Questioning Institutional Power: From Outside and Within

Who holds the strings?

Who holds top-tier executives accountable? I turned to Mr. Darrell for the answer: “Shareholders and debt-holders.” They have the power to set goals and develop their company’s interests, and “without them, the company couldn’t finance acquisitions or capital needs.”

What about those affected by institutional policies and decisions—such as communities, workers and taxpayers—do they get to hold corporate management accountable? What about externalities?

Investors, typically from the corporate community, create, expect and demand results from a company. “In a global society, the stakeholder’s role may play even larger as political and cultural ethos may be impacted for a considerable period of time, impacting the economics and status of a country.”

The mention of “investors, typically from the corporate community” refreshed my memory of an article in the Telegraph (2-23-11) explaining how “Investors are keen to have a greater say in the running” of Apple, Inc. Shareholders of Apple backed a measure in February designed to force important board directors to be elected with a majority vote, as opposed to a mere plurality. This was done despite Apple’s opposition to the measure.

It seems natural, however, for investors to want more control over their shares of a company. They provide the basis for the institutional structure of a corporation, because their motives directly set the goals for the institution. The effects of achieving these goals have an enormous impact on communities, but those communities (externalities) have no say in what the institutional goals are or how they will be achieved.

This concentration of power and decision-making can be described as corporate centralization, and it implies that resources and financial capital of a market-based society must be used to further the interests of those who hold power.

Power means nothing

My interview with Mr. Darrell provided me with new-found insight into the amount of institutional centralization and concentration of private capital. He was remarkably frank about how much power his executive level had to influence corporate goals, which is almost none.

The centralized power that modern corporations hold is not inherent, and the socioeconomic decisions made by these global elite groups are not necessarily justified. Unification of power happens to be incredibly undemocratic, because that’s almost exclusively where important decisions are made: decisions concerning resources, private capital, production, distribution, and others that have a huge impact on the public, who have virtually no say.

To learn more about these decisions and the criteria being used by those who actually control the dominant institutions, I researched Provisdom, a corporation “formed with the vision of bringing the mathematical rigor of Wall Street valuation to corporate decisions.”