The Rise of the Working-Class Shareholder: Labor's Last Best Weapon Hardcover – 2 April 2018
by David Webber (Author)
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When Steven Burd, CEO of the supermarket chain Safeway, cut wages and benefits, starting a five-month strike by 59,000 unionized workers, he was confident he would win. But where traditional labor action failed, a novel approach was more successful. With the aid of the California Public Employees' Retirement System, a $300 billion pension fund, workers led a shareholder revolt that unseated three of Burd's boardroom allies.
In The Rise of the Working-Class Shareholder: Labor's Last Best Weapon, David Webber uses cases such as Safeway's to shine a light on labor's most potent remaining weapon: its multitrillion-dollar pension funds. Outmaneuvered at the bargaining table and under constant assault in Washington, state houses, and the courts, worker organizations are beginning to exercise muscle through markets. Shareholder activism has been used to divest from anti-labor companies, gun makers, and tobacco; diversify corporate boards; support Occupy Wall Street; force global warming onto the corporate agenda; create jobs; and challenge outlandish CEO pay. Webber argues that workers have found in labor's capital a potent strategy against their exploiters. He explains the tactic's surmountable difficulties even as he cautions that corporate interests are already working to deny labor's access to this powerful and underused tool.
The Rise of the Working-Class Shareholder is a rare good-news story for American workers, an opportunity hiding in plain sight. Combining legal rigor with inspiring narratives of labor victory, Webber shows how workers can wield their own capital to reclaim their strength.
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352 pages
Language
English
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*Harvard University Press
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This item: The Rise of the Working-Class Shareholder: Labor's Last Best Weapon
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Review
David H. Webber argues forcefully that the future of the American worker is inextricably bound with shareholder power. It is only when labor's capital is fully unleashed, Webber theorizes, that American workers will then be able to win back control of their destiny. This is an important book.
About the Author
David Webber is a law professor at Boston University, where he won the 2017 Michael Melton Award for Teaching Excellence. He has published op-eds in the New York Times, Washington Post, Chicago Tribune, and Reuters, and has been interviewed by television, radio, and print media, including Nightly Business Report, NPR's Marketplace, Knowledge@Wharton Business Radio, Agence France-Presse, Reuters, and others.
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Product details
Publisher : *Harvard University Press; 1st edition (2 April 2018)
Language : English
Hardcover : 352 pages
ISBN-10 : 0674972139
ISBN-13 : 978-0674972131
Dimensions : 14.61 x 3.18 x 21.59 cm
Best Sellers Rank: 486,071 in Books (See Top 100 in Books)
94 in Corporate Law (Books)
211 in Private Equity
377 in Corporate Governance
Customer Reviews: 4.6 out of 5 stars 11 ratings
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David Webber
David H. Webber is the author of the critically-acclaimed book, The Rise of the Working-Class Shareholder: Labor’s Last Best Weapon, published by Harvard University Press. The book was reviewed or covered in the New York Review of Books, the Financial Times, Publisher’s Weekly, Bloomberg Radio, CSPAN’s BookTV, Forbes, the Harvard Law School Forum on Corporate Governance and Financial Regulation, de Volkskrant, Calcalist, The National Review, Dissent, Jacobin, and elsewhere. Webber has written for the New York Times, the Washington Post, the Los Angeles Times and other publications. He is a law professor at Boston University and lives outside Boston with his wife and three children.
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CorpGovNet
5.0 out of 5 stars Corporations Will Be Transformed From the Inside
Reviewed in the United States on 25 July 2018
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"For far too long, labor and its progressive sympathizers have sought to transform the market from outside the market: from courts, from legislatures, from regulators, from street protests, from strikes. These tools are important. But ultimately, it is not possible to transform the market from the outside. It must be transformed from within." (xiv)
Those sentences, early in the book, had me hooked. As a sociologist, I have long recognized corporations as the most powerful force in American life. I have tried to influence corporations through legislation, regulations, boycotts and protests. My most fruitful results have been from “inside,” as a shareholder advocate. While I am not sure more democratic corporate governance is labor’s ‘last’ or even its ‘best’ weapon, it is certainly an underutilized tool.
Capital in the Twenty-First Century found investment income accelerates at a faster pace than wages. To address that issue, we need many more participants in capitalism ( A Nation of Small Shareholders: Marketing Wall Street after World War II (Studies in Industry and Society) ). Second, we need to bring our full values to investing and be concerned with wealth inequality, climate change, diversity, etc. Investing must become social investing. We need to anticipate how our investments, including how we monitor and shape those investments as owners, impacts society and the environment. Helping more people investors and heightening their awareness of environmental, social and governance (ESG) issues is necessary, if we are to create a salubrious economy.
The Rise of the Working-Class Shareholder argues funds are not legally required “to ignore the overall economic impact of a fund’s investment on workers in the name of maximizing returns.” (36) Trustees should “consider workers’ economic interests beyond just maximizing the returns to the fund.” (37) “Trustees should broaden their economic perspective beyond blindly maximizing returns that can undermine their own workers’ economic interests in their investments.” (39) A more holistic view of workers’ economic interests can actually lead to higher returns, as many have shown.
I would go further. We need a more radical departure from what is typically defined as fiduciary duty. The prudent man standard of ERISA (Employee Retirement Income Security Act of 1974) is a “lemmings rule” because it requires fiduciaries to act like other fiduciaries. If most fiduciaries are investing in something that is highly profitable but will soon make earth uninhabitable, many believe the prudent man standard dictates all trustees must follow. Yet, even lemmings are not that dumb. Mass suicide is not what lemmings do in nature but is a Disney invention. Fiduciaries should focus on long-term sustainable growth.
In 1994 the Restatement of the Law, 3rd, Trusts: Prudent Investor Rule drafted by the National Conference of Commissioners on Uniform State Laws set out a list of usual considerations for meeting the Standard of Care, such as economic conditions, tax consequences, expected total return, needs for liquidity, etc. One interesting consideration that needs more attention was the following:
"an asset’s special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries."
What “special value” does any specific investment have to one or more of the beneficiaries? Yes, fiduciaries must pay close attention to the money but they should also consider other potential benefits that beneficiaries are known to value, such as clean air, clean water, affordable housing, a healthy planet and economy, etc.
When Norway required public boards to have 40% or more of each gender the initiative was not justified on the basis of expected higher returns because of more diverse boards. ( Getting Women on to Corporate Boards: A Snowball Starting in Norway The focus was on societal needs for justice, democracy, participation, equality and human rights. Fiduciaries in America need to push the envelope. We are not Homo Economicus. ( The Death of Homo Economicus: Work, Debt and the Myth of Endless Accumulation )
Webber’s The Rise of the Working-Class Shareholder is full of interesting bits of recent history, such as campaigns by CaPERS, AFSCME, NYC, SEIU, AFL-CIO and other union-related funds. That is the bulk of the book, with many lessons learned by labor leaders. Readers can learn much from the book on what works and what does not. The discussion of hedge funds may be particularly instructive to many, as will the discussion of the ugly push for conversion of defined benefit plans to defined contribution plans.
Conclusion
Weber has recommendations scattered throughout the book but concludes with the following (highly abbreviated below):
- Protect centrally managed defined-benefit pension plans. There is strength and intelligence in numbers.
- Dump investment managers who do not follow labor’s priorities. Our money should fight for our values, not against them.
- Continue to invest in shareholder activism. It works.
- Support “Secure Choice Pensions” to broaden the base.
- Explore “exit” as a meaningful strategy, especially where shareholder voice is limited. I prefer to frame this not as “exit” but as reducing the number of companies held to induce more in-depth monitoring. The State of Wisconsin Investment Board did this successfully for a time in the last century.
These are excellent recommendations, part of the reason The Rise of the Working-Class Shareholder is getting justified attention. As Webber goes around the country on speaking tours, he is soliciting additional suggestions from working-class people. In that spirit, I suggest the following:
- Labor’s pension funds should combine forces with consumer actions, such as those sponsored by Sum of Us, Change.org, U.S. PIRG, FACT, Consumer Federation of America, Care2.com, etc.
- Labor activists should pressure their pensions and 401(k) funds to announce proxy votes in advance to influence other shareholders. (Proxy Democracy.)
- Evaluate and publicize the voting records of all funds. (Fund Votes)
- Ask funds to survey members/investors to determine shared values beyond short-term economic return.
- Support a small securities transactions tax to decrease speculative turnover and market timing, while funding efforts to narrow the wealth gap.
- Engage in a dialog on Reviving the Forgotten American Dream through universal ownership of corporate assets.
Shareholders, acting as shareowners, should be able to demand that corporate directors and fund managers represent their interests as full human beings, not simply as imaginary rent-seeking robots. If that ever happens, future shareholders might spend as much time on corporate governance as they do now on market timing and stock picking.
When that day comes – if that day comes – we will we transform the corporation’s pathological pursuit of profit and power, as pictured in its most vivid form perhaps by Joel Bakan The Corporation , into fully developed mediating structures that help individuals make our world both more productive but also more salubrious. The rise of working-class shareholders will be central to the success of such efforts.
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Ben Edwards
5.0 out of 5 stars Engaging, Clear, and Thoughtful.
Reviewed in the United States on 10 April 2018
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When I heard this book was coming out, I jumped to order it immediately. David Webber is a uniquely talented law professor and writer. He takes the stories of ordinary workers and labor activists and uses them to help explain sophisticated corporate governance concepts. Along the way, he keeps his objectivity intact and never mythologizes the gritty labor activists that help him present key concepts. For example, he writes that one: "was no saint. He was highly confrontational and abrasive, with a tendency to overplay his hand. I don't write about him to hold him up as a paragon. I write about him because he . . . punched [his] way to a new set of tactics that must be refined and widely adopted if labor is going to reassert itself in the twenty-first century."
The balance he brings in his portrayal of labor leaders continues with his discussion of key legal concepts. You'll find yourself appreciating how much a nuanced understanding of ERISA can improve options. Although it's nearly impossible to make ERISA engaging, Webber's writing holds your interest. He presents his view plainly and explains why he thinks it offers the best approach. Still, the book is not another one-sided polemic. It also explains and addresses the other side of the debate to leave readers with informed opinions about the issues. It's a thoughtful book that conveys important ideas and concepts with clarity. It should open many readers' eyes to the true power available to labor's capital and the need to make better use of it.
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hpolo
5.0 out of 5 stars Easy to read and very informative!
Reviewed in the United States on 2 April 2018
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What a fascinating read. I was more than a little concerned the book would require significantly more than passing familiarity with organized labor and shareholder rights but these fears were entirely unwarranted. I found the book clear and thoughtful. It was not only easy to read but Webber broke down complicated situations with easy to understand factual examples. In many ways I found the book reminiscent of the wonderful job Michael Lewis did with The Big Short. I had no idea the battle that was already taking place and what shareholders could do to protect themselves.
I highly recommend this book for anyone with an interest in what will undoubtedly be the new front line in Labors battle against unbridled corporate interests.
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Jayasri (Joyce) Hart
5.0 out of 5 stars Arrived on time and in good condition
Reviewed in the United States on 27 October 2021
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As described, it's a library book that was pulled from the shelves, but in excellent condition. Of great interest to me since I am a participant in a large Public Pension Plan.
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Brian Walsh
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