Financialization and Corporate Governance

It used to be thought that what we now call ‘corporate governance’ was a rather complex affair. Which models of the corporation and corporate governance were productively superior? Which most encouraged research and development and investment in new technologies? Which best contributed to job satisfaction, to social cohesion and to the realisation of a ‘good life’? In the 1970s and 80s, as the developed capitalist world lurched from one economic crisis to another, many commentators came to believe that the more-stakeholder-friendly models of the corporation found in Germany and Japan were not only socially more cohesive than their more shareholder-oriented counterparts, but economically more efficient. Some continued to make this argument well into the 1990s. In 1992, for example, one of America’s most influential management writers, Michael Porter, argued that American corporate ownership and governance structures were seriously defective, prioritising short-term shareholder returns over long-term productive investment. In the UK commentators like the business economist John Kay were making very similar cases for the adoption of a conception of the corporation as a social or quasi-social institution.