Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245560 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14509
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper examines major forces that have decoupled economic and business prosperity from social prosperity and explores how recoupling can be promoted. Economists have specified well-known conditions under which free market enterprise with shareholder value maximization is efficient. These conditions are systematically violated by three forces – globalization, technological advance and financialization (GTF) – that have weakened the connections between economies and societies over the past four decades. Consequently, the recoupling process requires abandoning the default premise of economic decision making that social progress follows financial performance. For business, it calls for a move from shareholder to stakeholder value. For government, it calls for setting legal obligations, targets and incentives to ensure that stakeholder value is compatible with a rigorously defined concept of "societal and planetary value."
Subjects: 
recoupling
shareholder value
stakeholder value
wellbeing
globalization
technological advance
financialization
JEL: 
M21
P1
A13
Document Type: 
Working Paper

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