To live within the truth

In my new book, I discuss an often overlooked history – the evolution of corporate governance from the late 19th century to its current form, in which the doctrine of shareholder primacy is the guiding principle. This reductive view, which was made law by the Delaware Supreme Court in 1980, treats the corporation not as an entity with a mission that needs to be tended to and maintained but merely as a financial instrument for generating returns. But here’s the wild things. As I write in Incorruptible:

One of their main claims, in fact, is that there’s “a widespread normative consensus that corporate managers should act exclusively in the economic interests of shareholders.” That’s it. The understanding that currently shapes our entire financial system is based on collective agreement that it’s both how it is and how it should be. And that means that simply disagreeing can help dismantle what feels like an unbreakable system.

I was reminded of this by a great essay that dropped into my inbox the other day. It tells the story of Anna Walentynowicz, a Polish shipyard crane operator. She “spent years writing for and distributing an underground newsletter called Robotnik Wybrzeża, The Coastal Worker, which talked about things the official press could not: thefts at the shipyard, accidents nobody was reporting, the corruption of the official union. Every December on the anniversary of the 1970 strike, when security forces had killed fifty striking workers on the Baltic coast, she went out and collected money to buy memorial flowers, and every year the police arrested her for it.” Finally, she was forced out of her job in the summer of 1980. 

Though she was far from the only woman to be fired for such actions, her departure kicked off a chain of events that led to the Polish Solidarity movement, the rise of Lech Walesa, and eventually to the breakdown of the USSR. As the essay continues: “What Anna set in motion went on to dissolve an empire that, on the morning she walked out, had looked permanent.” 

Instead of buying into the collective understanding about how the world worked, Walentynowicz followed her own beliefs about what mattered, showing how the power of individual choices can effect reform on a previously unimaginable scale. She refused to accept, tacitly or otherwise, what everyone else did and by doing so, exposed its weakness. 

The essay goes on to discuss perhaps the most famous articulation of what Anna Walentynowicz was doing: Czech dissident and later president Vaclav Havel’s phrase, “living within the truth.” It comes from his long 1978 essay, “The Power of the Powerless.” Havel tells a parable about a greengrocer who dutifully hangs a sign with the Communist slogan “Workers of the world, unite!” in his window every morning, just like everyone else. As to his motivation, Havel writes:

But what if this fictitious greengrocer just decided not to hang the sign one day? In Havel’s telling, “He rejects the ritual and breaks the rules of the game…He gives his freedom a concrete significance. His revolt is an attempt to live within the truth.” He’s broken the pact with the normative consensus, and by doing so, gives other people a chance to announce they also disagree (in Havel’s words, “by his action, the greengrocer has addressed the world. He has enabled everyone to peer behind the curtain.”).

Right now, we’re all pretending that shareholder primacy is a good idea. But when I ask around, I can’t find anyone who actually believes it. It’s just that no one wants to be the greengrocer. The shared fear of breaking ranks upholds all kinds of systems.

So ask yourself: Are you part of this normative consensus or not?

If not, tell a friend tomorrow. Just say you don’t believe in shareholder primacy out loud. You might find out they agree with you.

In this way, we can create a cascade of people living within the truth that companies should be for more than just making their shareholders rich. Before too long, it could be enough to puncture the normative consensus around shareholder primacy (remember: that’s all we need to do – since there’s nothing to overturn, there’s no need to convince anyone). We’ll of course let its advocates come forward and make their case – though I don't think there are many, if any. 

Then let’s see what happens next. 

I am doing an experiment, and I'd like to invite you to join me. Independent bookstores are under tremendous pressure these days, thanks to multiple megatrends that are crashing over them like waves on sandcastles.

But, despite it all, they are important community institutions. I treasure them whenever I have a chance to wander their aisles. I've been trying to think about ways to support them.

Since I'm launching a new book, I'm spending basically all day every day trying to convince people to pre-order it. Books depend on early word of mouth to either sink or swim, and having passionate early adopters actually get the book on Day One is the most essential ingredient.

As we get closer to the May 26 launch date, online and big box retailers are discounting the book, making it less attractive to buy at the local indie.

So I am reaching out to local bookstores, asking them if they will provide a discount for people in their community who want to pre-order. So far, the response has been great.

If you’re ready to pre-order your own copy, you can find Incorruptible on bookshop.org, where your purchase will provide direct financial support to local bookstores. Right now Bookshop.org is matching Amazon’s pricing. 

If you are interested in pre-ordering 25 or more books for your company, team or just fellow mission-driven leaders you know, please reply to this email. I can get you at least a 30% discount and possibly more. 

Thanks for being part of this experiment! I’ll keep you posted...

Eric

P.S. Here’s a shot from this past week, when I virtually joined Morgenstern’s in Bloomington Indiana in collaboration with the entrepreneurship communities at Indiana University, Ivy Tech Community College, and Amplify Bloomington.