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Capitalism recoupled
[‘The Fall of the Labor Share and the Rise of Superstar Firms’]

Author

Listed:
  • Colm Kelly
  • Dennis J Snower

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

  • Colm Kelly & Dennis J Snower, 2021. "Capitalism recoupled [‘The Fall of the Labor Share and the Rise of Superstar Firms’]," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 37(4), pages 851-863.
    • Handle: RePEc:oup:oxford:v:37:y:2021:i:4:p:851-863.
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    File URL: http://hdl.handle.net/10.1093/oxrep/grab025
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    References listed on IDEAS

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    1. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
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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.

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