Who Rules America Now ?   THE CONCENTRATION OF STOCK OWNERSHIP (pages 57 - 59)   It is often emphasized in advertising campaigns that there are many millions of stockholders in the United States. In the 1950s the New York Stock Exchange publicized the large number of stockholders by calling the system "people's capitalism," and in the 1960s and 1970s individual companies ran magazine and television advertising that included information on their tens of thousands of stockholders.

During the late 1970s the stocks owned by pension funds were sometimes included in these claims, swelling the number of worker-owners higher than ever before. Management consultant Peter Drucker went so far as to say that the "unseen revolution" of pension fund socialism had brought to America "a more radical shift in ownership than Soviet communism," a claim that was pointed out to be quite inaccurate by economists and lawyers. A pension fund is only a promise to pay a certain amount of money to people of a certain age after a certain number of years of work, not ownership of stock by workers by which they can reap the benefit of any appreciation in its value or exercise its voting power to affect corporate policy.

Whatever the actual number of stockholders, systematic studies show that most of them own very little stock. Robert Lampman's studies using the estate-multiplier method for six different years between 1922 and 1953 estimated that the top 1 percent of all adults held from 61.5 to 76 percent of all privately held stock. Using the same method, James D. Smith found the percentage to be 51 percent for the top 1 percent in 1969. Smith's work also demonstrates that stock is even more dramatically concentrated within the hands of a few thousand major owners. One-twentieth of 1 percent of American adults have one-fifth of the corporate stock, and 0.2 percent have one-third of it. Sociologist Maurice Zeitlin makes this concentration more graphic by pointing out that "the Rose Bowl's 104,696 seats would still be half empty if only every American who owns $1 million or more in corporate stock came to cheer."

Research employing other methods leads to comparable results. A study using stock portfolios obtained from a sample of wealthy individuals came to the conclusion that just 0.2 percent of all "spending units" (families, generally speaking) held 65 to 71 percent of the stock in the early 1950s. This figure is very close to Lampman's estimate of 76 percent for the top 1 percent  The household survey for 1962 that was cited in the previous chapter estimated that the top 1 percent of wealth-holders owned 62 percent of all publicly held corporate stock; the top 5 percent had 86 percent and the richest 20 percent held 97 percent. Similarly, a study utilizing random samples of individual income tax returns obtained from the Internal Revenue Service for 1960 and 1971 found that the 1 percent of families with the highest income controlled 51 percent of the market value of all stock owned by families. There was virtually no change in concentration over the eleven-year period.'

These different estimates vary somewhat due to the fact they employ different data bases, and they may underestimate the degree of concentration because of the difficulty in obtaining solid information. But they all make the important point that the distribution of stock ownership is even more highly concentrated than the wealth distribution in general. Among all types of assets studied by Lampman and others, only the ownership of tax-free state and local bonds is more concentrated in the hands of the rich than corporate stock. In terms of privately held stock, Mills seems to be correct that "at the very most, 0.2% or 0.3% of the adult population own the bulk, the pay-off shares, of the corporate world:

However, this concentration of stock ownership within the upper class in general does not answer the question of corporate control satisfactorily. It may be that the stock is widely dispersed within the class as a whole, leading to a situation where no one family or group of investors could use its ownership of stock to influence or replace management. It therefore becomes necessary to consider the question of ownership and control more closely, for what has been demonstrated so far only shows that upper-class ownership of corporate stock may act as a general constraint upon top executives.