[EM] [MG] Helping the Pirate Party to vanish

[Abd ul-Rahman Lomax]

At 05:00 AM 3/18/2013, Kristofer Munsterhjelm wrote:
>On 03/18/2013 09:58 AM, Paul Nollen wrote:
>>Liquid democracy is tested for many years in every big (and small)
>>corporation. It is unthinkable that shareholders have the obligation to
>>give their voice for more than one General assembly to anyone. Every
>>shareholder can vote for himself or appoint a representative at his
>>choice only for that dedicated General Assembly. This system of "liquid
>>democracy" is proven over many years all around the world.
>>It is only in politics that voters are forced to give a mandate for many
>>years for decissions unknown.
>
>The way I understand liquid democracy (and correct me if I'm wrong), 
>people can give their votes to proxies, and these proxies can in 
>turn give their votes to other proxies; whereas in corporations, the 
>proxying happens only once. That is, either you vote or you say "X 
>will vote for me".
>
>(I imagine that if indirect proxying had been possible in 
>corporations, we'd heard more about cycles. But again, I could be 
>wrong. I've never been to a general assembly.)

It is theoretically possible. A corporate proxy is essentially a 
power of attorney. The power of attorney can allow the attorney to 
delegate tasks, and, in fact, this is often assumed. But the 
corporation may have specific rules about what it will recognize.

One of the FA/DP principles is to not expect others to change, but to 
reach out and create structure, among those willing to participate. 
It's not necessary to "get" the corporation to recognize delegable 
proxy, just as there should be no need to "get" the City Council to 
recognise Demoex. There is an action that is a real exercise of 
power, and it remains with the "shareholders" themselves -- 
democratic process, as one-person, one-vote, being equivalent to a 
share corporation in which each original elector has one share.

>Also, for corporations in general, there are arguments that the real 
>power resides as much with the board as the assembly.

It's all subject to the assembly, legally. It must be. However, 
boards may possibly attempt to hinder this in some way, and 
shareholders, individually, have the option of moving their funds away.

>This is given as an explanation for the weird incentive structures 
>that often appear, with enormous bonuses given to executives even 
>when the companies struggle or fail. The recent Swiss Minder 
>referendum can be seen in that light.

Basically, the shareholders are typically not organized except 
through the corporate structure. It's the same with democratic 
societies, where the common people are not organized except through 
the defective power structures of majoritation organizational 
structure. Those structures work, to a degree. But they also fail, 
and FA/DP is a suggestion for how to create coherent public (i.e., 
member, citizen, shareholder) supervision, so that the *actual 
sovereigns* -- the citizens collectively, or similarly the 
shareholders or employees or whatever is the foundation of the FA -- 
can use their individual power wisely and effectively. Are those 
bonuses wise? Probably not, but how is it that the Board favors the 
executives over the shareholders? We can look at the pathology, how 
it works, but it's probably easier to fix it. Shareholders have a 
critical interest in preventing abuse of power by the Board and 
executives. (The Board hires the executives, and it offers golden 
parachutes to encourage what are considered competent, powerful 
executives to work for the corporation. I am not prepared to judge 
that this is *wrong.* It's really up to, with a corporation, the 
shareholders, but corporations really represent or serve larger 
communities, they serve the interests not only of the owners (the 
shareholders), but also the employees (the executives and the general 
employees), the customers, and the whole society in which the 
corporation operates. A sane governing structure considers the 
concerns of *all* these stakeholders.

Hybrid corporations may, for example, involve the employees in 
ownership. They may also attempt to make organizational decisions 
collectively. I'm suspicious, but if it works, fine. It's the right 
of the *owners* to decide, legally, plus there is legal 
responsibility, generally on the corporate officers, to prevent harm 
to society, including employees. More normally, employee-owned 
companies simply consider employees as shareholders, as vested, and 
then the shareholders -- which may also include regular *investors* 
-- manage the company through an elected board which then hires 
executives. Such a structure may be associated with independent 
organizations; I recommend an FA/DP organization to which *anyone* 
can belong, but within it natural caucuses will form that may 
individually represent verious classes of stakeholders. Everyone 
needs advice from other players.

The point is that the legal structure can be *very* traditional, very 
well tested and understood -- and therefore envforceable in court, 
for example. But the *advisory* structure can be very sophisticated 
and empowered to negotiate as broad a consensus as possible.

>In effect, that argument goes that the board can more effectively 
>exercise power than the general assembly can counter it, so the real 
>decisions are made by the board. If this is true, then having a more 
>corporate system in the political domain may not be such a good thing.

No, the general assembly can remove all the board members, at any 
time. If you own a majority of stock in a corporation, you can 
essentially do what you want with it, provided that you don't rip off 
other shareholders. (You *can* rip them off, but then they may be 
able to sue you. You *can* sell the whole corporation to someone 
else. You can shut it down. You can fire any or all of the employees, 
up to and including all the executives. Usually this kind of activity 
is not seen, because it can be difficult to get a majority of shares 
represented. An FA/DP organization might be able to pull it off; 
otherwise corporate raiders do it by buying up stock. It can be 
expensive, unless the corporation has suffered some loss that 
artificially depresses the share value. Sometimes that value has been 
depressed by manipulation, there are huge scandals over this.

Some corporations may have set up bylaws to inhibit takeovers, and 
golden parachutes can be poison pills planted for that purpose. But 
if a board sets something like that for itself, it would probably be 
vulnerable to a shareholder lawsuit to void the measure. If I were 
involved with a shareholder organization, and I saw the board attempt 
something like that, I'd be supporting firing them ASAP, and then 
fighting the demand for payment.... that would be a board failing to 
exercise its obligation to protect and promote the interests of shareholders.

Big theme that's been coming up, a lot, the power of *information*. 
And an aspect of information is *how to coordinate activity to be effective.*

>On the other hand, perhaps the boards are powerful only because the 
>general assembly meets so infrequently.

It's generally called the annual meeting. It is set by bylaw and 
state law may require annual meeting. It could be done more 
frequently. There are supposed to be ways to call a special meeting.

>As an imperfect analogy: "you can accomplish lots of things even in 
>a prison if the guards only look on you once every year". And if 
>*that*'s the reason, then liquid democracy could work in a political 
>setting - at least for advisory purposes.

This is how I see it working: the FA/DP organization ("corporation 
interest group") is *continuous*. It advises, through the DP 
structure, anyone who needs advice, which is not limited to what 
represents the basic exercise of advisory power that is about 
controlling the corporation. So it most specifically advises the 
shareholders on designations of actual corporate proxies, to be filed 
before the annual meeting, according to the rules of the corporation. 
(As I recall, the deadline may be the day before the meeting.)

What usually happens with corporations is that the corporation itself 
sends out proxy solicitations, requesting that shareholders designate 
a named person as proxy. Twere it up to me, I'd disallow boards from 
doing that. Because so many shareholders, wanting to be 
*cooperative*, sign and send in these things, it gives the fox the 
job of guarding the henhouse. That's not really a good example, 
because the board is not necessarily a fox. But it could be. That's 
why boards should really be independent, and why proxies should be 
either names as persons specifically trusted by the shareholder -- 
not someone unknown to them, named by the board -- or they should be 
*not submitted.* What all those knee-jerk proxies do is to make 
actual control of the corporation by shareholders more difficult. But 
a substantial fraction of shareholders organized together could 
address this problem, and fix it. I'm not going to attempt to solve 
the problem here, I'm simply saying it can be done.

>I also note that vote-buying would make less sense in a corporation 
>since voting power is given by wealth, in terms of numbers of shares 
>held, in the first place. And then I wonder if there have been 
>instances of vote coercion on shareholders.

Anything and everything has happened. There have been, I'm sure, 
murders over proxy battles. But that doesn't mean that it's a 
realistic possibility in any given situation.

FA/DP organizations only exercise power through advice. Now, if you 
don't like that advice and want to get rid of it, want to know the 
sure way to guarantee you lose? Turn someone who was really 
representing a broad consensus into a martyr. For starters, they will 
be replaced *immediately*, and then you have a huge group very angry 
with you. Don't try it. Don't even *look* like you might do it. Very Bad Idea.

The political, governmental equivalent can result in the death of 
yourself and your immediate family, sometimes your entire class or 
ethnic group. Do *not* mess with a consensus, it can be deadly. 
Cooperate with it, cajole it, bargain with it, maybe slow it down a 
bit, but don't try to kill it. It can be suicidal.