A greater share for the shareholders (and less for workers)

Today I attacked the growing pile of Financial Times in my livingroom, and found several interesting articles. One front-page piece ("US Business Increases Its Share of Economy"; 6/5/06) shed some light on the pressures people are feeling for more corporate social responsibility.

The article essentially said that shareholders are receiving a larger and larger share of the economic "pie" - while employees are receiving a smaller share than ever, possibly because they lack bargaining power as their jobs shift overseas. Bondholders didn't fare too well either.

To share the exact figures with you: Profits were 7% of GDP in 2001, and are 12.2% of GDP today. This rate of profit growth is the highest since records began in 1947. The share going to workers has fallen over the same period from 58.6% to 56.2%. Interest payments also fell, from 5.6% to 4.1% of GDP.

While this article wasn't explicitly about CSR, it did show that corporations are being run more and more for the benefit of one stakeholder: the equity investor. There is, of course, a major school of though that believes a (public) firm's primary reponsibility is to these "owners" - but it is important to realize there are alternatives. Under different circumstances, more of the wealth generated by the private sector can go to employees. Maybe to consumers. Maybe even to communities or to taxes.

In other words, there are alternative slants to the capitalist model, and CSR to a large degree should be about finding the right balance.