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PRESENTER:
- Hello to all those who have just tuned in to the programme. Before we take a call from another listener, one question keeps coming up online... It concerns the role and place of companies in the workings of the economy. So, Brian Broke, chairman of Hassle-free Credit, are companies the essential link in the economy?
BRIAN BROKE :
- Obviously. An essential link and even key economic players !
PRESENTER:
- How would you define a company?
BRIAN BROKE:
- Ah! That's changed a lot over time.
At the dawn of the Industrial Revolution, Adam Smith already viewed companies as a new type of working organisation that would gradually take over from family organisation and craft guilds. He felt that the company benefited everyone since it was specialised and produced more.
PRESENTER:
- Karl Marx must be turning in his grave !
BRIAN BROKE:
- No doubt! But we're a century down the road, in the middle of the industrial boom and that division of labour that Marx found deeply inegalitarian. Although bound by a contract, he argued that – due to competition - workers would have no choice but to depend on employers who alone possess the means of production. And employers would organise this production to the benefit of their companies, not their employees.
PRESENTER:
- We've got Sharon on the line. I'm being told in my earpiece that you run your own business?
SHARON:
- Er, hello. Not exactly, I've just lost my job in fact...
PRESENTER:
- Ah, sorry about that… What's your question?
SHARON:
- I was just wondering whether a parallel can be drawn between the functioning of companies and that of markets?
PRESIDENT:
- Sarah Smart or else, Brian Broke..?
BRIAN BROKE:
- Yes, more or less. A company is first and foremost composed of employers and employees. They meet on the labour market and negotiate an employment contract. But once this contract is signed, the employee is at the disposal of the employer within the limits of this contract. They have to obey management and cannot renegotiate their salary each time they perform a task! The working relationship is no longer a market relationship, if you like. This is what was highlighted by the Nobel Prize winners of 1991 and 2009, Ronald Coase and Oliver Williamson.
PRESENTER:
- Yes Sharon, you want to add something?
SHARON:
- So that means that the company is a place where workers are dominated by employers to the benefit of employers alone?
BRIAN BROKE:
- Not necessarily! But that was the theory of Karl Marx who concluded that revolution was inevitable in the future.
PRESENTER:
- And what about the increasing impoverishment of employees in the company, do the facts bear out his theory? Sarah Smart?
SARAH SMART:
- Not necessarily. In the early 20th century, the Austrian Joseph Schumpeter, observed that over the long term, growth and purchasing power rise together in line with innovations made by companies. The interests of workers and companies can therefore coincide.
PRESENTER:
- Thank you Sarah Smart. Let's hope that an innovative company will shortly take an interest in the talents of our listener Sharon…
- Talking economics, listeners' slot, we're waiting for your calls!
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