More Than Money
Issue #31

The Everyday Ethics of Wealth

Table of Contents

“The Divine Right of Capital Dethroning the Corporate Aristocracy”

By Marjorie Kelly
Reviewed by Bob Kenny

Marjorie Kelly, co-founder and publisher of Business Ethics magazine, has written a provocative book. It is direct, simple, and possibly brilliant. In this clearly written work, Kelly articulates an argument for economic democracy alongside political democracy. Hoping to ground important corporation reform in the "larger project of democracy," Kelly suggests that major public corporations have evolved into something more massive and more powerful than our democratic forebears dreamed possible. (As Kelly points out, the word corporation itself appears nowhere in the Constitution.)

The Divine Right of Capital (Berrett-Koehler, 2001) artfully examines some of the possible ills underlying current economic and business woes. The main culprit, Kelly says, is shareholder primacy, the corporate drive to make profits for shareholders, no matter the cost. This, she argues, is an irrational remnant from earlier times, when aristocracies reigned. Although America has created a political democracy, we have not yet created economic democracy. Our forbears rejected the divine right of kings as the natural order; in much the same way, we need to reject the divine right of capital as the natural order.

The author proposes that we change the basis of capitalism, not abolish it. Until the American Revolution, government largely served the interests of monarchs. The Revolution did not abolish government, but it did significantly alter the basis of sovereignty on which government rested. The powerful idea in this book is that we consider doing the same with the corporation and create "a new democratic vision of capitalism, not as a system for capital, but a system of capital," where all people are allowed to accumulate capital according to their productivity, and capital is not the only thing that is served by the capitalistic system. Kelly argues for completing the democracy that our country's founders began—by building democratic principles into not only our political institutions, but our economic institutions as well.

The author envisions a rethinking of our economic system, based on democratic principles, not on the principle of maximum returns to shareholders. The intriguing aspect of her approach is that it would give shareholders, employees, management, and society a new and different moral lens through which to view decisions and dividends.