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Author Topic:   Executive Pay - Good Capitalism Bad Capitalism?
Member (Idle past 185 days)
Posts: 10198
From: London England
Joined: 09-30-2006

Message 1 of 135 (647231)
01-08-2012 6:50 PM

Here in the UK the 3 main politcal parties are tripping over themselves to be seen as the implementors of executive pay restraint.

Conservative prime minister David Cameron has described top pay of executives and bankers as a "market failure" Link

Is he right?

Are the salaries of the economic elite out of control and in need of regulation?

Or should the unrestrained market decide what is, or is not, acceptable without state comment or interference?

In the wider context - What is 'Good capialism' and what is 'Bad Capitalism' and who (if anyone) decides which is which?

Replies to this message:
 Message 2 by crashfrog, posted 01-08-2012 6:55 PM Straggler has responded
 Message 4 by cavediver, posted 01-09-2012 3:16 PM Straggler has responded
 Message 29 by Taq, posted 01-09-2015 1:43 PM Straggler has responded

Member (Idle past 185 days)
Posts: 10198
From: London England
Joined: 09-30-2006

Message 3 of 135 (647234)
01-08-2012 7:02 PM
Reply to: Message 2 by crashfrog
01-08-2012 6:55 PM

Crash writes:

Is the market deciding?

Who is the market?

The currently colluding CEOs seem to think that they are the market in this regard. They may be wrong in some sense. But unless actually made to be wrong they are arguably "right" at least in market terms (given that they define the market).

So - I agree with you that they shouldn't be. But I would argue that the market is effectively rigged in their favour and that they rather self servingly define the market.

This message is a reply to:
 Message 2 by crashfrog, posted 01-08-2012 6:55 PM crashfrog has not yet responded

Member (Idle past 185 days)
Posts: 10198
From: London England
Joined: 09-30-2006

Message 8 of 135 (648184)
01-13-2012 5:08 PM
Reply to: Message 4 by cavediver
01-09-2012 3:16 PM

Cavey writes:

Exec salaries are high because they need to compensate the execs for not being free to set up their own businesses which, if successful, could make them much wealtheir than any salary.

IF successful.....

Isn't good capitalism about rewarding innovative and entrepreneurial risk taking?

Frankly - If these execs could all successfully start their own highly rewarding companies then they could contribute to the collective wealth of the nation far more effectively by doing so than by heading up the existing companies that they do. I think we should take measures to encourage them to leave these jobs and setup the sort of new companies that you are saying they would.

But it strikes me that the risk factor of taking a position in a FTSE 100 company (or equivalent) is far less than investing one's existing wealth in starting a new company.

The CEO of the multi-billion multi-national I work for spends most of his time on the golf course. He also conveniently arranges his globe trotting around various sporting events. He is in London for Wimbledon, Melbourne for the boxing day test, wherever for the champions league final and so on and so forth. No doubt he will be in Eastern Europe for the Euro football this summer and back in London well in time for the Olympics. Could he go off and have an equally comfortable and profitable life by risking his own money in his own startup company? I very much doubt it.

What we seem to have in place at the moment is privatised profit and socialised risk.

This message is a reply to:
 Message 4 by cavediver, posted 01-09-2012 3:16 PM cavediver has responded

Replies to this message:
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Member (Idle past 185 days)
Posts: 10198
From: London England
Joined: 09-30-2006

Message 38 of 135 (747077)
01-12-2015 9:35 AM
Reply to: Message 29 by Taq
01-09-2015 1:43 PM

Rentier Vs Entrepreneurial
I agree that no economic or social system is perfect. I agree that some level of “injustice” or “unfairness” is always going to be present in any capitalist economy (or indeed any economic system) and that, to some extent, this just needs to be accepted. And I agree that some form of capitalism is the least worst option for a wealth generating economy yet devised and successfully applied in any sort of practical sense. However in this thread I am NOT talking about capitalism Vs something-else. In this thread I am talking about different forms of capitalism (“Good Capitalism Vs Bad Capitalism” being the thread title here)

Capitalism comes in many forms. The Nordic model of social democratic capitalism is not the same as the Chicago school of free-market fundamentalist capitalism. Capitalism as practised by the US and UK arguably lie somewhere between those two.

With regard to executive pay – The main problem I have with the current situation is that it is symptomatic of the move to an increasingly ‘corporatist’ and plutocratic form of capitalism. Currently in the UK we have a situation where millions of workers are paid so little that they cannot function in society without public assistance (“welfare” in the form of rent payments and income top-ups) whilst shareholders, executives and landlords receive an ever increasing portion of the wealth being generated. I would suggest that this public subsidy of private profit on the back of low wages is not only “unjust” but ultimately unsustainable. A symptom of an increasingly ‘rentier’ economy where the acquisition of wealth is linked to the existing ownership of wealth and decreasingly linked to the sort of risk, innovation and entrepreneurism that are the hallmarks of ‘good capitalism’.

This message is a reply to:
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