KEY POINTS:
The justification for big business - and the management principles which govern it - is that it is the engine of economic development.
The argument goes there is no such thing as an advanced economy without large companies (a measure of India and China's progress is that they are quickly developing them).
Roughly, the greater the density of big companies, the higher the standard of living. However, for the West, this description no longer applies.
One of the topics the global business elite discussed at the Davos economic summit in Switzerland was the "soggy middle".
There is arising a resentful perception that while the engine is steaming merrily ahead, it has quietly slipped its coupling and left the middle-class train in the station.
Thus, economist Paul Krugman notes that even households at the 95 percentile - that is, households richer than 19 out of 20 Americans - have seen their real incomes rise less than 1 per cent a year since the late 1970s.
In Britain, the median disposable household income has progressed at the same leisurely pace. Meanwhile, those travelling in the first-class coach to Davos are travelling in ever more extravagant luxury.
Over the same period the incomes of the top 1 per cent in the US have doubled; those of the top 0.01 per cent have risen fivefold. The story in Britain is similar.
In the largest 1500 US companies, the take of corporate profits appropriated by the top five executives has doubled to 10 per cent in a decade.
That's US$40 billion ($57.7 billion), which would make a sizeable dent in the pension scheme deficits that, in America and Britain at least, are in the process of ensuring that the now stationary middle-class coaches will in the future be shunted sharply, and permanently, backwards.
What, then, are big companies for? Increasingly, the answer seems to be: to keep the City and a tiny minority of top earners in the extravagant style in which they are cocooned.
Yet they should be worried. If the engine argument falls, there is no earthly remaining justification for these inequalities, or the management principles that perpetuate them.
Rather, they can be seen for what they are - the scaffolding that holds in place an upside-down world in which it has become the function of individuals to serve organisations, rather than the other way round.
In this chilly, Orwellian universe, individuals dance to the tune of the organisation. Faster! Harder! Longer!
And the organisation dances to the tune of high finance's dealmakers and financial engineers, all under the gaze of governments, which decree that the pain is for our own good.
The Davos economic summit warned of economic and social global warming.
The "soggy middle" phenomenon is nature's way of saying that our economic and management practices are as unsustainable as our environmental ones.
The inequalities are already fracturing psychological and social contracts within organisations - witness the dire levels of engagement and trust measured in umpteen surveys, and in society as a whole. How long before they lead to open breakdown and conflict?
Sustainability is not just about green issues - without their social and economic equivalents, environmental initiatives are just greenwash.
It's also about being fair, secure, in control of the job, and, unfashionable as it is, relatively equal.
All these are proven contributors to job satisfaction and productivity; and, as Richard Layard and other economists are beginning to show, to overall happiness and welfare, which are the point of economic activity.
Runaway engines are dangerous as well as unproductive. It's time to re-attach this one to the train before the brakes fail - or it is blown up by disaffected passengers.
- OBSERVER
