Massachusetts Senator Elizabeth Warren is proposing a new bill -- the Accountable Capitalism Act -- in an effort to reshape capitalism, reign in big corporations, and give local communities and workers a greater say.
Warren introduced the bill in an article in The Wall Street Journal and said she was looking to reverse “a fundamental change in business practices” that have long made corporations focus on profits, rather than bettering wages for workers or local investments.
“The obsession with maximizing shareholder returns effectively means America’s biggest companies have dedicated themselves to making the rich even richer,” Warren wrote in the article.
Under the Accountable Capitalism Act, corporations that bring in over $1 billion in annual revenue would be required to get a charter from the federal government. The charter would come from a new office Warren wants to create -- the Office of United States Corporations within the Department of Commerce -- and would require companies consider interests outside of shareholders.
The new department would also be able to revoke charters based on requests from state attorneys general, or if the department finds that the company has a history of repeated illegal conduct and has failed to correct it.
Businesses would have to take the interests of customers, workers, and the towns and cities where they operate into consideration. Should shareholders feel that corporate directors aren’t meeting their obligations, they are permitted to sue.
Additionally, employees at these corporations would be able to elect 40 percent of the boards of directors. Based on Warren’s research, nearly 3,500 public companies -- and hundreds of other private companies -- would be covered under the legislation.
“Real wages have stagnated even as productivity has to continued to rise,” Warren wrote. “Workers aren’t getting what they’ve earned. Companies are also setting themselves up to fail.”
Under the legislation, 75 percent of directors and shareholders are required to approve any corporation’s political expenditures.
Public opinion has been mixed since Warren introduced the bill. While some see it as governmental control, others are endorsing Warren’s creative thinking.
“The last thing I want is Elizabeth Warren telling companies what they can or cannot do,” said Kevin Kelley, CEO of Benchmark Investments. “The private market will reward those that take care of their shareholders.”
Steve Forbes, chairman of Forbes Media, believes the bill will lead to “stagnation.”
“What she’s talking about is freezing the economy as it is, keeping things as they are,” Forbes said. “That’s just not going to work.”
However, a group of academics studying the history of corporations and economics see the positives in Warren’s proposed legislation.
“We believe legislation along these lines to be long overdue,” the group, led by Cornell law professor Robert Hockett, wrote. “While some of us would like to go even further than the Act does, we all agree that [the] legislation takes the critical first steps in realigning our regime of incorporation with its original purposes.”