In August, 2018, Elizabeth Warren introduced the Accountable Capitalism Act into Congress, a proposal that would significantly change corporate governance in the US. It would require large companies (>$1B revenue) to give employees 40% representation on the board of directors. Additionally, it would replace the current fiduciary responsibility to shareholders with a duty to create a general public benefit for all stakeholders including shareholders, employees, the community, the long term interest of the corporation itself and the environment. It is based on the idea that if corporations are to be treated as persons, they must be required to act as ethical members of society. It would also require that any political contributions by corporations be approved by 75% of shareholders and directors.
It will never work, right? Well, it has worked in Germany since the mid 20th century, where it is known as Rhineland capitalism. Most other European countries require labor representation on the board at a minimum. Naturally, it is opposed by the very rich, as it will inevitably make them somewhat less rich. I'm not an economist, so I am not sure what the overall impact would be. But I would be fine with reducing corporate profits if it meant reducing economic inequality and promoting social responsibility.
What do you think? Good idea? Bad idea? Good idea but politically impossible? I suspect the latter, but I do wonder why sensible measures that work in other successful countries never seem possible in the US.