By Marjorie Kelly
Reviewed by Bob Kenny
Marjorie Kelly, co-founder and publisher
of Business Ethics magazine, has written a provocative book.
It is direct, simple, and possibly brilliant. In this clearly
written work, Kelly articulates an argument for economic
democracy alongside political democracy. Hoping to ground
important corporation reform in the "larger project
of democracy," Kelly suggests that major public corporations
have evolved into something more massive and more powerful
than our democratic forebears dreamed possible. (As Kelly
points out, the word corporation itself appears nowhere
in the Constitution.)
The Divine Right of Capital (Berrett-Koehler,
2001) artfully examines some of the possible ills underlying
current economic and business woes. The main culprit, Kelly
says, is shareholder primacy, the corporate drive to make
profits for shareholders, no matter the cost. This, she
argues, is an irrational remnant from earlier times, when
aristocracies reigned. Although America has created a political
democracy, we have not yet created economic democracy. Our
forbears rejected the divine right of kings as the natural
order; in much the same way, we need to reject the divine
right of capital as the natural order.
The author proposes that we change the basis
of capitalism, not abolish it. Until the American Revolution,
government largely served the interests of monarchs. The
Revolution did not abolish government, but it did significantly
alter the basis of sovereignty on which government rested.
The powerful idea in this book is that we consider doing
the same with the corporation and create "a new democratic
vision of capitalism, not as a system for capital, but a
system of capital," where all people are allowed to
accumulate capital according to their productivity, and
capital is not the only thing that is served by the capitalistic
system. Kelly argues for completing the democracy that our
country's founders began—by building democratic
principles into not only our political institutions, but
our economic institutions as well.
The author envisions a rethinking of our economic
system, based on democratic principles, not on the principle
of maximum returns to shareholders. The intriguing aspect
of her approach is that it would give shareholders, employees,
management, and society a new and different moral lens through
which to view decisions and dividends.