The Share Economy: Conquering Stagflation

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Harvard University Press, 1984 - Business & Economics - 167 pages
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In the pages of this intriguing volume, a cure to stagflation seems to be at hand. Martin L. Weitzman, one of America's leading economic theorists, has hit upon a central feature of our economic life as the cause of this chronic malady: the standard practice of paying workers a fixed wage, regardless of whether a company is doing well or poorly. Weitzman shows in a clear straightforward way that an alternative labor payment system, in which a significant number of firms share profits or revenues with their employees (like the Japanese bonus system), provides immunity against stagflation; an economy of such firms automatically soaks up unemployed labor and resists inflation.

Under the Weitzman system, firms always have an incentive to take on more workers because the additional worker is paid only a fraction or share of the revenue he brings into the firm. General Motors and Eastern Airlines have already taken steps to implement profit and revenue sharing. Here, for the first time, is a lucid explanation and justification of share systems. Eschewing theoretically unsound schemes such as supply-side tax cuts and industrial policy on the one hand and macroeconomic sledgehammer "cures" on the other, The Share Economy provides a powerful and hopeful account of what may become the most important economic innovation of our time.

 

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Contents

There Is a Better Way
1
Three Major Decisions of the Firm
10
The Coordination Problem of a Market Economy
24
The Wage System in a Changing World
39
Keynes and the Wage Issue
49
An Uninvited Guest Who Came To Stay
59
Back to Basics
72
Life in a Share Economy
96
Vaccinating Capitalism Against Stagflation
123
Is It Practical?
142
Notes
149
References
155
Index
163
Copyright

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About the author (1984)

Martin L. Weitzman is Professor of Economics, Harvard University.

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