Corporate Reform

Fred Block has an interesting paper at Longview Institute called A Strategy for Corporate Reform. He recommends implementing the Ethical Corporation to replace the Me-first Corporation.

During the past twenty-five years we have seen the return and rise of laissez-faire Market Fundamentalism. The implementation of Market Fundamentalism has been through the creation of the Me-first Corporation. The Me-first Corporation is built upon the extravagant rewarding of executives so as to motivate them to achieve good financial results in a Market Fundamentalist economy. The failures of Market Fundamentalism and the Me-first Corporation become more apparent each day.

The modern corporation is led by executives who have grown accustomed to outsized rewards and those who hope one day to take their place as leaders. The executives of these corporations view their companies as portfolios of assets to be bought and sold to generate value that translates into higher executive rewards at the expense of all other considerations such as the welfare of workers in these companies. This leads to short term thinking and a me-first attitude that excludes consideration of long term growth and denies the inclusion of other stakeholders such as employees, customers, shareholders, and the general welfare of citizens.

Block is a proponent of the Moral Economy. The Moral Economy takes into consideration the economic rights of all citizens, the rewarding of labor, protection of the environment and consumers, etc. The Ethical Corporation is part of the implementation strategy for the Moral Economy. The Ethical Corporation would be created by new state charters for corporations whose features would include these provisions:

* Executive compensation: restrict and control executive compensation
* Corporate governance: Boards would represent all stakeholders
* Corporate free speech: Employees could campaign for Board membership
* Employee rights: fair labor practices and negotiation
* Environment policies: corporate green plans
* Public health: high standards
* Global practices: extending best practices to all global operations
* Disclosure: high standards of reporting
* Enforcement: state attorney and third party enforcers

Block admits that it will be difficult to create the Ethical Corporation as a replacement for the Me-first Corporation.

One of the interesting questions is whether progressive reform is possible for the economy or whether it will take a radical type revolution to reform the economy.

There is no longer any doubt in my mind that one or the other will take place given the nature and excesses of the Fundamentalist Market/Me-first corporation approach to the economy.