Last Wednesday in Pittsburgh, Democratic presidential nominee and vice president Kamala Harris outlined her economic plan, a series of proposals that she dubbed the “opportunity economy.” The plan includes a strategy to “invest in emerging technologies and modernize traditional industries.” It aims to expand clean energy and technology manufacturing and innovation all the while supporting workers, unions, and the communities where these plants are located.

The proposed plan aims to do this almost exclusively with tax credits. But tax credits alone will not redirect flows of investment at the scale imagined by the plan’s authors, let alone the requirements of the United States. The problem today is not simply that capitalists underinvest in the areas needed to secure a decent future. It is also that ordinary working people themselves are sitting on tremendous pools of capital over which they have no actual control.

September 2024 marks the fiftieth anniversary of the Employee Retirement Income Security Act. Better known as ERISA, Gerald Ford’s administration passed the legislation to make retirement more secure for American workers. Yet, the long-run result of this law has been to divert workers’ capital away from the things that they themselves so desperately need and depend on.

Pension funds collect money from employees, employers, and sometimes governments. Trustees and asset managers then invest that money to grow it for the employees when they retire. In the United States, public pension funds, including those sponsored by state and local governments, have approximately $5 trillion in assets under management. Private pension funds, including traditional defined benefit plans and 401(k)s, have closer to $12 trillion. Worker’s capital is colossal.

But today, those funds are invested in ways that hurt the workers and communities they are intended to protect.

Pension funds invest billions in real estate funds run by firms like Blackstone. The asset managers make as few updates as possible and maximize rents and prices for resale. The result is rising housing costs. Pension funds invest billions in private equity. But private equity buyouts lead to plant closures and layoffs. And perhaps most crucial of all, pension funds have not been a reliable source of green investments.

That worker’s capital behaves like Wall Street’s capital is not simply driven by the market. Instead, it is by legislative design that pension funds mimic the worst of Wall Street investment practices and have done so for decades.

There is a way to change this: amending ERISA to require that plan beneficiaries be given the space to deliberate over and make binding decisions about how their own funds invest.

ERISA is a comprehensive law. It covers plan information disclosure, termination insurance, transaction guidelines, and funding requirements. But beyond these rules, ERISA made certain that workers would be unable to have a deliberative voice over how their funds are invested by formalizing fiduciary duty.

ERISA’s section 404(1)(a) stipulates that investment must be made “for the exclusive purpose of providing benefits to participants.” ERISA clarifies that those who manage pension funds do so “with the care, skill, prudence and diligence” a “prudent man” would use.

At first glance, this would appear for the better. Instead, ERISA’s fiduciary rules bind the investment policies of pension funds to the dominant investment practices of the investment industry more broadly. ERISA made the requirement that pension fund investment mirror the investment practices of Wall Street funds with similar risk profiles a legal obligation. Subsequent bulletins in 2015 and 2018 put out by the Department of Labor made clear that nonfinancial considerations can only be taken into consideration “as tie-breakers when choosing between investments that are otherwise equal.”

Investment managers dominated these funds long before ERISA. With the rise of modern portfolio theory and the efficient market hypothesis in the 1950s and 1960s, the infant money management industry, what would come to be the powerful asset managers that now dominate Wall Street, shifted their investments into stocks and diversified. Fast forward to 2008, it is perhaps no surprise that, if fiduciary prudence is about doing what Wall Street does, pension funds themselves were also tied up with the junk bonds and subprime mortgages that triggered the financial meltdown.

The rise of the professional fiduciary as the ultimate arbiter of a “good return” was not without controversy. Unions like the United Mine Workers won pensions for their members in the postwar period and immediately began to exert control over how those funds were invested.

Republicans and Southern Democrats responded with the Taft-Hartley Act in 1947. The act banned secondary boycotts and made union leaders sign noncommunist affidavits, which made it so that states could pass “right to work” laws. But less well known, Section 302 required that employers take up at least 50 percent of the seats on the board. This ensured that workers could never have a majority voice.

Without a check from labor, employers and their hired fiduciaries funneled pension investments into American capital. Worker’s capital controlled nearly 25 percent of all American corporate stock by the time ERISA was passed.

ERISA reinforced this system, creating the context in which in 1988, KKR, a private equity firm, could overload Nabisco with debt, strip its assets, fire its workers, and sell off the parts with the direct funding of AFSCME’s Oregon Public Employee Retirement System Fund.

Amplifying shareholder voice is not a promising alternative. Recent efforts at Vanguard to incorporate shareholder voice through proxy voting have fallen flat. The average beneficiary doesn’t have strong top of mind preferences about investment. And there is no evidence that unions using their positions as shareholders to pressure companies leads to more labor-friendly policies.

Today ERISA makes it illegal for pension trustees to integrate the values and preferences of the plan beneficiaries into their investment strategies. But there is a way to meaningfully draw beneficiary preferences into the investment profiles of their funds. In The Master’s Tools: How Finance Wrecked Democracy (And a Radical Plan to Rebuild It), which will be coming out with Verso this year, I argue that it should be randomly selected assemblies of beneficiaries’ right to deliberate over and make decisions about how their fund invests.

Around the world, from Ireland to Bogota to Belgium, governments are turning to deliberative assemblies to tackle complex and polarizing policy problems, ranging from abortion to climate change. We are riding a deliberative wave.

In the Netherlands this year, the Pensioenfonds Detailhandel, a $30 billion fund that covers the retirement savings of retail workers, brought together fifty random plan beneficiaries to discuss its investment strategy. These participants were selected to reflect the demographic diversity of the beneficiaries more broadly.

In several meetings, they learned about how their pension fund works and then had deliberations over how it invested and should invest. At the end of the process, the assembly made forty-nine recommendations emphasizing sustainability, labor rights and working conditions, affordable housing, and human rights. Beneficiaries wanted their fund to achieve a return, but not at social and environmental costs.

Because of its undemocratic definition of prudence, ERISA has kept experiments like this off the table. But if amended to include a process for beneficiaries to deliberate over and contribute to their fund’s policy, the law might instead provide a framework to benefit the working communities the funds were set up for in the first place. Were a progressive to win in November, they should know that mere tax credits won’t achieve what greater democracy might.