Leading economist and Financial Times columnist John Kay discusses his concept of a Good Company and why markets need to be socially embedded with Social Europe Editor-in-Chief Henning Meyer. This podcast was produced in cooperation with the Bertelsmann Foundation. A full transcript of the conversation is available here: http://www.socialeurope.eu/2015/08/what-is-the-good-company/

Host: Henning Meyer, Editor-in-Chief of Social Europe  

Guest: John Kay, Economist and Financial Times Columnist  

In this episode of the Social Europe podcast, host Henning Meyer sits down with John Kay, a leading economist and Financial Times columnist, to discuss the evolving concept of "the good company" and the challenges facing economic thinking in European Center-left parties. The conversation dives deep into the weaknesses of current economic models, the importance of social institutions in market economies, and the need for a revised critique of market economies that acknowledges the complexities of modern corporations.

John Kay explores how the collapse of socialism has left Center-left parties in Europe without a clear economic strategy, leading to fragmented politics both on the Left and Right.

Markets function effectively when embedded within strong social institutions. Kay argues against the "American business model" that prioritizes individualism and minimal regulation, advocating instead for a more collective approach.

The discussion covers the limitations of viewing corporations solely through the lenses of individualism or shareholder value maximization. Kay emphasizes the importance of corporations being embedded in their communities and balancing the interests of all stakeholders.

Kay shares his views on stakeholder capitalism, contrasting the German model of co-determination with other approaches. He supports the idea of companies being run by professional managers with a broad understanding of their social roles.

A "good company" is one that balances producing goods and services, providing fulfilling work environments, existing in harmony with its community, and delivering returns to stakeholders. Kay uses the metaphor of steering a boat in turbulent waters to describe the role of a modern corporate manager.

Kay critiques how some corporations, especially in the financial sector, have broken the implicit social contract with society, prioritizing short-term profits over long-term community engagement.

The conversation concludes with a discussion on the need for cultural change within corporations rather than relying solely on new laws or regulations. Kay stresses that rhetoric often runs ahead of reality and that changing the public discourse is crucial for reshaping the corporate landscape.

"Markets function because they're embedded in social institutions."

"A good company understands the multiplicities of its social role."

"Pursuing a goal directly is not necessarily the most effective means of achieving it."

John Kay's book, Obliquity: Why Our Goals Are Best Achieved Indirectly, is mentioned as a deeper dive into the ideas discussed in the episode.

This episode offers a compelling critique of current economic thinking and provides a thought-provoking discussion on how corporations can better align with social goals. Kay's insights challenge conventional wisdom and call for a renewed focus on the social responsibilities of businesses in modern economies.