In the final instalment of our debate between Colin Mayer and Henry Mintzberg on shareholder value – is it, as Jack Welch recently suggested, a “dumb idea”? – Prof Mintzberg responds:

I share Colin Mayer’s concerns, but not how he believes they should be addressed. Yes, we have issues that have yet to be dealt with by the public and private sectors. And yes, we need to open up our institutional designs. But Prof Mayer’s proposals are too narrow for me. These are all rooted in ownership of one kind or another, in “the context of the modern corporation”.

Beside the public sector, which cannot be dismissed (is not Oxford University a state institution?), there is a third sector, which gets ignored – in good part because of this very label for it. I prefer to call it the “social sector,” and see it as one of three legs of the stool on which a balanced society has to sit.

The social sector comprises organisations that are either cooperatively owned (Prof Mayer does mention mutual organisations, but seems to see them in the context of the corporation – I don’t), or else they are non-owned. Examples of the latter are Greenpeace (to use ones from the environment) and perhaps the hospitals that are being shifted to trust status in England (to use one from healthcare).

At their limits, governments can be crude and markets can be crass. (Downsizing, for example, often amounts to an effort to maintain shareholder’s earnings at the expense of workers’ livelihoods. By the way, I have never met a “poor investor”.) One or other may be fine for certain activities (raising taxes, trading cotton), but not for many others. Indeed, the very policy issues Prof Mayer cites – environment, health care, and poverty – are precisely where the social sector is the most useful. I don’t want my healthcare delivered by a business, no matter how “modern”, any more than by a government. I appreciate funding by the latter, for the sake of equality, and often supplying by the former, for the sake of efficiency. I just prefer that my healthcare be delivered by the social sector, for the sake of quality. Indeed, it is no coincidence that the vast majority of hospitals in the United States are non-owned.

And since we are opening up the variety of organization, let’s also open up their internal workings. Dean Mayer wants to “re-establish confidence in those who are charged with leading and running our organizations.” Fair enough, but nor far enough. In fact, I think leadership is now the problem: too much of it is narcissistic, and we are overly obsessed with this one element of organizing. As I have earlier (FT, October 23, 2006), we desperately need more “communityship” in all our organisations, especially in the private sector.

So, using Prof Mayer’s own phrases, there is in fact a great deal to stop the modern corporation, with any structure, new or old, from dealing with many of our greatest concerns. And shareholder value will never be aligned with the wide range of true human values in any decent society, because there is a great deal more to us as human beings than ownership.

So: one cheer for the private sector. Another cheer for the public sector. And finally, one clear cheer – but please, a little louder – for the social sector.