Last month, US Democratic Senator Elizabeth Warren proposed a federal bill, the Accountable Capitalism Act. This piece of legislation aims to reduce income inequality by shifting the power of companies of over a billion dollars in annual revenue less from the hands of the executives and more into the hands of shareholders. If this bill passes, trillions of dollars would shift from the top 10% income earners into those in the US’ middle and lower economic class.
Companies meeting the above criteria would be required to draft a federal corporate charter, mandating companies to consider the interests of all stakeholders as opposed to just consider how to increase revenue streams. This is a step towards decreed corporate social responsibility or corporate sustainability as communities and the environment must be taken into consideration when evaluating the interests of stakeholders.
The Accountable Capitalism Act also hands over a large portion of the company’s decision-making process to the workers by allowing employees to elect at least 40% of the board directors. Recent polls have indicated that this move has wide support from the general voting population of the US, with a majority of people in favour of more democratic representation on corporate boards.
This legislation would additionally require any political spending to be approved by 75% of shareholders and directors.
Another point of the bill is the limiting of the sale of shares received by corporate executives as payment. The bill would require that these shares are held by the receiver for at least five years after receipt and at least three years after buyback.
The Accountable Capitalism Act is not a step away from capitalism; it is a step away from capitalism by dictatorship and a step towards democratic capitalism. There will, no doubt, be teething issues should the bill become legislation as any major shift in policy generates. However, in order to achieve an economically, socially and environmentally sustainable planet by 2030, we must start to make major changes in how we do business. With the US federal government in trillions of dollars of debt, the Accountable Capitalism Act is a way to address major social inequality without expensive social welfare programs.
With the correct education and training of executives, shareholders, stakeholders and employees, this bill will offer hope for a large number of Americans and return corporate ideals to that of what was promised in the American Dream.