Time to Rethink Capitalism?
Harvard Business Review, Noviembre 2008
The leaders of publicly traded companies are beholden to the capital markets. Just consider the relentless pressure to meet the quarterly numbers. There once was a solid logic to this arrangement, but it no longer holds. The very logic that originally gave rise to free-market, competitive capitalism now supports free-market, competitive laborism - a system in which those who work for a firm reap most of the residual returns and have the greatest decision-making authority within it. This arrangement makes sense in terms of ethics and competitiveness.
Two hundred years ago, an individual investor might take the bulk ...view middle of the document...
Today the big risk taker is labor, not capital.
The same logic of ethics and competitiveness that once supported shareholder value maximization now leads to the conclusion that firms should focus on maximizing returns for labor.
This isn't an argument for a wholesale shifting of profits from capital to the talent working for a firm. To stay in business, after all, firms need to give market rates of return to all those who provide critical inputs - labor, capital, customers, and so on. If a firm doesn't give a risk-adjusted rate of return to investors, it won't be able to attract and retain capital and will fail. Likewise, a firm must provide a market rate of return to labor, in the form of competitive employment contracts and working conditions. Finally, a firm must deliver an attractive value proposition to customers or it will not sell its products. But after all stakeholders providing critical input receive their market rates of return, laborism theory says that labor should get the bulk of the residuals.
If those with the greatest risk are most motivated to ensure that a firm remains competitive, then we...