Elizabeth Warren introduces Senate bill to hold capitalism ‘accountable’

The senator Elizabeth Warren will introduce a bill in Congress on Wednesday aimed at shifting corporations away from “maximizing shareholder value” and towards giving more support to workers and other stakeholders.

The Accountable Capitalism Act proposes a series of reforms to increase corporate responsibility, strengthen the voices of workers and others in corporate decisions and shift companies away from their focus on shareholders.

In the 1980s, the largest corporations in the US dedicated less than half of profits to shareholders, reinvesting the rest into the company, according to a fact sheet on the bill provided by Warren’s office to the Guardian.

But over the past decade, more and more profits have gone to shareholders rather than workers or long-term investments. During the same period, worker productivity has risen, with only modest increases to real wages for the median worker, while income and wealth inequality have soared.

“Workers are a major reason corporate profits are surging, but their salaries have barely moved while corporations’ shareholders make out like bandits,” said Senator Warren in a statement on the bill “We need to stand up for working people and hold giant companies responsible for decisions that hurt workers and consumers while lining shareholders’ pockets.”

Given that 93% of all stocks in the US are owned by the wealthiest 10% of the population, with over 50% of all US households owning no stock at all, Warren argues the corporate policy of maximizing shareholder value is predicated on “making the richest Americans even richer at all costs”.

The bill would mandate corporations with over $1bn in annual revenue obtain a federal charter as a “United States Corporation” under the obligation to consider the interests of all stakeholders and corporations engaging in repeated and egregious illegal conduct can have their charters revoked.

The legislation would also mandate that at least 40% of a corporation’s board of directors be chosen directly by employees and would enact restrictions on corporate directors and officers from selling stocks within five years of receiving the shares or three years within a company stock buyback.

All political expenditures by corporations would also have to be approved by at least 75% of shareholders and directors.

She first introduced the bill in 2018 to the US Senate, with the congressman Mark Pocan of Wisconsin introducing a companion bill in the House.

The bill faces tough opposition in Congress, especially with an incoming Republican administration. Business leaders have considered similar proposals. In 2019 the Business Roundtable, the US’s lead business lobby, called for a redefinition of the purpose of a corporation away from a focus on shareholders to an “economy that serves all Americans”. But that redefinition now seems to have been dropped.