Preamble: --In a reading group, our consensus response was rather lukewarm; there was much to agree with, but we wCapitalism’s Absentee Ownership 101…
Preamble: --In a reading group, our consensus response was rather lukewarm; there was much to agree with, but we wanted the next steps. This seems to stem from uncertainty over the book’s target audience. …The book is short enough to be an intro, but the topic is inherently abstract; thus, some parts are rather clunky as contextual explanations are not provided. --Still, upon reviewing my notes, I may be the most positive in our group towards this book’s potential. The subject of capitalist ownership is foundational, so I’ll focus on (and supplement) the good.
The Good:
1) Ownership and Dispossession: --Ownership is relational, between: a) Owner: exclusive rights to property/assets/resources. This is the side which proclaims “freedom” and “liberty”. b) Non-owner: dispossession via, in capitalism's case, an ongoing history of Enclosures/colonization/privatization (backed by direct or threat of violence, usually from the capitalist State); unfreedoms; dependency on owners. …So much for “equality” and “fraternity”. --Laws dictate what can be owned/by who/what can be done with it/how this is enforced/how property can be exchanged. Laws stem from politics (see: “What is Politics?”), i.e. group decision-making based on bargaining power. This is not some vague and inevitable “human nature”, but an ongoing struggle with contingencies esp. given capitalism’s volatilities (A People's History of the World: From the Stone Age to the New Millennium).
2) Ownership vs. Management: --A key contradiction of capitalism identified by Marx and shared by Keynes is the growing divergence between the following roles: a) Ownership: shareholders trading in passive property claims (company shares) for returns via dividends/capital gains, thus impersonal/absentee/rentier (for a distinction between “rent” vs. “profit”, see: Technofeudalism: What Killed Capitalism). b) Management (“control”): managers directing the active property of the corporation’s assets, compensated by wage income.
--Historical context: i) The “capitalist” started as a single owner-manager, occupying both roles. Note: the book only provides a one-liner on this; there is so much to unpack here, including the “transition” debates on feudalism-to-capitalism (ex. between Orthodox Marxists vs. World-Systems Analysis: An Introduction). ii) The modern corporation accelerated the separation of the roles. Note: the book does not unpack connections with colonial joint-stock (also limited liability) companies (ex. East India Company, 1600-1874) nor the context of Marx’s analysis. iii) Next, the book skips ahead to the post-WWII Bretton Woods period, the “Golden Age of Capitalism” (which I would describe as the “Golden Age of watered-down Socialist policies after War-time Planning”). …This brief aberration in capitalism also saw global finance restricted (the Great Crash/Depression still fresh in the minds of New Dealer reformists) and shareholders dispersed, with managers in charge (“managerial capitalism”). The corporation was driven by reinvestment of internal profits, thus sheltered from stock market financial pressures. iv) This brief aberration succumbed to contradictions on numerous levels (some I’ve added) by the late 1960s, from the geopolitics of US’s genocidal military spending losing US’s gold reserves (Super Imperialism: The Origin and Fundamentals of U.S. World Dominance) to the threat of decolonization upending capitalism’s global prices (The Darker Nations: A People's History of the Third World) to other profit-squeezing pressures (A Brief History of Neoliberalism). …This all led to the unshackling of US Finance (Wall Street; The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy). v) On the ideological side, pro-shareholder rhetoric was a backlash against the threat of activist managers taking advantage of diffused passive shareholders: “agency theory” tried to frame shareholders back into control (“shareholder primacy”) dictating the goal of the corporation (“shareholder value maximization”). vi) Behind the rhetoric, this was about gaining power for absentee owners (“rentier”; “passive income”; think of all the glossy self-help business books today, like The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich). Profits were still mostly made by extracting surplus value from production (Marx’s Capital: A Critique of Political Economy, Volume 1), but now more was distributed to shareholders (dividends/capital gains) rather than to workers/managers (wages) or back to the corporation (reinvestment). …Note: “owners” and “managers” here describe roles rather than individuals. An individual can still play both roles (in differing contexts); indeed, top managers (given their own personal investments) often supported this pro-shareholder shift. vii) This meant the corporation’s performance suffered, where equity investment (new share capital) dwindled compared to new bank loans/corporate bonds (capital gains speculation). “Shareholder activism” meant short-term pillaging of corporations (“corporate raiding”; Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy). viii) Clearly, “shareholder activism” actually meant getting others to do the activism (work) on behalf of shareholders (passive income). Thus, the age of inequality saw the rich relying on “passive investing” via indices (portfolios pooling many companies representing entire markets), leading to the rise of “Asset Manager Capitalism” and its big-3 asset management firms (the intermediaries who control the funds): BlackRock/Vanguard/State Street. ix) Keynes:
Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes a bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.
…Traditional bank lending (longer-term, profiting on the interest spread) gave way to securitization (turn the lending into “financial products” to immediately sell off): Why Can't You Afford a Home?…Thus, as COVID-19 devastated a fragile real economy, capitalist stock markets boomed as central banks refloated the “whirlpool of speculation”.
3) Ownership vs. Socialization of Production: --Managers are only the tip of the contradiction iceberg, since the actual work is being done within the increasingly-socialized production of the corporation by the workers (i.e. corporations being islands of planned economies: The People’s Republic of Walmart: How the World’s Biggest Corporations are Laying the Foundation for Socialism). --Thus, the book briefly considers the historical context of the corporation, from its colonial public/private ventures to US corporate law granting the corporation legal personhood some 130 years ago (The Corporation: The Pathological Pursuit of Profit and Power). Corporations were granted free speech (lobbying bribing politicians) via the Citizens United case, etc. Limited liability protected shareholders during bankruptcy, leaving the rest of the costs to the actual stakeholders (workers and local community). --To re-purpose the corporation: i) Purpose: passive income for shareholders vs. social needs for stakeholders ii) Membership: financial intermediaries vs. participatory stakeholders (via modified corporate share/new purposeful ownership). iii) Governance: capital markets/institutional investors/executives vs. stakeholders (labour/socioenvironmental community). iv) Capital: laws that flood shareholders with credit while creating scarcity for alternatives. This also relates to Global North states having public debts owed to themselves (ex. via their own central banks), whereas Global South states are forced to borrow on global markets. Foreign debts can be owed to other states (bilateral) or to private investors, with the big-3 asset management firms buying them up. …The book focuses on the state power of central banks esp. during crises to re-negotiate controlling stakes in corporations rather than merely bailout shareholders; alternatives: public utility credit/public banking; public investment credit guidance; restrict demand for absentee ownership. v) Networks: siloed artificial scarcity of markets vs. socially-guided markets/non-market commons. …I find much clearer analyses of re-purposing corporations in Another Now: Dispatches from an Alternative Present. --Expanding to the entire society, the foundations: i) Democratic ownership: shared inheritance/community wealth/participatory stakeholders ii) Social planning: Commons/stewardship/universal basic services (de-commodification) iii) Public investment: under modern capitalism, investment is dominated by violence (military/prison industrial complex) to preserve artificial scarcity rather than unprofitable social needs; even automation is stunted when there is cheap labour. And automation from toil is no salvation under capitalism since workers do not own the machines, so will be greeted with structural unemployment amidst artificial scarcity on access to needs.
...see comments below for the rest of the review ("The Missing")......more