The American Dream Didn't Die—It Was Murdered
How shareholder capitalism transformed freedom into oligarchy
More specifically, the "ism" systems are rarely at fault for what ultimately boils down to bad actors within the system.
"Shareholder Value" is the mantra chanted in the C-Suite at almost every publicly traded company… a cry for who they're prioritizing.
The Shareholder is lauded as the most important resource, as a call-back to the original shareholders that invested money to help a company get off the ground.
Unfortunately, once a company is profitable, the shareholder is still there pulling strings and placing emphasis incorrectly on profit and growth.
There's a laundry list of reasons why shareholder prioritization is problematic… so let's explore some, and how they're the canary in the coal mine of larger scale problems.
This story starts in the United States of America, but the concepts and ultimate fate are global… stick with me.
Free Market - A well-intentioned start
The ideological foundation of the United States was one where anyone could be "successful"—with success defined as being wealthy and free from governmental restrictions. While capitalism wasn't a word at the time, it was baked into those original dreams. Operating under the concept of "Free Trade," its intentions were pure.
The 'founding fathers' and those in early America were intent on letting you create a thing, own it, and grow it into your own operation without the belief that birthright—especially divine birthright—had any control over what you were working on.
In the beginning, it wasn't capitalism, it was just good ol' fashioned "freedom."
In the early days you could literally bootstrap your way into financial success… at the time, it had its own set of ethical problems, but you could point at an individual and make it clear they were a bad person doing bad things.
Outside the United States, there was plenty of "generational wealth" and family money in play… but it wasn't business entities, it was monarchy or royalty. It was established, entrenched wealth, which made it impossible for the common man to get started.
Industrialization - An evolution of privately owned businesses
As we moved through American history, you saw those "bold" enough to take land and resources for themselves starting to create their own new empires. You went from divine right kings to barons who controlled their pocket of the world through wealth.
In the U.S., the ability to do what you want with little restriction or repercussion allowed much more rapid acquisition of wealth and power. With this growth came a new narrative: you could accomplish anything if you put in the effort. The hours, the blood, sweat and tears.
"The American Dream" wasn't quite baked yet—that still looked like "haves and have nots." It was also before widespread news coverage became a thing, so most were just doing what they could to get by and carve out their own small holdings.
The government itself wasn't funding much, but the country was growing rapidly… so another industry started to grow, another place to build wealth specifically to expand commerce. The railroads became a goal to distribute resources, or more easily move them into industrial centers.
Railroads made a titan of Rockefeller, but they also showed there was opportunity in pooling wealth for bigger projects.
Capitalism finally rears its head
Glossing over a ton of 'progress,' we went from "get the land, grow the things, sell the things" to "build places to refine the things, build new things, sell the things to a larger market" pretty quickly. "The American Dream" didn't exist yet, but the pieces were on the board.
cap·i·tal·ism - Capitalism is an economic system based on the private ownership of the means of production and their use for the purpose of obtaining profit.
Wealth grew, the population grew, the reach grew… but people were simple—they would buy the thing they needed, and be done with it. The first signs of how hungry capitalism would become were beginning to emerge.
People were starting to settle into having everything they needed to live and thrive… but now there were industrial and commercial centers in major cities. Once everyone's needs were met, why would anyone need to buy more of that thing?
Around this time is when "marketing" hitched its wagon to psychology and advertising started to create the illusion of needing more.
Also around this time, Russia and America started to compete with ideologies. Communism was starting to suggest that you could "have it all" by allowing the masses to own the means of production.
Now that America was able to produce en masse, and had a concept of selling a vision… finally the "American Dream" was born. It was there to help boost morale after World War II, it was there to create a nationalistic—patriotic identity. Finally, we arrive at a platform for modern capitalism.
Whew… it took longer to get here than I expected…
Shareholder Capitalism - Owning a piece of the dream?
Around the mid-20th century, those who were starting to amass some wealth were hoping to expand that wealth. Similarly, those who had created something big needed money to "take it to the next level."
The hope of being wealthy like a Rockefeller was baked into the American Dream. If you could dream it, you could achieve it.
We lived in a world where newspapers, magazines and television were showing you another life. These were hyping the American Dream to create strong national pride, sticking it to the commies by buying more things, by having your own house with a white picket fence.
The NYSE had been around for a little while, it had plunged and started the depression, and came out stronger on the other side. If you had a little money, you could see the advice that over the long term, stocks win. Not only that, the idea of owning stocks was proving that little guys could be something bigger.
It's an over-simplification, but those who were making it to the top in business were starting to invest that money, not just spend it.
With the growing base of stock-owning shareholders, the phrase that was the beginning of the end of this story finally arose:
"Maximizing Shareholder Value"
Somewhere in the 1970s, government regulations arose in the FDIC and SEC, both designed to make it easy for the public to trade stocks.
With this confidence, the market grew further. You could "buy a piece" of companies that make the thing you love. For the shrewd, you could start to put money into companies you thought would grow long term, and the idea of playing the market became more widespread.
The distinction between white collar and blue collar became more noticeable, and so did the biases.
There was still plenty to protect investors, and it seemed like a new golden age was arriving as we could become successful by helping our countrymen grow and add value to the world.
And then the 1980s hit…
You've seen the numbers—a CEO of a company in 1950 was making a certain amount of money… it was a modest percentage more than their employees, not too disparate. You also saw how much a millionaire was paying in taxes vs the common man.
In the 1980s, those in power made the case that the more wealth they had, the more it would "trickle down" to the common man.
It was the beginning of what we might now call "Late Stage Capitalism." It was also setting the grounds for the emerging oligarchical "Ruling Class"… at least in the United States.
Finally, the United States was playing on the same field as its forefathers, separating its population with clear class divisions.
The trick, the secret sauce of this new class division? The narrative of the American Dream never went away.
The belief that we could all still make it big remained, and it was fuel for the lower classes to support the upper class. The idea of being a "temporarily embarrassed millionaire" arose early in the 20th century, but the evidence became obvious by the late 80s.
All of this is just to understand how we have arrived at where we are now, to make it clear that capitalism is easy to vilify, but it was also used to create something with the potential to be amazing.
But how does this make shareholders bad?
"There is nothing good or bad, but thinking makes it so"
The greatest power comes in a group's willingness to band together for a common cause.
It takes a village to raise a child.
It takes an army to win a war.
It takes investors to grow a company.
There is plenty of evidence to support the belief that joining together to do something can accomplish amazing results, but there always needs to be a leader at the front.
A great leader is typically "one of us"—often they're reluctant to lead and they have a clear vision of their end result.
The best leader is tied to their cause with conviction.
And here's where things go off the rails inside of the various "-isms."
com·mu·nism - a political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.
so·cial·ism - a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.
na·tion·al·ism - identification with one's own nation and support for its interests, especially to the exclusion or detriment of the interests of other nations.
When you have a monkey in the middle, any of the ideologies have the potential to fail. Here's the pattern:
Idealism → Coordination → Leadership Bottleneck → Power Hoarding → System Serves the Few
All of this is to say, once we put our faith in a leader, or once we remove our own agency from a system, it starts to fail…
Shareholders are the collective group of interests
So, capitalism is not inherently evil—same for the other ideologies. The "evil" that fails us with any system is when we adopt a "not my problem" attitude and the way it allows bad actors to amass power.
A shareholder of a corporation is only one of many, until you own a majority of shares… at which point you're not simply a shareholder, you're also a co-owner.
A shareholder of a community is one of many. If the community is big enough, you become a 'citizen' but your role is the same.
A "shareholder" is someone who invested money into a business or enterprise, or invested their time into a project, or their belief into a religion or ideology.
The problem with shareholders is the willingness to allow—or the misbelief that—your voice is too small to matter.
It also anonymizes that person or group of people to be spoken about in a neutral tone.
A shareholder, from the individual side, is an excuse to not try harder.
A shareholder, from the organization side, is a non-human entity.
But all shareholders are not created equal…
Why Late Stage Capitalism is Dangerous
The problem with being able to buy shares is that it allows one person to have the power of many. If you have 100 employees in a company, and each gets 1 share in the company's profits or ability to make decisions—that's one thing.
But if you have 100 employees and each gets 1/2 a share, and then someone else gets 50 shares… those 100 employees only matter if they ALL work together.
Where we are now is that we've let the idea of shares in a company become corrupt. There are wealthy individuals, or groups that hold large stakes, making those with just a handful of shares feel like they're getting something, but ultimately having no agency.
With this uneven distribution, and with those that have a larger portion also being the type to try and impose their will, a modern corporation becomes responsible to a select few.
I mentioned the 1980s before… in that decade, a corporation had many of its limitations removed, allowing a corporation to behave like an individual in many cases. Without those restrictions, they are able to use their wealth and power to shape politics, land ownership and even economies.
As the rich got richer, they came to own MORE of these corporations, and were allowed to combine them and become even MORE powerful.
So yes… late stage capitalism IS bad. Shareholders being able to shape company policy means that companies now make bad decisions for the economy, and for the employees, at the request or demand of the large stake shareholders.
And all of this happens with the illusion that the c-suite's hands are tied, that they have to grow the company, increase revenue or increase savings, all to increase "shareholder value."
Is there a solution today? Not a pretty one.
The starting point is awareness of the problem, evolving into the understanding that we're all still shareholders in the system itself… and have power that comes with group action, but only if we're working together.
As long as you hate your neighbor, the shareholders who are buying out corporations and countries will continue to do exactly that.
It's going to take a village.
About Me: I’m just a guy that things a lot, writes a little, and is watching with growing alarm as job markets shrink, wealth imbalance grows, marginalized groups get targeted, and other humans prioritize hating one another over taking back their power.
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