From Fourth International, Vol.13 No.4, July-August 1952, pp.101-103.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
Proofread by Chris Clayton (July 2006).
The new Brookings Institution study, Share Ownership in the United States, dealing with the ownership of shares in American corporations, was published on June 30. Newspaper readers will recall that this report was greeted with great fanfare by the daily press. The world was told that the Brookings survey proves that this nation is owned “democratically.” Actually, the report contains no such proof. It proves the very opposite.
The Cleveland Plain Dealer contended in a July 2 editorial:
“The fact that 6,500,000 American citizens have a direct, undisguised stake in American business and industrial enterprise should destroy, once and for all, the specious notion that corporations-for-profit are owned predominantly by a coterie of plutocrats whose financial and spiritual home is Wall Street ...
“Politically, the findings of the Brookings Institution should be regarded as complete refutation of the demagogue’s propaganda to the effect that American business and industry is owned chiefly by a rapacious, profit-hungry few.”
The Plain Dealer rests its whole case upon one figure: 6,500,000 shareholders. With all due respect to the Plain Dealer and the other papers which took this line, this figure proves nothing at all until it is analyzed as follows:
The first thing to be noted about this 6½ million shareholders figure is that it came as a great surprise to offical economic, forecasters. Most advance estimates had been much higher, some going as high as 20 million share-owners. In the face of this advance billing, the real figure was shocking, not to the Marxists, but to the professional Marx-killers who expected a striking refutation of socialist claims. It must be said for them that they concealed their surprise very gracefully, and hailed the results of the Brookings study with admirable sang froid. In almost all cases, the fact that the findings fell far short of expectations was not even mentioned.
Only one out of every sixteen persons, or 6.4% of the adult population, has any share in the ownership of US corporations. In other words, 93.6% of the adult population has no share whatever, not even the smallest, in the corporate wealth of the nation. Any editor who can twist this around to make it show that corporations are not “owned predominantly by a coterie of plutocrats” deserves a Pulitzer Prize, and will probably win one some day.
There remains another possible justification of the claim that 6½ million shareowners proves something “democratic” about American capitalism. It is possible that, although the present number of stock owners is small, the trend is in a “democratic” direction; that is, perhaps the number of shareowners is growing with the passage of time.
The Brookings survey provides some information on this point. In the late Thirties, the congressional Temporary National Economic Committee worked out an estimate of the number of share owners at that time. The results are included in an appendix to the Brookings study. Not one major newspaper or press service saw fit to mention this appendix, and the reason is that the TNEC study reached this conclusion:
“It was estimated that in 1937 there were from eight to nine million shareowners who held stock in at least one corporation ... The limits were determined on the basis of separate estimates made by jour methods largely independent of each other.”
Now if in 1937, out of a population of less than 130 million, there were eight to nine million shareowners, and in 1951 out of a population of 155 million only 6½ million, then the trend of shareowners as a proportion of the population must be downward at a very sharp rate. As a matter of fact, the percentage of the adult population owning stock was cut almost in half between 1937 and 1951, from about 10–11 % in 1937 to 6.4% last year!
The fancy estimators who thought, before the Brookings study, that there must be as high as 20 million stock owners today made their very drastic error in a very simple way. They knew the 1937 TNEC estimate, and figuring that the country is about twice as prosperous now as it was then, calculated that there must be at least twice as many share owners. But they don’t understand capitalism and capitalist prosperity.
The last dozen years of war prosperity have not created more capitalists and fewer workers. On the contrary, in accord with the basic tendencies of capitalist accumulation, the working-class population has been enlarged at one end of the scale, while at the other end the concentration of wealth has been increased. This is the inherent mode of capitalism, as revealed by Marx almost 100 years ago in his explanation of the social process of the accumulation of capital.
We turn now to our next question: How is the nation’s stock distributed among these 6½ million owners? The Brookings Institution survey spends dozens of pages describing the age groups, geographical distribution, size of family, educational bracket, etc., insofar as they are related to stock ownership, but it has no breakdown at all on this most important point. Is it possible that the Institution found this information so strikingly demonstrative of the existence of a corporate plutocracy that it stayed away from this point entirely out of deference to Wall Street? That is quite possible and even likely. Such a very important matter would never have been omitted accidentally.
However, although the report has no information on shareowners, it does have a great deal on shareholdings from which we may draw rough inferences about the shareowners of the nation. The difference between these two categories is this: A shareowner is a person owning stock, while a shareholding is a parcel of stock owned by one person. There are, according to the survey, about 201/3 million shareholdings on record in the nation, and these are owned by about 6½ million people. This means that shareholdings are distributed on an average of three to a person. The “average” shareowner owns parcels of stock in three corporations.
The holdings are actually very unevenly distributed. Almost half of the 6½ million owners have only one holding. Another million have only two holdings apiece. This means that in the upper brackets, individual owners must have many shareholdings each. We find this corroborated by further facts in the report: the top 20% of the shareowners have 5 issues or more, and the top 8% have 10 issues or more.
If we assume that three shareholdings represent one shareowner, we can get an idea of the way stock is distributed among the 6½ million owners. Of course, by this method, we get a very conservative idea: the extent of concentration will be much greater because, as we have seen, large numbers of owners have one or two holdings, and small numbers of owners have many holdings. We have, however, no reasonable way of including that factor into our calculations, and so the reader should keep in mind that the following estimates give an understated picture of the extent of stock concentration.
The Brookings report divides all shareholdings of record into three categories: blocs of 1–99 shares, blocs of 100–999 shares, and blocs of 1000 shares and over. This is done for common stock, which constitutes about 90% of all corporate stock, and for preferred stock. The following calculations are based upon the sum of both common and preferred stock.
The lowest category of shareholdings, between 1 and 99 shares to the bundle, take in most of the shareholdings of the nation, but takes in very little of the stock of the nation. The exact figures are really startling: Fully 69% of all shareholdings are in this 1–99 shares category, but these tiny holdings put together only add up to about 14% of the total market value of all shares.
If we translate these shareholdings into shareowners, we find that an owner in the lowest category owns about 81 shares of stock with an average market value of $41 a share and an average total value of $3912. Such a holding gives the owner neither any power in the corporations nor any significant income. And we have very good reason to believe that about 4½ million of the 6½ million share owners in the country fall into this category.
What would the average income from dividends be in this grouping? Running our finger down the latest New York Stock Exchange listings, we find that Continental Can, paying a dividend of $2, is quoted at a little more than $41 a share. Our small owner, equipped with an average of 81 shares, would find himself the proud recipient, once a year, of a dividend check for $162. Or, if he owned $3912 worth of better paying American Telephone & Telegraph, he would possess 25 shares paying $225 a year. Not exactly J.P. Morgan style.
The New York Daily Mirror, in an editorial on the Brookings report, said that the 6½ million stock owners are “capitalists.” But the above figures show that, when we call at least 4½ million of these 6½ million people “capitalists,” we are only mocking them. The people in this category are only “capitalists” as a sort of a hobby, but for purposes of making a living, they must have some more serious form of income. Some of them are full-time wage workers, whose stock ownership does not mean any more to them or their standard of living than the ownership of a few US government Defense Bonds.
The report gives some figures for working class ownership of stock which we reproduce in the following table:
|
|
No. Owning |
|
Total No. in |
|---|---|---|---|
|
Skilled Workers and Foremen |
410,000 |
9,310,000 |
|
|
Public Service Workers |
40,000 |
1,180,000 |
|
|
Semi-Skilled Workers |
210,000 |
15,090,000 |
|
|
Unskilled Workers |
10,000 |
5,640,000 |
|
|
Unidentifed Occupations |
* |
390,000 |
|
|
Totals |
670.000 |
31,610,000 |
The groups included in this table represent a large part of the American working class, and probably the whole of the industrial working class. The really sharp demarcation of the classes in America is made very clear by the above figures. Only 610,000 workers out of more than 31 million or about 2% of the class including foremen, are owners of stock, and, as we have shown, own such small amounts that their budgets are not very much improved by the dividends.
Of course it is theoretically not excluded that some of these workers or foremen own large blocs of stock, paying substantial dividends. But this assumption is completely unreasonable on the face of it. It must be understood that if a worker owned enough stock to support his family on the dividends, he would quit being a worker. In years of acquaintance with many hundreds of industrial workers, I personally have met only one worker who owned any stock, a legacy from a near relative. The annual dividend he received would purchase a cheap radio for his car, but hardly anything more than that.
These very small owners, as we have pointed out, probably include about 70% of all stock owners, or about 4½ million of the 6½ million shareholders. This whole big group owns only 14% of the market value of all stocks. Now how about the top groups – those owning blocs of 1000 or more shares?
This top group includes only 2% of all shareowners, possibly 150,000 individuals. This tiny oligarchy owns outright 56% of the total market value of all stocks of the nation. This doesn’t look much like the “democratic” picture emblazoned in the newspapers when the Brookings report appeared, but it is the fact of the matter, as it actually appears in the text of the Brookings report. This fact also was unreported in the papers.
The Brookings report actually proves everything which the press seeks to deny as “falsehoods” of “Marxist demagogues.” It shows that the corporate stock is actually concentrated in very few hands: that fully 93.4% of the adult population is totally excluded from all stock ownership; that of the remaining 6.4% most are small owners with negligible corporate income and nothing to say in the running of the corporation; and that the remaining few who may have some control over the corporations and who do receive sizeable dividend incomes constitute only 2% of the shareowners and thus less than 2% of the adult population. This is not itself the tiny Wall Street oligarchy that dominates the corporate wealth of the nation; that oligarchy is a still smaller group contained within this small segment of the population.
Financial interest groups representing only a few dozens of individuals can and do dominate giant corporations or whole groups of such corporations. For example, General Motors Corporation, with close to half a million stockholders, is dominated by the Dupont interests. The Duponts, holding about 23% of the voting stock, control the basic policies of General Motors without any difficulty. This picture has been generally well documented by the Temporary National Economic Committee and by Ferdinand Lundberg in his book America’s 60 Families at the end of the Thirties. If it were brought up to date, it would show far more concentration now than then.
This then, is all there is to the legend about “a nation of capitalists.” Like all fairy tales, it is intended to bemuse the mind, but, also like all fairy tales, it fails to convince those who live in the real world. To the tireless Marx-killers, we award an A for effort, but, so far as results are concerned, they have failed once again.
Last updated on 19.7.2006