Conclusion

What Next?

IN HIS BOOK Zen and the Art of Motorcycle Maintenance, Robert Pirsig observes that “if a factory is torn down but the rationality which produced it is left standing, then that reality will simply produce another factory.… There’s so much talk about the system. And so little understanding.”¹

Pirsig’s assertion that we must first understand the patterns in a system before attempting to fix the system is spot-on. In this book, we have attempted to do just that.

Understanding the nature of the corporate system and the elements, interrelations, and connections that exist in the system is the key to understanding why we now have an environment in which corporate behavior and social outcomes are often thought of in distinct silos. However, this need not be the case.

All citizens can play a role in incentivizing corporations to unleash their full potential in service of humanity. The key is to design a new component of the system that does at least three things.

First, it should honor and amplify the full value of corporations. Corporations already provide immense value in the form of new innovations, such as the development of lifesaving drugs, social media platforms, and environmentally friendly products; salaries, retirement plans, and health benefits; tax revenue; and returns on capital.

Second, it should promote long-term thinking by creating a countervailing force in corporate governance that encourages long-term value over short-term wins.

Third, it should drive universal corporate engagement. It should provide a means for more diverse and democratic participation in corporate governance, including underrepresented segments of the population, prosocial shareholders, and long-term shareholders. Having a broader mix of who counts as a “shareholder” has significant implications for the assumptions on what shareholders actually “value.” Suddenly, “value” may no longer mean merely financial value or short-term gain. Other values such as the quality of the environment, the integrity of our political system, and the prospects for future generations could be expressed through the shareholder franchise.

The Universal Fund sits at the heart of Citizen Capitalism. Here is what it could accomplish:

In addition to addressing many of the dysfunctions in today’s corporate governance system, the Fund will also provide a stream of supplemental income to citizens and promote equality in opportunity to participate in corporate governance (chapters 5 and 8).

The Fund will be patterned on the model of a mutual fund, except participation in the fund would be available to each US citizen eighteen years or older, at no cost (chapter 3).

The Fund will assemble a portfolio of stocks in different corporations, acquired through donations by corporations and individuals (chapter 3).

The Fund will also accept donations of cash, bonds, and other assets (chapter 3). It will convert such assets through some neutral trading rule, like “purchase a proportionate amount of all the stocks in the S&P 500” or “purchase the stocks already held by the portfolio” (chapter 3).

The Fund will pass on the income received to its citizen-shareholders (chapter 3).

The Fund will hold stocks in its portfolio indefinitely (chapter 3).

Citizen-shareholders will not be allowed to buy, sell, or bequeath their citizen-shares (chapter 3).

Citizen-shares will be held for life and will revert to the Fund when citizen-shareholders die (chapter 3).

Finally, in order to ensure that citizen-shareholders are able to exercise their vote in a meaningful and informed manner, the Fund-approved proxy advisory services will be made available to citizen-shareholders, and the Fund will pay for the services (chapter 5).

The Universal Fund is undisputedly a big idea, but it is also eminently practical: it deploys the existing tools of capitalism, not government, to give all citizens a direct influence on corporate actions. The Fund will be an institutional investor benefitting not just a small clique of stockholders pushing for mere financial value or short-term gain, but all. The Fund will be a steward shareholder—able to reward those corporations whose decisions and actions did not harm people, communities, and the environment and to support corporate strategies that support long-term value creation.

To receive information on events and join discussions, you can visit CitCap.org.²

If you want Citizen Capitalism to happen, you need to take initiative. As citizens, you can get engaged, spread the word, bring your knowledge to the table, and/or be a founding funder.

We have spent our professional lives studying how business corporations can benefit humanity. It is in this vein that we offer our proposal of Citizen Capitalism. But the book does not end here. Its practical impact begins when all citizens start doing their part.