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Capitalism Recoupled

Author

Listed:
  • Kelly, Colm

    (PwC Deutschland)

  • Snower, Dennis J.

    (Hertie School of Governance)

Abstract

This paper examines major forces that have decoupled economic and business prosperity from social prosperity and explores how recoupling can be promoted. Economists have specified well-known conditions under which free market enterprise with shareholder value maximization is efficient. These conditions are systematically violated by three forces – globalization, technological advance and financialization (GTF) – that have weakened the connections between economies and societies over the past four decades. Consequently, the recoupling process requires abandoning the default premise of economic decision making that social progress follows financial performance. For business, it calls for a move from shareholder to stakeholder value. For government, it calls for setting legal obligations, targets and incentives to ensure that stakeholder value is compatible with a rigorously defined concept of "societal and planetary value."

Suggested Citation

  • Kelly, Colm & Snower, Dennis J., 2021. "Capitalism Recoupled," IZA Discussion Papers 14509, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14509
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    Citations

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    Cited by:

    1. Rebecca M Henderson, 2021. "Changing the purpose of the corporation to rebalance capitalism [‘Towards Collaborative Community’]," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 37(4), pages 838-850.
    2. Dirk Schoenmaker & Hans Stegeman, 2023. "Can the Market Economy Deal with Sustainability?," De Economist, Springer, vol. 171(1), pages 25-49, March.
    3. Braganza, Oliver, 2022. "Market paternalism: Do people really want to be nudged towards consumption?," ifso working paper series 23, University of Duisburg-Essen, Institute for Socioeconomics (ifso).

    More about this item

    Keywords

    recoupling; shareholder value; stakeholder value; wellbeing; globalization; technological advance; financialization;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • P1 - Political Economy and Comparative Economic Systems - - Capitalist Economies
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values

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