[lifeisstillgood]

That is the same argument kings and emperors used. But over time the abuses, and the frequently stupid decisions, became too much. It's faster in an business but no different.

Democracy is coming to the last bastion of dictatorship in modern western world. It won't be pretty - but it will lead to better companies

[sgt101]

Public companies are somewhat a democracy of ownership; they publish accounts and the board is accountable to the owners - the shareholders. Privately held companies are quite different, and there is a strong argument that they simply should not be allowed above a certain capitalisation - say $40m because they create an uncontrolled risk to the economy. For example; if five of the top 10 unicorns fail in the next three years due to Enron style lying this will implode the venture market choking investment for a long, long, long time.

But public company democracy is hugely problematic; modern shareholders think as a herd and work on 60 day time scales. Fortune 500 companies need diverse signals (and sophisticated risk management) and visionary management - creating processes, people and markets over decades. This is the model of the private market, but sans the potential for fraud and collapse.

[lifeisstillgood]

I worked in a company selling equity research to large pension funds - and one thing that I tried to push was it was possible to give everyone of their pension-holders a vote at every AGM (sonfor exampleninstead of one investment manager block voting 10% of coca-cola shares, the 10 million fire fighters of America could decide for themselves which way to have their 1.4 shares voted).

It still is a feasible idea imo. And would lead to an lot of new agm items !

[sgt101]

Yes - it's now a lot more feasible. I'm not sure it'll work though as my guess is that this will lead to end-game democracy quite quickly a-la activist investors vs bunches of equity managers now. I would prefer measures that increase the diversity and long term stake of the decision making groups and diffuses the complexity of the individual decisions that they make. Most of all I would like the short term benefits of financial engineering (and financial engineers) to be better balanced against the long term impact of reduced investment and loss of capability. People capital and data assets should be on the balance sheet.

[lifeisstillgood]

Ha-Joon Chang is a economist and writer with similar views - just reading the last few chapters of his 2010 book and he says very similar things

[sgt101]

Fantastic tip - thank you I will read his work. Amusingly I am watching a documentary called "The Mayfair Set: part 3" by Adam Curtis which is describing the idea of technostructure as developed by JK Galbraith as a response to the robber barons of the depression and how it was dismantled in the 1980's...

[sanderjd]

But businesses aren't states. If a business makes the wrong decisions, it can fail and be replaced. It is too dangerous for states to go through failure and replacement, but as you note, it's also bad for there to be no mechanism to punish of bad decisions. The goal of a republic is to bring the fail-and-be-replaced mechanism to state governance, but in a controlled way. But this is less efficient, so if it's ok (with respect to society at large) for an organization to fail, it makes sense to just use that mechanism directly.

There's definitely a loophole with "too big to fail" companies. Maybe those should be run more democratically. I'm not sure, I've never worked for a company that couldn't just fail if it persistently made the wrong call.

[lifeisstillgood]

Interesting comparison of business vs states. The thing is there are an awful lot of businesses larger than states.

Just take simple comparisons of population (I know I know) and the smallest states like islands have tens of thousands - of the 233 nations in the UN we reach only 100k people at 200, and companies like Bank of America employ more people than "real I have heard of them" places like Iceland.

So I like the idea of just letting companies fail - but putting half a million people out of work is pretty bad.