For over fifty years, the guiding “logic” of shareholder primacy has been one of the key drivers of inequality in our economy. Palladino’s proposed interventions—which represent well-reasoned and feasible policy adjustments that could shift structural power within U.S. corporations—would be a watershed advancement. However, it is only a first step.
Palladino argues rightly that shareholder primacy represents an ideology, not a fact of nature. Corporate actions, as they currently exist, are not due to a metaphysical wisdom of the market. They are due to decisions—decisions that have their roots in, among other things, an ideology of white supremacy and a belief in oligarchy that obscures the true community investments that enable corporations to function.
Milton Friedman’s theories on shareholder primacy, for starters, arose within a specific historical context, and they should be understood, in part, as a reaction to political conditions in the United States at that time. In the midst of an emerging and successful civil rights uprising in the southern states, and at the close of one of organized industrial labor’s most successful decades, Friedman declared that the interests of shareholders (who were largely white, wealthy, and male) should govern the actions of the corporation. By engineering a relentless mission to deliver and optimize shareholder value, he was able to define the needs of labor and of communities as in perpetual conflict with the corporation.
The edict of shareholder primacy can thus be understood as a hegemonic project, one that reaffirmed structurally and ideologically the primacy of white, elite, men—and it has been remarkably effective. Even today, the manner in which we see corporations as disconnected from communities, towns, cities, and nation-states has its roots in this twisted logic. Friedman, his fellow members of the Mont Pelerin Society (MPS), and the think tanks that MPS later spawned were so successful because they invested not only in the development of policies but also ideas. This broader neoliberal thought-collective understood that their policies, at face value, would never win mass support, and so it looked to craft language that would cast their brazen propositions as the common sense of the market. As a result, we now regularly anthropomorphize the market. Imagining it as a living, breathing entity, we talk about the market in terms of “freedom” and “unleashing.” We see it as divorced from ourselves, our labor, and our communities.
If we want to undo this framework now, we will need to similarly think about the battle of ideas, not just policy prescriptions. We need a vision and language that reimagines the corporation not as a living being with autonomy and human rights, but as a vehicle that we have all labored to start, support, and keep running. We need to advance the idea of shared prosperity.
Tackling shareholder primacy opens the possibility of doing this and ending the racist lie, advanced by so many elites, that the economy is divided into takers and makers. If we understand the importance of shareholder primacy to the development and governance of late racial capitalism, then we understand that by dismantling it we take on one of the structural pillars of white supremacy. Palladino’s proposed Inclusive Ownership Fund would make visible the incredible risk and investment of working people, especially the work of people of color. But we can’t stop there.
Next, our movements and institutions will need to seize the space created by this opening. We need to expand the voices and the constituencies that govern the corporation. When working people gain structural power within the corporation through an Inclusive Ownership Fund, they should use this new power to expand the voices of other non-elites who have a stake in the actions of the largest corporations. They should ask themselves not only how they can advance their needs as employees but also as members of a community. The people who labor in a corporation hold many identities, after all. They are community members, transit riders, tenants and mortgage-holders, parents of school age children, and inhabitants of our delicate ecosystem.
Currently, corporate promises of jobs and trickle-down investments often distract from the questions of wages, environmental sustainability, and resident well-being in many political decisions. But if these worker shareholder collaboratives are to credibly challenge assumptions in the boardroom, then surely they can end the reign of the “wisdom of the market” in other arenas as well. They could advance demands for harmony with the environment, for example, or an end to real estate speculation that displaces their neighbors, or for corporate taxes which would support community infrastructure projects such as schools and transit. They could even build the case to overturn Citizens United. The key question here is: how will these ownership funds, with their newly gained power, further push open the doors and make room for other voices and constituencies?
Because corporations, as Palladino reminds us, are born of society; they owe their existence to the commons. It is society, replete with its collective resources, which grant the corporation its ability and right to exist, the infrastructure to operate, and the engaged citizenry (as customers, employees, or neighbors) that powers its success. They depend on our roads, our bridges, our water, and our railroads. They also depend on our schools, our libraries, our family systems, our environment—everything that keeps their workers and customers healthy and functional. This is the true significance of their charter being granted by a governmental agency; corporations operate at the behest of the public. We are all risk takers, investors, and stakeholders, so the corporation should be accountable to the society in which it exists.
Palladino’s proposal frees our dreams and aspirations. By considering the possibilities she presents we are engaged in the first and most important step in any campaign or movement; we are imagining the world as we want and believe it should be. The follow-up question of “what next” is so crucial because progressive wins, we now know, are neither final nor static. We must always strategize two steps ahead, lest we be moved backwards, which is why the movement for corporate accountability must lay further plans now to transform the corporation not just for employees, but for the whole body politic. If we are not continuing to advance, we will be on defense.
