Citizen Capitalism by Lynn A. Stout

Author:Lynn A. Stout
Language: eng
Format: epub
Publisher: Berrett-Koehler Publishers
Published: 2019-03-05T16:00:00+00:00

Belief and Investment in the Future

The revolutionaries who founded the United States were an optimistic lot. It takes optimism to think you can break free from a world power and create a new nation. That capacity to hope has persisted for centuries. Alexis de Tocqueville observed in the nineteenth century that Americans “have all a lively faith in the perfectibility of man … They all consider society as a body in a state of improvement.”17 It survived well into the twentieth century, as reflected in Americans’ embrace of the pursuit of happiness and the American Dream.

But Americans’ belief in a better future is wavering. A recent survey by the Pew Research Center found that nearly two-thirds of respondents believed today’s children would grow up to be worse off than their parents.18 This is a shocking loss of faith in the future.

To restore citizens’ hope for the future, we need to restore their belief in progress: ongoing improvement in the circumstances of their lives. This means not only access to a wider variety of material goods, but also greater comfort, more leisure, better health, more social connection, and more opportunities for new experiences. Corporations can play, and indeed historically have played, a key role in that sort of progress.

Today, anyone who is willing to pay a small fee can incorporate. This is why, although there are millions of corporations in the United States, many of them have only one or two shareholders and no significant operations. However, if we look at the giant organizations we typically think of as “corporations”—the Amazons, Exxons, Googles, Aetnas, Boeings, and General Electrics—it becomes apparent these organizations specialize in pursuing long-term, large-scale projects. This has been true throughout corporate history. Prior to the fourteenth century, corporations founded universities and built cathedrals. In the seventeenth and eighteenth centuries, companies like the Dutch East India Company and the Hudson’s Bay Company opened whole continents for trade. In the eighteenth and nineteenth centuries, corporations built railroads and developed the steel and oil industries. In the twentieth century, corporations built the electrical grid, mass-produced automobiles, and developed the internet. Government supported many of these initiatives, but that does not detract from the critical role corporations played in implementing them. Much of what we think of as progress can be credited to corporations.

Yet corporations’ key role in promoting progress by pursuing large-scale, long-term projects is threatened by the way the current system places control over many of our biggest firms in the hands of narrow, short-term interests. These interests relentlessly pressure boards to stop reinvesting and instead cut back on basic research and development in order to “maximize shareholder value.” By creating a powerful, diversified, and fundamentally long-term investor with no interest in the gyrations of market prices, and with great interest in how corporations contribute to the overall economy, Citizen Capitalism counters these forces. It would give corporate boards more breathing room to plan for the long term and to make the kinds of investments that lead to the breakthrough innovations of the sort economist Robert Gordon argues drive long-term economic growth.

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