Academic

 In its practice of ruling the country over the past five decades and more, the CPC has developed a series of important theories on, and established an institutional system of, democratic rule, and is actively exploring new ways and new methods of democratic rule. The sense of democracy among the CPC members has been continuously enhanced, and notable progress has been made to improve the democratic work style of Party officials at all levels. Democratic rule means that the CPC sticks to the principle of ruling the country for the people and relying on the people in its rule, guarantees that the people are the masters of the state, upholds and improves the people's democratic dictatorship and the democratic centralism of the Party and the state, and promotes people's democracy by enhancing inner-Party democracy. (From Information Office of the State Council of the People's Republic of China, Building of Political Democracy in China,  October 2005, Beijing, Chapter 8)

After a quarter-century of conspiracy and struggle, the great day came at last for China's Red conquerors. In Peiping's crumbling Imperial Palace, under the golden tiles of bygone Mings and Chings, the Communists last week proclaimed their new dynasty. . . .  
In the pillared hall, 636 delegates of the "Chinese People's Political Consultative Conference" cheered deliriously. A 49-piece brass band blared Red songs.
China's new people's republic would be strictly Soviet style. According to the principle of "democratic centralism," party rule would be exerted downward through a tightly knit administration. The "people's" conference was not elected by anyone, but appointed by the Communist bosses. Neither Mao Tse-tung nor any of his comrades had a "mandate" from the people. Mao described the new regime as a "people's democratic dictatorship." (From China: Democratic Dictatorship, Time, Oct. 3, 1949).

Risks are always accompanied with opportunities. Facing the increasingly rigorous competition, we will rely on the solid strength of China National Machinery Industry Corporation, give full play of the comprehensive advantages of ?United Engineering?, and strive to create development platform for "China United Engineering Corporation." We advocate the management culture of "seeking truth from facts, democratic centralism, people-oriented and harmonious development", always try our best to create an inner "equal, fair and harmonious? environment and follow the development conception of "development for the staff, by the staff and to the benefit of the staff?. While continually doing better in designing and consulting business, we will improve our ability on general engineering contracting and project management, explore capital operation carefully, develop new business steadily, and participate in international competition actively. We are dedicated to becoming the first-class international engineering company in design, procurement, and general engineering contracting. (From General Manager Speech, China United Engineering Corporation).

The Guangxi Golden Thtoat Co.,Ltd has a united and enterprising leading body,headed by President Jiang Peizhen .The board's members make decisions in a scientific and democratic way;they support each other and coordinate with each other.They emphasize studying,taking political stands and moral spirit ,and they have a new mindset and determination carry out reforms.They are incorruptible and self-disciplined,and they insist on democratic management and decisions based on scientific reasoning.Holding on to the principles of democratic centralism,they make decisions on important problems after discussions by the Board of Directors,the Party Committee,employee representatives' conferences and shareholder representatives' conferences.
Adhering to Deng Xiaoping's theories and the essence of Jiang Zeming's "Three Represents,"the corporation's leaders often trust and rely on the employees.The corporation's leaders also put a lot of emphasis on developing an enterprise culture,which strengthens the corporation's cohesiveness. (From Guangxi Golden Throat Group About US).

Still, is it possible to argue that democratic centralism, and capitalist authoritarianism retain a place in American corporate governance in a way that is not alien to the language of Chinese political culture, and that itself provides an alternative basis for harmonization? Let's turn the usual analytical framework upside for a moment and consider the consider the ramifications of an analysis of American corporate governance principles from the starting point of democratic centralism as a basic organizing principle of corporate governance.  Almost a decade ago the anti-democratic element of American corporate governance was not unknown, nor well hidden.  That was a sense that commentators, for example, suggested from the well publicized share offering of Google in 2004.    

Google thus thumbs its nose at one of the major pieties of our day: shareholder democracy. This has been the high-minded response to Enron and the other corporate-looting scandals: Shareholders should have more say -- or, more precisely, some say, since now they basically have none -- about the management of their companies. That way, management couldn't so easily overpay itself or loot the company in more dramatic ways. The Securities and Exchange Commission is considering rules to make it easier for large institutional investors, at least, to challenge management nominees for boards of directors.
It's democracy. Who could be against it? Yet just this week, despite Enron, WorldCom and all, investors kicked and clawed to put money into a company that, in democratic terms, might as well be the old Soviet Union. Apparently they don't care. They want to be serfs. Are they nuts? Financial masochists?
Well, they think they're going to get rich, don't they? And, like the citizens of Singapore, they would rather be rich than free, at least in this narrow context. They cling to this view despite studies waved around by shareholder democracy enthusiasts showing that companies with some fundamental democratic reforms do better than companies without.
More important, and unlike the old Soviet Union, Google will let you leave anytime you want. You just sell your stock. (From Michael Kinsley, Voting 'No' on Shareholder Democracy, Washington Post, Aug. 22, 2004).

But perhaps focusing on shareholder democracy misses the mark, at least in states organized like the United States.  A more relevant measure, one that is controversial within both corporate and political governance circles, is that of enhancing the power of putting forward shareholder resolutions, a method of participation that comes as close as corporate governance dares to the referendum legislation mechanics popular in states like California.  This, too, is sometimes known in the popular pres as "shareholder democracy."

Shareholder proposals are nothing new. According to Securities and Exchange Commission (SEC) rules, any shareholder of a publicly traded company that has held $2,000 worth of that corporation's stock for at least a year can send in a proposal to be voted on at the firm's annual meeting. The proposals have to be about general business practices and not day-to-day operations, which are considered to be at management's discretion. Companies include the proposals, along with management's recommendations on how shareholders should vote, on the proxy statements they send out to all shareholders once a year. Typically, most proposals that don't get management approval are voted down.
But a number of changes may make proxy proposals more contested this year than usual. Last year, the SEC ruled that brokers are no longer allowed to vote on behalf of clients who had declined or forgot to send in their proxy statements. Corporate critics claimed this was a form of ballot stuffing because brokerage firms routinely voted with management. And a number of websites like Moxy Vote have popped up that make it easier for individual investors to see shareholder proposals and vote. Lastly, in the past year, the SEC, which has final say on what proposals can be put up for vote, has been giving shareholders more leeway in what can be included in proxies. (From Stephen Gandel, Nuns vs. Bankers: The Shareholder Proxy Wars, Time, April 21, 2010)

But perhaps democratic centralism as an ordering principle of American corporate governance are most relevant in the analysis of the relationship between a Board of Directors and corporate officers.  One might consider the board of directors in the position of a party in power (serving in the interests of and subject to the ultimate sufferance of the people--in the corporate case, its shareholder/stakeholders) whose democratic dictatorship extends to the apparatus of government of the corporate enterprise.  That enterprise is operated through the organs of everyday governance headed by corporate officers, roughly the national people's congresses of the enterprise.  In this context, the core corporate governance notion of the relationship between a board of directors ("The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors" Delaware Corp. Code, Section 141(a)) and its officers suggests the compatibility of democratic centralism principles and American corporate governance.

But the reality of corporate governance suggests a more complicated relationship.  On example will homew this point.  Consider the Bank of America's description of that relationship:

The basic responsibility of the Board is to oversee the Company?s businesses and affairs, and to exercise reasonable business judgment on behalf of the Company. In discharging this obligation, the Board relies on the honesty, integrity, business acumen and experience of the Company?s management, its outside advisors and the Company?s independent registered public accounting firm. (BANK OF AMERICA CORPORATION Corporate Governance Guidelines, As of December 14, 2010, Sec. 7)

What result?  The idea that corporate governance reflects the fundamental political orientation of the state from out of which corporate governance is drawn remains a powerful insight.  More interesting, even though differences in national political culture tends to be reflected in corporate governance cultures, corporations tend to behave in ways that suggest a functional convergence.  However, the meaning and thrust of that convergence, can be understood quite differently depending on the political cultural values used in the assessment.  Americans should be wary of assuming that their political orientation unquestioningly serves as the basis for understanding or assessing corporate governance and its character.  That assumption might have been easier to defend in the days of unchallenged preeminence of American companies.  But that is not the case now.  And some states, particularly China, are rapidly trying to change the framework within which discussion of functional convergence is undertaken.  See Larry Catá Backer, Fracture, Translation or Substitution in Knowledge Production: 19th Century European Ethnic Nationalism With 21th Century Chinese Characteristics, Law at the End of the Day, Dec. 9, 2011.  This essay has suggested the danger of assuming that corporate and state governance are invariably (or usually) distinct and that such distinct spheres of governance can be  understood to converge on the basis of some sort of set of universal understandings of "best" or "ideal" presumptions or norms.  However, convergence is some sort is likely, as a functional reality, not because of the convergence of national governance frameworks, but because of the deepening of the normative frameworks around which economic globalization is organized.  The understanding of that functional convergence, ironically, will be a function of the normative assumptions of the political governance framework of the analysts. Americans  assume that this political framework will invariably be one grounded in American political principles at their peril.  Other states, powerful states, have already begun, quite deliberately, to put forward their own frameworks as an organizing basis for such converging trends.  That these alternatives can serve as a rational basis for  policy deliberations about corporate governance is readily apparent.