Economic Democracy and Market Power

The original motivations of antitrust suggest an alternative remedy for market power: changes to corporate governance to include stakeholders who are subject to this power. In contrast to structural and behavioral remedies, “stakeholder remedies,” as we call them, have several desirable features. Stakeholder remedies allow corporations to harness benefits of scale while blocking their ability to exploit market power and avoiding cumbersome direct regulation by nation states. Thus, such remedies have the potential to resolve the key tensions in existing competition policy, and could stimulate a new inclusive democratic paradigm for corporate governance.

By Zoe Hitzig, Michelle Meagher, Andre Veiga, Glen Weyl¹

I. INTRODUCTION

Dissatisfaction with the present state of corporate capitalism has reached something of a boiling point. Global business elites are finally responding to years of simmering discontent, exemplified by social movements like Occupy Wall Street and by progressive presidential candidates’ proposals calling for more aggressive antitrust and regulatory policies. The fundamental purpose of the corporation – long defined by the shareholder value paradigm – is being revisited. Business leaders and policymakers seem to be summoning a reorientation of the corporation around stakeholders, rather than shareholders. The Business Roundtable, a group of nearly 200 chief executives of major U.S. corporations, brok