"Shared Capitalism"

Nancy Folbre:

Shared Capitalism, by Nancy Folbre: ...The term “shared capitalism” is a catchall for a variety of arrangements that businesses can make to share profits with ... employees, whether through stock ownership or incentive pay based on company performance. ...

Many Americans long for more evenly shared prosperity, and a new wave of economic research suggests that more gain-sharing in large companies could help us move in that direction. ...

How could public policies promote and expand this shared capitalism? Public policies already offer companies tax benefits for setting up employee stock-ownership plans... It would also be relatively easy to encourage companies to offer more workers incentive pay... Companies are allowed to write off costly stock options that represent incentive pay for top executives, despite a lack of evidence that such incentives lead to improved company performance.

Why not restrict the tax benefits to companies that provide the same type of incentive pay for all full-time employees, stipulating that the value expended on the bottom 80 percent of employees by salary must equal at least that expended on the top 5 percent? Similar restrictions have long been in effect for employee retirement and health plans. The costs of these programs are not tax-deductible unless they are offered in a nondiscriminatory way to all workers.

Private-sector precedents are also strong. Two very successful American companies, the Wegmans supermarkets and Cisco Systems, offer broad-based incentive systems that effectively meet these restrictions.

If America’s capitalists mean what they say about the virtues of an ownership economy, they should throw their weight behind modest changes in tax incentives that could expand it. If they don’t, we might infer that they prefer to keep the benefits of ownership to themselves.

Here's a post from a few years ago on the same topic:

Does Shared Capitalism Work?: When I think about the evolution of economic systems over time, I often wonder if capitalism is the end of the road, the last and best economic system that will emerge. I'm not sure, but I see no necessary reason why we can't do better.

But what would come next? One possibility is employee ownership. At first glance it appears to provide better incentives to workers than wages, but more thought leads to a consideration of free riding problems - if everyone but you works really hard you will still receive a large profit share -- and it was never clear how such a system could work in its pure form since the entrepreneurial function would be absent. That is, how would new businesses get started? Who would accumulate the capital and execute the plans needed to get things going? Financial innovation could pool funds, but how does a large group of workers get together and decide to open a new business? It seems like some sort of individual entrepreneurship function would still be necessary, coupled with some economic incentive to transfer ownership to workers over time.

Despite those problems, however, employee ownership is growing in popularity:

Does shared capitalism work in the United Kingdom?, by Alex Bryson and Richard B. Freeman, Vox EU: Does shared capitalism work...