The Divine Right of Capital: Dethroning the Corporate Aristocracy

I highly recommend this book. Personally I have stored my older books by Mises, Hayek, Friedman, etc...away in my basement. Although still on the shelf, even Adam Smith and Ricardo are a bit outdated. Others may still believe in their theories, but I do not. I am looking for someone who can put forth a plan for economic reform. Ideas that again value work and economic stability from which strong families and engaged citizens can emerge. The author does this. Personally I have grown weary of the right wing, free market utopian dogma of the day. Besides being old and tired, it is largely a sham. As the author points out the defenders of the status quo would have us believe the current economic system is natural law, when in fact it is subject to change and reform. Beyond the rhetoric, the truth is in your pay check. For many Americans each day is filled with hard work and economic insecurity. It is also a matter of liberty. If all one knows is work, sleep, and worry, you can know nothing of freedom. In particular the author's suggestion that beyond the IPO, subsequent stock holders are little more than anonymous economic parasites is very intriguing. Along with "Confessions of an Economic Hit Man" and the Alexander Hamilton bio, I found it to be one of the best non-fiction books I've read this year.

As much information as I absorb about our state of government, there are still some very broad assumptions which pass under my radar. This book shines a brilliant light on issues that are critically important for ANYONE who wishes to consider themselves 'informed'. The most basic mythology exposed: that those who speculate have superior & perpetual rights over those who earn by labor. The bias in our mass media & legal institutions is so outrageous that at first it's difficult to accept just how deeply we are being bluffed. I am now on my second reading. If you only read one nonfiction book this year (instead of the Wall Street fiction & PR positioned as fact) do yourself a huge favor & buy this book.

For anyone who's ever felt a disconnect between what they're hearing about the economy and what they're experiencing personally, Marjorie Kelly's book is very enlightening. She challenges some of the fundamental assumptions we hold about the stock market's role in the overall economy. Particularly in the context of current debates about corporate responsibility legislation and the privatization of Social Security, this book is very important. "The Divine Right of Capital" is a must-read for social justice activists and market conservatives alike as we all try to figure out what to do with this broken system in post-Enron America. Love them or hate them, the ideas Kelly offers up are innovative and groundbreaking. Note: I've talked to a couple of more radical/anarchist/extreme whatever types who found this a little on the tame side because it's so darn grounded in reality. If you're really about tearing down the whole system (not my approach, but best of luck), there might be more satisfying extremist rants out there. For everyone else, read this now!

The central aim of "The Divine Right of Capital" is show that the structure and legal basis of the modern American corporation bears a great deal of resemblance to feudal estates of the Middle Ages. However, this situation is at odds with an era that holds democracy to be sacred. Large corporations that draw upon the ideas of an era of aristocratic privilege are contrasted with corporations organized democratically. A secondary and less successful interest of the book is to show paths that have or could be taken to bring about such a change.The author outlines those characteristics of modern corporations that can be considered aristocratic. The aristocratic corporation adopts the legal pretense of being a non-public, private entity. Based on private property rights, a distant and ever-changing group of stockholders have the liberty and voting rights to choose the CEO, while the core constituent body of the corporation and the actual wealth producers, the employees, have no legal voice. Financial gains for the stockholders by virtue of their "ownership" position, irrespective of any real corporate functionality, are to be maximized while costs, which employees represent, are minimized. It is this "wealth privilege" that is truly reminiscent of the status of the olden feudal lord.By contrast democratically organized corporations would be developed and viewed much differently. First, it would be acknowledged that corporations are semi-public entities with obligations for the public good and subject to control by both the community and employees. A body of distant, amorphous "owners" would not be able to disenfranchise a stable, human community of workers, that is, the employees. The aims of the corporation would reflect the primacy of employees. Payouts to stockholders would be viewed as costs to be contained with the rewards of productivity improvements accruing to employees. Historically, however, the author notes that in the early republic corporations were chartered by state governments for fixed terms to accomplish specific functions and were subject to some government oversight with the possibility of charter revocation. But a series of court decisions established the "bizarre" notion that corporations are private entities with full rights as persons. In that construct, employees are subsumed within the corporation with only a subservient role to perform. Turning to more recent attempts at ameliorating the primacy of shareholders, the author notes that some states have enacted legislation that obligates corporations to act in the best interests of other stakeholders including employees, customers, and the community. But much of that legislation is relatively weak and untested. In addition, voluntary corporate initiatives such as codes of conduct or enlightened management seem to be mostly reactionary with little staying power. At this point in our economic and political history, any change in the structure of corporations would be a most diff

The Divine Right of Capital expands on a theme that many Leftist writers allude to but rarely explore in depth: the correlation between the profit motive and the co-optation of our democracy by private corporate interests. Inspired by the work of Thomas Paine -- who in an earlier era helped build support for the American Revolution by communicating to ordinary people in clear, uncluttered prose -- Marjorie Kelly makes her case for the democratization of capital in an accessible manner, making this a highly readable book. The work challenges our basic assumptions. Why are balance sheets constructed to highlight the rate of return from a shareholder perspective only? The author points out that accounting practices could easily be changed to create a more balanced view of the company's value to society. It could measure things such as the value of its employees, the amount of financial support corporations may have siphoned off the public trust, the depletion of natural capital, etc.Kelly explains that such exercises are rarely taken because shareholders make infinite demands on capital, in much the way that Monarchs declared perpetual domain over land and people in an earlier time. The author refers to writings by Jefferson and other revolutionaries to support her case that the colonists were concerned about limiting the power of corporations even while they were struggling to overthrow the King: corporate charters were usually awarded during this era for limited time periods and were often revoked when companies misbehaved.Regrettably, corporations later used their power to petition the courts and eventually claimed status as "persons", leading to numerous abuses of power (such as the relatively recent argument that corporate campaign contributions are equivalent to free speech and are therefore protected); these abuses unfairly skew the democratic process in favor of big money. This is just one of many reasons why Kelly believes that citizens must reclaim their rights and cast off the corporate aristocracy. Could it be that in the wake of the Enron scandal -- which so compellingly shows how deeply corporate money and political power are connected -- the people will demand the kind of change that Kelly advocates? If so, they would do well to consider some of the ideas in this outstanding book.