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In a capitalist economy, private investors launch companies to create wealth (3.2.1). This wealth is shared between the investors, employees and the government – but the amount received by each is determined in separate negotiations:
· The board of directors distributes much of the profits: as dividends to shareholders, as remuneration for the directors themselves, or retaining money to develop the business. Shareholders can exercise some governance over the board but, particularly if they are able to move their money around quickly, tend not to ‘interfere’ even when the management performs poorly.
· Remuneration for other employees is largely determined by the labour market (3.3.3.1), in accordance with supply and demand, though face-to-face negotiations (3.3.3.2) and minimum wage policies (3.3.3.3) may play a part.
· If loans have been taken out, the lenders receive a rate of interest which is largely determined by financial markets (3.3.4.1).
· The government’s share (taken in tax) is politically negotiated (6.7.1).
Shifts in the relative strength of the power wielded by the participants in these negotiations have resulted in their proportions of wealth having changed markedly since the 1980s – as reviewed in the next section (3.5.6.2).
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