Charles E. Wilson, the CEO of General Motors in the middle part of the last century, reputedly once said that “what was good for our country was good for General Motors, and vice versa.”
The idea was that large corporations had a duty not just to their shareholders, but also to their employees, customers, and community. What was good for all of these stakeholders was inseparable from what was good for large corporations like GM.
But in the 1980s, this shifted. The only goal of large corporations goal became maximizing profits and returns for shareholders.
Corporate profits are now a higher share of the economy than they were for most of the past century, and workers’ share of the total economy is the lowest.
Corporations are now amassing huge control over our economy and fueling widening economic inequality.
Workers must have more power.
Elizabeth Warren’s proposal, the Accountable Capitalism Act, is a good start at remaking the economic system so it works for all of us.
It recognizes that large corporations, with revenues of $1 billion or more, are so big and powerful they should be held to a higher standard of conduct—chartered by the federal government to serve all their stakeholders, not just their shareholders.
Under Warren’s proposal, workers would elect at least 40 percent of big corporations’ boards of directors. These corporations wouldn’t be able to make political contributions without the approval of 75 percent of their directors and shareholders. And their legal right to exist could be revoked if they engaged in repeated and egregious lawbreaking.
Effective action to hold corporations accountable needs to be federal because the states, left to their own devices, have to compete with one another for businesses to locate in their states. This has led to a race to the bottom for corporate cash. Two-thirds of big corporations in America are now officially headquartered in Delaware, because Delaware’s corporate laws are weakest.
This would be a huge change, bringing into better balance the voices of American workers with the overwhelming dominance of big corporations and their major investors.
It’s time to demand that the economic system work for all of us.
This post originally appeared at RobertReich.org.
Robert B. Reich is the chancellor’s professor of public policy at the University of California, Berkeley and former secretary of labor under the Clinton administration. Time Magazine named him one of the 10 most effective Cabinet secretaries of the 20th century. He is also a founding editor of The American Prospect magazine and chairman of Common Cause. His film, Inequality for All, was released in 2013. Follow him on Twitter: @RBReich.