The following excerpts are from a letter published in The New Jersey Star-Ledger on 8/5/19. Apparently inspired by Elizabeth Warren’s proposed "Accountable Capitalism Act," Gordon Sell wrote under the heading Time to reconstruct corporate America:
The “CBODOA” [corporate boards of directors of America] is making its members rich beyond their wildest dreams, while sacrificing America’s resources, innovation and future greatness on the pyre of shareholder equity.
We’ve been taught to think of these boards of directors as collections of wise business leaders who supposedly help corporations make prudent decisions. The reality is that it is a vast old boys’ network of golfing buddies who serve on each others boards, vote for exorbitant pay raises, give unqualified people powerful jobs and vote to sell out America’s corporate resources to the highest bidder, even if they are our international competitors.
The current corporate board-of-directors system is not working. It is time to rewrite corporate law to tear down the conflicts of interest, focus on core business rather than stock price and give managers, engineers, workers, communities and even customers a seat at the table.
Throughout history, whenever someone succeeds at producing wealth, greedy people want to take it and/or power-lusters want to control it. Sell is one of them. “Corporate resources” are not “America’s.” They belong to the corporation’s owners, the shareholders. “America’s . . . greatness” lies in the fact that private property rights are protected. So this letter totally contradicts fundamental Americanism, which lies in the protection of individual rights. Sell does, however, regurgitate an old ideology.
Warren’s "Accountable Capitalism Act" would require this:
American corporations with more than $1 billion in annual revenue must obtain a federal charter from a newly formed Office of United States Corporations at the Department of Commerce. The new federal charter obligates company directors to consider the interests of all corporate stakeholders – including employees, customers, shareholders, and the communities in which the company operates. This approach is derived from the thriving benefit corporation model that 33 states and the District of Columbia have adopted and that companies like Patagonia, Danone North America, and Kickstarter have embraced with strong results.
Note that the list of stakeholders is preceded by the word “including,” meaning “not limited to.” The list of stakeholders that would be granted the “right” to run business corporations that they neither financed not built would be limited only by the whims of government officials, including politicians and bureaucrats. Warren may have been inspired by Ralph Nader’s 1970s scheme for federal chartering of large corporations. But it is really aligned with someone from the early 20th Century. Now read these excerpts from THE DOCTRINE OF FASCISM by Benito Mussolini and Giovanni Gentile, published in 1932.
REJECTION OF INDIVIDUALISM AND THE IMPORTANCE OF THE STATE
Fascism is therefore opposed to all individualistic abstractions based on eighteenth century materialism [i.e., Enlightenment liberalism].
Anti-individualistic, the Fascist conception of life stresses the importance of the State and accepts the individual only in so far as his interests coincide with those of the State, which stands for the conscience and the universal, will of man as a historic entity [i.e., mysticism].
No individuals or groups (political parties, cultural associations, economic unions, social classes) outside the State (15). Fascism is therefore opposed to Socialism to which unity within the State (which amalgamates classes into a single economic and ethical reality) is unknown, and which sees in history nothing but the class struggle. Fascism is likewise opposed to trade unionism as a class weapon. But when brought within the orbit of the State, Fascism recognizes the real needs which gave rise to socialism and trade unionism, giving them due weight in the guild or corporative system in which divergent interests are coordinated and harmonized in the unity of the State (16).
8. Conception of a corporative state
(16) We are, in other words, a state which controls all forces acting in nature. We control political forces, we control moral forces, we control economic forces, therefore we are a full-blown Corporative state. We stand for a new principle in the world, we stand for sheer, categorical, definitive antithesis to the world of democracy, plutocracy, free-masonry, to the world which still abides by the fundamental principles laid down in 1789. (Speech before the new National Directory of the Party, April 7, 1926, in Discorsi del 1926, Milano, Alpes, 1927, p. 120)
The Ministry of Corporations is not a bureaucratic organ, nor does it wish to exercise the functions of syndical organizations which are necessarily independent, since they aim at organizing, selecting and improving the members of syndicates. The Ministry of Corporations is an institution in virtue of which, in the centre and outside, integral corporation becomes an accomplished fact, where balance is achieved between interests and forces of the economic world. Such a glance is only possible within the sphere of the state, because the state alone transcends the contrasting interests of groups and individuals, in view of co-coordinating them to achieve higher aims. The achievement of these aims is speeded up by the fact that all economic organizations, acknowledged, safeguarded and supported by the Corporative State, exist within the orbit of Fascism; in other terms they accept the conception of Fascism in theory and in practice. (speech at the opening of the Ministry of Corporations, July 31, 1926, in Discorsi del 1926, Milano, Alpes, 1927, p. 250).
All emphasis is mine.
Warren would require corporations to seat on their boards of directors members elected by a vote of its employees. Other stakeholders would be “represented” on corporate boards by government dictate. Don’t be fooled by the “democratic” ruse. When the government mandates, the government dictates the interests of these various groups. The individual members may gain a vote. But it is a useless vote, gained in exchange for sacrificing their right to think, determine, and act according to what they judge to be their own personal interests. The election is infected with the disease of all democracy, mob rule; that is, the interests of minority voters is subjugated to the will of the majority. They are forced to accept, by government decree, someone they may not know to represent interests that may not be their own. Private corporations are of course free to allow its employees to vote for corporate directors. But when the government forces it on corporations, it violates the rights of shareholders to govern their own corporations as they see fit.
Only a free market recognizes the rights of individuals to determine their own interests. In regard to business corporations, the individual judges based on voluntary choices--as a consumer, the choice whether to buy the product; as a worker, the choice whether to work for a company; as an investor, the choice whether to invest in the company; as a supplier, the choice of whether to contract with the buying company, and so on.
All of that will be superseded by some new American incarnation of The Ministry of Corporations. Warren’s “accountable capitalism” would not empower stakeholders. It would strip the stakeholders of their power and transfer that power to the state. All these interests will be “brought within the orbit of the State [and] coordinated and harmonized in the unity of the State.” That is what it means to have government gun its way into private corporation boardrooms, whether in the name of “stakeholders” or “divergent interests”.
There is nothing wrong with a company considering many interests other than shareholders, of course. In fact, as I observed in my previous post “On the Purpose of a Corporation by the Business Roundtable PART 2”, the best interests of the company’s shareholders ofthen requires it. And Warren acknowledges that “For much of their history, American corporations tried to balance the interests of all of their stakeholders, including employees, customers, business partners, and shareholders.” She claims without evidence that this is no longer the case, so the Federal Government must force them to. But that is just a thin and transparent rationalization. Her bill is really just a power grab by a socialist trying to frame it to appear to fit Americans’ generally free enterprise-respecting culture.
But what Warren actually proposes is a reprise of Mussolini’s Doctrine of Fascism, a form of guild socialism expanded to encompass “all stakeholders,” or as Mussolini puts it, “divergent interests.” Guild socialism is a “socialistic theory advocating state ownership of industry with control and management by guilds of workers.” Fascist collectivism expands beyond “workers” to encompass all of society, organized into groups, or guilds. Fascism, after all, derives from the Italian word fascismo, which literally means group. Hence, Mussolinin’s hostility toward individualism. In the fascist version of guild socialism, the workers are joined by all other groups. In the American version, nominal ownership remains in private hands, but controlled by state-mandated board members. “Fascism,” explains Mussolinin, “is . . . opposed to trade unionism as a class weapon,” instead “giving . . . due weight in the guild or corporative system [to] divergent interests,” all under the auspices of the state. “Managers, engineers, workers, communities and even customers” would all have “a seat at the . . . corporate board-of-directors . . . table,” as Gordon Sell demands. Elizabeth Warren would add an open-ended list of other “stakeholders” categories. “No . . . economic unions . . outside the state,” explains Mussolini.
The parallels are stark, and scary. Warren’s “accountable capitalism” puts us on the way to “a full-blown Corporative state.” It puts us on the way to socialism—national guild socialism. Warren claims her proposal is “derived from the thriving benefit corporation model that 33 states and the District of Columbia.” It is not derived from, but an override of the states--a power grab by the federal government of a function now relegated to the states under the Founders’ federalism. It is another attack on the separation of powers, further marginalizing the balancing power of the states. Warren’s “accountable capitalism” is a power grab--taking away a corporation’s accountability to the stakeholders it deals with in the free market, making it accountable to the government. It is a power grab from the rights of individual and from the powers of state governments—a repudiation of the Ninth and Tenth Amendments, respectively.
In a free country based upon individual rights, there is no room for fascism. There is no room for Benito Mussolini, or for Elizabeth Warren. In America, the moral rights of individuals to finance, build, and run a company for profit is protected by constitutional and moral law. The rights of voluntary exchange are protected by law. The rights of any individual “stakeholder” to judge for himself whether or not to deal with the company is retained by each individual, not forcibly transferred to some collective guild via a government-imposed “representative.” According to American principles, the government cannot step in and dictate how private business is run, or how private individuals or voluntary associations of individuals trade with each other. It can only police the market for force or fraud, otherwise leaving individuals to their free choices.
As regards Gordon Sell’s Star-Ledger letter, I posted these comments:
Contra Gordon Sell, American business is not a tribal resource. Corporations are private businesses started, financed, and built by the shareholders. Only the shareholders have the moral right to choose who and how to govern their corporations. Non-shareholders who think they have the “right” to muscle in on what others own are no different from underworld crime bosses.
Sell apparently draws from Elizabeth Warren’s so-called “Accountable Capitalism Act”. The “managers, engineers, workers, communities, and customers” that Sell says should be “represented” on corporate boards via legal federal mandate, and other “stakeholders” Warren would add, are essentially no different from the “divergent interests” of Benito Mussolini’s Italian fascism. Warren’s ACA reprises Mussolini’s 1932 “DOCTRINE OF FASCISM,” in which all economic groups are “coordinated and harmonized in the unity of the State” leading to “a full-blown Corporative state”—i.e., totalitarianism. Everyone is enslaved to the corporations, which are corralled “within the sphere of the state.”
Of course, the state corporatism of Warren’s ACA is not capitalism. Capitalism protects the rights of individuals to operate businesses and consumers, job-seekers, suppliers, and others to decide for themselves whether to work for, contract with, or patronize what business. A capitalist government polices the markets for criminal activity like force and fraud, but otherwise leaves people free to work, contract, and trade. What Warren, Sell, and their ilk are advocating is not corporate accountability to consumers, employees, et al. That’s a free market. They are advocating accountability to government masters. They are abandoning capitalism, and introducing to America the guild socialism of fascist state.
In Defense of the Corporation by Robert Hessen
The Capitalist Manifesto by Andrew Bernstein