Labor in a World of Financial Capitalism

The traditional hostility between labor unions and the world of finance should not obscure their common interest in using financial tools in an expansive and creative way. We live in an age of financial capitalism, and the only intelligent way forward – for unions and other workers’ associations – is for these bodies to help their members make increasingly sophisticated use of the tools of risk management.

The traditional boundaries between labor and capital are becoming blurred. For example, companies increasingly augment standard wage packages with stock options, even for rank-and-file employees. In the United States, the Labor Department reports that in 2003, 14% of US workers in firms with 100 or more employees were offered stock options. Expect more such packages in the future.

The problem is, most employees do not fully understand options or stocks and do not know how to evaluate them. A recent paper by MIT Professors Nittai Bergman and Derk Jenter suggests that management tends to award employee options when employees are excessively optimistic about the outlook for company stock – thereby in effect opportunistically substituting overpriced options for full pay.

To continue reading, please log in or enter your email address.

To continue reading, please log in or register now. After entering your email, you'll have access to two free articles every month. For unlimited access to Project Syndicate, subscribe now.

required

By proceeding, you are agreeing to our Terms and Conditions.

Log in

http://prosyn.org/t3QAeCR;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.