There’s No Cabal of Elites Destroying Our Lives and Our Democracy: Only Zombie Corporations
One of the least discussed aspects of capitalism is that there is no one running the joint. Most people imagine CEOs with near-infinite power, the buck stopping with them. Even though CEOs today have far more control than they have historically ever had (Monks and Minnow, 2011), they are still ultimately beholden to their shareholders. What do their shareholders want? Like zombies only want brains, shareholders only want cash. The vast majority of stocks are held anonymously, which is to say, as part of a mutual fund or balanced portfolio or indexed fund. With very, very few exceptions (mostly institutional investors and investment bankers), no one knows what companies are in their investment portfolios, nor do most people care. They just want to see a significant positive number at the end of the year.
To the Republican free-market fundamentalists that have been carefully nurtured by well-funded and well-organized think-tanks (e.g., Cato Institute, Heritage Foundation, Olin Foundation (Mayer & Potter)), there is a magical belief in the power of markets. We’ll discuss the philosophical and economic background of the free market fundamentalism another time. Still, a close look at their views suggests that if we do nothing but what we want to do, and let everyone act in her or his self-interest, voila! The greatest good for the greatest number. Given the economic disasters that have visited us since the dawn of the industrial revolution, they must believe one of two things:
1) That God is the invisible hand, and therefore anything that happens as a result of that system must be just, by definition. Given the explicit Calvinist overtones of today’s Republican party, this is actually consistent; The losers at the game of capitalism are just living out God’s plan for them (as are the winners).
2) Economics is the only social science where a complex set of problems is solved by a single principle (they hold this in common with Marxists).
As an ex-Libertarian myself, I know the lengths to which free-market fundamentalists will go to protect their ideology from obvious examples of market failures. Their favorite retort, when faced with the Panic of 1873 or the Great Depression, is “but laissez-faire capitalism has never really been tried before! It’s the regulations that caused the market failures!” If you consider the full spectrum of income redistribution to the rich since 1980, this is a hard argument to make. Still, you will find young, clean-cut students claiming that if only FDR had left the market alone, we’d be living in a capitalist utopia.
Which, in a sense, we are. Due to the combination of decreased power in boardrooms, anonymous investors, regulatory and legislative capture, we live in a world where CEOs enrich themselves and drive decisions toward the bottom line alone. They are acting exactly the way the system incentivizes them to. The instability we are currently facing both individually and as firms is built into the system. Corporations are disincentivized from carrying rainy day funds; shareholders will insist that the money be invested in the business or returned to the shareholders.
So when jobs were taken from the middle class and shipped off to become part of “labor arbitrage,” that CEO was maximizing the only thing her shareholders cared about: cash flow. When the big box company comes into your town and forces all the mom and pop stores out of business and offers you $13/hour and no health insurance, the CEO was only doing what his shareholders expected: cash flow growth. And when, in cahoots with the most regulatorily captured administration in history, the oil company drills off the coast and spoils the ocean and kills the fish and destroys the ecosystem, everyone was acting the way the system incentivizes them to. At the center of capitalism is a zombie that forces those in it to bring more brains to feast on: cash flow.
Citizens United has made the problem exponentially worse. Now, the zombies have the right to lobby the government and spend unlimited money on pro-zombie candidates. The Trump administration, among its many crimes, is the pro-zombie administration, cutting zombie taxes and rolling back regulations on the zombies.
There is no cabal of elites stealing people’s future on purpose. Oh, there is an economic elite, and they are taking away the future of the middle class, but they are acting as the market insists they must. There’s just no cabal — just a bunch of individual zombie corporations. The only way to stop the elites is to re-imagine how we organize our economic institutions. We need to enshrine human values in the market. The most enlightened, best-intentioned CEO is still just a cog in the zombie cash-flow generating machine that all C corporations are. When push comes to shove, the zombies are going to get what the zombies want. If we want to stop them, we need to look at the “B” corporation movement and make corporations (that we’ve given most of the rights of humans) less like zombies and more like humans.
Mayer, J., & Potter, K. (2016). Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right. New York: Doubleday.
Monks, R. A. G., & Minnow, N. (2011). Corporate Governance. Chichester, UK: Wiley.