Apple recently became the first publicly traded American company to be valued at $1 trillion. It is also the world’s single greatest direct cause of inequality. This claim is not polemical, but statistical: Apple redistributes more wealth upward than any corporation or country on the planet.

Apple redistributes more wealth upward than any corporation or country on the planet.

In fiscal year 2017, Apple counted $229 billion in revenue. That means it brought in more money in sales than all but nineteen countries did in tax revenues last year. While governments then pump most of their revenues back into their own militaries, welfare systems, and infrastructure, Apple pays its suppliers and its workers market rates and then counts billions leftover—$48 billion in profit last year alone. No country comes even close to running such a surplus, and no corporation’s is within $20 billion of that amount.

After announcing its most profitable third quarter ever last month, Apple is already running a 2018 surplus of $45 billion. What happens to this surplus encapsulates the story of inequality in this country and around the world.

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Apple’s revenues come from purchases made by consumers across the entire wealth distribution, but the moment that money hits Apple’s ledger it comes under the control of the elite: most shares of Apple, like most shares of stock in general, are owned by the wealthy. While stock markets have reached record highs in recent years, fewer Americans own stock than ever before, with the top 10 percent of the wealthiest households owning 84 percent of all stock in 2016. (According to economist Edward Wolff, this is up from 77 percent in 2001.) The bottom 80 percent of households, by contrast, own just 7 percent of stocks. The preponderance of Apple’s income is transferred to shareholders, who largely fall into the upper echelon of the economy.

This redistribution is trickle-up, not trickle-down. The resulting concentration of capital at the top results in even more money being made for people who do not have to perform labor to watch it grow. This is the root mechanism by which corporations like Apple contribute to an increasingly unequal society. As Matt Bruenig writes, in 2014 passive capital income accounted for an average of $764,596 per person for those in the top 1 percent, or 58.9 percent of their total income. For those in the bottom 50 percent this number was only $826, or 5 percent of their yearly income.

The top 10 percent of the wealthiest U.S. households own 84 percent of all stock. This is trickle-up economics, not trickle-down.

Apple’s plans to return an unprecedented $100 billion to investors over the next year through stock buybacks will only exacerbate this pool of passive income and thus directly increase income inequality at a level unknown in recent history. Such a huge buyback is possible because for the last decade Apple has been storing profits in overseas tax havens to the tune of more than $285 billion—cash reserves large enough to meet the International Food Policy Research Institute’s yearly goal to end hunger by 2030 and buy Boeing or McDonalds with what is leftover.

In our current economic environment, it is taken as a given that any company that runs a surplus should return it to shareholders—who, after all, own the company. From this perspective, Apple’s buybacks are well within current norms. But there is growing concern among economists that focusing only on returns for shareholders leads to a less prosperous and equitable society overall.

In the Harvard Business Review, William Lazonick writes that between 2003 and 2012 more than 54 percent of the earnings of the S&P 500’s public companies were spent on stock buybacks, with an additional 37 percent going toward dividends. Such allocations “left very little for investments in productive capabilities or higher incomes for employees,” leading directly to increased job insecurity and inequality. In the United Kingdom, about 10 percent of profits were paid to shareholders as dividends in the 1970s, whereas today that number is closer to 70 percent. Andy Haldane, the chief economist for the Bank of London, notes many of the same issues as Lazonick and goes on to state that there are “other models of corporate governance around the world which share the spoils somewhat more equally between a wider set of not just shareholders but stakeholders in a firm . . . that includes its employees, that includes its customers and its clients.”

This is the crux of the issue. To combat inequality corporations must reorient themselves from an outsized focus on shareholder welfare to the welfare of every group whose prosperity and happiness is tied to them: the stakeholders in a company. For Apple and most large corporations, this group includes not only thousands of its own employees, but also the millions who make up its supply chain around the world and the hundreds of millions who own and use their products each day. Lazonick suggests that to begin such a reorientation, U.S. corporate governance should “enter the 21st century” by making sure boards of directors include taxpayers and workers. Senator Tammy Baldwin of Wisconsin recently introduced legislation to limit stock buybacks and require a third of corporate boards to be directly elected by workers.

According to such calls for change, corporations should give stakeholders a share of the power and representation that shareholders enjoy. But to confront inequality in a decisive way, it is not enough to implement reforms which simply aim to tweak the current system. The problem is that the structures of major corporations remain, at base, undemocratic. Instead, we must look for a model of governance in which the stakeholders in a corporation are the shareholders, ensuring that it is for their good that business leaders strive.

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Thankfully, such a model exists. Even though it is largely foreign to the twenty-first-century capitalist American economy, it is already practiced elsewhere around the world, notably in the Emilia Romagna region of Italy and in the Basque region of Spain. The primary stakeholders in any corporation are its workers. An economic model that places them at the center has existed since the dawn of the industrial revolution and persists today: the cooperative.

In Democracy at Work: A Cure for Capitalism (2012), and through his organization Democracy at Work, social economist Richard Wolff advocates transforming corporations into “workers’ self-directed enterprises.” There the employees of a company become cooperative owners and act “collectively and democratically, [as] their own board of directors.” Considering the structure of the typical modern corporation, this is a revolutionary effort.

The workplace is a top-down, hierarchical structure. Unless they own billions in the company’s stock, the Apple store worker who sells iPhones all week or the administrative assistant at Apple’s new $5 billion spaceship headquarters in California receive no effective representation within the decision-making process of the company whose success they make possible. Within a cooperatively owned, worker-directed structure, each worker would own an equal share of the company and have an equal vote in determining its leadership and thus the direction of the business.

Our shareholder-obsessed corporations are not inevitable. They are maintained by the powerful, who have a direct stake in their existence.

The practical implications of such a shift are manifold. An enterprise directed by the workers themselves would allow them to determine the allocation of surpluses. They could, of course, simply spread the profits of the company equally among themselves, which last year would have meant that each of Apple’s 123,000 employees would have received an extra $390,000. In effect, this would redistribute billions of dollars across the middle class, promoting debt repayment, first-time home ownership, and a general economic stimulus. 

As it stands now, more than 3 million people around the world who build Apple’s products work for independent contractors, often for about $2 an hour. In addition, groups like China Labor Watch have faulted Apple for worker suicides and other inhumane conditions in their supply chain and have already called for a share of Apple’s profits to be used to improve conditions and wages within the chain. If each worker were given an equal share of profits, it would garner them an extra $16,116. Cooperative ownership in and of itself would lessen the inequality exacerbated by a corporate model focused on shareholder return. Further, worker-owners would be more cognizant of ways to allocate profits that would benefit not only the enterprise but also the communities and larger society in which they live and work. This would stand in contrast to investment banks or mutual funds, which are headquartered in a few major cities and exist outside the day-to-day functioning of the company.

The potential of a worker-directed enterprise thus goes far beyond simply dividing profits evenly among workers. As activist John Restakis writes, cooperatively owned, worker-directed enterprises have the potential to “humanize” the economy, to push against a culture which has subordinated societal concerns, from education to health care, to an “ideology of predatory competition and profit maximization at any cost.” In Humanizing the Economy: Cooperatives in the Age of Capital (2010), Restakis highlights how cooperatives not only combat income inequality through shared ownership, but also can “begin to reweave the social fabric that has become threadbare around us.” He writes of how cooperative businesses can strengthen civil society and the practice of democracy itself by running successful, democratically organized businesses deeply embedded within their own communities. 

One example stands out. During the Argentine debt crisis of 2001, thousands of factories in Buenos Aires were abandoned by their owners to cut losses and seek profits elsewhere, extracting all capital and leaving workers without months of wages. Workers at the Zanon ceramics plant resisted pressure from the owners and the government to strip the factory to sell its parts. Instead, the workers formed a cooperative and resumed production under worker control. Today it remains a successful tile business integrated into the life of the community, donating money and labor to schools and soup kitchens and constructing a medical center for the local neighborhood.

Apple, of course, is not a single ceramics factory located in a certain neighborhood. It does, however, directly operate and support hundreds of factories around the world with millions of workers. Most of them are overseas. In a cooperative model, workers would have the democratic power to create jobs in their community and to prevent the outsourcing meant only to increase profit margins with no heed paid to their societal cost. This would change Apple’s current structure, which is completely beholden to shareholders’ demand for constant growth and increased earnings. A worker-owned and worker-directed company could more easily and realistically contribute to local causes and charities and more generally utilize their surplus in a way beneficial to society as a whole.

The potential of a worker-directed enterprise goes far beyond simply dividing profits evenly among workers.

Over the last ten years Apple’s public philanthropy totals less than 0.5 percent of its more than $300 billion in profit. For the most part, that profit sat in overseas banks avoiding U.S. taxation. By all accounts, Apple should do more to benefit the society in which it operates and on which it depends for its success. It could easily pay its workers more and improve conditions within its supply chain. As Restakis points out, however, the lack of such commitment is expected. As it stands it is simply not realistic to expect an “undemocratic system to serve democratic ends,” especially when that system is principally concerned with profit margins.

Nothing better illustrates the fact that an undemocratic status quo has become thoroughly entrenched in our economic landscape than the seeming fantastical absurdity of proposing a move toward a democratic cooperative model for Apple and other mega-corporations. And yet, the seventh largest corporation in Spain, Mondragon Corporation, is cooperatively owned, and research by economist Virginie Pérotin has shown that cooperative firms “are at least as productive as conventional firms, and more productive in some areas.” Such examples refute the inevitability of the current system. Activists, and increasingly politicians, have begun to consider a cooperative model more seriously. It is not inevitable that workers should lose jobs and cities be left decimated because companies chase profits overseas only to fail to pay those workers a living wage. And it is not inevitable that its billions in profits should go to the richest.

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The undemocratic, shareholder-focused, profit-obsessed corporate structures we live with and work within in the United States seem inevitable, only because we fail to recognize them for what they are. They are not an unavoidable result of human nature; they are not the market functioning perfectly and efficiently, guided by an omniscient invisible hand. Instead, those structures are created and maintained by those in power who have direct stake in their existence. To start to change these structures we must renew our belief that cooperation, community, and democracy are the building blocks of a just and humane society. And we must extend these principles into the economic sphere.