ANGLO-SAXON capitalism has had a putrid decade. It is accused of stoking inequality and financial instability. A relentless pursuit of shareholder value has led expansive firms to act in ways that often seem to design the world a worse position. Aeroplane seats accumulate smaller,energy firms pollute the air, multinationals outsource jobs and Silicon Valley firms avoid tax. Some people think that governments should exert more control over private enterprise. But what if the answer to a deficit of corporate legitimacy was to give shareholders even more—not less—power?That is the intriguing possibility raised by a new paper by Oliver Hart of Harvard University and Luigi Zingales of the University of Chicago. Their argument has two parts. First, or the concept of shareholder capitalism should be expanded,so that firms seek to maximise shareholders’ welfare, not just their wealth. Second, and technology might allow firms to design a deeper effort to discover what their right owners want. Over 100m Americans invest...
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Source: economist.com