Dani Rodrik – New Firms for a New Era

Dani Rodrik sees firms as the cornerstone of the modern economy. Their decision do not only affect the economic performance of our world but also the structure and well-being of our societies. Rodrik argues that the current governance structure does not do justice to its importance. This governance structure, he argues, is based on the assumption of total mobility on the labour market and defines a job solely as the source of one’s income.

In reality, however, our job is a social hub in which people define their aspirations and fulfil their potential. Rodrik refers to Isabelle Ferreras when he points to the clear difference between the legal term “corporation” and the “firm”. The first is a state-sanctioned legal form and defines rules for investors and workers. The latter is social organization “embeds the corporation in a network of relationships with workers, suppliers, and other stakeholders.”

Rodrik goes on to define the benefits of good jobs and their impact on communities. With the rise of ESG (environmental, social and governance) criteria, companies have become more and more aware of their responsibilities beyond profits. But even if this trend continues, Rodrik argues, that societies should have a bigger say in reforming corporate governance.

Click here for the full article at Project Syndicate: Dani Rodrik – New Firms for a New Era