Missions and public purpose: a new social contract between business, labor and the state by Mariana Mazzucato published by UCL Institute for Innovation and Public Purpose -IIPP (2022).
“Capitalism is not a deterministic system that is either good or bad—the exact form it takes is a result of concrete choices made to structure businesses, government organizations and transnational institutions—and how they relate to each other. In this sense, the market itself is an outcome not a deterministic process that forces decisions on others. The fact that capitalism is not working for so many – with real wages stagnant in many countries, private debt mounting due to the financialized structure of our businesses and financial system, and the planet warming irreversibly – means we must revisit those structures and decisions. Labor’s share of global income is almost at an all-time low. In the US, for instance, the share of gross value added in the nonfarm business sector paid out to workers as wage (or self-employment) income remained stable, between 63% and 65%, for more than a century – but then, around 2000, began to drop to hit a low of 56% in 2013, before recovering slightly to about 58% by 2020.1 At the same time, and as a consequence, the capital share of global income has risen. Is this because capital has gotten smarter and more efficient while labor has gotten less so? No. Even in periods when productivity has risen, labor has not reaped the rewards, indeed the growth of real wages has lagged productivity growth2 . And the increasing financializaton of the economy, has meant that profits are not being reinvested back into the economy, but to a large extent going to shareholders—increasing the divide between those that own capital and those that don’t…”