Projected Reach of Commons Enterprises in the United States

Reference code: C25-12

Recent data from the Federal Reserve and related analyses show just how concentrated wealth has become in the United States. The Federal Reserve’s Distributional Financial Accounts, summarized in a June 2025 article from the Federal Reserve Bank of St. Louis, report that the top 10 percent of households hold about 67.2 percent of total household wealth, while the bottom 50 percent hold only about 2.5 percent. A separate FRED series on the share of net worth held by the top 1 percent indicates that this group’s share reached around 31 percent of total net worth by mid 2025.

Stock market wealth is even more concentrated. Axios, drawing on Federal Reserve data, reports that roughly 93 percent of U.S. households’ stock market wealth is held by the top 10 percent of households. This means that when conventional corporations direct surplus into dividends and stock buybacks, the gains overwhelmingly accrue to a narrow slice of the population.

At the same time, the position of workers in the income distribution reflects long structural shifts. A detailed Brookings Institution paper by Michael Elsby, Bart Hobijn, and Aysegul Sahin finds that labor’s share of income in the United States, as measured by the Bureau of Labor Statistics, historically fluctuated around about 64 percent in the postwar period but trended down over the last quarter century to around 58 percent by the early 2010s, reaching its lowest level in the postwar era following the Great Recession. IMF and OECD work on advanced economies generally confirms a downward trend in labor’s share since the 1980s in many countries, including the United States.

Union membership has weakened sharply over the same period. The Bureau of Labor Statistics reports that the union membership rate in 2024 was 9.9 percent of wage and salary workers, compared with 20.1 percent in 1983, the first year with comparable data. This erosion of collective bargaining power has left many workers with less influence over corporate decisions, even as gains from productivity and asset appreciation have flowed upward.

A scenario in which commons corporations and their wholly owned subsidiaries become the prevalent form of enterprise has to be read against this backdrop of high wealth concentration, a modest downward trend in labor’s share of income, and historically low union density. The question is what combined economic and political reach such entities would have if they transformed from a minority experiment into the dominant institutional form.

Key Structural Assumptions about CCEs

Under the design being considered, several structural features are fixed. The commons corporation sits at the top of the group, incorporated as a nonprofit entity that does not qualify as a charitable or social welfare organization in the sense used by Internal Revenue Code sections 501(c)(3) or 501(c)(4). It has no public or charitable purpose in the legal sense and does not seek tax exemption on that basis. Instead, it acts as the governance and ownership hub for one or more market facing subsidiaries.

Each subsidiary is defined as a legal entity that is wholly owned, at 100 percent, by the commons corporation and conducts ordinary commercial operations in competitive markets. Partial ownership structures, such as 51 percent stakes or joint ventures where the commons corporation holds less than full ownership, are not treated as subsidiaries for purposes of this framework.

There are no private investors at any level. Managers, directors, lenders, and other stakeholders do not hold residual capital claims. Surplus after expenses and reasonable operating reserves is retained inside the CCE system, to be allocated by rule among funds dedicated to premium wages, broad based benefits modeled on Nordic social protections, education and training, internal reserves, and the acquisition or conversion of additional subsidiaries. These are factual assumptions of the model, not claims about existing law or practice in the current economy.

Communities enter this design only as the context within which enterprises and workers live and operate. The model is not framed as a vehicle for broad public or community benefit in the charitable sense, even though its internal rules may produce positive spillovers into local economies.

Macroeconomic Distributional Effects in a CCE Economy

If CCEs become the prevalent enterprise form over several decades, the most direct macroeconomic shift concerns the distribution of income between capital and labor and the resulting patterns of wealth accumulation. Existing research on the decline of labor’s share in the United States shows that a growing portion of national income has flowed to capital rather than wages since roughly the 1980s. Because ownership of capital is highly concentrated at the top of the wealth distribution, an increased capital share of income mechanically amplifies wealth inequality.

By structurally eliminating private residual claims and treating surplus as an internal commons, CCEs reverse this distributional channel at the firm level. Instead of distributing surplus through dividends or stock price appreciation that mainly benefit the top 10 percent of households, surplus is re routed toward wages, benefits, and reinvestment inside the CCE structure. Given that the top 10 percent currently hold roughly two thirds of household wealth and an even larger share of equity wealth, while the bottom 50 percent hold a very small fraction, this rerouting would, over time, tend to thicken the wealth holdings and income stability of the lower half of the distribution.

The precise macro effect would depend on the share of GDP generated by CCEs relative to legacy investor owned firms. If CCEs dominate major sectors such as manufacturing, logistics, health care services, and parts of technology, they would re anchor the labor share of income upward in those sectors because the surplus that would otherwise be paid out to shareholders is instead recycled into wages, benefits, and internal funds. The empirical literature shows that declines in labor’s share are associated with wage growth lagging behind productivity. A regime where enterprises are structurally committed to allocating surplus toward labor and long term investment would push in the opposite direction, aligning wage growth more closely with productivity and reducing the divergence that feeds inequality.

Effects on Capital Markets and Financialization

The move from traditional corporations with tradable equity to CCEs with no private residual claims would reshape capital markets. Today, capital income for wealthy households is heavily tied to the value of corporate equity. Analyses based on Survey of Consumer Finances data and Federal Reserve distributions show that the wealthiest households hold a large share of their portfolios in equities, while lower wealth households hold relatively little.

In a CCE dominated system, there are no shares representing claims on residual surplus. Financing for expansion and acquisition flows instead through retained surplus and debt instruments. Lenders still earn interest, but they do not hold ownership stakes. Over time, this reduces both the volume and the centrality of publicly traded equity. That change would naturally dampen the direct link between stock price movements and household wealth for the affluent segment of the population, because a smaller share of aggregate corporate surplus would be capitalized into market valuations of shares.

The academic and policy literature on financialization has documented how, in recent decades, firms in the United States and other advanced economies have often used profits to fund share repurchases and dividends rather than new physical or intangible investment, sometimes contributing to weak business investment rates. A CCE regime in which there are no outside shareholders to satisfy shifts management incentives. Surplus is not used to defend or inflate share prices. Instead, pressure arises to demonstrate that surplus is being used effectively to support wage stability, benefit promises, training programs, and the capacity to acquire additional subsidiaries.

Financial markets do not disappear, but their composition and influence change. Bond markets, bank lending, and possibly specialized funds that hold CCE debt remain important. However, the ability of wealthy households to amplify their economic and political power through equity ownership in the largest firms diminishes because that channel is structurally closed.

Transformations in Labor Markets and Work

The labor market effects of a CCE dominated economy would build on these distributional shifts. The BLS data showing a union membership rate of 9.9 percent in 2024, down from 20.1 percent in 1983, capture a long term weakening of independent worker voice. In the CCE framework, worker voice is not primarily mediated through external unions or collective bargaining, although those may still exist. It is embedded structurally through defined board representation and specified veto rights over certain transactions involving personnel and property inside the subsidiary.

When this design is scaled to the level where CCEs are prevalent, several effects follow. Workers across broad sectors would experience governance as something they participate in rather than something done to them. Their influence does not extend to turning the entity into a worker cooperative with capital accounts, but it does extend to blocking certain forms of alienation and to shaping surplus allocation priorities within the guardrails set by the commons corporation and its funds.

Research on declining labor shares and rising inequality emphasizes that when labor income fails to keep pace with productivity, distributive tensions increase and households face greater precarity. CCEs respond by institutional design, not by after the fact bargaining: surplus is committed ex ante to wage, benefit, and reinvestment funds, so that austerity measures designed primarily to protect shareholder distributions are not part of the picture. In downturns, boards still face hard choices, but those choices revolve around how to share sacrifice while maintaining internal funds rather than how to preserve dividends or stock prices for outside investors.

Over decades, this would likely produce a labor market where expectations of stability and participation are thicker. Workers would expect wage paths and benefit coverage that track more closely with firm level performance, because the main claimants on surplus are internal funds that directly support them and the institution’s long term viability.

Regional and Sectoral Dynamics in a CCE Landscape

If CCEs concentrate in particular regions or sectors, the pattern of local economic development changes. Because surplus is retained and recycled into wages, benefits, and local investment rather than distributed to distant shareholders, a larger share of enterprise income remains in the communities where workers live. This is consistent with broader empirical work on local multipliers, which has found that each additional dollar of labor income spent locally can generate more than one dollar of local economic activity, although exact multipliers vary by region and sector.

In a CCE dense region, households receive more of their income as wages and benefits tied to productive activity rather than capital gains. Over time, this can produce more stable housing markets, more predictable demand for local services, and a stronger tax base for public services, even though the CCEs themselves do not have a formal public purpose and are not organized as charitable entities.

Corporate Political Power in a CCE Dominated Economy

The second major dimension of reach concerns politics. In the existing system, U.S. campaign finance has been profoundly shaped by decisions such as Citizens United v. Federal Election Commission in 2010 and SpeechNow.org v. FEC in the same year. The Brennan Center for Justice notes that Citizens United opened the door for corporations and unions to spend unlimited amounts on independent political expenditures, greatly expanding the political voice of wealthy donors and corporate entities. A detailed Washington Post analysis of SpeechNow reports that this lower court decision, left unappealed, effectively legalized super PACs and contributed to an increase in super PAC spending from about 140 million dollars in 2008 to more than 4.2 billion dollars by 2024, largely funded by billionaires.

Scholarly work has linked high wealth and corporate resources to disproportionate political influence. A summary of Martin Gilens’s research in Unequal Democracy notes that when preferences of voters in the top 10 percent of the income distribution conflict with those of lower income voters, policy outcomes tend to track the preferences of the affluent, while the preferences of poorer voters have little independent effect. Studies on corporate lobbying and campaign contributions find that higher lobbying expenditures can reduce effective corporate tax rates and that relatively modest campaign contributions can yield substantial tax benefits at the state level.

In a CCE dominated economy, corporate political actors still exist, but their internal incentives change. There are no private shareholders pressing for tax cuts and regulatory changes that raise distributable profits. Instead, boards are accountable to the commons corporation’s charter, which commits surplus to internal funds. This does not automatically produce altruistic political behavior, but it reduces the structural pressure to pursue policies that primarily enrich remote investors.

Over time, the political agenda of CCEs would likely center on maintaining a stable macroeconomic environment, preserving legal space for the CCE form, protecting labor standards and social insurance that complement their wage and benefit structures, and ensuring that financial markets remain capable of providing debt on reasonable terms. While it is possible for any corporate form to seek narrow self interest, the absence of private residual claimants and the presence of embedded worker voice create a different balance of internal pressures compared with traditional shareholder dominated corporations.

Democratic Participation and Social Outcomes

The link between economic inequality and political representation is not speculative. Gilens’s work and related studies show that the policy influence of low income and middle income citizens is weak when their preferences diverge from those of the affluent. Research on “money in politics” has raised concerns that increased corporate political influence can tilt policy in favor of capital and against labor, although there is an active debate and some empirical work finding more mixed effects.

By structurally redirecting surplus toward workers and institutional funds, and away from private capital accumulation at the top of the distribution, a CCE dominated economy would gradually flatten the extremes of wealth inequality documented by the Federal Reserve and St. Louis Fed. As more households experience stable wages, comprehensive benefits, and opportunities for training funded by internal education and benefits pools, their material capacity to participate in civic life increases. People whose basic needs and future security are more reliably met are better positioned to vote, to organize, and to engage in public debate.

In addition, working in institutions that recognize structured worker voice can cultivate expectations of participation and accountability that extend beyond the workplace. When millions of workers develop habits of reviewing surplus allocation policies, questioning management decisions, and exercising limited veto rights, those habits provide a cultural foundation for more demanding democratic participation in the wider polity.

Constraints, Risks, and Countervailing Forces

Despite these promising channels, several constraints limit the reach of CCEs even in a world where they are prevalent. First, other forms of wealth, especially real estate and privately held financial assets outside the CCE system, can remain highly concentrated unless addressed through tax policy and regulation. Existing analyses of wealth distribution show that concentration is not confined to equities but extends to housing and business equity more broadly.

Second, there is no guarantee that commons corporations will always use their political voice in egalitarian ways. They could, for example, align with other large enterprises to seek regulatory advantages or to oppose environmental or labor measures they perceive as costly. The key claim here is not that CCEs are inherently virtuous, but that they lack private residual claimants whose primary interest lies in maximizing distributable profits and share prices, which historically have been central drivers of lobbying for favorable tax and regulatory treatment.

Third, the transition path matters. Law, professional practice, and financial infrastructure are currently optimized around investor owned corporations and familiar nonprofit forms.

Commons corporations and their subsidiaries would need statutory recognition, standardized model forms, and a cadre of lawyers, accountants, and managers who understand how to operate within this framework. During the transition, hybrid forms and legacy corporations will continue playing a major role, and some may attempt to appropriate commons language while preserving investor oriented structures, as critics of stakeholder capitalism already warn.

Overall Economic and Political Reach

Drawing these threads together, a reasonable projection is that, if CCEs become the prevalent form of enterprise in the United States over several decades, their combined economic and political reach would manifest in three broad ways.

First, they would dampen extreme wealth inequality by structurally channeling surplus toward workers and internal funds rather than toward private investors, counteracting the forces that have produced high wealth concentration at the top and a declining or stagnant labor share in recent decades.

Second, they would change the character of corporate political engagement by removing shareholder enrichment as the central objective and replacing it with a mandate to sustain wage, benefit, and reinvestment commitments. This would not remove corporate power from politics, but it would reshape the direction of that power relative to a system dominated by investor owned firms operating in the legal environment created by Citizens United and related decisions.

Third, by giving workers structured influence inside enterprises and by improving their material security, CCEs would strengthen the social foundations of democratic participation. A society in which typical households experience stable employment, meaningful workplace voice, and claims on institutional funds for education and benefits is better positioned to resist the corrosive political effects of extreme inequality that current research and commentary highlight.