John Kay is one of Britain’s most respected economists. A former chair of the UK government's review of equity markets, his ideas have shaped policy, business thinking, and public debate. His recent book, The Corporation in the Twenty-First Century, argues that many of our core assumptions about business—ownership, hierarchy, shareholder primacy—are no longer fit for purpose.
This wide-ranging conversation with D Shivakumar explores why.
The Language of Capitalism No Longer Fits
Capitalism, says Kay, was born in a world where capital meant machinery and labour meant workers. But business today looks nothing like that. Modern corporations are teams of people creating intangible value—yet we still use outdated terms like "capital" and "shareholders" to describe them.
“I wish we’d stop using the word capitalism,” he says. “It gives too much importance to tangible capital, which doesn’t matter as much anymore.”
From Command-and-Control to Collaborative Hierarchies
Today’s firms—like Apple—are shaped less by top-down management and more by fluid, cross-functional teams. Kay uses the term “mediating hierarchy”: there’s structure, but it exists to synthesise diverse perspectives, not impose direction.
Hollow Corporations, Real Value
The iPhone says “Designed in California”, but most of it is assembled in China with parts from Samsung—Apple’s rival. “Apple, in a sense, makes nothing,” Kay notes. Its value lies in ideas, not materials.
The same applies to the Pfizer COVID vaccine. “It’s probably the most expensive product per gram ever made—but the value is in the IP, not the ingredients.”
Ethics and the Trust Deficit
Consumers love the product, but distrust the producer. That’s the paradox of today’s most powerful tech firms—Google, Facebook, Apple. Kay warns against over-regulation, but insists these companies must internalise ethical values instead of outsourcing them to ESG departments.
He cites Merck: “Medicine is for the people, not the profits,” said its former CEO. “And the better we remembered that, the larger the profits became.”
India’s Place in a People-Driven Business World
The move from industrial giants like Ford and Carnegie Steel to people-driven businesses has played out largely in the developed West. As manufacturing gets outsourced, much of it now shifts to Asia.
India, with its strong base of Western-style education, is somewhat differently placed. It has become a hub not just for manufacturing but for outsourced services and knowledge work. In that sense, India may straddle the industrial past and post-industrial present—as global firms seek distributed, cognitive talent.
What Killed Boeing?
Kay sees Boeing as a case study in the perils of shareholder obsession. After its merger with McDonnell Douglas, the culture shifted. “They reconfigured the 737 into the Max instead of designing a new aircraft—and it crashed,” he says. It’s a classic case of ignoring long-term capability for short-term value.
The Hare, the Tortoise—and Consultants
“The idea that the tortoise succeeds by turning itself into a hare is a fantasy,” Kay warns. Strategy isn’t about copying the hare, it’s about building capabilities that fit your environment. The tortoise, after all, lives much longer.
There are no generic strategies. True differentiation is evolutionary—and rooted in what only you can do better than others.
Who Owns the Corporation? No One.
Borrowing from Charles Handy, Kay argues that companies are communities. “No one owns a corporation. The corporation is a community of people. I wish we would discard this idea that shareholders own a company.”
Radical Uncertainty and Resilience
Kay distinguishes between measurable risk and radical uncertainty—events that can’t be predicted or easily modelled. “The solution is modularity and redundancy,” he says. “Design systems that don’t collapse if one part fails. The financial sector forgot that in 2008.”
Recommended Reading
Kay’s top pick? Not the End of the World by Hannah Ritchie—a balanced take on sustainability, free from doomsday narratives and greenwashing.
Dig Deeper
Read | The Gist: The new business theme: Love the product, hate the producer. D Shivakumar’s insights from Kay’s book The Corporation in the 21st Century
Coming soon!
Before The Corporation in the 21st Century, John Kay and Paul Collier co-authored Greed is Dead—a sharp critique of the dominance of individualism in Western economies. They argue for a shift toward communitarianism as a more sustainable path. We’ll unpack these Big Ideas in an upcoming conversation with John Kay. Stay tuned.
