The Washington Post wrote an interesting article entitled You Can Cap The Pay, But The Greed Will Go On a couple of days ago that confirmed my suspicions about corporate greed and executive compensations. With the current state of the economy, many of us are beginning to question the stability of an unfettered capitalist system. The experiments with communism in the Soviet Union and China have shown that system to be unworkable, but unfortunately, that has been used as an excuse to promote unregulated capitalist markets as the alternative.

I am a strong believer that it is not an either/or argument between capitalism and communism. I believe that economic prosperity can be found somewhere between capitalism and communism. Markets need some regulation to prevent unfair competition and exploitation of workers & resources. Society needs the safety nets of unemployment insurance and health care.

Corporations could act responsibly and for the long term good of both their shareholders and society as a whole if the investors in those companies took a personal interest beyond the short term returns of their investments. We are all guilty of this. Most of us don’t even know what companies we are invested in since most of our savings are in mutual funds and RRSPs.

It is partly this disinterest on the part of investors and the focus on short term profits that got us into the mess that we are currently in. Investors and senior executives seem to only be interested in draining as much profit out of companies as possible.

In 1980, executives at large companies made about 40 times what the average worker made. Last year, CEOs made about 360 times more than the average worker.

I believe that we need to figure out how to make corporations accountable to the people and society as a whole. An excellent example is the Mountain Equipment Co-op, which is owned by the people who shop there, is very successful and socially responsible. I don’t know how we can make more corporations responsible, but I think it is an important area to explore.

If you have ideas, please comment.