Wealth and Want
... because democracy alone is not enough to produce widely shared prosperity.
Home Essential Documents Themes All Documents Authors Glossary Links Contact Us


Divine Right of Capital

see Mason Gaffney's comment at the top of the page on property rights.

Peter Barnes: Capitalism 3.0 — Chapter 6: Trusteeship of Creation (pages 79-100)

The California drivers’ handbook states: “At an intersection, yield to the car which arrives first or to the car on your right if it reaches the intersection at the same time you do.” (I discovered this when my teenage son took his driving test.)

Why does the car on the right get priority over the car on the left? It’s unclear. Quite possibly the rule is entirely arbitrary. But someone has to have the right of way or cars will collide. The same is true for boats at sea, and for moving objects in any complex system.

So too in a market economy. When two property rights come to the same intersection, one has to trump the other. Either capital can fire labor, or labor can fire capital. Either my right to pollute trumps your right not to be polluted, or vice versa. As they say in Hollywood, someone must get top billing.

But who? Marjorie Kelly has written a brilliant book called The Divine Right of Capital. By divine she doesn’t mean God-given. She means that, under our current operating system, the rights of capital trump everything else. The rights of workers, communities, nature, and future generations — all play second fiddle to capital’s prerogative to maximize short-term gain. This hierarchy isn’t the doing of God or some inexorable law of nature. Rather, it’s a result of political choice.

The question of who gets the top right in any society is always an interesting one. Invariably, the top dogs in any era assert that there’s no alternative. Kings said it three hundred years ago; capital owners say it today. They hire priests and economists to add moral or pseudoscientific credence to their claims. The truth, though, is that societies choose their top right holders, and we can change our minds if we wish.

Kelly locates many places where capital’s supremacy is written into our codes. Corporate directors, for example, are bound by law to put shareholders’ financial gain first. If a raider offers a higher price for a publicly traded company than its current market value, directors have little choice but to sell, regardless of the consequences for workers, communities, or nature. Similarly, it’s the fiduciary duty of mutual funds, pension funds, and other institutional investors to seek the highest returns for their shareholders or beneficiaries. This duty is embodied, among other places, in the Employee Retirement Income Security Act of 1974. Although the language of the act sounds innocent enough — a pension fund manager, like any trustee, “shall discharge his duties . . . solely in the interest of the participants and beneficiaries” — it results, ironically, in the financing of many workers’ retirements by investing in companies that shift other workers’ jobs overseas. Throw in the WTO and NAFTA, and the rights of capital stand comfortably astride everyone else’s.

What’s wrong here? It’s not that businesses pursue profit; that’s what they’re designed to do and what we want them to do. The problem is that private capital rides in the front of the bus while everyone else rides in the back.

At the moment, there’s one law that does give preference to creation’s gifts: the Endangered Species Act, which says a species’ right to survive trumps capital’s right to short-term gain. The trouble is, the law comes into play only when a species has been so devastated it’s on the brink of extinction. Even then, the courts don’t always enforce it. Recently, in a very dry year, the government reduced its delivery of subsidized water to California farmers because endangered fish needed it to survive. Some farmers sued, arguing that the government had unconstitutionally “taken” their property. A federal court agreed, the Bush administration refused to appeal, and the farmers collected $13 million in damages.

It seems to me that, if anything is divine, it should be gifts of creation. Morally, they’re gifts we inherit together and must pass on, undiminished, to future generations. Economically, they’re irreplaceable and invaluable capital. Protection of these shared assets should trump transient private gain. Broad benefit should trump narrow benefit. The commons should trump capital. This should be written into our economic operating system and enforced by the courts. ... read the whole chapter



To share this page with a friend: right click, choose "send," and add your comments.

Red links have not been visited; .
Green links are pages you've seen

Essential Documents pertinent to this theme:

Top of page
Essential Documents
to email this page to a friend: right click, choose "send"
Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper