I recently finished the book The Dictator’s Handbook. One thing that surprised me at the end: after many chapters examining (dys)functions of governments, the book suddenly applied the same concepts to corporations.
The main thrust of the book is that we can put countries on a spectrum from dictatorship to democracies, by examining the number of key supporters needed for the government to stay in place. Democracies predictably deliver much more value to citizens. It’s a classic story of incentives.
If we look at corporate incentives, most (but not all) corporations have a small number of major shareholders. They do a pretty good job of delivering value to those shareholders.
If we look at the corporations that are more customer-owned, they do a better job of delivering value to customers. (Unlike many of the other claims in the book, this claim was not backed up with a bunch of data, only with a case study AKA anectdote. But it makes sense!)
Customer ownership is implemented by EG setting limits on how many shares any one individual can own, so that you can’t get a bunch of shares accumulating in a few hands.
This was an aha moment for me: it’s not economically inevitable that, as you put it,
The Invisible Hand compels companies to extract maximum profit from whatever leverage they have.
A prepackaged commercial product designed to make things easier for consumers tends to contain anti-features.
Instead, it’s a consequence of typical corporate ownership structure.
In Israel there’s a journalist group called Shakuf that tries to combat exactly this phenomenon in journalism (journals having one or few owners) by crowd funding themselves, limiting the amount someone can invest to 1000 Shekels, and giving each investor the right to participate in votes. as of right now they have about 7000 investors (i myself am one, at 10 Shekels per month) and i think the model works fantastically
I recently finished the book The Dictator’s Handbook. One thing that surprised me at the end: after many chapters examining (dys)functions of governments, the book suddenly applied the same concepts to corporations.
The main thrust of the book is that we can put countries on a spectrum from dictatorship to democracies, by examining the number of key supporters needed for the government to stay in place. Democracies predictably deliver much more value to citizens. It’s a classic story of incentives.
If we look at corporate incentives, most (but not all) corporations have a small number of major shareholders. They do a pretty good job of delivering value to those shareholders.
If we look at the corporations that are more customer-owned, they do a better job of delivering value to customers. (Unlike many of the other claims in the book, this claim was not backed up with a bunch of data, only with a case study AKA anectdote. But it makes sense!)
Customer ownership is implemented by EG setting limits on how many shares any one individual can own, so that you can’t get a bunch of shares accumulating in a few hands.
This was an aha moment for me: it’s not economically inevitable that, as you put it,
Instead, it’s a consequence of typical corporate ownership structure.
In Israel there’s a journalist group called Shakuf that tries to combat exactly this phenomenon in journalism (journals having one or few owners) by crowd funding themselves, limiting the amount someone can invest to 1000 Shekels, and giving each investor the right to participate in votes. as of right now they have about 7000 investors (i myself am one, at 10 Shekels per month) and i think the model works fantastically