This blog entry is another plea for less focus on building wealth for shareholders. Importantly, it is a plea from within a capitalist framework: it isn’t a criticism of capitalism itself, but a plea for a new approach hoping to make capitalism work better. >>>
LINK: ORIGINAL HEADLINE (by Will Hutton in The Guardian)
…Free-market apologists insist that the more cash is handed back to shareholders, then the more they have to invest in innovation. The stock market is doing its job: promoting efficiency. The trouble is that everyone can see it’s 100% wrong. The market is hopelessly inefficient, greedy and myopic. When Larry Page and Sergey Brin floated Google, they took care to insulate the company from “quarterly capitalism”: they accorded their shares as Google’s founders 10 times the voting rights in order to protect their capacity to innovate from the stock market – what they considered Google’s real business purpose…..
What do you think?
Note: Hutton makes use of the term “stakeholder capitalism,” a term popularized by business ethics professor Ed Freeman. For a review of the book Freeman co-wrote on that topic, Managing for Stakeholders, see here: Managing for Stakeholders (Book Review)
Here’s another story, same theme: “Shareholder power ‘holding back economic growth'” http://www.bbc.com/news/business-33660426?
Of course, if shareholders really are holding back economic growth, one would expect to see OTHER kinds of companies — ones not dominated by greedy shareholders — zooming forward. Is this the case?
Actually, Will Hutton meant something very different from Freeman’s use of the term. The crucial difference is that Hutton stipulated legal mechanisms for employee and public voice. Have a good time in Vancouver, everyone.
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