When I came across this article in New York Times on how employee-shareholders might have voted on a non-binding resolution against the pay-packet of Vikram Pandit, I was reminded to search for my own letter sent to FT in 2002 on this topic. I am reproducing the letter below:
LETTERS TO THE EDITOR:
Marx and Smith needed more than ever
Financial Times; Jun 06, 2002
From Dr V. Anantha-Nageswaran.
Sir, It was a pleasure to read John Plender’s thought-provoking article on the issue of stock options (“Fuzzy lines of ownership”, May 29). The argument that technology companies depend more on internal capital (human capital) rather than external capital and hence there is a case to be made for rewarding insiders better, is insightful.
However, this argument is grounded by the audaciously disproportionate rewards that top management bestows on itself.
The public outcry would be muted if only such rewards for internal capital were more evenly spread. On the other hand, this self-congratulation often comes at the expense of employees who had helped to build up the company. The standard prescription is to lay off employees in the thousands in an attempt to shore up the value of the stock options.
In effect, what we saw in the 1990s was neither capitalism nor socialism but elitism – top managers rewarding themselves and getting governments to work in their favour. Maybe we need an alliance of Karl Marx and Adam Smith to restore a semblance of parity between labour and capital on the one hand and top managers on the other.
V. Anantha-Nageswaran, Singapore 039393
© Copyright The Financial Times Ltd
I am glad that the alliance of Karl Marx and Adam Smith is now becoming a reality.
I am also linking here to an article I wrote on American capitalism in 2003. At that time, I had a fortnightly column in ‘Business Line’ (a publication of THE HINDU group).