Ownership and responsibility

The central project of corporate capitalism is separation of the function of ownership from management. Financial capital can purchase human capital, but beyond that there is no reason the twain should meet, except through periodic meetings of the corporate board. As a way to raise the large amounts of capital necessary for complex industrial operations, the separation strategy is functionally ideal. The ownership of industrial enterprise, whether direct or mediated through an investment fund, can be conceived as a discrete activity whose sole aim is to send money to its site of most efficient deployment, as measured by financial return. The managers and workers of the enterprise can, for their part, concentrate on doing what they do best: maximizing the efficient production of their product or services.

The separation of ownership and management has also enabled another separation: between investment and ethics. Once owners of enterprises are spared the operational duties of industry, and moreover are generally restricted in their capacities to set constraints on those operations, their companies’ activities no longer figure in their own sense of ethical agency. What their companies do is not something they have done, for which they are responsible. Ownership is not participation (through investment) in strip-mining, munitions manufacturing, strike-breaking, greenhouse-gas emitting; but simply a reason to enter a figure on a portfolio spreadsheet, and perhaps to expect a dividend check from time to time. Further, in the case of publicly traded companies, even significant stakes in ownership are dwarfed by the fraction of equity owned by others. And given that selling one’s own shares would simply lead to their repurchase on the secondary market by others, one can easily tell oneself that ownership makes no difference to the financing of the company as well.