May budget could reduce inequality, the size of government and its taxes?

Enriching democracy by removing corporate dictatorships

According to Oxfam, eight men own more assets than half the poorest individuals on the planet. Fixing this problem requires processes for sharing ownership. Stakeholders need to be included as owners as no firm can exist without them. In 2018 the largest fund manager in the world, Larry Fink recognised the need for "A new model for corporate governance" that would bring "critical stakeholders to the table". As Mark Carney stated at Davos earlier this year, "If you are not at the table you are on the menu." Polycentric governance creates a way for stakeholders to protect themselves as co-regulators.

Economists such as Thomas Piketty have documented the concentration of wealth but struggle to explain its mechanisms. One reason is the absence of a concept such as “surplus” profits to describe excessive payments to investors. Piketty observed in his 2017 work that “through most of human history, the inescapable fact is that the rate of return on capital was always at least ten to twenty times greater than the rate of growth of output and income.” This dynamic helps explain the Oxfam findings.

The solution is to introduce time limited corporate property rights as adopted for all intellectual property. Countless billions of dollars have been invested in patents that only last 20 years. On two occasions, I have proved that hundreds of investors will contribute millions of dollars to fund higher-risk new ventures with 15-year leases. The first was Saxonvale Vineyards Limited founded in 1969 and publicly traded in 1975. The second was Barwon Farmlands Limited, founded in 1980 and publicly traded in 1985.

Under the proposed system, investors would receive a tax incentive providing larger, quicker and less risky dividends on the condition that two changes are introduced to corporate charters.

The first would be adoption of the polycentric self-governing "Design Principles" described by Elinor Ostrom in her Nobel Prize lecture. The second would require five per cent of shareholder equity to be transferred annually, through book entries, to a stakeholder equity account. Stakeholder shares, with taxable dividends, would be gifted to citizens in the host bioregion of the firm. These dividends would be untaxed if reinvested in other participating firms.

Over time, corporate scale would remain closer to human dimensions as ownership cycles gradually shift toward local stakeholders over roughly twenty-year periods. Operational stakeholders would become shareholders, reinforcing responsible governance but still maintaining shareholder primacy.

These processes would reinforce self-governance, environmental stewardship, and the re-election of supportive politicians across the political spectrum. Evidence already exists in the United States, where both Republicans and Democrats support tax incentives for Employee Share Ownership Plans. However, only about eight per cent of US citizens participate.

Ecological corporations could involve all voters. Capitalism would become more sustainable, governed by the renewable natural endowments of nature.