A Study in Cyberpunk Economic Philosophy

Saturday, 11 February 2017 09:11 by The Lunatic

How many times have you read a book, or saw a movie, with a monopolistic “mega corporporation” as a primary plot element - a giant company run by a powerful, brilliant, egocentric, multi-gazillionaire?

It’s usually a male character at the helm, either the company founder or the founder's son, and he ruthlessly destroys every competitor and government agency that gets in the way of his quest to own it all and rule the world; It's a common theme in cyberpunk fiction stories.

But I’d like to take a slightly different approach to the idea of the giant company that we’ll just call ... megacorp.

In my scenario, the corporate merger mania that exists today continues unabated, as companies strive for higher efficiencies and economy of scale. Coke and Pepsi merge. Nestle and Tyson Foods do the same. Google and Microsoft and Facebook. Ford and GM and Tesla. FedEx and UPS. Novartis and Pfizer. United and American and Delta airlines. Then slowly they all start merging together. Berkshire Hathaway gets swallowed up along the way.

In the process, the large shareholders of the initial companies end up with smaller and smaller chunks of the combined entities, so the total number of smaller shareholders goes up but no one person owns a significant share. After a few mergers, a previous “majority” shareholder might end up with 5%. They merge again and that shareholder now owns 2.5%. The incredibly large number of individual shareholders suddenly have all the power.

Eventually, the individual shareholders of all these companies realize that the widely distributed ownership structure is actually beneficial, so they vote to put shareholder limits in place: no one person can own more than 1% of the company, with an annual decrease over ten years down to .1% - and then it goes even lower as more mergers take place.

In the end, they all finally merge together to form the almighty, invincible, unstoppable “megacorp”.

But instead of the popularized evil empire, I envision a different outcome: nearly everyone works for megacorp, and nearly everyone is also a shareholder. Employees get bonuses based on performance, and profit sharing is distributed as shares of stock so every employee has an opportunity to increase their shares. Employees are strongly encouraged to invest retirement savings back into the company as well – and if they do, they get matching shares this way as well. Even low level employees who are with the company long enough will have enough dividend income to support them during retirement.

Shareholders vote to do away with the CEO position – no one person should have that much power. Instead, they institute a governing body that has full transparency in every move, with effective oversight and checks and balances. Nothing is hidden, and shareholders – who are now mostly employees – watch the bottom line like a hawk. The higher up in management someone gets, the more they get paid; but limits are set. No one, not even people on the executive governing body, makes more than 100 times in base salary from what a janitor makes (but even with the shareholder limits, they can still own enough shares to be incredibly wealthy). Separate, but similarly structured, governing bodies run all the subsidiary business units – airlines, food service, automobile manufacturing, etc.

All the independent brands of this “magacorp” still exist. When you go to Starbucks to get a coffee, it’s still a Starbucks and that business unit has their own performance goals to meet. Pepsi and Coke still compete. You can go to Walmart or Saks Fifth Avenue to buy clothes, and fly a plane from NY to LA on whatever airline you choose. But in the end, the profits go to the top, and dividends are paid out to shareholders – who are mostly employees.

Now in my fantasy scenario, there are people that don’t want to work for the megacorp. They have innovative ideas for new products or simply want to build their own businesses. Megacorp thinks this is fine, and they don’t try to crush these small innovators. They don’t rush to come out with their own competing products if they didn’t come up with the idea first. However, if the small entrepreneurial company is successful with their new idea and they do hit it big with a viable long term business, it is understood that their “exit strategy” is to eventually sell out to the megacorp. Their innovation is rewarded; the founder will get enough shares from the acquisition to either retire early, or land a sufficiently high level management position within megacorp – maybe on the governing board that acquired his or her company.

Small business owners who have a niche can still run their independent businesses – there is still a need for local services, artisans, craftsman, restauranteurs, home repair specialists and landscapers, doctors and dentists. If they work hard and do well, they can be very successful on their own. They may still be shareholders in megacorp even if they don’t work there.

But employees that do work for megacorp have good jobs, stable employment, retirement, and an equal say in how things are run. Profit is still the goal; an efficient and well-run company generates massive profits – and the profits are distributed to shareholders.

Now don’t get me wrong, I don’t think this scenario is feasible in the slightest. There are hundreds of reasons as to why it wouldn’t work. Frankly, it’s pretty silly. But I do want to ask one simple question:

Is this megacorp the ultimate in capitalism, or the ultimate in communism?

 

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