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20.5.03

Glaxo's "Fat Cat" Pay Deal Rejected


The boss of one of Britain's biggest companies last night became the first senior director to have his pay package rejected by shareholders who were appalled by a potential £22 million payout if he lost his job.

... Although not binding on the company, it is likely to send shock waves through many boardrooms and could be the first of many votes against company "fat cats" and what shareholders see as corporate greed.

-- via Junius


A little good news. As Perry de Havilland points out in the comments over at Junius, this isn't so much about the stockholders standing up for some egalitarian principle as it is reining in a bad business move. And I think this is good news for precisely that reason. It shows that market forces can be used against the formation of a cronyish quasi-capitalist class. And I think it's this sort of cronyism, which exploits the capitalist system, that is at the root of much of the recent Enron-type problems.

There seem to be three general perspectives on capitalism these days. There's the socialist-egalitarian perspective, which claims that capitalism is in need of much guidance (through regulations and such) to prevent it from abusing the public. People of this perspective tend to see corporate corruption as an inevitable outgrowth of the logic of capitalism. On the other side are the libertarians, who praise capitalism as it is supposed to work in theory. Allied with the libertarians in the modern Republican Party are what we might call the "capitalist class," people who are in favor of capitalism not on principle but out of self-interest as business owners and executives, and who hence have no problem with corruption or government favors, if it benefits them. The libertarians and capitalist class wind up on the same side most of the time because the capitalist class hides behind libertarian rhetoric (about free markets and small government), and because the political discourse tends to lump the existing economic situation and the theory of free markets into a single "capitalism" entity (much like we fuse the writings of Marx, Kropotkin, etc. with the empirical reality of the Soviet Union). The story I quoted above shows how there's room for socialist-egalitarians and libertarians to work together against the capitalist class.

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