Capitalism recoupled

Colm Kelly and Dennis J. Snower

No 2191, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

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.'

Keywords: recoupling; shareholder value; stakeholder value; wellbeing; globalization; technological advance; financialization (search for similar items in EconPapers)
JEL-codes: B41 B55 M10 M14 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cwa, nep-his and nep-hme
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:2191

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