Notes

Shareholders, Stakeholders, and Careers

When an appraisal of a long-term economic operating process and theory becomes a key element of disagreement during a presidential election, then the practice in question along with its rationale has reached a level of deep significance. This is the ongoing case of a possible post-neoliberal corporate market. Neoliberalism, a widely used expression by economists speaking to the late 20th century mode of free market fundamentalism, is facing its greatest challenge so far.


Going back into the mid-century writings of Milton Friedman, which focused on financial policy, taxation, deregulation, and privatization, there has been widespread acceptance of his economic doctrine of unfettered free markets as the best way to support both a free society and domestic economic well being. visit this web-site , low regulation, and small government rules of the Republican Party continue to be driven by the Chicago school of economics, where Friedman was a principal contributor.


A recent widely held perspective, especially by the political left, and increasingly the middle, is this neoliberal style of capitalism has resulted in well recorded wealth inequality being blamed for a lot of our economic and political angst today. It is contended that despite the claim of free markets as best providing economic expansion, the advantage of such expansion is limited to a small and wealthy segmented slice of the populace and therefore is an inadequate model for the larger good. To a large degree, the public debate emerging in the presidential election race is a referendum on whether free market economic conservatism first preached by Barry Goldwater, a Republican presidential candidate in 1964, is applicable any longer when so many Americans are struggling to keep a middle class lifestyle.


Shared prosperity is the newest buzz term. It indicates that a system, including private and government business, should jointly have a more inclusive outlook about how generated riches should be diffused throughout the country and citizenry. This contention goes on to state that wealth inequality isn't only unfair, but contrary to robust economic growth, because most of the people who would invest broadly for goods and services are unable to do this if capital is sequestered to the wealthiest top strata. In other words, there is a call for both social responsibility and economic invigoration.


To do so thinking into the job level, particularly among corporations, it's enlightening to have a look at the production and governance paradigm used by a number of large companies. Friedman advanced the idea of shareholder primacy. Shareholders assume the greatest risk through their investments and therefore should receive the largest reward. Employees and direction exist to produce wealth for shareholders. Plain, simple, and very hierarchical. It turns out however, there are different stakeholders inside or near a corporation who also have a vested interest. They include workers, management, as well as the ancillary businesses relying on corporate achievement in their communities. Marginalizing these other stakeholder groups can diminish the financial gain they receive.


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Extrapolating from this belief into the practice of shareholder primacy is not hard to do. Could exceptionally large executive compensations also stem from this persuasion? And what of Business Models ? I hypothesize not many workers are satisfied with simply serving shareholders. True, shareholders make possible their very jobs, but would not productivity, innovation, and morale be enhanced when there was an ethic of shared profit in corporations' achievements? Maybe, a more intentional perspective of collective advantage could boost profits for those involved.


The election appears poised to devolve into a ridiculous, &quot;Which is better, Socialism or Capitalism? This can be a time for a serious and measured examination by most people to pick for whom is an economy designed to work.


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