Angus King: Capitalism and Its Discontents—The Case for Rules

Angus King H’07, a distinguished lecturer at the College since 2004, is a regular contributor to the Bowdoin Daily Sun. In his latest post, the former two-term governor of Maine warns that an unrestrained market can take America to a place it’s been before.

Capitalism (n.): An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market. (Merriam Webster)

I am a thoroughgoing capitalist. Twenty years ago, I had an idea, risked everything, sweated through some very long nights, and created a business that ultimately paid off—and I was handsomely rewarded. Without at least the possibility of that reward, I wouldn’t have taken the risk, created the jobs, helped my customers or generated millions of dollars of economic activity in Maine at a period when new economic activity was pretty scarce. This is by way of saying that I believe that free-market capitalism is the best system yet devised to produce widespread economic opportunity.

Photo: Lewis Hine

This belief is strengthened by having seen first-hand the results of the opposite system—state socialism as practiced in the old Soviet Union. Like many others just graduating from college, a buddy and I decided to take a trip to Europe after graduation (in 1966!), but our destination was a little different that most. After meeting up in West Germany and buying a fifteen-year-old German army surplus BMW motorcycle (my friend was on an early Honda), we headed east and spent the rest of the summer in Czechoslovakia, Hungary, and Yugoslavia. It was an amazing experience in many ways. We went places where people had never seen an American (let alone a Honda), met some wonderful every-day people, and saw an economic system very different from ours, up close and personal. And it (the economic system, not the people) was awful.

I have many vivid memories from those days—empty store windows, grocery stores (more like our little country general stores) with half empty shelves, more motorcycles than cars (because cars were beyond the reach of most workers), the presence of the military everywhere, unpainted rows and rows of drab public housing, no lights at night, fields being plowed with horses and oxen, police with machine guns instead of billy clubs, and not many smiles.

But I think one of my most poignant recollections is of a dinner with three East German medical students we had met at a camping area on the river in Prague. At the end of the night, after a pretty good quantity of beer (which helps with the language skills, to a point), they asked where we were headed. “Around Eastern Europe,” we replied, “then on to Paris and London and home.” Silence. Then a sad admission that they weren’t allowed to travel outside of the Soviet Bloc because of the government’s fear that they wouldn’t come back.

And we all agreed that any political system that has to lock its own people in was pretty lousy.

So capitalism is good and state socialism is bad. But “good” is not synonymous with “perfect.” The key phrase in the dictionary definition of capitalism above is “…prices, production, and the distribution of goods…are determined mainly by competition in a free market.” The first thing to observe is that “competition in a free market” is a decision-making system, not a flesh and blood person; the market, more than any individual, largely decides how much things will cost and what people will earn who make them. The second point is that “competition in a free market” is focused almost entirely on two things: quality and price; not much else counts.

…capitalism is good and state socialism is bad. But “good” is not synonymous with “perfect.”

The result is that capitalism is really good at producing (mostly) decent products at (mostly) low prices. But the inner dynamic—the absolute essence of the system—is always toward lower input costs, and “input costs” is a fancy way of saying what the guy running the drill press gets to take home or what it costs to get rid of the waste from the plant. The great textile mills of Maine and New England didn’t go south 60 years ago for the weather; they went for cheaper labor. And they didn’t go from there to Mexico and Asia for the spicy food; they went for cheaper labor. And when the mills were here, in the early years of the last century, they didn’t employ kids and women 12 hours a day, six days a week because the jobs required short workers; they went for cheaper labor.

By the same token, the mills didn’t dump their poisonous waste into the rivers because they disliked fish; it was just much cheaper to dump the stuff through a straight pipe than to clean it up.

If a company (or its owners) decided to buck this logic and pay its workers more, or spend money on controlling pollution, or not employ child labor, the market generally was not very sympathetic. If those expenditures made its prices higher, its less benevolent competitors would promptly put it out of business.

This is what Marx and the other leftist intellectuals of the 19th Century argued—that the exploitation of workers and resources is hard-wired into the logic of the capitalist system itself and is not the product of cruel and heartless people at the top (although there were certainly plenty of those). If it were the latter, elevating better people up the corporate ladder would be the solution rather than attacking the system itself.

The problem is that we now know from experience that their alternative—state socialism—had it’s own set of hard-wired problems, starting with the lack of reward for creativity and efficiency that led in turn to the failures of the system so evident to me and my friend on that trip through Eastern Europe. It was pretty obvious that our system delivered the goods; theirs didn’t.

Capitalism with rules…had the effect of shaving off the rough edges of an undeniably productive system and in the process saved us from most of the social and political unrest that engulfed much of the rest of the world in the first half of the 20th Century.

So is this the either/or choice? One system inevitably tilted toward low wages, harsh working conditions, and intractable pollution, and the other toward shortages, low wages, and (interestingly) also intractable pollution? Fortunately, more by pragmatic trial and error than by adherence to a particular ideology, we evolved a third way: capitalism with rules, like minimum wage and child labor laws, protections for organized labor, and environmental protection. The market dictated none of these; to the contrary, the public—through the government—put them in place precisely because the market wouldn’t. And it worked. These rules had the effect of shaving off the rough edges of an undeniably productive system and in the process saved us from most of the social and political unrest that engulfed much of the rest of the world in the first half of the 20th Century.

We don’t have to speculate or make up horror stories about the defects of either system. All we have to do is look at history. In the Soviet Union and China we could see the misery and degradation endemic to their system, and many of us have first-hand memories of what it looked like. The excesses of unregulated capitalism here at home showed themselves a little longer ago, however, and memories seem to have dimmed. Children working in (literal) sweatshops, education ending at the 8th grade, thousands killed or maimed on the job, hopeless poverty, 70 hour work weeks, gross disparities between rich and poor, rampant stock manipulation and fraud, poisoned air and water, and early death paints the unpleasant picture of unrestrained capitalism in this country barely a hundred years ago.

Again, capitalism didn’t cure any of these problems itself; actually, it fought each reform in turn, usually by arguing intolerable costs or a drag on competitiveness. A perfect example is the reaction to new fire regulations put in place (by the government) after the terrible Triangle Shirtwaist fire, which occurred exactly 100 years ago in New York City. Harold Myerson, writing in a recent edition of The Washington Post, captured the essence:

Businesses reacted as if the revolution had arrived. The changes to the fire code, said a spokesman for the Associated Industries of New York, would lead to “the wiping out of industry in this state.” The regulations, wrote George Olvany, special counsel to the Real Estate Board of New York City, would force expenditures on precautions that were “absolutely needless and useless.”

“The best government is the least possible government,” said Laurence McGuire, president of the Real Estate Board. “To my mind, this [the post-Triangle regulations] is all wrong.”

Does any of this sound familiar?

The fact is that the cures always came from an outside force—usually the government but occasionally organized labor, which imposed change through regulation or negotiation. Child labor laws, minimum wage and hour laws, occupational safety, clean air and water rules, securities laws, and compulsory education together wove a web which allowed capitalism to function (actually flourish) but protected it (and us) from its excesses.

Of course, reasonable people can differ about the appropriate level of regulation—where crucial protections end and frivolous over-regulation begins—but making these decisions is what politics is all about. There is no doubt that excessive regulation really can add unnecessary costs and impede competitiveness (especially in a globalized economy), so every new restriction—and some old ones—must be weighed in terms of both their costs as well as their benefits.

…if there are no national standards, the competition between the states will inevitably engender a race to the bottom.

But today we seem to be in a moment where the need for any regulation is in question and the market has been elevated to mythic status as the ultimate arbiter of all economic (and implicitly, social and cultural) decisions. And this isn’t all; the apostles of unregulated markets want to go beyond just getting rid of those pesky rules, they want to dismantle or at least neuter the institutions which make the rules, the only institutions with the power to provide counter-weights to the not-so-positive impulses of the market.

In other words, we’re being asked not just to roll back certain regulations but the idea of regulation itself—and to eviscerate the only entities we have that are realistically capable of doing the regulating. In the immortal words of conservative theoretician Grover Norquist: “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”

A variation on this theme is the argument that well, regulation is okay, but it should only be on the state and local level—that things like minimum wage and environmental laws (and Social Security and Medicare, for that matter) are beyond the constitutional authority of Congress. The problem with this idea is that if there are no national standards, the competition between the states will inevitably engender a race to the bottom. Each state will try to outdo its neighbors in being “business-friendly,” which will be defined by the lowest minimum wage, the weakest environmental policy, or the most restrictions on unions—all in the name of attracting or retaining jobs. Companies will play states off against one another in these areas just as they do now in the areas of taxes and subsidies. Having lived this kind of competition for eight years, I haven’t the slightest doubt about this result.

I know that governments and unions can sometimes go too far—whether with over-burdensome regulations or outdated work rules or confiscatory taxes—but the solution ought to be to recognize and rein in the excesses, not throw out the whole idea of regulation and collective bargaining as many now seem to be urging. For if we do, if the unions are eviscerated and government is rendered impotent, we will have no defense left; the same unrestrained market forces that put our forebears to work in those mills at age 12 will be fully ascendant, and America will be a very different place than the one we have known for the century just past.

If you disagree, let me know which of your kids you’d like to see in the picture at the top.


  1. Workn4ALiving says:

    Your article seems to argue that the pendulum has swung so far back as to put our children at risk, but the reality is that the dialogue is louder today because it’s nowhere close to where you think it is. You perceive today’s dialogue as a subjective dicussion about protecting American labor institutions. I believe it is now about the MATH…the cost of governmnent regs, and the cost of government labor.

    I own a small business and I know how much time is spent both by staff (where I can delegate) or to me (when I can’t delegate) complying with government regulations.
    Personally, every intersection I have with government has become either a disappontment or a waste of time. The heated rhetoric you bemoan is NOT because the pendulum has swung; it is because the government still protects mediocrity and penalizes innovation and success. This is wrong on so many socioeconomic levels.

    But the regs are not what are driving today’s heated dialogue; the math is. When we consider the trajectory of unfunded liabilities at the municipal and state levels, we see Ponzi schmes at every level of government promises. Business owners hate regs; but taxpayers fear the future costs of these unsustainable promises.

    The pendulum has a long way to go before kids are operating machines again, or before we will experience good government. To any government worker who can’t stomach a pay freeze, I say, come compete in the private sector.

  2. So how do you really feel about Obama health care?

  3. This is a very thoughtful commentary by Gov. King and a thoughtful response by Workn4ALiving. And what of the concerns of today’s young people? Take a look at a couple of opinions printed in the Bowdoin Orient:
    Marx, the environment, and the implications of global warming
    February 5, 2010
    By Chris Sanville
    Consumerism poses largest threat to the environment
    March 4, 2011
    By Jonathan Coravos

  4. The governor seems to believe that the government, including the regulatory agencies, are robotic servants of the People, free of private influences and innocent of any tendency toward bureaucratic creep. Seems a little naive to me.

  5. Thank you for your article. The horrific Triangle Shirtwaist Factory fire spurred important reforms and regulations including the enactment of the first state workers compensation laws.

    See article in Huffpost:

  6. Seems to me like the economic crisis of the last few years provides as good an argument as any for why regulation is needed to protect the excesses of capitalism from itself. After all, transparent markets with explicit rules are those that will ultimately function best—both in terms of stability and prosperity.

  7. Carter Jones says:

    it seems Governor King thinks we need to strike a balance but never offers an olive branch proposal…not that one would be accepted by the left anyway…

  8. Sharon McCann says:

    Sanity lies in the tensions between government, business and labor. It has always been thus, that each one of the three will go overboard if not balanced by the needs of the other two. Currently we are in a bizarre land where one leg (business) has co-opted another leg (government) and convinced the third (labor) that they and government are the cause of the problems. The problems stems from the inability to see that a good thing is not necessarily good for every situation. And that a middle sized or small business cannot be held to the same laws that a large corporation should be. Multi-nationals in particular must be held accountable, but the justified complaints of small business owners free up massive corporations to run roughshod over what should be a free market. What we have now is not capitalism and it is not a free market. One can even question if it is even democracy.

  9. Rules can sometimes turn capitalism into chaos ~
    The prohibition of hemp has distorted our economy around petroleum, plastics and pharmaceuticals, all of which would change drastically if agricultural hemp, second only to cotton and opium in the 19th century, were permitted in commerce. Medical costs would plunge with a safe, natural medicine that could replace up to 50% of expensive, dangerous mood-altering chemicals. Fuel costs would stabilize with a locally-produced, sustainable source of biomass and diesel oil. Dangerous BHA and other plastics would give way to biodegradable plant-based materials. Forests would no longer need to be destroyed for paper. This single natural resource might slow down global warming and pollution. Maine was once a strong agriculture state. Hemp could return millions of acres of abandoned farmland back into production, with locally-manufactured products providing good jobs.
    All this progress has been blocked for 100 years by racial prejudice, which associates cannabis with color, and the “just say no” exploitation of a health issue for political gain.
    A simple change in the laws could make capitalism a TRULY FREE MARKET, not one addicted to oil because the most promising alternative by laws that deny science. Yet few leaders can think outside of the Just Say No box. When will someone lead us into a science-based policy?

  10. Allen Hale says:

    Your final sentence is just pure sensationalism and hyperbole. If the government is so good at regulating our businesses and economy, how do you explain ObamaCare, Dodd-Frank, Sarbanes-Oxley, Medicare, Social Security, Amtrak, US Post Office, our huge national debt? Absolute incompetence of politicians and bureaucrats! And unions? If the public service unions are so wonderful, then why are so many states almost bankrupt because of the excesses of pay and pensions?

    The problem is that the government and unions are incapable of reining in their excesses. That’s why the economy and business in America are in the tank.

  11. You preface your article with the following definition and statement that you are a thoroughgoing capitalist”: Capitalism (n.): An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market. (Merriam Webster)

    With all due respect, how does your statement identifying yourself as “a thoroughgoing capitalist” square with your current dependence on federal taxpayer subsidies and outright federal “demonstration” grants to make your company — Independence Wind LLC –survive?

  12. Bill Hinckley says:


    It is difficult not to see the need for “rules” to overlay the capitalism hardware. In addition to thoughful regulations, we truly need a stronger code of business ethics. I would like to hear how you would apply your argument for collective bargaining to public sector unions. I just don’t see the exploitation that you’ve pointed to in our manufacturing history.

  13. John Fleeman says:

    We are living in an era where candidates for offices from local government to the US Senate are making loud cries for the elimination of numerous regulatory agencies and the reduction in staffing, funding or authority of others, rendering them virtually powerless. It appears to me that Mr. Angus is addressing that position…the idea that all regulation is bad and that regardless of other undesirable consequences, only the results of completely unregulated markets are desirable. He doesn’t claim that regulatory agencies are “free from private influences.” His point is not to offer an “olive branch proposal.” He is merely addressing a real trend among many to call for the elimination of all government regulation, and points out that 100 years ago, in such an environment, a number of ills including child labor, widespread pollution and unsafe working conditions were a matter of course accepted by many as necessary conditions for companies to operate profitably. I completely agree with that premise and agree that “reasonable people can differ about the appropriate level of regulation.” But to differ about whether there is a need for any regulation at all seems absurd.

    Finally, with regard to the accusation that the final sentence is “sensationalism and hyperbole”, perhaps you have not heard of Missouri State Senator Jane Cunningham sponsoring a bill to eliminate many of that state’s child labor laws. I wish I could agree that it is hyperbole, but the facts do not bear that out.

  14. Mr. King,

    I enjoyed your truthful, realistic confrontation with the broken down elements of our social-economic model … a subject I have been writing about in detail for almost three years now (first on Robert Reich’s blog and now on John Lawrence’s blog entitled, “WILL BLOG FOR FOOD” (FOOD being a metaphor for ‘thought’). I asked John to post your article on his blog in California … which he did today.

    Yes, our country has been on a 30 year slide of a “middle-class race to the bottom”
    with wages rising 12% over this period for bottom 80% of households; with outsourcing, robotosizing, automating, downsizing seriously reducing the net growth rate and quality of jobs over the last 3 decades. Even if net job growth stayed at 200,000 every month for next few years, it would take until 2019/20 before we would have a pre/bubble unemployment rate of 5% or ± 7 million, EXCLUDING the plus 10-12 million underemployed, not looking for work, etc., and NOT included in the published
    BLS unemployment data.

    And now the Republicans are on new insane propaganda scheme and economic war-cry: “TO INCREASE JOBS WE MUST FIRST DESTROY JOBS AND CUT GOVERNMENT SPENDING.´´ By destroying government jobs, goes the story, the fired workforce entering the private job market for scarce jobs force will worker wages down further (possibly even below inflation), then new jobs will come back. If this along with eliminating unions isn´t VOODOO ECONOMICS aimed at impoverishing the middle class, then I don´t know what is!

    It´s a no brainer we have to cut wasteful federal spending including the Defense Budget, Pork Barrel spending corruption and other financial waste. It´s a no brainer we have to make adjustments in retirement elgibility to put Soc. Security (which is actually in sound financial shape today)on a strong footing. Medicare needs some much more urgent reforms.

    But, simultaneously, we also have to wisely INVEST in our Infrastructure, Education (i.e., the Sciences, Mechanical/Technical Skills, Langauges), R&D and Green Energy Independence … all to provide more sustainable job and GDP growth over the next decade. Failure to do this will mean irrresponsibly increasing the risk of entering a 10-12 year economic stagnation similar to what Japan experienced between 1992-2002 because they didn´t face headon in a timely manner the structural breakdowns in their economic model like the deeply-rooted corruption and casino real estate euphoria that plagued the nation´s banking system.

    Lassey-faire destructive capitalism has got us into our current MESS … where all the blame, shame and pain is heaped onto working class Americans. We need more than sensible rules, financial transparency, drastic reforms/simplification of the tax code, etc. We need to get back to the common sense values and norms of equitably shared prosperity within a fair playing field. This is what made our nation trully great and at its democratic best. So the challenge is as much about OUR SHARED MORAL VALUES as it is about RULES for CONTROLLING EXCESSES and STIMULATING ADVANCES of CAPITALISM.

    In essence, it´s about balancing public and private initiatives for the betterment of ALL Americans, not just the top 10%.

    As an independent business person who has worked and lived over 35 years in Europe for European firms, I know better than most how well the economic models in the more mature European countries work for fostering an acceptable qualty-of-life standard for All under a principle of solidarity … while also preseving dynamic and innovative market opportunities.

    Your wonderful article got at the dilemma of how we have to rediscover our unique societal balance where a rising economic tide lifts the majority and not just the privileged few. My compliments!

    Frank Thomas, Bowdoin Class 1961
    (Born in Presque Isle, Maine)

  15. Gov. King: In Capitalism and its Discontents—The Case for Rules, you make a very good argument for the necessity of laws and regulations to protect people and the environment in which we live from the inherent excesses that corporations with seek in an unfettered economic system.

    Except for those blinded by greed, it is not difficult to see the need for “rules” to to “level the playing field” for both small and large businesses. Obviously, thoughtful regulations, that protect the common good as well as take into consideration the needs for people to make a profit in return for taking risks are difficult to create. However, those who advocate for the need a stronger code of business ethics, are neglecting to consider that the only “persons” in this country who are under any legal obligation to consider ethics are human beings. Corporations are created so that they can create profits without the need to consider ethics. The humans who make decisions on behalf of the corporations can lose their jobs if they make decisions that are ethically “good” while reducing the profits sought by the shareholders.

  16. Capitalism without restraint is little more than a license to exploit. Exploitation has consequences.

    The problem lies in our economic structure. The institutions of business, from retail, to communications, to manufacturing, to investment houses are all driven by rule and by market conditions to maximize short-term profits over long-term stability. This destructive, short-sighted and relentless pursuit has robbed the country of its wealth which is now concentrated in the hands or 1 or 2% of the population and in the coffers of large corporations, leaving the government to squabble over untenable alternatives for the rest of us.

    For the past 30 years the government has deregulated many industries that previously operated under the watchful eye of government, and stripped away its own power to regulate the excesses of corporations, who at every turn seek to “capitalize” on these opportunities to maximize their profit. We saw the result of this in 2009 when the excesses of an unwatched Wall St. sent the economy into a tailspin from which it has not yet, and may never recover. And who were the first to be saved? The perpetrators of the chaos themselves, who have gone right back to the same practices that have wrecked the economy in the first place. The financial institutions knew that if they simply got big enough, the government would bail them out to save the jobs of their employees if their decisions lead to failure.

    The solution is not a return to more regulation, or better regulation, but to restructure the incentive under which corporations operate in the first place. To completely redefine the role of business that will finally compel business to conduct itself in a manner that earns our respect and admiration, rather than our contempt.

    Frank Thomas said, “We need to get back to the common sense values and norms of equitably shared prosperity within a fair playing field.”

    The path to this balance is through a constitutional amendment that not only makes it clear that corporations are not people, and should not be granted the rights people have, but also defines for all to understand, the public’s expectations of corporations and the influence of money in society.

  17. Mr. Keleher,

    Your point correctly dramatizes that a corporation exists by law to protect the interests of the corporation and its shareholders. While this often encourages greed and abuse of the public interest, directors and officers will argue their only legal responsibility under any state corporate law is the pursuit of maximizing profit for shareholders … and not the pursuit of the public interest. Directors and officers are not legally liable under civil or criminal law as individuals if they fail in this responsibility to shareholders — short of committing overt fraudulent acts, of course. They are merely on the firing line where personal income losses can be substantial — given extremely high U.S. top executive pay packages (over 200 times median worker pay vs. 95 times for European executives). Furthermore, over 90% of total executive compensation in the top U.S. firms comes in the form of stock options or restricted stock grants. This also plays a significant role in greedily driving executive loyalty to shareholder wealth first and foremost and last to employees and the public interest.

    Quite coincidentally, your idea of a constitutional amendment in effect making corporate directors and officers legally responsible for damages their firms cause to the public interest was addressed by my colleague John Lawrence today — on his blog, “Will Blog For Food.” John has posted a proposal made as far back as 2002 by a Maine lawyer, Robert Hinkley, to amend Maine corporate law to achieve same corporate public interest objective you allude to in your remarks.

    Mr. Hinkley’s legitimate argument is that we must rid ourselves of the myth that making profits and protecting the public interest are mutually exclusive. His solution was and is to add a clause to section 716 of the Maine Business Corporation Act that would make directors and officers personally liable and responsible that their firms’ pursuit of profit does not damage the public interest.

    The core aim of his amendment is briefly summed up as follows: “Directors and officers still have the duty to maximize shareholder profits … BUT not at the expense of the environment, human rights, the public safety, the communities in which the corporation operates or the dignity of its employees.” The idea is that corporations have more than just one purpose. They also owe something to their workers and communities.

    For a more complete explanation of Mr. Hinkley’s “Code For Corporate Citizenship” as an amendment to section 716 of the Maine Business Corporation Act, you may find John Lawrence’s summary of Mr. Hinkley’s proposal most interesting. Such a proposal, to my knowledge, obviously hasn’t been implemented in any form yet. It certainly merits serious, rational discussion, but that is apparently impossible as it is for so many critical issues in our broken-down system of governance these times.

    In brief, Mr. Hinkley feels the problem of corporate abuse and greed is fundamentally due to the design of corporate law … a design that says the only legal duty of company directors and officers is to their own corporate self-interest, i.e., to maximize shareholder profits. In contrast, Warren Buffet, my business idol, ran all his companies successfully under the corporate stakeholder priority regimen of :


    Mr. Buffet swears to this day that this has worked well and fairly for ALL stakeholders in his businesses over the past plus 50 years. Unfortunately, his stakeholder priority ranking has become just the OPPOSITE for most firms over the last +30 years.

    This has resulted, among other things, in American workers being treated as readily dispensable objects in the process optimizing global profits and thus shareholder wealth. This only exacerbates our societal Have/Have Not Gap and raises the urgency, as you and Robert Hinkley emphasize, of making society’s most powerful CITIZENS, CORPORATIONS (as legally established by recent Citizens U.S. Supreme Court decision) legally and ethically commensurately bound to be as concerned about the public good as they are about corporate and shareholder interests.

  18. Thanks to Mr. Thomas for adding to this discussion a clear explanation of the legal structure behind the current situation driving current corporate behavior, and also for referring us to Maine attorney, Robert Hinkley’s work entitled “The Code of Corporate Citizenship”. I have been to his website, , where one can read exactly what Atty Hinkley is proposing.

    I quote: “Robert Hinkley is the originator of The Code for Corporate Citizenship… “The Code” is a 28 word phrase that he proposes be added to corporate charters in all 50 states. This phrase would be appended to the sentence in all charters that directs the officers and board of the corporation to conduct the affairs of the corporation for the financial benefit of the shareholders, period. Instead this sentence would replace the period with a coma, followed by the words – “… but not at the expense of the environment, human rights, the public health or safety, the communities in which the corporation operates, or the dignity of its employees.”

    If, these 28 words could be appended to the legally-required words in the corporate charter of all 50 states, then certainly the narrow-minded focus of corporate management might be broadened to include a more balanced perspective.

    However, I wonder if such a change would go far enough to actually cause boards of directors to change their deeply entrenched behavior. Also, if widespread change in corporate behavior does not result, enforcement of the “Code” could just produce more legal wrangling and little real change. I also wonder about the difficulty and time involved in passing this legislation through all 50 states individually for it to have any impact. In short, my first reaction to reading Mr. Hinkley’s Code is that this effort, although well intentioned is not broad enough to effect the needed culture change and may be difficult to pass nationally and enforce once in effect.

    My inclination still leans toward an amendment to the US Constitution. The Amendments to the US Constitution apply to us all and carry broad national impact and respect. The authors of the Constitution lived in a raw, underdeveloped nation that would benefit from unbridled entrepreneurship. They could not have foreseen the economic situation the country find itself in today now that that small newly founded republic has grown into the largest economy in the world. The Amendments were always intended to be adapted or modified to meet the needs of a changing world. The world has changed since the writing of the US Constitution, and it’s time for the Constitution to change with it.

    Mr. Thomas’ allusion to the methods of Warren Buffet are fascinating. As Mr. Thomas presents his methods in light of the fiduciary requirements of corporate management we are discussing, Mr. Buffet’s methods appear to border of the illegal! However, given his immense success and near universal respect, I wonder what the “Oracle of Omaha” would have to offer to the idea of a Constitutional Amendment defining the role of business in America…

    Paul Keleher
    Bowdoin ’69

  19. Thomas Jefferson would agree with the proposition that our Constitution is not a document fixed in concrete, and neither is it document to be changed for light reasons or transient causes.

    Over 200 years ago, Jefferson’s and the Founding Fathers’ living reality was a predominately self-sufficient agricultural environment where the largest cities were New York and Philadelphia with populations of 60,000 and 30,000, respectively. Yet, remarkably, even then Jefferson saw the need for an adaptive constitutional framework while also favoring a dual concept of mimimalist government and support for the common man. In his words: (July 1816)

    “Some men look at constitutions with sanctimonious reverence, and deem them like the ark of covenant, too sacred to be touched…. Laws and institutions must go hand in hand with the progress of the human mind … We might as well require a man to wear still the coat which fitted him when a boy, as civilized society to remain under the regimen of their barbarous ancestors.”

    Survival of the fittest was NOT Jefferson’s governmental doctrine; but prudence balanced with social concern for the common man’s welfare were also his prima facie governmental values … conveniently forgotten by the ultra right’s adherance to Pres. Reagan’s simplistic claim that, “Government is the problem, not the solution.”

    In Jefferson’s time, there were no drugs, complex medicines, urban congestions with related multiple crime, health, social, infrastructure problems. There was no massive use of insecticides in food production nor resort to questionable food additives/preservative methods. There were no pervasively excessive eating and obesity problems. There was no exponential dependence on polluting fossil fuels intensifying huge trade deficits. There were no issues of: disappearing industrial production and rapidly advancing technology creating fewer jobs; cut-throat product-import competition fed by a frenzied consume, consume, consume culture propelling trade deficits; automating, outsourcing, robotosizing jobs away in a “race-to-the-bottom Wall-Marting” of blue and white collar jobs at a faster pace than new ideas and investments can replace them.

    Would Jefferson have favored adapting his governmental principles to working people and consumers in a vastly transformed high-tech world with prudently balanced and well-controlled proactive policies, guidelines, incentives … including new institutional arrangements to advance societal stability, equity, and a fair playing field for All citizens to reasonably share and prosper in?

    My answer as a centrist is, YES!

    The responsible Founding Father conservative James Madison said it right: “If men were angels, no government would be necessary… In framing government which is administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place, oblige it to control itself.”

    To achieve today’s critical social and fiscally responsible transformations, would Jefferson — like Herbert Hoover did in the Great Depression — be recommending Cutting Taxes for everyone and drastically Cutting Government Spending in a structurally stagnant job economy suffering from deflation, a decayed infrastructure and pre-college educational system, a 30-year middle-class race-to-the-bottom?

    My minority answer (sofar) is, NO!

  20. Apologies for the delay. Thanks again to Frank Thomas for his eloquence. So, let’s move this discussion forward. Where do we go from here?

    Simply put, a constitutional amendment setting forth the rights and obligations of corporations and placing limits on the influence of money in politics that are in keeping with the desires of common people may carry the import necessary to reverse the now dominant influence of money in our politics and our culture. Assuming there is agreement on this point, then how do we begin?

    There is already a movement to petition the government for a constitutional amendment to overturn Citizen’s United vs FEC. Yet the only organization I am aware of in this regard has not yet published a draft text of an actual amendment that it is busy gathering petition signatures to propose.

    So, again, where to begin such a task?

  21. Mr. Keleher,

    The first reality step I recommend is to have a good discussion with fellow Mainer, Robert Hinkley, THE pioneer advocate of a state constitutional amendment on business’s dual role of an ethical/moral obligation to consider public interests and a legal obligation to protect shareholder interests. At some stage, I would certainly engage former Maine Governor and now Bowdoin Professor, Angus King, in this exploratory discussion together with Mr. Hinkley.

    Depending on results here, the next step might be STOP … reformulate and refine the amendment issue and proposal for discussion with Maine’s U.S. Senators. Prior to this, however, a lot of due diligence, solid information must be gathered and condensed as to WHY such a Constitutional Amendment is ESSENTIAL.

    For example, the opinions and documented research of some outstanding economists should be examined: such as Nobel Prize winner Joseph E. Stiglitz (go to his recent writing, “Of the 1%, By the 1%, For the 1%”); Nobel Prize winner Paul Krugman (go to his writing, “The Great Divergence”); G. William Domhoff (go to his just completed exceptional social-economic research writing including the outstanding social-economic research of E.N. Wolff, “Wealth, Income, and Power”); Harvard’s M. Norton and Duke’s D. Ariely’s 2010 findings in “Building a Better America.” The thoughts of respected constitutional lawyers from both sides of the political spectrum should also be engaged.

    These are but a few suggestions from a great distance on some exploratory pragmatic, preparatory feasibility actions, among others. I must say though, I believe the chances of success here–given the deeply bipolarized, massively purist-ideological and narrow self-interest psychology crippling our governance system the last three decades — is NIL to ZERO.

    But that is hardly the right attitude to have in confronting the truly dangerous oligarchic corporatization of our democracy taking place and accelerating in recent years right before our naked eyes! There’s no use denying that WEALTH and POWER relate … and definitely NOT in the broad public’s interests. History has taught this and the mature nations of Europe have learned this long ago. A country can have a concentrated wealth distribution and still have a more equal income distribution, thus democratically assuring an equitable playing field for all to advance in. BUT, with 85% of all privately held U.S. Wealth concentrated in 20% of the people, the U.S. is dangerously flirting with an autocratic private power pyamid that can and is buying the political decision makers. Power has moved to the Rich in more than one not so subtle way!

    For the big Red Danger Signal in our nation’s direction — and what makes us DISTINCTIVE today compared to other industralized nations — is that we are now structurally plagued with the 1929 GREAT DEPRESSION ultra-high concentrations in BOTH Income and Wealth distributions!

    A constitutional amendment that makes CITIZEN CORPORATIONS reasonably directly responsible for the impact of their actions on Community, Environment, and Employees as well as on Shareholder Returns seems what our bi-polarized, increasingly inegalitarian society desperately needs. A country raped of any sense of coherent equity, stability, and solidarity among its peoples is, in my opinion, doomed in this closely connected global world.

  22. Frank,

    The cynicism I detect in your last post calls into question the need for faith that all people possess a universal desire for genuine happiness, one which can only be realized in the context of the relative happiness of others. In the face of what appear to be insurmountable obstacles, faith in the resiliency of human nature to overcome its own darkness is a force that can help one maintain a positive outlook.

    Thank you for mentioning these resources. Support from respected authorities for any given effort to create societal change is certainly a necessary part of the process.

    Your thoughts lead toward the formation of a new and independent effort to propose a constitutional amendment. My inclination is to first learn whether I/we can lend assistance to existing efforts in this direction before embarking on a new and separate effort. Accordingly I will attempt to make contact with the one organization I am aware of that is circulating petitions to propose a constitutional amendment intended to provide the necessary legal grounds to overturn the Supreme Court’s Citizen’s United decision by asserting a legal distinction between corporations and individuals in so far as any right to influence the political process is concerned. I intend to suggest to them that they consider broadening the scope of such an amendment to define the fiduciary responsibilities of corporations to all of society, not just to their stakeholders.

    If this group is open to such suggestions, then given the daunting nature of the task, it would be wise to affiliate with others if common goals can be established.

    Paul Keleher
    Bowdoin ’69

  23. Paul,

    Yes, your comment about cynicism reminds me of that old saying, “Pessimists see problems in every opportunity. Optimists see opportunities in every problem.”

    You are right to join other credible advocates on your constitutional amendment idea. The potential special interests’ in opposition to such an idea is AWESOME … as they will be that power pyramid Top 20% that owns 85% of All U.S. private wealth and earns 65% of all reported income.

    I suggest you still contact Robert Hinkley to access all the experience and know-how he´s acquired trying to bring to life such a constitutional amendment in his home State-of-Maine.

    Contacting a group now organizing a petition to overrule the Supreme Court´s Citizens United decision seems a good step forward. If this effort is successful, then a path towards serious consideration of the constitutional amendment you are advocating may be facilitated. However, an amendment of this scope defining explicitly a corporation´s ethical and fiduciary responsibilities to protect the public interest will be no mean task to achieve in these chaotic times.

    As you know, the Supreme Court´s ruling in the Citizen´s United case opened the floodgates for corporations and special interests (the billionaire Koch family types) to fund even more voraciously, directly or indirectly, political candidates by using broadcasting electioneering methods to advance predatory self-interests. This was made possible by the Court´s ruling that Corporations were also in effect Citizens and therefore, based on the First Amendment Congress cannot fine or jail citizens or “associations acting as citizens´´ (like corporations) for engaging in the simple act of political speech.

    I´m with the Dissenters who say nothing could be more undermining of the public interest and integrity of political candidates and elected officials than this decision. By allowing unlimited corporate funding of independent political broadcasts in elections, it has now become almost impossible for average Americans to have any real influence with their small contributions for their favored political candidates.

    Despite this, in the Citizens United case the Supreme Court Overruled the McCain-Feingold Act making it illegal for corporations and unions to broadcast electioneering communications prior to a general election or primary. Sadly, this has only accelerated and deepened the already devastatingly corrupt role MONEY has long been insidiously playing in our elections and governing processes. Contrast this with the Netherlands where firms CANNOT use the TV to promote political candidates and CANNOT give funds directly or indirectly to political candidates. Corporate funds can only be given to political Parties and can amount to no more than a few tens of thousands of Euros per contribution. Direct or indirect lobbying activities of any sort that compromise a politician´s integrity are strictly forbidden and come with penalties for all concerned.

    My feeling is the opposition to a corporation Code of Conduct amendment to our constitution will be even more overwhelming than was the opposition in the Citizens United case. A possible overruling of latter case is not helped by the psychologically warped anti-government propaganda that has been in full orchestration by ultra right fundamentalists … and very weakly countered by Democrats, Progressives and the Common Folk (so far, at least). On the positive side, however, I believe that Robert Hinkley DID FIND in surveys he conducted that a strong majority surveyed FAVORED a corporate Code of Conduct amendment to the state constitution along lines he outlined.

    In the final analysis, broad support for such a federal constitutional amendment should ideally be endorsed “Bottoms-UP´´ … and thus, if possible, be included in a nation-wide state-by-state Referendum in next year´s national elections. How to bring such an initiative to this stage is the challenge!

    I admire your tenacity on this worthy issue, Paul!

    It´s essential Americans reverse the destructive, selfish “Individual FIRST, Community LAST´´ capitalist extremes that have invaded our social-economic system and democracy the past three decades. We must get back to those inherited basic constitutional cultural values that for so long served ALL Americans rather well … values embellished in the words: “A government Of the people, By the people, and For the people.´´

    However, as Nobel Prize economist Joseph Stiglitz recently has warned, we are now evolving a government that is: “Of the 1%, By the 1%, and For the 1%.´´

  24. Dear Mr. King,

    For an erudite, reasonably credible Plain English synopsis of the RESPONSIBILITY for our nation’s federal tax revenue, spending, financial (deficit), and social breakdowns and the solutions to same — as proposed by the Paul Ryans for The Rich over the backs of the middle-class and, in contrast, as sensibly proposed by John Lawrence for “Main Stream Americans” — I urge you, my good man, and all Americans of independent mind to Google “Will Blog For Food,” Editor John Lawrence.

    Our tax system’s bias towards huge wealth and income concentrations, particularly for the top 1% and 10%, is the key destabilizing force behind our middle-class and 50-state Races-To-The-Bottom, steadily bankrupting and dividing our society financially and socially.

    Frank Thomas
    The Netherlands
    Bowdoin Class 1961

  25. Paul (Mr. Keleher),

    I would value without prejudice or possibility of contretemps your response to my recent writing on John Lawrence’s blog, “Will Blog For Food.” The writing is entitled, “The U.S. Ongoing Structural Unemployment Calamity.” If you prefer, you may also Email me at:

    Kind regards,
    Frank Thomas


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