Leo Strine's Third Way: Responding to Agency Capitalism. (Response to Article by Leo E. Strine Jr. In This Issue, P. 1‪)‬

Ten years ago, Tony Blair's "New Labour" government sought an agenda that replaced ideology with a pragmatic focus on both the creation of wealth and its distribution. Not surprisingly, part of this effort involved proposals to bridge the gap between capital and labor through reframing corporate governance. A "third way" as it was then styled, would walk a fine line between privileging markets and allocational efficiency at the cost of social justice on the one hand, and accepting less for everyone as long as the distribution was fair on the other. Motivated by changes in how we save for retirement that have made workers "forced capitalists," Vice Chancellor Leo Strine in Common Sense and Common Ground offers his own third way: an approach to corporate governance that reflects the dual status of worker-shareholders. But more is needed than the shift in the position of workers from creditors under a defined benefit plan to shareholders under a defined contribution plan, to prompt a strategy for making corporate governance more worker friendly. After all, the U.S. corporate governance system generally privileges shareholders. Whichever side may have won the legal fight in the 1980s over the objective function of the corporation, as a practical matter even the Business Roundtable has come to acknowledge that the corporation's purpose is to maximize shareholder value. If workers are shareholders, their interests will be protected just like those of other shareholders.