The Lie of Shareholder Hegemony

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We Americans are facing an especially virulent, plutocratic version of this overbearing power. It’s called “shareholder hegemony.”

Attention, class! Here’s our word of the day: “hegemony.” The word describes a situation in which some force becomes the domineering power over a society. Think of a gang of schoolyard bullies. Like them, various kinds of hegemonies have arisen throughout history to rule local, national and even global “schoolyards,” shoving other interests aside and subordinating the whole community to their will.

We Americans are facing an especially virulent, plutocratic version of this overbearing power. It’s called “shareholder hegemony.”

It is rarely mentioned by the mass media, not taught in our schools, and politicians almost never bring it to public attention. It can’t be seen, for it’s not an incarnate hegemony, like an emperor, church, cartel or occupying army. Rather, it’s an ideological concept, nothing more than a figment of the corporate imagination. And yet, it has become the preeminent force shaping everything from economic and political inequality to global climate change and your civil rights.

Shareholder hegemony is a doctrine asserting that the first, foremost and only moral obligation of corporate executives is to maximize the profits of their shareholders. Absurd? Yes. What about customers, workers, communities, suppliers, the environment, the nation, the common good and all the other legitimate interests directly impacted by corporate decisions? “Not our problem,” the proponents say, “for our strict duty is to do whatever it takes to make as much money as we can for those who own our stock — everyone else be damned.”

This grotesquely shriveled ethical standard has been fabricated and foisted on us by a tiny group of insiders who comprise what amounts to a cult of Machiavellian corporatists. They number only a few thousand people, including CEOs, board members, in-house lawyers, Wall Street money managers, lobbyists, right-wing think tank ideologues and business school deans. Yet, collectively, these elites have become the formulators and promulgators of the corporate order that now dominates our nation of 329 million supposedly sovereign people.

The ascendancy of corporate supremacy in America is not happenstance. It has come over us incrementally by the deliberate design of moneyed interests. Their big breakthrough came in 1970, when their ideological mumbo-jumbo received a veneer of academic legitimacy from the University of Chicago’s reigning guru of laissez-faire economics, Milton Friedman. He embraced shareholders-above-all as an absolute truth: “Do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible?” he asked, before he answered unequivocally, “No, they do not.”

Surely Friedman snickered when he added that sly qualifier: “provided they stay within the law.” As we’ve all learned, corporations write the law, routinely dumping millions of dollars a year into lobbyists, lawyers, legislators and judges to ensure that the definition of what’s legal will stretch like a giant prophylactic over practically any corporate sin.

Indeed, in an amazing demonstration of the cult’s manipulative magic, by the mid-1990s it had elevated its shareholders-first postulation into such widespread public use that it was perceived as law: Enough professors, CEOs, lobbyists, reporters, et al. had repeated the phony notion of shareholder primacy so often and so emphatically that they managed to weasel it into America’s vast and vacuous trove of conventional wisdom.

In fact, there is no legal basis for ranking stock prices and corporate owners above any other interest. No national law requires it, nor does any state law. To the contrary, until the 1970s, when the corporatists started pushing their radical (and ridiculous) model of “shareholder capitalism,” a more-humble corporate culture preached and practiced “managerial capitalism,” to balance the drive for profits with the needs of various other constituencies.

“Shareholder” hegemony is actually a hegemony of executives, directors and big investors who are perverting the whole economic system to cause our society’s rivers of income and wealth to flow uphill into their coffers. Adding to the irony, the insiders who promote the fiction of shareholder primacy have simultaneously built walls, moats and barricades around their fiefdoms to keep shareholders at bay and prevent the putative “owners” of the corporation from having any substantive impact on how, and for whom, it is run.

The corporate cult has “fixed” our economic and governing systems in the same sense that veterinarians use the term: They have neutered the rightful power of the people themselves to be sovereign over (or at least to have a meaningful say in) the decisions that affect their lives.

This hegemony of corporate profiteers is crushing the life out of our democratic ideals. An ethos of “anything goes” now rules at nearly all major corporations, and those self-enriching princes of plutocracy are extending their unethical and hegemonic control over the rest of us. Greed has taken America’s true ethics prisoner, and moneyed elites now call the devil “partner.”

Jim Hightower
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