New Books in Economics John Kay, "The Corporation in the 21st Century: Why (Almost) Everything We Are Told about Business Is Wrong" (Yale UP, 2025)
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Apr 9, 2025 John Kay, a distinguished British economist and author, dives into the complex realities of modern business in his latest work. He questions traditional profit-driven narratives and argues for the rising significance of human capital over mere financial assets. The discussion highlights the dramatic shift from long-standing corporate giants to the prevalence of 'hollow corporations.' Kay also addresses the evolution of business leadership, urging a fresh perspective on management and innovation in our fast-paced economy.
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Business Is Not Profit Maximization
- People in business often do not maximize profits or personal income.
- Instead, they cope with a complex and uncertain world, challenging standard economic assumptions.
Modern Business Centers on People
- The essence of modern business is its people, not physical capital.
- Companies now buy physical capital as a service and are run by professional managers.
Understanding Economic Rent
- Economic rent is the profit from unique capabilities others can't replicate.
- It explains corporate profits more than returns on capital in today's economy.
