Democratic presidential candidate Bernie Sanders unveiled a set of “corporate accountability and democracy” plans on Monday that radically reimagine the role of corporations in U.S. society ― and should shake up an already vibrant debate about corporate power within the Democratic primary field.
By far the boldest of the proposals is Sanders’ plan to force large corporations to grant workers ownership of 20% of the shares issued by the company and 45% of the seats on the board of directors.
The proposal would apply to all publicly traded companies, as well as privately held corporations with annual revenue of at least $100 million or balance sheets with the same amount.
The package of reforms, which also includes a number of less spectacular changes to tax and regulatory laws, is perhaps the senator’s biggest move so far to back up his identification as a “democratic socialist.” The Vermont independent has generally used that term to describe his support for New Deal-style, welfare-state liberalism, but with this proposal, he is getting closer to the kinds of economic democratization envisioned by members of the Democratic Socialists of America.
“For more than 40 years, the largest and most profitable corporations in America have rigged the tax code and our economy to redistribute wealth and income to the richest and most powerful people in this country,” Sanders said in a statement. “The American people are saying enough is enough.” ―
Sanders argues that if workers have a greater say in their corporate employers’ practices, those companies will be less likely to offshore jobs, overpay CEOs and pollute the communities in which they’re located.
“Employees in worker-owned companies are not simply cogs in a machine owned by someone else,” his campaign states in its official description of the policy. “They play a central role in determining what the company does and how it is run.”
But critics of worker-owned companies, including some socialists, have noted that even those companies are subject to the competitive demands of a global, for-profit market. That means that worker-owners are often under pressure to embrace exploitative practices even if those practices negatively affect them and their co-workers.
Still, Sanders believes that more worker-owners would at least be a monumental improvement on the status quo.
With that in mind, he would also force corporations to give their workers the right of first refusal to buy the company before it is shuttered or sold. Companies that automate jobs or outsource them to cheaper workers in other countries would have to give the affected American employees shares in the company. And he would create a U.S. employee ownership bank, which would provide loans to workers trying to buy the companies that employ them, as well as centers to teach the advantages of worker ownership to employees and those business owners looking to sell.
In addition, Sanders’ corporate accountability plan features an array of changes to corporate governance, tax law and antitrust enforcement. Sanders would ban large-scale stock buybacks and force corporations to obtain new federal charters requiring them to weight the interests of the diverse array of stakeholders rather than just shareholders.
He is calling for the restoration of the top corporate income tax rate of 35%, which was cut to 21% under President Donald Trump’s 2017 tax cut legislation, and the closing of loopholes and tightening of disclosure requirements to crack down on the use of offshore tax havens. Other Democratic presidential candidates, such as Sen. Cory Booker of New Jersey, have said they are open to raising the top corporate tax rate to the high 20s, but not to its pre-2017 level.
Sanders also plans to toughen up antitrust enforcement on U.S. corporations by overhauling the Federal Trade Commission; writing merger rules that weigh impacts on workers and innovation, rather than just price competition; and barring companies from forcing workers into non-compete agreements and other anti-competitive practices.
As Sanders scrambles to improve his standing in the polls and regain momentum after his heart attack at the start of the month, he has been releasing a steady stream of ambitious policy proposals, most of which relate to his signature issue of economic inequality. In the past few weeks, he has put out plans to eliminate medical debt, curb CEO pay and get rid of corporate money in politics.
The closest analog to Sanders’ corporate accountability and democracy reforms is Warren’s Accountable Capitalism Act, a bill she introduced in August 2018 that requires 40% of corporate board members to be chosen by employees. She does not yet have a plan to devolve corporate ownership to workers as well.
Corporate reform has been a strong suit for Warren, but Sanders evidently believes it is an area where she can be bested. Warren drew criticism from left-wing commentators for a Friday tweet from her Senate account that detractors thought painted an overly rosy picture of labor-management relations prior to the country’s rightward economic shift in the 1970s and ’80s.
“For most of America’s history, when our companies did better, our workers did better ― and America built a thriving middle class,” she wrote. “The Accountable Capitalism Act will help realign our skewed market incentives so companies & workers can once again do well together.”
The Sanders campaign still sees the types of working-class voters who gravitate toward former Vice President Joe Biden as ripe targets for persuasion. But his team has grown increasingly willing to draw distinctions between him and Warren, signaling a weakening of the truce they had reportedly negotiated before launching their respective presidential campaigns.
In an interview with ABC News’ Jonathan Karl that aired on Sunday, Sanders began to underscore their differences.
“Elizabeth, I think, as you know, has said that she is a capitalist through her bones,” Sanders said. “I’m not.”
“I am, I believe, the only candidate who’s going to say to the ruling class of this country, the corporate elite, ‘Enough, enough with your greed and with your corruption,’” he added. “We need real change in this country.”