Econintersect: Marshall Auerback interviewed William Lazonick recently. Lazonick is Professor of Economics at the University of Massachusetts Lowell and Co-director of the Center for Industrial Competitiveness. He presented a thesis that the concept of maximizing shareholder value which entered the governance equation for corporations in the early 1980s is not a constructive factor for competitiveness but is in fact purely an extractive mechanism. The financialization of corporate management has been a negative influence on the growth of capitalistic ventures because it has discriminated against investing for future growth.
The interview covers 17 minutes and describes how modern financialization is destroying capitalism. Such things as stock buybacks are actually market manipulation activities and are in fact a fraud (currently legalized) for extraction by executives that was illegal before 1982. The title of the interview is The Myth of Maximizing Shareholder Value.
- Marshall Auerback has contributed to Global Economic Intersection.
- Yves Smith has an extended discussion of this interview at Naked Capitalism.