New Management Tendencies and Their Impact on the Form of Capitalism

The chapter presents a new kind of hybrid company, which appeared and developed rapidly after 1980 and came to be known under the characteristic name of “distorporation”. The main difference between this new form of companies and the traditional ones with limited liability is the treatment of the shareholders who are losing their old privileges. These privileges are assured only for a few among them, called oligarchs. But the most important change concerning the management of this new kind of companies is the fact that they do not keep any profit for investment, but distribute the whole to a few shareholders. As the profits are no longer channeled towards investment, the distorporation companies are trying to cover the need of financing thanks to their presence on the Stock Exchange and no longer thanks to the saving of small savers. No problem was encountered during the high phase of economic cycle, but the same was not true during recession. It is certainly clear that this new management is just trying to avoid taxes and it was very successful until now. However, the distorporation has negative results as it intensifies inequalities which have reached unacceptable levels everywhere, thus destabilizing modern economies, encouraging recession because of insufficient demand, weakening the welfare state, and disrupting social cohesion. The higher profits assured by those companies and the almost complete avoidance of taxation, lead to a rapid increase of their number as the political parties of both sides, republican and democratic show no interest in distorporation businesses.