
The American Corporation Is in Crisis - huihuiilly
https://bostonreview.net/forum/lenore-palladino-american-corporation-crisis%E2%80%94lets-rethink-it
======
ryandvm
Interestingly, this is something that pirates (yes, maritime pirates) actually
figured out several hundred years ago. They had the problem of trying to run
fairly large organizations in a particularly extralegal environment. (It's
hard to sue your manager for not paying you when the legal system would
frankly rather see all of you hanged.)

For pirates, the solution was multifaceted, but the most critical components
were: * Profit sharing - The riches captured by a pirate vessel were split
amongst the pirates in a remarkably egalitarian model. * Democracy - The
Captain and Quartermaster of a pirate ship were elected democratically by the
crew.

The result was pirate ships were able to outfox the established navies of the
time and manage ships with crews upwards of 100 all without the support of
established judicial systems.

Disclaimer: I am one of the co-founders of a design and development studio
based on these exact same principles:

[https://www.fountstudio.com/blog/yes-we-have-a-pirate-
code-1...](https://www.fountstudio.com/blog/yes-we-have-a-pirate-
code-1aa1b2e02bf6)

~~~
vageli
> For pirates, the solution was multifaceted, but the most critical components
> were: * Profit sharing - The riches captured by a pirate vessel were split
> amongst the pirates in a remarkably egalitarian model. * Democracy - The
> Captain and Quartermaster of a pirate ship were elected democratically by
> the crew.

> The result was pirate ships were able to outfox the established navies of
> the time and manage ships with crews upwards of 100 all without the support
> of established judicial systems.

This is fascinating to me. Do you happen to have any references or further
reading you're willing to share?

~~~
ryandvm
Definitely, I highly recommend Peter Leeson's book on the subject, The
Invisible Hook:

[https://www.amazon.com/Invisible-Hook-Hidden-Economics-
Pirat...](https://www.amazon.com/Invisible-Hook-Hidden-Economics-
Pirates/dp/0691150095)

------
gniv
Article is long but well written and argued. I found this paragraph about a
proposal in UK especially interesting:

"The Labour Party’s plan is detailed. It ensures that investors are not
injured by having their share value diluted because it institutes a transition
process: every year, employees gain a 1 percent ownership stake, up to a cap
of 10 percent. Once funds are in a trust, then the shares are not available to
be resold. This is crucial: the stakes are not a private, freely transferable
wealth asset, and since employees don’t purchase stakes, they can’t sell them
when they leave employment. Rather, by becoming an employee of the
corporation, you receive an ownership stake in the employee collective trust—a
stake that remains in the trust if you move to a different job. So long as you
are an employee, though, that stake grants you governance rights and the right
to receive a share of the profits."

~~~
chrisseaton
> In September 2018 the UK Labour Party proposed a policy for “Inclusive
> Ownership Funds,” which would require corporations with over 250 employees
> to ensure that employees receive dividends.

But most professional employees get an 'ownership stake' (shares) in the
company as part of their compensation anyway.

~~~
MarcScott
Really?

Most - greatest in amount or degree i.e. greater than 50%

Professional - engaged in a specified activity as one's main paid occupation
rather than as an amateur.

Were you being facetious, or do you honestly believe that most people in the
world receive shares as compensation in their full time jobs?

Neither I, nor anyone I know, has ever received shares as part of an
employment contract.

~~~
chrisseaton
That's not what 'professional' means in this context, and I'm sure you know
that.

[https://en.wiktionary.org/wiki/professional_class](https://en.wiktionary.org/wiki/professional_class)

Most public-sector jobs for university educated people include shares of some
form or another for employees. Some times it's a very large proportion of the
compensation, or even essentially all of it, for some management.

~~~
MarcScott
But the Labour party aren't using this definition. They are talking about
_all_ employees, regardless of education, training or position.

Forgive me if I am misreading your post, but it appear you're saying that a
minority elites that are employed by a company already receive shares, so this
is already happening.

Under this plan, all employees receive a stake in the company, which is more
in line with what the original article was suggesting.

~~~
chrisseaton
> But the Labour party aren't using this definition.

...err well they aren't using the word at all so it's a bit odd to say it's
not the definition they're using.

> Forgive me if I am misreading your post

My point was that it wasn't some new radical idea - many people (not really
elites - random programmers at tech companies, or marketers at agencies, or
whatever aren't 'elites' by any stretch) are already getting this and it works
fine without government intervention.

I would guess that at least 10% of Google, for example, is already owned by
the employees? I may be wrong.

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Excel_Wizard
I think that the American Corporation is not in crisis, and is doing a better
job at performing its primary function of benefitting shareholders better than
ever.

I think, on the other hand, that public benefit corporations and other
governance structures are in crisis, because it is evident that they are
getting outplayed everywhere you look.

EDIT: Non-profits have been doing well though. It seems easier to go "all in"
on a charitable cause, or "all in" on a greedy cause, but combining the two
into an amalgamated pro-social gung-ho business (a la public benefit
corporations) is not easy to do.

~~~
GcVmvNhBsU
The thesis of this article is based around the idea that the primary function
of a corporation is not to create wealth for shareholders, but to involve more
stakeholders. The crisis is therefore not in profitability of a corporation,
which is still rather high; the crisis is in the effects of shareholder
primacy on the environment, on labor, and on managers. Which is to say,
unemployment is low but so are wages, inequality is high and increasing, and
we’re on the verge of a mass extinction event caused by human activity - all
this to maximize shareholder returns.

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hogFeast
Oh boy, try looking outside America. The US is still the shining example of
how to do things. Most of the world, even in Europe, are decades behind.

~~~
swiley
Ah yes, Amtrack is an amazing experience compared to the European passenger
rail network.

US housing also extremely efficient for filtering unwanted people out of
populated areas. Europeans could stand to learn a thing or two from that
(although I've heard London is doing a good job of emulating us.)

~~~
hogFeast
Ah, so you have actually have places to live in the US?

In the UK, there are no new houses at all in most cities and developers aren't
allowed to build new ones because of planning regulation (designed by people
who already have houses in that area). Also, remember that the UK is a small
island with a fairly large amount of people on it (and remember that
population density numbers are skewed by Scotland which is the same size as
England but has 7% of the population)...that kind of thing isn't obvious when
you live somewhere with infinite land.

Pointing to one or two things and saying: "Oh this is so terrible, we need to
knock it all down" is not a smart approach. Most European countries have
experimented with this (the UK went bankrupt doing this), it isn't a good idea
(particularly when you have a system that is already the most successful).

~~~
eli_gottlieb
> Ah, so you have actually have places to live in the US?

Only outside the East Coast and California metro areas.

~~~
snambi
USA has a lot of places. However, everyone wants to live in CA. That doesn't
mean other areas are bad. They are very good.

~~~
dsfyu404ed
> everyone wants to live in CA

Except for the people who actually live in CA. They all want to live in
Oregon, Colorado or Texas.

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joeyrideout
The ideology of generating shareholder profit "has caused immeasurable harm"?
Really? The author is casting aside decades of economic growth, peace, and
innovation.

> New policies could ensure that all the stakeholders who collectively
> generate a corporation’s prosperity then benefit from its wealth.

I don't agree with this slight-of-hand. Employees are stakeholders, sure; they
will lose their job if a company goes under, and may not get a promotion if
growth at the company stops. But they are NOT owners of the company in equity
terms.

~~~
SolaceQuantum
_" The author is casting aside decades of economic growth, peace, and
innovation."_

What about things like healthcare costs, lifespan estimates, mass shootings,
addiction rates, cost of housecare, and economic movement?

EDIT: Wait, decades? Are you sure? Wasn't the 2008 recession just over a
decade ago?

~~~
mieseratte
> What about things like healthcare costs, lifespan estimates, mass shootings,
> addiction rates, cost of housecare, and economic movement?

What do any of these things have to do with corporations?

It sounds like your gripe is with something else.

~~~
president
It has a lot to do with corporations given that corporations actively lobby
for policies that have adverse affects on the general public, collude with
each other to fix prices/wages, and monopolize industries to push out
competition, among other things. All of this due to them carrying out their
"fiduciary responsibilities".

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bitL
The real crisis is lack of high quality shareholders. Basing businesses on
stakeholders rarely works as groupthink sets in quickly; the current
shareholders are however mostly either persons that inherited wealth with no
real connection to business itself or pension funds that are unable to
guarantee contractual monthly retirement benefits, pushing for short-term
stock profits.

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markus_zhang
It is the American people that are in crisis, not the corporation. The
corporation is doing pretty fine, it's just the profit is not distributed in
the best of the interests of the smaller share holders (ordinary people).

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dapf
This looks like direct quotation out of the pages of Atlas Shrugged.

~~~
eduren
Why do you say that? the headline might have been hyperbolic, but the contents
of the article don't seem anywhere near Ayn Rand.

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DATACOMMANDER
“Including workers in ownership and governance is necessary to lessen the hold
on corporate wealth by affluent white families.”

Why should this be a goal? Is there something wrong with affluent people, or
white people, or affluent white people?

~~~
germinalphrase
Extreme wealth inequality has historically led to social instability, so
there’s that.

~~~
cat199
none of this speaks to the 'problem' as it relates to race manifested in
'white ownership'

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gerbilly
[https://imgur.com/gallery/3Cu7f2T](https://imgur.com/gallery/3Cu7f2T)

~~~
bantunes
Thank you for this.

