Why is modern capitalism irresponsible and what would make it more responsible? A company law perspective

We claim that capitalism is inherently irresponsible precisely because production and distribution to meet the needs of society is subordinated to profit maximisation. Historically, the corporate form enhanced that irresponsibility by accommodating rentier shareholders – whose only concern is with the income generated by their shares – by limiting their liability and by treating the company in law as separate from shareholders and their property, the fungible and fully transferable share. We show how this irresponsibility was somewhat countered in the post war period by government policy and an empowered and active labour movement, but re-emerged in the late 1970s when the economy could no longer support both rentier and labour interests. Since then, company law has enabled various financialised methods of increasing shareholder returns at the cost of innovation, productivity and returns to labour. We recommend policies to reform the company by reducing rentier-driven irresponsibility, particularly in the form of executive remuneration. We argue that existing responsible company forms such as the community interest company cannot create a more responsible capital while the limited liability company continues to provide substantial benefits to the alliance between rentiers and executives.