Sen. Elizabeth Warren has a good chance to be the Democratic Party’s presidential candidate in 2020. (I would say it’s definitely not going to be Andrew “America Was Not That Great” Cuomo, but I thought a guy whose pastor screamed “God d-mn America” would never make it, either.) Warren would have all the warmth, charm, and heartland appeal of Hillary Clinton, but be farther to the left.
To kick off her campaign as the “progressive” standard-bearer for 2020, Warren has proposed the Accountable Capitalism Act. As legislation, it is certain to go nowhere. But it is meant as a statement of where she stands and the direction she wants to take her party. Here is what it would do.
Under the legislation, corporations with more than $1bn in annual revenue would be required to obtain a corporate charter from the federal government—and the document would mandate that companies not just consider the financial interests of shareholders. Instead, businesses would have to consider all major corporate stakeholders—which could include workers, customers, and the cities and towns where those corporations operate. Anyone who owns shares in the company could sue if they believed corporate directors were not meeting their obligations.
Employees at large corporations would be able to elect at least 40% of the board of directors. An estimated 3,500 public US companies and hundreds of other private companies would be covered by the mandates.
This is a “progressive” proposal, but its adherents keep emphasizing that it’s just a return to the past. Warren describes it as “a new bill to help return to the time when American companies and workers did well together,” while a group of academics in support of Warren declares that this will “realign our regime of incorporation with its original purposes.” In a way, they’re right. This is a return to the past, because it resurrects an essentially feudal approach to property rights.
Corporations were originally a grant of special privileges given by a monarch to reward his loyal supporters. They grew out of the old feudal system of prerogatives and privileges. At the center of that system was the feudal concept of property in which no one but the king owns anything free and clear. All property was held in “tenancy” from the crown, in exchange for services rendered back to the king.
That relationship was then propagated downward. The highest level of aristocrats held their land as tenants of the king, a lower level held their land as tenants of the lords, and so on. Various forms of European common law built up extensive rules about the obligations owed back and forth between the crown, the lords, and their vassals.
This is the context in which corporations were first conceived as just another form of privilege the crown offered to its supporters. In America, and to some extent in Britain and Europe, as the legal remnants of feudalism were being cleaned up, the basis for the law of corporations was changed from one of privileges to one of rights. A corporate charter wasn’t a special favor the sovereign granted in exchange for special services. It was a recognition of free-and-clear ownership of the corporation by its shareholders.
This is what regressive “progressives” have always hated, the concept of free-and-clear ownership, and they have been struggling all along to go back to a neo-feudal system in which all economic activity takes place only with the permission of the sovereign. They merely give it a gloss of democracy by claiming that the sovereign, this time, will be “the people.”
You can get a sense of this neo-feudal approach in the way that corporations, in this proposal, would be attached to the land like medieval serfs, unable to move or change without the permission of the cities and towns where they operate. While in theory this is a way of making corporations answer to “the people” in the same way that feudal barons answered to the king, notice that in practice this proposal gives power to bureaucrats and ambitious, self-promoting politicians.
The proposal would create a new Office of United States Corporations within the Department of Commerce, which would be responsible for granting the charters—and which could revoke a charter if a state attorney general requests it, and the office finds the firm has a history of egregious and repeated illegal conduct and has failed take action to correct it.
The state attorneys general are the new feudal barons imagined under this system, empowered to destroy any corporation that does not render them sufficient service. All it takes is a word to the crown, or in this case, the Commerce Department. The record of state attorneys general, especially the already elastic powers of the office of the New York attorney general, should give us an idea of the vast scope for corruption and abuse of power.
Before he became Client #9—the client, that is, of an illegal business he was supposed to be in charge of prosecuting—Eliot Spitzer was notorious for squeezing New York corporations to make “donations” to causes he chose. In effect, he used them as his personal slush fund, and you can bet this also spilled over into using them as an unwilling campaign fund.
That points us to the wider potential for abuse. Warren and the state attorneys general have a history of, for example, issuing subpoenas to corporations and threatening to prosecute them for fraud for supporting any person or organization skeptical of global warming. Unlimited feudal power over corporations turns out also to be an instrument of censorship.
If none of this fazes you, then consider that Warren is conspiring to give this power to Donald Trump. After all, she is introducing this bill now, during his term of office, and who do you think is ultimately in charge of the Commerce Department?
Trump has already threatened to use government power to punish corporations that move their operations overseas without his permission. Imagine what he could do if he had the power to revoke any corporation’s charter. Perhaps he would direct the Commerce Department to examine the charters of certain corporations he believes have been peddling “fake news.” But the left is so besotted with the lust for power that they cannot think ahead to the prospect that somebody they don’t like might use it.
The left used to like to masquerade as “liberals” while campaigning to curtail our liberty. Now they like to call themselves “progressives” while they try to reverse mankind’s progress from a system of arbitrary power to one of individual rights. Nothing could better sum up this regressive progressivism than the fact that they are now scheming to give Trump the powers of an absolute monarch.