Towards Shareholder Socialism? | An interview with Giacomo Corneo

Giacomo Corneo is Professor of Public Finance and Social Policy at the Free University of Berlin. He is author of the book Is Capitalism Obsolete? A Journey through Alternative Economic Systems (2017). His research interests include inequality and redistribution, public finance, and the economics of values and norms. Since 2004, he has been managing editor of the Journal of Economics.

Hi Giacomo, it’s a pleasure to sit together for a cup of tea and a conversation. Let me start from the basic question of your book Is Capitalism Obsolete?, which asks whether there is a superior alternative to capitalism and how would this look like. To begin with conceptual clarity, what is your definition of capitalism and how do you judge the desirability of an alternative socio-economic system?

I consider economic systems to be collections of rules that determine the behaviour of individuals as producers and consumers, such that the result of those rules allows society to reproduce itself in material terms over time. There are many collections of rules determining consumption and production behaviour, the ones that are characteristic of capitalism are those that stem from its two key institutions: private property of the means of production and the markets. This, of course, allows for a whole array of different variants of capitalism, and the one that is characteristic of the countries of Western Europe is what I call social market economy. In this economy, the government interferes with the distribution of resources, trying to reduce the inequality and the uncertainty that is caused by market processes. Of course, this is just one of many possible sets of rules. During the history of mankind, there has been a lot of variation in which different economic systems have arisen or have been discussed by intellectuals.

In general, there are three levels at which systemic change can occur: micro-level, macro-level and meso-level. At the micro-level there is an evolutionary trial and error process that prompts up from below. For instance, today we observe a lot of attempts to create initiatives in the social economy, fair trade, and shared economy. These are very interesting attempts that we observe in the history of mankind at least since the first Christian communities, and even before. The main filter to ascertain whether the existing status quo is interesting or not is praxis; in practical terms, we experience a selection of what works and what doesn’t. The macro-level is very different and, basically, is the attempt to social engineer from above the entire system, which — given the complexity of current societies — is an unsolvable task. There has been plenty of critique on this approach; the most well-known is the one by Karl Popper. What I am interested in is the meso approach, for which you cannot have just spontaneous trial from below — as you need some coagulation of individual wills into a collective one — and it is not as ambitious and risky as the macro approach.

My approach is to look at possibilities to create intermediary novel institutions that can fix structural problems that arise in the course of history. This is an approach that has been profitable, for instance, in the creation of social security and welfare state arrangements; from Bismarck to Roosevelt, to the Scandinavian countries. These are institutions that today we conceive as obvious parts of our everyday life, but actually demanded an initiative from social actors during history.

And what about the criteria to judge the desirability of a socio-economic system?

I think the key ones are those of efficiency, justice and autonomy. Efficiency is a strictly economic criterion, which refers to the possibility to make the best possible use of resources compared to the needs of societies. Resources, human talent, capital goods, land, natural resources can be put to many different uses. A system that wastes its resources is one in which the economy does not thrive and material prosperity fails. This is not merely an economic issue, but concerns every realm of life, because if you are poor, you cannot afford good education for you and your children, you cannot afford healthcare, and so on. So, it is much more than an economic issue. A second criterion is distributive justice, and this is something heavily discussed since the financial crisis in Europe, with the rise of populism and xenophobia, and in the US where we have observed a huge rise in inequality since the late 70s or 80s. Autonomy is the third one. Autonomy means, on the one hand, helping people to make beliefs that are based on judgement, evidence and logic, so as to empower individuals to better judge their environment and what is best for them. On the other hand, autonomy with respect to preferences, needs and priorities, so that they are not directed by advertisement or other external forces, but that individuals genuinely try to discover what is best for their own flourishing.

In the book you embark in a journey through different socio-economic alternatives that have been proposed during the history of mankind. What is the main conclusion that you reach at the end of the journey?

The main conclusion is that even the best blueprints that have been proposed during the last centuries fail to pass what I call the double-test, that is solving the allocation and cooperation problems: to motivate people to accomplish their economic tasks and to deliver tasks that lead to a meaningful allocation of resources. However, there is one system that I think is very inspiring and promising and passes this double-test, which is what I call shareholder socialism. My bottom line is that there is the chance — and also the need I think — to try to start an institution building process that is inspired by the blueprint of shareholder socialism.

Shareholder socialism? I never heard about it…

We have an extremely successful record behind us in Western Europe, if we look at the decades between the end of the Second World War and the early 80’s where we experienced a huge rise in standards of living as well as improvements in life expectancy, mobility, better education, expansion of civil, political and social rights. That success was mainly grounded on the combination of, on the one hand, what people think as capitalism — competitive markets with free entry and exit, and entrepreneurial activity which triggers dynamism, innovation and flexibility — and on the other hand clever regulations by the government, progressive taxation, public education, public health. These are the elements that led to this success.

However, the world has changed. Now, we are in a globalized economy with free mobility of capital and of high-earners and companies, so it is very difficult to redistribute from the winners to the losers. We are in a situation where migratory flows put an increasing pressure on labour markets, especially with respect to low- and middle-skills. And, we are in a situation in which automation and the development of artificial intelligence are going to lead to a kind of robot revolution, in which this new capital is not like the old one, complementary to most workers, but substitutive. Being substitutive it means it reduces the relative scarcity of that type of labour and hence produces downward wage pressure, which will not be compensated by strengthened trade unions and other institutions of collective bargaining, because our social norms are leading to an erosion of institutions like trade unions.

So, we have a situation in which the national income has shifted to a bigger share going to capital and a smaller one going to labour, and — within the labour share — the dispersion of wages between highy-mobile, highly-qualified skills and low-skills competing with foreign workers and with machines, is leading to even more inequality. We need something that complements redistributive taxation — which is always a good thing but is not sufficient anymore — and complements labour market institutions, like collective bargaining, in order to preserve social cohesion and the European project of a good society.

And this is where shareholder socialism comes in?

Right. The basic idea of shareholder socialism, which can be seen as an updated version of market socialism, is that the corrective intervention with respect to markets already occurs at the level of the distribution of primary incomes from capital. So, it occurs at the level of primary income and it is not at the level of redistribution, after taxing, so that it avoids all shortcomings of taxation in a global economy and it affects the distribution of capital incomes, which are growing more rapidly than labour incomes. In this way, it can avoid the problem that the share of the pie on which you can redistribute — the aggregate wage income — is shrinking with respect to the overall pie.

I guess many of the readers would not be familiar with the idea of shareholder socialism. How does this systematic alternative work and which institutions characterize it?

The blueprint has private ownership in the means of production with respect to small- and medium-sized firms, because we think that individualism at the level of entrepreneurial initiatives is an important ingredient for economic dynamism. But all large firms would be in public ownership, and this would be the key difference with respect to today’s economic system. Why this? Well, because capitalism produces a lot of bad results and because of the disproportionate power that is achieved by the money elite in control of the biggest corporations, which are so big that can exert an influence on the political decision-making process. And this influence is used to raise profits and wealth concentration, at the cost of the overall society.

Concrete examples of this are polluting industries that manage to get exempted from ecological regulations and controls; in Germany we have the Diesel scandal, which would be an example of how lobbies can influence politicians. A second example is the successful attempt of the lobby of the financial industry to reduce capital requirements for banks, which makes the financial system more liable to crises. And when, in the end, they are bailed out, this comes at a huge cost for the taxpayer, so money that is not there for public schools and public hospitals. A third example would be agricultural conglomerates, which have successfully lobbied for import duties, which make us poorer — because necessities become more expensive — and make farmers in developing countries less rich because they have less access to our markets. And the final example would be the success of oil companies to convince countries to military intervene in Libia and other countries to secure access to oil for their own profits.

In all these examples, we have always the same underlying pattern: powerful profit-maximising players have the possibility to force the government to make political choices that, in expectation, raise the player’s profits at the cost of some public bad, which can be polluted environments, tax losses and so on. Of course, this is not in the interest of the majority of the population, so that objectively there is a disentrancement of voters. Democracy is not working properly; this is an example of plutocracy. And shareholder socialism, by taking the money elite out of the room of buttons, would avoid the influence of this rich minority on the government, so that it would lead to a more balanced decision-making in politics. And that’s the key reason why I think shareholder socialism improves efficiency, because it would allow avoiding those public bads. And shareholder socialism would mechanically also ameliorate income distribution, because the profits of those large companies would not accrue to that money elite, but to the government that could, for instance, finance a social dividend out of it.

And why is it a ‘shareholder’ socialism?

The key idea of this system, as compared to old market socialist blueprints, is the use of the stock market. The stock market has become a very important institution in modern capitalism, and most progressive left-wing people have not realised yet that such a capitalistic institution can be overturned in its aims and be transformed into an instrument for social progress. The idea is that it can be used in order to monitor public firms, as those firms would be quoted in the stock market and the share prices contain information about management quality that can be used to write incentive contracts for the managers, and make sure that the public firms are efficiently led. This was a huge problem and deficit of public firms both in Western Europe — we had many public firms before the privatizations of the Thatcher era and after — and also a huge problem for countries like Hungary, which tried a kind of market socialism in the 70s’ and the 80s’.

The basic idea of shareholder socialism is to use the stock market. That’s where shareholder comes from: the dividends of those public firms accrue to the government, which is shareholder on behalf of the citizens. And the stock market, which is the intermediary through which the collective shareholder gets the dividends, is an allocation and cooperation device.

I would like to push you on this new institutional arrangement you propose with a few questions. I find it an interesting proposal for the way in which it solves the eternal dichotomy between the market and the state, with the state being heavily involved in the stock market. In relation to this, you just mentioned the role of the stock market as a driver for good. But what about its dark side, the volatility and uncertainty we often observe? Not to mention all the different types of financial crises and their consequences…

What I referred to before is a long-term vision. Then there is a question of getting there: the transition process. And, indeed, the issues that you mentioned are very relevant for designing an appropriate transition process. Avoiding disruptions in the stock market and financial markets in general and avoiding volatility.

What I propose is indeed a two-step transition. First of all, our polity should learn to manage public capital in a passive way. So, before contending with the capitalists for the control of corporations, I think it would be a meaningful first step to show citizens that indeed we have sufficient knowledge at the institutional level in order to invest in the stock market so as to finance a social dividend. So, the first step I propose is to create a special Sovereign Wealth Fund (SWF) that mainly invests in the world stock market, without achieving control of the publicly listed companies, and whose net returns are used to finance a social dividend. This is something that in part we observe already. For instance, Norway has a very successful sovereign wealth fund.

Once this institution has accumulated a pretty large financial endowment — in the long run it could be something between ⅓ and ½ of GDP as a market value — then it would transfer a part of its endowment to a different institution, which I call Federal Shareholder. The Federal Shareholder would use the money to purchase, mainly by means of hostile takeovers, selected companies, so that no expropriation is necessary. Then, we would have the second step in which, through majority in the shareholder assemblies, the Federal Shareholder would also have the possibility to select the people in the supervisory boards of those companies, which would in the end determine the strategic operations of the firms and outburst the capitalists.

In this stage, there would be a huge change in the organization of those corporations, because the Federal Shareholder would promote workers’ participation in decision-making by means of co-determination institutions and there would be the empowerment of civil society as a watchdog within those firms. I propose that there should be, within firms, novel institutions that consist of representatives of customer protection agencies, environmental groups, and trade unions, that from within can have access to information on how the firm is operating, in order to make sure that all the wonderful regulations that we have to protect the environment, customers and employees indeed are enforced. That they are binding not only on paper, but also in reality.

Let me remain on a sceptical note, for the moment. If we were to have the Sovereign Wealth Fund (SWF) and Federal Shareholder buying shares of all big listed companies from capitalists, then what would the capitalists do with all the money once they can’t invest in these companies anymore? Where would these resources end up?

Actually, it depends a lot on what economists call the ‘returns to scale of investment’. It is a bit technical, but if we have constant return to scale, then we are expecting in general equilibrium that new kinds of similar investment possibilities will open up. That is to say that if there is a lot of investment possibilities in the world that now are not used just because they are a little less profitable than the current ones, then the fact that the SWF invests in stocks, which are basically risky projects, will encourage private savers to buy stocks of different projects. I think that the main effect that would occur is a rise of real investment in risky projects. I also have a general equilibrium model that investigates this.

There are also other effects, however. One effect is that those savers that currently own stocks will choose to sell their stocks, because they understand that the government implicitly is holding stocks for them. They will incorporate the financial decisions of the government into their own personal budget, so that they will sell stocks. To some extent, they will keep them, but choose other forms of investment. This will generate a rise of stock prices. This rise of stock prices will favour the current rich to the expense of the future citizens, because the current rich will have assets that suddenly are more valuable. This is an unintended effect of this policy that can be undone quite easily by means of capital gains tax. If this effect practically turns out to be important, which clearly depends on the intensity and rapidity by which the government intervenes in the stock market, then it could introduce or raise capital gains tax and use the proceeds of the tax to redistribute to the losers, which are the young people of the next generations, by reducing the wage tax for those workers or reduce their social contributions. The unintended redistributive effect can be undone with relatively simple measures.

Another point concerns the experiences we have been accumulating in the mis-management of public companies. In Italy, where both you and me are from, we are quite familiar with this, but by no means this is something unique to the Italian peninsula. Is it not a risky practice to have a public management of companies, where political interests and preferences can interact with firms’ management and strategy?

Indeed there are negative experiences, but not only negative ones. For instance Finland managed almost one fourth of the domestic manufacturing firms through the public sector till the ’90s, and when privatization started it was not because they were doing badly, but because it was a must from an ideological point of view in Europe to privatize. However, I agree that, with some exceptions, the old method of managing public enterprises is not a promising one.

What I suggest is to take stock of the negative experiences to build a governance structure that is very different. What is the main difference? One is the explicit use of the stock market as a monitoring and incentive device. The second key idea is to exploit the chances that are given by a second institution that has developed over the last decades: public politically-independent agencies. Starting around 30 years ago, we have developed in Western Europe a lot of agencies regulating energy, water, and other public utilities and competition authorities. These are neither judicial nor executive nor legislative power, but are a different unelected power pursuing public goals, in a democratic and legitimate way however. We need these because in some sectors, for instance competition, there is a broad consensus in society about the goals — to have free entry and possibly fair competition — but the problems are very complex. It is better to demand it to experts, and this is something that not always but on the whole has been quite successful.

There are the risks of capture by powerful interests and of technocratic paternalism, but I think that the potentials are higher than the risks. And what I suggest when I talk about a devoted SWF or Federal Shareholder, is to conceive them as politically-independent public agencies that are competent, that are insulated from the government of the day, so that they are not under political pressure. Moreover, they are much more participated by the citizens as compared to current regulatory agencies, in order to avoid the dangers of capture and paternalism that I mentioned before. I think this is a very different way of managing public firms that is plausibly delivering far better results.

Does shareholder socialism need to be a globalized system with international harmony or is it also something that a single state can do? An obvious possibility that comes to my mind is that the capitalists, who do not want to sell their shares, would simply move to another country so that they can maintain their stocks and companies…

Maybe this is an instance of circular economy. Here the idea is really to exploit globalization, because the government can raise money in order to endow the SWF on the world financial market. Especially in China, India and other emergent economies, there is a middle class growing very rapidly and there is huge hunger for safe assets in order to finance retirement, university education for the children, and the government would exploit the global economy in order to endow the SWF. The access to shares is also not limited to the domestic stock market, but on the contrary is mainly obtained through foreign markets.

There are very convincing economic and political reasons why the investments of the SWF should mainly be directed to firms abroad. The economic reason is that we want to finance a social dividend by means of the returns that are obtained through those shares. Returns on stocks are very volatile, but they also have some probabilistic relations with the evolution of other variables, in particular with the evolution of domestic wages and income. By looking at the world stock market, the SWF can find stocks that turn out to generate high returns on average precisely in the periods where we are at a crisis in the domestic economy. We call this a negative correlation. And in this way it helps to smooth the disposable income of domestic residents, providing for a kind of income insurance. This is the economic reason why the SWF should mainly invest abroad. The political reason is that by investing abroad, the SWF is less disturbed by attempts of domestic lobbies that otherwise would try to convince the SWF to channel its investments into domestic firms that would profit from access to capital at a lower cost that perhaps the market would give. So, also from a political economy point of view, it is better either to forbid or to strictly limit the amount of shares of the SWF in the domestic stock market.

So to avoid these economic and political problems, you would have the Italian SWF owning 60% of a Brazilian company, for instance…

Yes. Well, not 60% because the SWF would not acquire control in participated companies, it would always be a minority shareholder. An interesting point is that by investing more than proportionally in countries that are very different from ours, for the diversification reason that I gave before, we indirectly help also economic development of poor countries, because we are going then to provide funds for the construction of plants, for the installation of machineries, in countries that are structurally very different from ours and this are typically developing economies.

Now, leaving the sceptical and going to the benefits of shareholder socialism, you already mentioned the disentanglement between economic and political powers, the possibility for a social dividend and even benefits for ‘developing’ countries. One recent study found that 100 companies in the world are responsible for more than 70% of world’s greenhouse gas emissions. In this respect, do you see shareholder socialism as a way of putting the environment at the top of the management agenda of big companies?

I think that already the type of sovereign wealth fund (SWF) that I propose would help. It would help at least if the size of the SWF is large enough to make it a prominent actor in financial markets. The reason is that if the SWF is a prominent investor in financial markets, it can introduce the ethical requirements on investment that the Norwegian SWF already introduced ten years ago. And these ethical requirements include not only the fact that we are not going to invest in firms that produce nuclear weapons or use child labour, but also that we avoid giving capital to firms that generate serious environmental damages.

The Norwegians have been very transparent about this policy and are accumulating interesting experiences about this. You can look at the home page of the asset manager of the Norwegian SWF which is Norges Bank, and you find not only the ethical code which has been endorsed by the parliament, but also the name of the members of the commission of ethics that check whether participated companies have violated their ethical requirements. You also find some 90 or 95 names of companies that have been already excluded by the universe of investable funds for the Norwegian fund. Now, if multinationals know that SWFs have those ethical requirements, they will think twice before undertaking some environmentally critical policies, because they will anticipate that if things turn out to be damaging for the environment, then a big financial player will sell the shares it owns and the share prices will fall. Since the top executives of those firms regularly receive stock options that are linked to the evolution of share prices, this would entail huge income losses for the decision-makers so that, in this way, there is a bit of a crude, but quite effective threat that would lead corporations worldwide to be more careful in choosing their business strategies.

In your book you state that systematic problems in capitalism seem to arise not inside the capitalist system itself, but at the interface between the economic and political spheres. And this is a reason why to advocate for shareholder socialism. My question here is: do we necessarily have to go through such a radical change to avoid the harmful political and economic interconnections?

Well, for sure we do observe already now within capitalistic countries a huge variation with respect to this type of interference. In some cases we would say that we have an oligarchy, that has both economic and political powers, I am thinking here of Russia, but the United States is not very different in this. Then we have countries, maybe the Scandinavian ones, where we think there is a quite balanced situation so that political decision-making is quite balanced. This indicates that there must, even within the capitalistic world, factors that promote a more balanced interplay of economic and political sphere.

The big issue is to what extent can these factors be changed in a situation where the relationship is of the oligarchic type? Here we have the problem of the chicken and the egg. Say a country like Russia, where there is this entrenchment and in order to destroy it one should take political decisions but those political decisions themselves are now captured by oligarchic interests. So it is pretty difficult. There is however always some dynamism, a public discourse, freedom of association and political initiatives and there are some measures that can help. For instance, I think that the movement towards open government, more transparency, using the new information technologies in order to make sure that political responsibilities are clearly stated for policy decisions and that policy themselves are evaluated in scientific ways, will always help as well as having a well functioning political competition between parties. I am also convinced that small evolutionary steps towards a more direct democracy, for instance learning from Switzerland, would also be helpful in order to reduce the power of politicians and the strength of the alliances with powerful economic actors.

This is an interesting point, and I have a question regarding direct democracy. From your perspective, is it desirable to have citizens to directly decide on fundamental issues such as public finance and migration policy through public referendums?

I think that the basic principles of the advantages of division of labour apply also to this realm, so that it would be in general crazy to have every political issue to be decided by vote. I think this is not promising. But, on the other hand, we have in historical perspective a population that over time becomes more intelligent, the IQs of younger generation is higher than older generation, and it is better educated, that has more free time, that has more access and understanding of information technologies, more access to data, so that objectively speaking in an historical perspective, there is the potential for more, and the issue is then to find the right magnitude of this more over time.

I think people also do not want to be engaged in every political decision-making, but there are some decisions that are important to them and they feel frustrated if they have the impression that those decisions are taken without consulting them, by people who do not seem to be particularly competent, like a lot of politicians, and not very benevolent, because many of them are corrupted. So, I think one should look at it in a pragmatic way, without trying to make big leaps forward, so starting at the local level, where issues are discussed that everybody understands, so accustom people to get informed, to talk to each other, putting their piece of information in the ballot, so to speak, in the sense of the Condorcet theorem, which would raise decisions or decision-making. I see it as a normal evolution of our societies to decrease the amount of delegation and to increase the amount of empowerment, but not as a revolution.

From a more pragmatic angle, in the book you argue that the best arrangement we have today is a market economy with a strong welfare state. In relation to this, are the austerity measures that followed from the financial crisis, with great reductions in public spending and funds for social policy, something that is taking us away from the best form of capitalism?

The circumstances under which the welfare state is organized have changed because, as I said before, it is more difficult to tax highly-skilled individuals that are internationally mobile, to tax mobile companies. This means that there are proportionally less resources for things like public education, public health and so on. In the data we also do see that there has been a relative reduction in the quality of these public services. The big issue is: how far will this trend reach? Did we reached the plateau, say in the mid ’70s, and then there was a stabilization and maybe a small decline, but things are now stable again, or is it going to become worse in the future?

I think that nobody can tell, but given what we observe today, we do not see an improvement of circumstances. We are not closer than in the past 20 years to an international agreement avoiding harmful tax competition, Donald Trump has worsened things, we are not closer than in the past to an international climate agreement, we are even in a worse position. We are not closer to have agreements on common taxation of high-skilled in EU. Not only did the UK introduce very shameful tax advantages for hedge funds managers and other people in the finance industry, but now other European countries too, because of Brexit and the hope to become the new city of London, are introducing similar things. The current state of affairs is rather bleak.

Two questions to conclude, hinging upon your public finance expertise. The first one is about guaranteed basic income. From a public budget point of view, is universal basic income something feasible? And what about its desirability?

With guaranteed basic income, it is very easy to see that you are running into huge problems. If you want to give a basic income that reaches the poverty line — which for me it would be the minimum if you want to have a true change in the system — you must give a transfer that is somehow equal to 1/3 of per capita GDP. Since every capita would receive it, this would lead to expenditures equal to about 1/3 of GDP. The share of tax revenues to GDP in a country like Germany is between 20 and 22%. Just this comparison makes clear that, given you cannot double tax rates without consequences, especially in a globalized world, from a public finance point of view, it is a very inefficient and un-targeted way of solving poverty. We have Hartz-IV in Germany, which is an income transfer to those who are needy and cannot find a work that produces sufficient income so that it avoids poverty, and the total expenditure for it amounts to about 1.5 GDP points. So, compare 1.5 with 30 GDP points: even if you cut other expenditures it is not feasible.

Then, there is the issue of justice, whether it is just that healthy people spend their time surfing in California, financed by the basic income, which is financed by the wage tax paid by blue-collar workers. I don’t think it is a fair thing. Then, there is also the issue of what people do with such a freedom. We are a species that has evolved over millennia and has learned to structure everyday life in meaningful activities, and this has shaped our brain in certain fashions. Now, giving everybody the possibility to do nothing, I think some privileged people with lot of education, who can play an instrument and are integrated in interesting groups, maybe can organize 90 years of life without working. But I think many people are not of this kind, so I think there is also an anthropological issue.

I like very much the idea of personal freedom, so I propose to finance by means of the social dividend sabbatical years for every citizen. This would be a way to learn how to use more personal freedom. Instead of having the social dividend paid out, one would let the social dividend accumulate in individual accounts in the SWF and after say 7 or 9 years there would be enough money that one could say ‘well, I stop working, I get some period of time with the right to return to my old job, and I spend this year volunteering in the social economy, or engaging in politics, or pursuing life-long learning, so that I do something useful for me and society and I have more personal freedom, but without being financed by the taxes paid by workers.

So you see universal basic income as both non-feasible and non desirable. Another proposal that goes around in circular economy environments is the Extracted Value tax, which is a proposal to shift taxes away from labour to natural resources and other non-renewables. Again from a public finance point of view, is it feasible to have this shift?

I am quite sceptical for the average Western European countries that it can make a change. There are quite technical issues involved. Nature, in its primitive state, is almost nowhere to find, so it is quite difficult to separate what is natural resources to what is already a resource that incorporates some capital value, that is the value of past work embodied in some improvement of the resource, so this is quite tough technically. And there is a fairness issue as with other property taxes, which concerns the arbitrary time at which it is introduced. If you make a small increase in this tax the problem is negligible, but if you think that it should be an important measure, then because of the way in which asset markets work, this would have a huge effect in asset pricing, so that there would be very strong losses for those who happened to be the owners of these resource by the time these measures are introduced. So, I think it is interesting, but I am sceptical it would make a significant difference.

To conclude: is capitalism obsolete?

Yes, time is ripe for a change!

Thank you very much Giacomo, it has been a stimulating and insightful conversation. Time will tell us whether this change will lead us towards Shareholder Socialism!