Forward Economics
Chapter 6
Why the Forward Business Model Will Win
The mind of man is like a chariot: swift in victory, but vulnerable where its armor is thin.
— Homer, The Iliad
Inequality, it turns out, is not an economic necessity: it is a design failure.
— Kate Radworth, Doughnut Economics
In 2018, economist Neil Irwin set out to compare worker-compensation data from companies in the Standard & Poor’s 500 to see how the financial pie is split between workers and owners at a typical large corporation. His idea was simple: examine a firm’s annual shareholder report, total all business expenses except labor compensation—i.e., buildings and land, utilities, maintenance, consultants, raw materials, advertising, R & D—then subtract that subtotal from total revenue.
What remains is the pool of money available to allocate between the company’s two remaining stakeholders: workers and owners.
How is that pool divided?
Irwin found that shareholders, on average, earn about $117 (54 percent) for every $100 paid to employees.
Two Companies, Two Designs
Now imagine two companies competing head-to-head in the S&P 500.
Business A is a typical S & P 500 firm: it pays the majority of its profits to shareholders through dividends and buybacks.
Business B is a Forward Business that reinvests the same funds back into its workforce and operations. It splits what would normally be paid to shareholders among higher wages, stronger R & D, and expanded marketing. On top of that, it gives ten percent of profits to noble causes and returns twenty percent to a Forward Fund that seeds more forward businesses across the economy.
Visually, the difference is striking. The same dollars that in Business A exit the economy to enrich a few instead become—in Business B—a continuous flow of reinvestment and shared prosperity.
Who will prevail in open competition over time?
Observe that the Forward Business can:
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Pay its workers roughly 50 percent more.
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Significantly increase its investment in R & D and marketing.
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Leverage its ethical model to strengthen customer and supplier loyalty.
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Do all this without raising prices.
In most cases, it won’t even be close.
The Achilles’ Heel of the Modern Capitalism
Behold, now, the Achilles’ heel in today’s dominant form of capitalism: the shareholder. Consider, for example, what happens after the seed capital has done its job. In today’s model, investors become a permanent siphon—extracting wealth long after their risk has been repaid. Each dollar pulled out is a dollar no longer strengthening the enterprise that created it. In effect, the shareholder becomes both benefactor and ball and chain: necessary for birth, parasitic in maturity.
A Forward Business severs that tether. It uses the same seed capital but locks the flow of profits into perpetual motion and reinvestment—fueling new growth, new jobs, and new innovation instead of bleeding them away. This means it’s inherently more powerful and competitive, preserving all the core strengths of free enterprise—freedom, competition, and innovation—while discarding the self-limiting flaw of extraction from the investor.
The Evidence Is Plain to See
Happier customers. More motivated workers earning higher wages. Stronger survival in lean times. Greater innovation. Faster organic growth. Meaningful community giving. Higher revenue and profit.
These are the competitive advantages that Forward Businesses bring to the marketplace. They don’t guarantee the success of every single firm—but, like the House in Las Vegas—which wins on only a small probability edge—the outcome over time is practically guaranteed.
Forward Businesses will win — not by decree, but by math.
When Prosperity Compounds
As Forward Businesses multiply, their advantages won’t stop at company walls. The same design that rewards virtue inside the enterprise begins to reshape the wider economy outside it — lifting wages, narrowing inequality, and rebuilding trust in free enterprise itself. That is where we turn next.