Corporate Law and the Democratic State

Two prominent progressive senators, Bernie Sanders and Elizabeth Warren, have recently proposed that employees should be allowed to elect 40 to 45 percent of the directors of large corporations. If implemented, such a reform would bring U.S. corporate law substantially closer to European countries like Denmark, Germany, and Sweden, where worker codetermination has long been a central feature of corporate governance.

An extensive body of theoretical and empirical scholarship analyzes codetermination’s economic impact on corporations and their employees. This Article focuses on a different issue. It examines codetermination’s potential for protecting our democracy against the dangers inherent in the accumulation of extreme wealth and power by private corporations.

Concentrated corporate wealth creates the risk that corporations will use their resources to undermine democratic institutions. This Article argues that codetermination can mitigate this risk by splitting corporate voting rights between shareholders and employees, thereby playing a role that is broadly similar to that of the Constitutional separation of powers.