Capitalism Recoupled

Colm Kelly and Dennis J. Snower ()
Additional contact information
Colm Kelly: PwC Deutschland
Dennis J. Snower: Hertie School of Governance

No 14509, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: technological advance; globalization; wellbeing; stakeholder value; shareholder value; recoupling; financialization (search for similar items in EconPapers)
JEL-codes: A13 M21 P1 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2021-06
New Economics Papers: this item is included in nep-hme
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Citations: View citations in EconPapers (3)

Published - pubished in: Oxford Review of Economic Policy, 2021, 37 (4), 851 - 863

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