The Divine Right of Capital | Marjorie Kelly

Summary of: The Divine Right of Capital: Dethroning the Corporate Aristocracy
By: Marjorie Kelly

Introduction

Discover how the corporate world has come to resemble the era of feudal aristocracy in Marjorie Kelly’s ‘The Divine Right of Capital: Dethroning the Corporate Aristocracy’. The book unravels how stockholders and the wealthy are exploiting societal structures and preserving their status through a flawed system. Learn how this economic aristocracy is built on principles that prioritize the needs of property owners while disregarding the workforce and the community. The author challenges these outdated concepts in order to advocate for a democratic vision of capitalism that promotes equal rights, public good, and corporate responsibility.

The Myth of Shareholder Capitalism

Today’s predominant business paradigm of maximizing returns to shareholders is not questioned or controversial, but it should be. This approach gives virtual sovereignty to the wealthy, creating a new divine right of capital. Despite the belief that stockholders fund major corporations, most of their investment dollars go to speculators who buy and sell to one another. The real productive investment comes from the entrepreneurs and initial venture investors who take the risk to build a business. This approach creates a wealth privilege bias that serves the few and disregards the many, reflecting a belief that employees are just expenses and not truly part of the firm. The result is a focus on short-term returns at the expense of long-term productivity and the well-being of employees and local communities.

Redefining Capitalism

Capitalism should be transformed into a new democratic version, where prosperity is based on productivity, sustainability, and community. Shareholder primacy leads to an unjust concentration of privilege and entitlement in a market economy. Maximizing stockholder returns contradicts the basic principles of a free market that recognizes, at its core, supply and demand, competition, self-interest, and wealth creation. Corporations are not private property and have become more powerful than the democracy’s governing institutions envisaged. Owners’ responsibility has shrunk, providing them with little function beyond extracting wealth. Knowledge, created by employees, provides firms with their competitive advantage; therefore, shareholder wealth allocates resources unfairly. Finally, natural resources are finite, and corporations can harm ecosystems. The concept of property privilege is obsolete, and maximizing stockholder returns has become inconsistent with the capitalist system’s fundamental principles. Thus, shareholder primacy, which favors a particular group, should be altered to ensure the principles of democracy, productivity, sustainability, and community guide capitalism.

Challenging the Divine Right of Corporations

This book summary discusses how the prevailing corporate culture, focused solely on maximizing shareholder profit, can be traced back to six principles promoting the needs of property owners. The author argues that this system perpetuates inequality while restricting liberty and harming both employees and the community. To promote economic democracy and greater equality, the author outlines six alternative principles and a new institutional framework rooted in Enlightenment ideals and economic justice. The resulting shift towards democratic governance will require a reimagining of property rights, citizenship in corporations, and the broader role of corporations in promoting the public good.

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