Stockholders are left with the power to remove, which can be likened to the power of Congress to impeach. They have the advantage of a hypothetical watchdog, requiring the execution of certain formalities, like a company's annual reports. What was envisioned as supplementing stockholders' rights was the concept of the public's rights. A WorldCom CEO who dissimulates damages his stockholders, but hurts also a public that, taking heed of what happened at WorldCom Inc., hesitates to back other ventures, slowing down the dynamic of capitalism and inducing skepticism about the very idea of private enterprise.
Congress is busy trying to come up with revised systems of auditing. The most prominent reform being discussed is outlawing the accounting firm that acts in a second capacity as company consultant. That idea would seem to be commendable, though the practice of it could be hard on the smaller of the 16,000 publicly traded companies that would now have to add an entire service echelon to the cost of doing business.
What is needed quickly and extensively is: punishment.
In the late l930s, no less a figure than a former president of the New York Stock Exchange went to jail for the misuse of funds. This is not a call to the denial of due process, but a call to the legitimate use of public punishment as a retributive act.
In the public-school lore of Great Britain there is the story of the senior boy nailed for public indecorum and had up for a flogging. He pleads, in deference to his seniority, to be punished outside the view of voyeuristic fellow students. Permission denied, on the grounds that the public humiliation was an essential part of the punishment.
Richard Whitney was sent to jail in l938. We need his successors to go to jail in 2002. The alternative is to sit by, supine in the gestation of a managerial class that violates the very idea of a capitalist class bound by laws and practices which make it a proud part of a free economy, whose leaders in large enterprises have done their best to discredit.
This is a very real public issue and inevitably will separate many Republicans from many Democrats. The possibilities open to demagogues are great. But the Republicans would do eternal disservice to their responsibilities if they failed to take action against the great post-Marxian challenge to capitalism.