Martin Wolf joins a chorus of critics attacking the fundamentals of the market economy, but he neglects to point out that most people work for private not public firms.
Having been involved in many private companies, where family members risk their entire fortunes, it is disingenuous to say that companies such as Ikea, Dyson, Mars or Rolex can “divest themselves of their engagement in an instant”. During bankruptcy proceeding, the equity owners stand behind bondholders, creditors, suppliers, employees and pensions obligations. There are also many ways to reconcile the various stakeholders: German work councils, Japanese employment policies or French government-style shareholdings.
These policies act to balance the adverse incentives inherent in the corporate agency model in favour of employees, suppliers or creditors. Just like democracy (“the worst form of government, except for all the others that have been tried from time to time” to quote Churchill), the market- based economy continues to offer greater accountability, individual freedom and innovation than all the others — Russian, Chinese, Cuban, Venezuelan or North Korean. We need a debate on the best methods to achieve a more principled management of our public and private companies. There is much work to be done!Aron Miodownik
“High time for a reasoned debate on market policies” | Financial Times New York, NY
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