This analogy is going to make me unpopular with some friends. Meh.
Outside of the CEO class and the wingnuts who think that any criticism of actually-existing-capitalism is the beginning of a slippery slope that leads to Stalin, Pol Pot and North Korea, the following proposition should be uncontroversial; t he CEO-class are screwing the share-holders, running what should be a shared enterprise (cough cough) for their own benefit. The share-holders aren’t bothered enough (usually) or engaged enough to do much about this.
My ‘controversial’ analogy is this: this behaviour – organising life to the benefit of the “in-gang” at the expense of the stated aims of the organisation – is not totally unknown in “social movement organisations.” There is a silent majority that thinks there’s a collective enterprise going on. They pay financial dues. But there’s the active “core” that has other motives alongside (and sometimes in stated or unstated competition) with the organisation’s aims. There, I said it.
See this quote from “Oligarchy in the UK,” a review of Ferdinand Mount‘s “The New Few: Or A Very British Oligarchy”, published in this weekend’s FT. The review is by the FT’s chief leader writer…
What interest Mount is the way that this business class has managed to seize control of companies and extract such vast rents from them, almost irrespective of the wishes of their owners. THe answer, he suggest, is to be found in a basic flaw of shareholder capitalism. The inevitable dispersal of ownership that occurs in widely-held listed companies leads ineluctably to the entrenchment of management power.
This “principal-agent” problem has only deepened with the decline of the individual shareholder and his replacement by money managers who are naturally sympathetic to executives. … Freed from the tiresome constraints of shareholders, the only limits on pay are those imposed by executives on themselves. But, as Mount points out, “a director who regularly votes for the lowest plausible pay rise for his colleagues is unlikely to prosper. He is the equivalent of the man who never stands his round or the journalist on expenses who never signs the restaurant bill for his colleagues’ lunch.”
Robert Michels on organisation