Because, she says, stockholders are considered to be owners of the corporation. They are owners only because of the way corporations are structured. She compares this structure to the old feudal structure. The mostly rich stockholders are the noblemen. They have privilege: They claim wealth they do not create, though the employees - the serfs - create this wealth. Stockholders treat the corporation, which consists of a human community, as property that they buy and sell; after a merger these nobelmen destroy the livelihood of employees without so much as a qualm. Stockholders have some democracy - they may vote. Employees follow orders.
Kelly demolishes the idea that stockholdrs are owners. She demonstrates that the amount of capital supplied to corporations by stockholders is today less than 1% of the total value of all traded shares. The stock market is primarily a big casino for gambling.
Furthermore, even the 1% figure is too much. When you consider the stocks that corporations buy back, the stock market effect is NEGATIVE! Here are her inimitable words with reference to the big '90s boom:
"The fact is, stockholders did not fund the rising market. Companies pumped massive amounts of money into it, to prop it up."
To counter this state of affairs, Kelly suggests that we change our point of view, that we look at corporations, not as part of a feudal system, but as part of a democratic system. Employees and the community are just as important as shareholders. They deserve a voice and they deserve part of the wealth created. Since corporations are chartered by a state, they are supposed to work not only for the selfish interests of stockholders, but for the common good. Otherwise we have a right to abolish their charters.
I appreciate greatly Kelly's suggestion for a modification of the financial statement. As it is now, an employee has no value; he is an expense. She recommends the following;
Employee Income + Capital Income = Revenue - Cost of Materials
This means the corporation must maximize employee income as well as capital income. A revolutionary change!
She makes several other suggestions. But her major contribution is getting us to think of the corporation in a more constructive way. I heartily recommend this book.
