Jeremy Lent: We need to rein in the destructive power of corporations and billionaires before it’s too late. These five ideas would do that, while leaving global capitalism intact. Ultimately, only a complete transformation of our economic system will save our future, but these proposals could set changes in motion that might eventually take us there.
Transnational corporations have become the dominant force directing our world. Humanity is accelerating toward a precipice of overconsumption, and the large transnationals are the primary agents driving us there. We’re rapidly losing the earth’s forests, animals, insects, fish, even the topsoil we require to grow our crops. The earth is becoming denuded of its bounty as every living system is ransacked for resources—not to mention the looming emergency of climate breakdown. As a result, twenty thousand scientists have recently issued a public warning to humanity, while prominent academics consider the collapse of civilization this century to be a serious threat.
Transnational corporations are driving humanity to a precipice of overconsumption
Changes in our personal consumption patterns are important, but are
ultimately inconsequential compared with the impact of the
transnationals that have come to dominate our global economic and
political system. Of the world’s hundred largest economies, sixty-nine are now corporations. Political parties in many of our so-called democracies are funded in large part by billionaires, while government cabinet positions are staffed by corporate executives. International bodies setting global policy are infiltrated by corporate agents
so successful at entrenching corporate power that even those
governments that still prioritize their people’s needs can no longer
make autonomous decisions without risking crippling lawsuits
from the transnationals whose interests they threaten. Meanwhile,
countries and cities compete with each other to beg their corporate
overlords for investment dollars, even it means undermining public services and legal protections for their own populations.
Environmental groups, recognizing where ultimate power resides, try
to pressure corporations to improve practices through the threat of
public shaming, with some appreciable results. However, these attempts are necessarily constrained by the very structure of big corporations, which exist to enrich their shareholders
regardless of the consequences. The common goal of corporations around
the world is to monetize human activity and what’s left of nature’s
abundance as rapidly and efficiently as possible. The overriding purpose
of the world’s powerful institutional force is thus directly at odds
with a flourishing earth or a viable future for humanity.
Having spent the first part of my career in the heart of the
capitalist system, consulting to major international banks and
corporations, I developed a sense of the underlying forces that direct
the centers of financial power. These ideas are my distillation of what I
believe could be effective levers for humanity to take back some
control from the increasing hegemony of corporations and billionaires.
If we are to avoid disaster, our global economic system with its
gaping inequities and deranged consumption will eventually need to
dismantled and replaced by one based on life-affirming principles
rather than wealth maximization. These suggestions, even in aggregate,
wouldn’t do that. They represent mere tweaks in a system that ultimately
needs to be completely transformed. But like a modest trim tab that
helps redirect an ocean liner,
perhaps they could begin to curb the destructive force of
transnationals and redirect their enormous power toward a more
sustainable path.
1. Triple bottom line required for corporate charters
A fundamental reason for the rapacious behavior of transnational
corporations is their drive to maximize shareholder value above anything
else. While there is no explicit requirement for this in the standard corporate charter, a century of case law has entrenched this principle into the behavior of large corporations to the point that is has become the de facto standard of operation. As a result, if corporations were people, they would be considered psychopaths, utterly devoid of any caring for the harm they cause in the pursuit of their goals.
It is easier, however, to change a corporation’s values than those of
a human psychopath. All you need to do is change the legal basis of
their charter. Instead of pursuing shareholder interests alone, they
could be re-chartered with the explicit purpose of achieving a triple
bottom line of social and environmental outcomes as well as
financial—sometimes known as the “triple Ps” of people, planet, and
profit.
This alternative corporate value system is already available through chartering as a benefit corporation or certifying as a B-Corp, and has been adopted by over 2,000 corporations in over fifty countries around the world—including several multibillion-dollar transnationals.
My proposal is that, instead of being a voluntary step taken by a
select few, this would be a requirement for all corporations above a
certain size.
Overnight, the intrinsic character of the corporation would be
transformed. Currently, CEOs and corporate boards are faced with
continual pressure to grow their earnings at all cost. If they chose to
make a humane decision, such as not to exploit a copper mine because of
the consequent pollution, they could expect to be sued by shareholders,
and possibly acquired by a more ruthless competitor. However, if they
were legally required to achieve a triple bottom line, they would weigh
up decisions in a more balanced way, as a rational person might. With
the board responsible for all three bottom lines, they would have to
consider the risk of being sued if they caused excessive pollution, or
if they were callous to the needs of the communities where their plants
were located.
Currently, large corporations boast of their corporate social responsibility
departments that are supposed to care about issues such as employment
practices of their suppliers, sustainability of their raw materials,
environmental impact of their packaging, gender balance and ethnic
diversity in the workplace, and investments in local communities.
Suddenly, they would have to stop paying mere lip service to these
issues and take them as seriously as marketing costs, revenue growth and
distribution channels—the things that CEOs actually worry about when
they go home at night.
2. Charter renewal required every five years
Changing the corporate charter requirement might not, however, be
enough by itself to halt the relentless pursuit of profits by large
transnationals. After all, executive pay packages consist of dollars
rather than goodwill, and those dollars are linked directly to the share
price, which is driven by shareholders’ expectation of financial
returns. If they could get away with it, they might continue their
rapacious practices, while trying harder to look like they’re meeting
the other two bottom lines.
That’s the reason for my second proposal, which is to require that
corporations, which currently enjoy what’s known legally as a “perpetual existence,”
get their charters renewed every five years. If they failed to meet
pre-established criteria on their two non-financial bottom lines, they
would not be permitted to continue in business. Currently, if a company
can’t meet its financial obligations, it’s forced into Chapter 11
bankruptcy proceedings and the value of its stock generally tanks to
zero. Under my proposal, executives would also have to consider the risk
of declaring “social bankruptcy” or “environmental bankruptcy” as they
made their business decisions.
As in currently regulated industries such as banking, the final step
of losing their charter would not have to be immediate. If a corporation
failed to meet its basic parameters, it could be given a warning, with a
time period set to fix things. However, the mere threat of this
happening would lead corporate executives to make sure they were well
above the criteria required to keep their charter.
Corporations are, of course, highly adept at using their financial
resources to influence regulatory bodies through bribes and other
mechanisms. To avoid this, panel members responsible to renew the
charter would be representatives of the communities and ecosystems
covered in the company’s scope of operations. Their task would be to
weigh up the findings of experienced independent auditors on the
company’s performance. To minimize corruption, the panel could be chosen
by a process of random selection called sortition, just a like a trial jury is chosen in our legal system.
3. Tax stock trades based on the length of the holding period
Powerful as they are, even corporations have their masters: their shareholders. But don’t think of the typical shareholder as a Warren Buffet type, sitting back in his leather armchair perusing his holdings. Instead, corporate stocks are subject to the frenetic activity of financial markets, where split-second computer algorithms govern much of the trading. Investment firms spend hundreds of millions of dollars enhancing their computing networks to shave as little as three milliseconds off the timing of their trades. The hyper liquidity of global markets means that investors are obsessed with short-term market trends, which leads corporate CEOs, forever anxious about their stock price, to focus their time horizon on the next quarterly earnings report. Financial valuations apply discount rates to future earnings, which means that an investment paying off thirty years in the future can be worth as little as five percent of its future payoff in the present. Under these conditions, why would any CEO care about the state of the planet—or even their company—thirty years from now?
The financial markets’ hyper liquidity drives the short-term orientation of corporate CEOs
During the 2016 US election campaign, Bernie Sanders proposed a Financial Transaction Tax to pay for free college tuition, setting the rate at 0.1% of the transaction. In Europe, discussions are under way
to apply a similar EU-wide tax. My proposal increases the tax rate by
orders of magnitude, and differentiates based on the length of the stock
holding. For example, the tax rate might look like this:
- 10% if the stock is held less than a day
- 5% if less than a year
- 3% if less than 10 years
- 1% if less than 20 years
- Zero if more than 20 years
The effects of this single step would be enormous. The financial
services industry would be transformed overnight. High frequency stock
trading and same-day traders would disappear. The short-term orientation
of the stock market would be replaced by carefully considered long-term
investment decisions. A typical mutual fund, which in the US currently
turns over its portfolio at the rate of 130% a year,
could no longer afford to do so, and would have to change its
investment decision-making based on sustainable returns. The tax could
be waived for individuals experiencing a life-changing event or for
simple hedging techniques where, for example, farmers need to lock in
the price of their produce at a future time.
The result would be a massive shift away from destructive extractive
industries and toward sustainable businesses. For example, the fossil
fuel industry is recognized to be vastly overvalued as a result of its “unburnable carbon”:
the amount of fossil fuels in the ground that can never be burned if
the world is to keep climate change below the 2° rise agreed at COP21 in
Paris. A recent study estimates the overvaluation as high as $4 trillion.
Investors, however, play a game of musical chairs, hoping they won’t be
the ones left holding the stranded assets. This proposed transaction
fee would incent them to dump fossil fuel investments immediately for
opportunities in renewable energy with longer-term payoffs.
4. Cap on billionaire’s assets over $5 billion
As corporations have taken increasing control of the global system, they have catapulted founding shareholders and their heirs to previously unimaginable pinnacles of wealth. The combined wealth of the world’s 2,754 billionaires is now $9.2 trillion, an amount that has doubled in the past six years, and increased tenfold since the beginning of this century. The magnitude of this wealth is difficult to conceive. The top six billionaires own as much as the lower half of the entire world’s population. Taken together, the world’s billionaires would represent the third largest economy in the world, behind only China and the United States, with wealth equivalent to the GDP of Germany and Japan combined.
These six men own as much wealth as half the world’s population
There is no legitimate rationale for this outrageous concentration of such wealth in a few individuals. The argument that the founders of Microsoft, Amazon, or Facebook deserve such excessive wealth is no more valid than the belief of the ancient Egyptians in the divinity of their Pharaoh, or the Medieval notion of the divine right of kings. Mark Zuckerberg, aged 33, currently owns over $70 billion. If someone had singlehandedly miniaturized the transistor, developed the logic for computer code, invented the PC, and come up with the internet, then maybe they’d deserve having close to that amount as a reward for the value they created. But all Zuckerberg did was figure out a way to connect people up in a network that became a bit more popular than other networks, and because of the internet’s scale effects, he was the lucky one who hit the jackpot. Zuckerberg merely took advantage of all the other infrastructure work that led to the internet, painstakingly pieced together by millions of people over decades, which has been the real value creator for the world.
In response to this excess, my proposal is to cap billionaires’
wealth at, say, $5 billion. It’s an arbitrary amount, still obscenely
high and presumably more than enough for those who argue that people
should receive ample financial rewards for success. Beyond a certain
level of wealth, however, what drives these people is power and
prestige. This could be tapped by requiring them to donate their excess
wealth to a trust over which they could retain some influence.
Such a trust, however, would need to have some strict criteria. While
the billionaire could influence the trust’s priorities, he would not
have control over its activities. The current Bill and Melinda Gates
Foundation, for example, while a step in the right direction, is under the total control
of the Gateses and Warren Buffet. The foundation set up with much
fanfare by Mark Zuckerberg is viewed by experts as little more than a fancy tax dodge.
Each trust would need to avoid interference in a country’s political
system and be dedicated to life-affirming activities, the scope of which
could be based, for example, on the principles of the Earth Charter, a framework for building a just, sustainable and peaceful global society endorsed by over 6,000 organizations.
The positive impact that these trillions of dollars could have on
human and natural welfare would be prodigious. Imagine a country the
size of Germany and Japan combined dedicated entirely to serving human
and natural flourishing. It would have the resources to end extreme poverty, increase regenerative agriculture to over a billion acres worldwide, educate hundreds of millions of girls through the Global South, disseminate up to a billion clean cookstoves, and much, much more.
The billionaires of the world, meanwhile, would continue to enjoy enormous wealth, and when they jet to Davos
to hobnob with other luminaries for the annual World Economic Forum,
they could finally have something worthwhile to boast about.
5. Declare a crime of ecocide at the International Criminal Court
Even with all these constraints, the powers of transnational
corporations would remain enormous, and there would still be times when,
through willful negligence or intentional bad faith, corporate action
causes massive environmental damage. A UN study, which remained unpublished,
found that the world’s largest companies had caused over $2 trillion of
environmental damage, which would cost a third of their overall profits
if they were forced to pay for it. Because of their extensive political
influence, even their most damaging activities go unpunished. This
leads to my final proposal: to declare a crime of ecocide at the International Criminal Court (ICC).
The ICC is an independent judicial body set up by international
treaty, the Rome Statute, in 2002 to prosecute war crimes, genocides,
and crimes against humanity. While it continues to face serious challenges
to its enforcement powers, it has had the effect of putting tyrants
everywhere on notice that they can no longer act with impunity. If
ecocide—the loss, destruction, or severe damage of an ecosystem—were
declared a crime by the ICC, this could have a similarly daunting effect
on those corporate tyrants who currently know they can get away with
devastating the world’s “sacrifice zones” where they are pillaging the
earth’s resources for profit.
There is a campaign, Eradicating Ecocide, already under way to make this happen. A model law has been drafted, and an Earth Protectors Trust Fund
has been set up to permit common people everywhere to become legal
Earth protectors. If a two-thirds majority of the Rome Statute
signatories were to approve this as an amendment, it would become
enforceable globally. Suddenly, corporate boards and CEOs everywhere
would realize they are no longer above the law.
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There is a strange paradox to consider about these proposals. One
the one hand, notice how limited they are in scope. Even if they were
all implemented overnight, the global system would not be overturned.
People would still go to work and get paid, food would still be on the
shelves of the grocery store, the same governments would still be in
power, and the internet would still work. The gaping structural
inequities of our current world order would continue unabated, and we’d
still be consuming far more than our planet can sustain. Ultimately, we
need a complete transformation of our global system if our civilization
is to survive intact through this century.
On the other hand, it doesn’t take a political genius to realize that
these ideas are so far from mainstream thinking that they have
virtually no chance to be adopted any time soon. They would be
considered too radical for even the most progressive mainstream
politician to endorse. What does this tell us about our current
political dialogue? To me, it suggests that our conversations are too
severely constrained by what we’re “allowed” to think in terms of how
our system works. We need to cast our gaze outside the norms that our
billionaire-controlled mainstream media permits us to consider.
Imagine a world where these ideas (or others like them) began to be
seriously entertained. How would they even be enforced? The only way
corporations could be brought to heel, or billionaires compelled to give
up their excess billions, would be a concerted effort led by the United
States in conjunction with the European Union, and joined by the
preponderance of other countries.
This, of course, could only happen if grassroots demand for these
ideas spread so powerfully that politicians had to take notice. This is
not such an unrealistic scenario, given the worldwide disavowal of the
dominant capitalist model: most Europeans have a higher opinion of socialism than capitalism, and even in the US, the overwhelming majority see big business as unethical and unfair.
Then, there is the potential “trim tab” effect of adopting these ideas. Even though these proposals alone wouldn’t fundamentally transform our system in the way that’s needed, they might set changes in motion that could eventually take us there. There may be other ideas more effective than these, and of course each proposal contains within it complications that would need to be worked out carefully. However, my hope is that these ideas invite a new mode of political dialogue, along with a recognition that even in the darkest times, realistic pathways exist toward a thriving future for humanity and the natural world.
The next Occupy movement will need clear demands that lead to specific deliverables
When the Occupy movement failed to achieve its initial promise, many
people pointed to its lack of specific demands as a reason for its
demise. If and when the next radical grassroots movement emerges, which may be sooner than you expect,
let’s make sure they have an array of ideas such as these in their
quiver to focus public opinion on actual political deliverables.
There are very few people who really want to see our civilization
collapse. If these proposals eventually did get implemented, perhaps
even the executives of the transnational corporations might sleep better
at night, knowing that they can become part of the solution rather than
a force of destruction.
Jeremy Lent is author of The Patterning Instinct: A Cultural History of Humanity’s Search for Meaning,
which investigates how different cultures have made sense of the
universe and how their underlying values have changed the course of
history. He is founder of the nonprofit Liology Institute, dedicated to fostering a sustainable worldview. For more information visit jeremylent.com.
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