Chief executives are unlikely to be feeling enthusiastic about the rise of the Democratic Socialists of America (DSA), a left-wing political organisation whose members have recently won a slate of nominations to represent the Democratic Party in November’s midterm elections.
Last month the DSA published a manifesto that decried the power of corporate America and called for “public ownership of the largest corporations”.
Because the gap in economic performance between rich and poor places runs through their firms, that matters. Across the OECD, a club of mostly rich countries, the productivity of small and medium-size enterprises (SMEs) averages just two-thirds that of large firms. A country’s firm-level labour productivity moves almost one-for-one with its GDP per person. This suggests that a country does not get rich off the back of small businesses. Instead, it has to create an environment in which those firms can get big—requiring robust property rights, functioning capital markets and a government free from corruption.
