Stakeholder Capitalism - Assignment Example

Political Economy Political Economy Stakeholder capitalism Stakeholder capitalism de s a form of corporate governance that allows all the stakeholders to have a voice in the major decision-making processes as well as the operations of the farm. Since an organization has many stakeholders, they must all be represented on the board of directors. Specifically, the owners, the managers, as well as the employees are well represented on the board of directors. Stakeholder capitalism is significant because corporations rely on the consensus of the various interests expressed by different stakeholders. Corporations that practice stakeholder capitalism do not necessarily promote the interest of shareholders, but rather give reconsiderations to the diverse interests expressed by all the stakeholders (Béland & Cox, 2011). Stakeholder capitalism allows businesses to focus on long-term economic decision-making. The basis of Stakeholder capitalism is contrary to shareholder capitalism, which focuses on profit maximization. Stakeholder capitalism is common in Germany and Japan because corporate governance does not rely on the rights of private property as promoted in the shareholder model of capitalism. Businesses that rely on Stakeholder capitalism are more likely to have a positive reputation because they make decisions that promote the interests of different parties. De-commodification De-commodification focuses on analyzing the extent to which social welfare minimizes the market dependence of the people. Therefore, de-commodification can only become a reality when people receive services as their rights without unnecessary dependence on the market. Moreover, the people must be able to sustain a livelihood without exhibiting any measure of dependence on the markets. For this reason, social welfare should ensure that people do not necessarily need to actively participate in market relationships for them to access necessities. Notably, de-commodification promotes the provision of necessities outside the labor market mechanisms. De-commodification has outstanding benefits to workers and individuals because it can raise their collective power. The concept of de-commodification was developed recently, a factor that explains why there is a lack of definitive descriptions of the concept (Hall & Soskice, 2001). However, many people understand the concept of giving citizens a measure of freedom to quit work without facing risks such as lack of income or loss of jobs. Moreover, the fact that people do not have to rely on labor markets to access necessities promotes their wellbeing. Disintermediation Disintermediation is a term that denotes the elimination of intermediaries in the business. For example, disintermediation allows people to access goods from wholesale distributors without the involvement of retailers. In other cases, disintermediation eliminates the role of brokers as people can access capital direct from the banks. In many cases, disintermediation helps people to save a remarkable percentage of money because they access goods at a lower price. However, there is a critical role played by intermediaries specifically by adding value to the goods and services and the provision of market expertise. For this reason, disintermediation serves to control the prices of goods in an economy (Hyman, 2004). Wholesale distribution or selling directly to clients eliminates the commission paid to sales representatives a factor that ensures reduced prices. Although disintermediation saves a remarkable percentage of money for the consumer, it blocks opportunities of employment for local retailers and representatives as well as other intermediaries. In the case of manufacturers and wholesalers, disintermediation serves to increase the expected marketing costs. Co-determination Co-determination is a concept common in European companies that allow workers to express their voice and actively participate in the decision-making process. Workers participate actively either at the operational level as well as at the level of a corporate entity and have legal capacities. At the operational level, workers participate in production, marketing, and administration. When workers participate at the level of the company being a corporate entity, they are more likely to pursue economic objectives. Co-determination allows the formation and functioning of work councils that serve as advocacy groups addressing all the issues that employees may face in their workplace (Konings, 2008). Some of the issues addressed by the work councils include payment systems, working hours, social plans, as well as the employee benefits. The primary role of work councils is to promote the interests of the employees, ensuring that the company treats them well. Supporters of co-determination argue that it improves efficiency as it facilitates decision making between the workers and the company. How do Regulation theorists conceptualize the differences between various types of capitalism? What concepts do they use and what are the significant types of contemporary capitalism identified by them? Regulation theorists seek to understand the capitalist systems beyond the understanding presented by neoclassical economics. Many regulation theorists believe that it is impossible to understand the capitalist mode of production, relying on a single set of laws. For this reason, regulation theorists have the conviction that capitalism is governed by different sets of laws that have been changing over time. They consider capitalism as a succession of phases that need to be studied. In addition, regulation theorists believe that each of the phases occurred during a specific historical time and had both social and institutional impacts. Each of the phases was defined by unique economic trends and patterns (Lapavitsas, 2011). Some of the key concepts that regulation theorists used to understand capitalism include the mode of regulation as well as the regime of regulation. These theorists define the mode of regulation as either political or ideational constructs that promote the functioning of the different regimes of accumulation. The regimes of accumulation denote the long term stabilizations that define a balance between the allocation of social production in consumption and accumulation. The regime of accumulation implies that there is an existing correspondence that defines both the transformations of production conditions, as well as the conditions defining reproduction of wage-labor. Regulation theorists denote the succession phases as modes of development. According to the regulation theorists, the regimes of accumulation represent unique patterns of economic evolutions. The patterns exhibit a measure of stability, but are limited to a specific time in history. Each regime of accumulating relies on dynamics from a series of regularities from the pattern of productive organization that govern the means of production and the work of wage laborers as well as the time horizons that define decision making processes for capital formation (Peet, 2003). Other dynamics emerge from the patterns that define the distribution of income in wages, profits, and taxes. The level of demand also affects regimes of accumulation. Finally, regulation theorists highlight that the existing connection between capitalism and other non-capitalist modes of production affect the regimes of accumulation. The modes of regulation comprise of a network of institutions that determine the nature of capital, the type of inter-capitalist competition, the nature of money and credit relationships, the nature of adhesion of companies in the national economy, and the different ways of state intervention into the economy. The regulation theorists highlight that there is a variance of capitalism with industrialization marking the first phase of capitalism between the 1850s and 1930s. Industrialization relied on a competitive mode of regulation and had an extensive regime of accumulation. Fordism marks the second phase of capitalism, which occurred between 1950 and 1975, and was marked by an intensive regime of accumulation. Fordism was also defined by the monopolist mode of regulation (Perelman, 1981). Post-fordism is the last phase, which began in 1980 to the present, governed by a flexible specialization regime of accumulation and a neoliberal mode of regulation. Post-fordism defines the contemporary capitalism, which is defined by flexible specialization and relies on lean production. The neoliberal model of regulation that governs post-fordism places emphasis on competitiveness rather than social protection. What are the key differences between coordinates market economies and liberal market economies? Why are their differences important for the study of political economy? Liberal market economies and coordinated market economies define two of the variations of capitalism that have been discussed by different authors. Liberal market economies are defined as economies that allow companies to coordinate their operations through existing hierarchies and competitive market arrangements. These economies ensure that there are equilibrium outcomes resulting from the behavior of companies and from demand and supply conditions. On the other hand, coordinated market economies rely on non-market relationships to establish a coordination of their activities (Schmidt, 2002). Therefore, in coordinated market economies, corporations are likely to rely on non-market relationships to develop core competencies. Scholars have highlighted that there is a close connection between economics and legal institutions. Therefore, liberal market economies are common aspects in common law countries, while coordinated market economies are more likely to occur in civil law countries. The primary difference between coordinated market economies and liberal market economies is the extent to which either individual or collectives as well as the state exhibit control rights. Liberal market economies rely on industrial and employment relationships and exhibit a high level of decentralization in the bargaining process. Moreover, liberal market economies are more likely to exhibit extensive individualization of employment as well as a high level of employment flexibility. In liberal market economies, human resource management practices tend to be more competitive and allow organizations to be able to respond promptly to any changes in profitability levels (Seiler, 2009). On the other hand, coordinated market economies tend to interlock training and education systems and industrial relations. The interlocked systems contribute to the limited competitive practices that define coordinated market economies. In coordinated market economies, competitive tendencies are highly neutralized while the state has a higher level of control a factor that contributes to limited employment flexibility. Worth noting is the fact that coordinated market economies give special attention to education and training, a factor that allows such economies to empower individuals as well as organizations to develop unique competencies and skills. On the other hand, liberal market economies tend to give more focus to general skills and less attention to education and training. In many coordinated market economies, equilibrium outcomes result from strategic relations with other organizations contrary to demand and supply conditions in liberal market economies. Coordinated market economies are defined by extensive relational contracting as well as a networking system that enables a high level of collaboration between organizations. In coordinated market economies, industrial relations are highly centralized compared to the high levels of decentralization visible in market economies. Instead of collaborative inter-firm relations exhibited by liberal market economies, coordinated market economies adopt a more competitive approach (Hall & Soskice, 2001). Coordinated market economies rely on stakeholder corporate governance while liberal market economies focus on shareholder capitalism. There is a high level of rigidity in the coordinated market economy and labor markets, unlike the high level of flexibility exhibited by labor markets under the liberal market economy. It is important to study the differences between coordinated market economies and liberal market economies because they are of critical importance in understanding how the varieties of capitalism operate. Moreover, studying the difference between the two types of market economies leads to the understanding of the legal ground rules as well as the scope of the state in each market economy. References Béland, D., & Cox, R. H. (2011). Ideas and politics in social science research. [electronic resource]. Oxford ; New York : Oxford University Press, 2011. Hall, P. A., & Soskice, D. W. (2001). Varieties of capitalism. [electronic resource] : the institutional foundations of comparative advantage. Oxford : Oxford University Press, 2001. Hyman, R. (2004). Models of capitalism: Growth and stagnation in the modern era. British Journal of Industrial Relations, 42(2), 399-402. Konings, M. (2008). European finance in the American mirror: financial change and the reconfiguration of competitiveness. Contemporary Politics, 14(3), 253-275. doi:10.1080/13569770802396311 Lapavitsas, C. (2011). Theorizing financialization. Work, Employment & Society, (4). 611. Peet, R. (2003). Regulation theory: The state of the art. International Journal Of Urban And Regional Research, 27(2), 473-475. Perelman, M. (1981). A theory of capitalist regulation: the U.S experience (Book). Journal of Economic Issues (Association For Evolutionary Economics), 15(1), 242-243. Schmidt, V. A. (2002). The futures of European capitalism. [electronic resource]. Oxford : Oxford University Press, 2002. Seiler, C. (2009). A Brief History of Neoliberalism. American Quarterly, 61(4), 943-953. Read More