Its most important objective is to maximize long-term market rates of return to ensure adequate retirement payments for workers. In this regard, the worker view does not differ from conventional investment priorities. But the worker-owner view departs from conventional investment wisdom by expanding the options, methods, and principles that guide capital allocation decisions. Capital markets are neither perfectly efficient nor value-free. Therefore, those who seek to advance the long-term interest of workers inside financial markets must look beyond both the array of choices these markets presently offer and the narrow band of information they provide through price signals.
Pension funds can advance a larger social agenda reaching beyond simple individual returns.
To hold, as many money managers do, that the quality of capital allocation depends solely upon its risk and return profile and that impacts upon workers, the environment, and communities need not be directly considered is not to be unburdened by values. Rather, it is to advance one particular value, the risk-adjusted rate of return, above all others. There are inefficiencies and systematic negative consequences of contemporary financial market operation. A preoccupation with short-term returns can also induce destructive behavior such as corporate downsizing, overseas job flight, employee layoffs, and mergers and acquisitions. While such practices give rise to short-term increases in stock price, some research shows the majority of firms that undertake these activities lose value over the long run.