Despite the headlines, Elon Musk might never make a trillion dollars. The Tesla CEO would only receive this astronomical amount if he were to meet a set of incredibly ambitious goals, which includes increasing the stock value of the company to $8.5 trillion, selling 20 million vehicles and one million robots. It seems the stuff of science fiction, and perhaps it is. But the fact that Tesla shareholders see it fit to reward this vision should make us re-assess the place of shareholder capitalism in our economy, as it has shown itself unable to tackle two significant problems: irrational exuberance and inequality.
Speculation and inequality
Many analysts have pointed to Tesla’s stock being overvalued, with a high price-to-earnings ratio. Its market capitalisation has increased even though sales and profits fell in the wake of his association with the Trump campaign, currently standing at nearly $1.5 trillion. Why then, is Musk being rewarded when his company’s real-world performance has not matched up to the stratospheric rise of its financial values?
The current pay package voted in by Tesla shareholders is a pure bet on the future, that the company would eventually be able to transform itself into an Artificial Intelligence-behemoth under Musk’s leadership. But there is little to support the claim in the present, and the validation of Musk’s extreme pay package is a speculative bet on his ability to deliver record profits in the future. This is irrational exuberance writ large, a gamble made under profound uncertainty regarding the future, the very same irrational exuberance that has seen the economy devastated in 1929 and 2008.
As Keynes himself pointed out, only harm can accompany a system which makes economic activity the byproduct of speculation. Let us assume, however, that the gamble does pay off. The exuberance of shareholders’ might prove rational, but it would only exacerbate inequality. Under the deal, if Tesla were to achieve a $8 trillion valuation, Musk would be granted additional Tesla stock that would bring the value of his total holdings to over a trillion dollars — an enormous increase in wealth inequality concentrated under the power of a single individual. An institution designed to mitigate the worst excesses of individual entrepreneurs by diffusing power among several shareholders has shown itself decidedly incapable to the task.
Either they are guilty of perpetuating an inflated view of the company’s prospects, or of legitimising a level of wealth concentration unheard of in history, and, by extension, weakening the foundations of democracy.
Voting rights and the principles
Voting rights to shareholders are, in principle, a useful mechanism. If workers were to own shares in the modern corporation, what they would lose out due to slow wage growth could be compensated, in theory, by the rise in equity holdings. Furthermore, the diffusion of voting rights would ensure checks and balances on the exercise of CEO power. The Tesla vote has shown the limitations of these arguments.
One could argue that the trillion dollar payoff is a reward to Musk increasing shareholder wealth. This fits in with a world-view that sees inequality as being justified if it leads to an increase in living standards without making use of market distortions such as strong-arming competitors or cheating consumers. But this is to take too narrow a view of the political import of inequality.
The process of voting at Tesla may be legitimate, given the narrow bounds of procedure laid down by the company, but is unjustifiable given the fact that Elon Musk has interfered in elections, publicly made a gesture that has been interpreted as a Nazi salute and amplified hateful right-wing content on a social media platform that he owns.
The procedural form of voting is necessary, but not sufficient, for the preservation of economic democracy. A simple account of democracy, for instance, would hold that organs of free speech should not be monopolised. Yet this is exactly what X’s (Twitter) shareholders voted to do when they agreed to its sale.
Imagine that all workers of Tesla can vote on executive compensation, but not on conditions of work. Further, imagine that Musk provides a credible plan to increase stock values, and along with it comes a significant increase in his own net wealth. Voting for the plan increases workers’ net wealth, but increases the possibilities of further election interference. By the narrow bounds of economic rationality, it would be rational for individuals to vote for the plan. For shareholder capitalism to truly uphold democratic norms, voters would have to be economically irrational in prizing political objectives over their narrow economic interests.
The effect of wealth rise
One might criticise this argument by claiming that this writer is unfairly conflating political and economic objectives, which shareholder capitalism was never meant to tackle. But the unchecked wealth accumulation of the last couple of decades has meant a blurring of the boundaries separating the political from the economic. Rising wealth inequality, even if accompanied by rising individual wealth, has brought with it a weakening of political institutions.
X’s sale and Tesla’s pay package have shown that simple access to equity shares and the act of voting alone cannot meaningfully halt modern capitalism’s worst excesses. What is required is to embed these processes in broader democratic institutions that explicitly limit the concentration of wealth and its ability to interfere in democratic processes. Keynes realised this contradiction: capitalism can only meaningfully work if its operation is curtailed. It is beyond time we recognise it as well.
Rahul Menon teaches at the Jindal School of Government and Public Policy at O.P. Jindal Global University
Published – January 02, 2026 12:08 am IST
