A Democracy of Elites: Shareholders as Citizens

• Author: Allan C. Hutchinson
• Pages: 155-175

155



A Dmocrac  Elites:

  

e can have a democratic society o r we can have great concen-

trated wealth in the hands of a few. e cann ot have both.

~ Louis Brandeis

F    as proof in political and economic

theory. Despite the fact that the plethora of explanations put forward

to justify corporate power have proved spectacularly unsuccessf ul in

passing critical muster, they still manage to exert considerable intel-

lectua l authority and even prest ige. Whether it is t he private property

claims of corporate shareholders (see chapter ) or the public discipline

of the private market (see chapter ), the arguments for the continued

acceptance of corporate power are cogent only to those who are already

persuaded or committed to the status quo. Be it the religious or the

corporate establishment, reason comes second to faith and vested in-

terest as a defensive warrant. However, the failure of traditional eorts

to propose a persuasive rationale for the enormous accumulation and

exercise of corporate power has not proved fatal. Whatever their other

faults, apologists for existing arrangements have not been lacking in

persistence or ingenuity. Interpreting such failure as setbacks, they have

not been prepared to accept that the overall project is awed and fated

PART TWO: TAKING S TOCK

156

to defeat. ey remain undeterred in t heir mission to demonstrate that

corporate power can be reconciled with the basic demands of a demo-

cratic society. In short, corporate theoreticians have refused to concede

that Charles Lindblom was right when he concluded that “the large

corporation [does not t] into democratic theory and vision.”

e most common and recent oering to gain a semblance of

popular support has been that of shareholder democracy. In justify-

ing corporate power in a contemporary democratic society such as

Canada, this notion has obvious appeal because it connects directly

to and draws on the imagery of democracy itself. e basic assertion is

that, whatever the historical record suggests, the present distribution

of shareholding is so extensive among Canadians that large corpora-

tions are actually controlled by society at large. is developing trend

has been reinforced by the increasing role of institutional shareholders,

such as mutual funds and pension funds (see chapter ). ese organi-

zations not only allow Canadians to participate in corporate aairs

through the ownership and trading of shares but are able to exert this

aggregated inuence in a more eective manner. However, despite the

initial attraction of this line of justication, its force and weight are

severely curtailed by the accuracy of its empirical claims as regards the

extent and types of shareholding. As well as relyi ng on the erroneous as-

sumption that shareholding is a valid mode of citizen participation, the

Canadian corporate scene is characterized by an egreg iously skewed,

if broad, distribution of shares and by various organizational arrange-

ments that invalidate the possibility of even a semblance of shareholder

democracy. Consequently, there is a plainly inadequate popular di-

mension to the present pattern of shareholding to satisfy the demands

of the most modest commitment to advancing the democratic agenda.

Shareholder democracy is a perversion of the democratic ambition, not

its realization. Shareholders are the governors, not the governed.

  

A ,   its Athenian invention, the notion that

people should rule over themselves still has the power to disturb and