamental reform propositions. She also deliberately leaves room for doubt, disagreement, and playful speculation. “I only presume to offer hints, not plans,” Thomas Paine wrote. Kelly likewise generously explains that what she offers is a rough draft, and if it encourages others to make better drafts, it has served its purpose.

The book brims—actually spills over—with unsanctioned ideas and imaginative new directions, all utterly unacceptable to those in the orthodox circles of economics, business, government. But the style is like a loose and friendly conversation, an invitation to think and talk about what is possible, what might work.

As a small business owner and business journalist, Kelly is grounded in the real world of enterprise. She has earned her conviction that nothing less than systemic structural change is needed. For fourteen years, she has edited and published Business Ethics, a publication that chronicles the many efforts to establish social responsibility in business and investing. Her publication is both hopeful cheerleader and tough critic. She remains idealistic herself but says that in recent years she has become increasingly discouraged at how little enduring change has been accomplished. Legislation, social investing, business ethics, and other progressive initiatives have in some measure made business more humane, she believes, but the overall result seems to her the opposite: corporations are focused more ruthlessly than ever on shareholder gain, to the exclusion of all competing values—from employees to the environment to social equity. It was this discouragement that led her to search for deeper answers.

Can we imagine an economy in which firms are typically owned in large part by the people who work there? In which corporate boards of directors are required to exercise broad fiduciary obligations to all of the stakeholders in the company—employees and community as well as absentee owners? Can we imagine a broader, more inclusive understanding of property rights? Kelly believes all these are possible. And she shows how in beginning ways they are already becoming reality, with nearly twelve hundred employee-owned firms thriving today, thirty-two states already having stakeholder laws redefining fiduciary duties, and courts beginning to recognize community property rights.

Kelly puts big questions on the table. But she also offers smaller steps that can move us forward, explaining all with a sense of history that helps us understand how we got to the present circumstances. Along the way she introduces new language with which to discuss the structure of modern corporations. Perhaps most provocatively, she introduces the phrase wealth discrimination, showing its kinship to sex and race discrimination. The principle of equality, in her view, has no meaning unless it is also established in economic terms: “Under market principles, wealth does not legitimately belong only to stockholders. Corporate wealth belongs to those who create it, and community wealth belongs to all.”

Those are fighting words, of course, and the people who presently hold the high ground of economic power in society will not be amused. But the strength of Kelly’s case is that it restores democratic principles in the economic context—demonstrating that structural changes in business, far from being radical, are grounded in the founding ideals of America and are required to sustain the democratic idea. Kelly wants to provoke a fighting spirit in America and other democratic nations. She aims to stimulate active curiosity and doubt about the current nature of the system and how far democracy has drifted from its first principles. Her flood of ideas are so numerous and profound, no one should expect to agree with all of them—and certainly I didn’t. But I believe this book is an important step toward generating a new politics, and I share Marjorie Kelly’s optimism that this is possible. What she essentially is after is a lively time of argument and inquiry in which the oldest, deepest questions—what it really means to live in a democracy—are back in play again, and people are once again in motion toward achieving their democratic ideals.

WILLIAM GREIDER

author, Who Will Tell the People: The Betrayal
of American Democracy and One World,
Ready or Not: The Manic Logic of Global Capitalism