Dear Friends,
It seems to me, the new class has tricked us, into exchanging the bourgeoisie for corporations. No matter how much people hated the owner of the factory town, and vilified him or her of it, even the most ardent complainer knew in their heart the boss had skin in the game. If the factory failed he failed, not only the workers would suffer, the owner would as well. Under the corporate structure however, the executives and board of directors are free to loot a firm, wield it as a political weapon or milk it dry, as well as the town it is in. Executives then just leap with their golden parachutes to another company. This is of course made easier since people serve on multiple boards of directors, making it an good old boys club, a Drones club if you will.
An executive is an employee of a firm, not the owner, they have little or no skin in the game. If they are perceived as having skin in the game it is because of good public relations. It is only in the interests of executives to make it appear as if the company is profitable. This brings in a plethora of means executives can make a zombie company appear profitable, all of which essentially defraud the shareholders. Most of these shady means are unavailable to a bourgeois business owner. Executives never lose, if the company fails, they move to another. The term golden parachute didn’t fall from the sky. It means executives that collude with the board to write themselves sweetheart deals in case of any “contingencies.”
The founder and owner of a company who keeps it private and runs it at his own risk, by definition, has skin in the game. He cannot write himself a sweetheart deal. She cannot have a golden parachute. The business owner is on the hook for expenses of, and liabilities for, any bankruptcy, where the executive gets a tidy wage to manage the bankruptcy. Because the bourgeoisie’s own hide went into the fire if their companies failed, so they didn’t do stupid things with them. They didn’t use them to force their political opinions on the world. (And some had some pretty strange political opinions). Walton never poked his customers in the eye by allowing men in the girls room, Ford never refused to sell his cars to republicans and Sealy couldn’t care less who sleeps on their mattresses, as long as their check is good.
Today, a founder of a company builds it to monopoly, or near, and sells it on an exchange. They retain controlling shares but sell probably most of the shares to the public. We see that often once Wall street takes over, they run a firm into the ground, then scavenge the carrion and leave. The founder sometimes then come back and return the firm to profitability, many times astoundingly so. This illustrates the fact that the corporation structure is in some way deficient. That deficiency is that executives and board members have little or no skin in the game if the business fails. Their goal is to maximize their cut of the profits. This is the same reason that the government of Venezuela cannot run an oil company, even when they stole it, lock stock and barrel, because they are unaccountable for it’s success or failure.
Nothing illustrates the point further than that corporate executives have a get out of jail free card. How many times a week does Wells Fargo get caught breaking the law? No one goes to jail. The shareholders are fleeced again though by a huge fine. Wells Fargo has been caught stealing money from their customers, in a myriad of ways, yet the people who made the decisions are not punished, they are rewarded. If a business owner did one single thing Wells Fargo has got away with, he or she would do time in prison, a cushy prison to be sure, but prison nonetheless. No matter how absurdly criminal the actions of an executive, they are not held to account, putting no limits on their actions, where a bourgeoisie owner would be held to the law itself and so their actions are limited by law.
What we have today, is a system put in place because those bourgeoisie are just so darned evil… that magnifies the bad parts of bourgeois capitalism and erases the good parts. Executives run a company like it is their property but lose nothing if it fails. If their machinations cause it to fail, oh well, they are on at least a dozen other boards. There is nothing then to stop a CEO from using someone else’s company to, effect an election by censoring opinions the executives don’t like, inflate their own wages buy borrowing money in the name of the company to buy back shares, create conditions that will lead to chaos that will create a demand for stability, stability that autocracy can provide. Why not? Because even if the firm fails the executives are cared for, while owners are on the hook… some trade eh?
Sincerely,
John Pepin
