Research Paper Number
corporate governance; Financial Crisis; financialization; labour law; regulatory reform
This paper constitutes the introduction to an edited collection, THE EMBEDDED FIRM: LABOR, CORPORATE GOVERNANCE AND FINANCE CAPITALISM (Cambridge University Press, 2011). This book brings together contributions from law, economics, sociology and politics in order to evaluate the effects of the shift to shareholder primacy in both the United States and the United Kingdom, in the context of an increasingly financialized economy. Contributors include Ruth Aguilera, William Allen, Harry Arthurs, Blanaid Clark, Mary Condon, Simon Deakin, Sandy Jacoby, William Lazonick, Sue Konzelmann, Dalia Tsuk Mitchell, Larry Mitchell, Frank Wilkinson, and the editors Cynthia Williams and Peer Zumbansen, among others. The book emphasizes empirical evidence, in conjunction with theory, in conscious rejection of the oft- stated view that “it takes a theory to beat a theory.” For in evaluating the empirical effects of these decades-long trends, in light of the on-going global financial and economic crises - crises propagated from the United States - the problems inherent in American-style corporate governance have become manifest. Such problems do not only concern corporate governance, since the shareholder wealth maximizing norm in the United States is embedded within economic and political institutions stripped of many social democratic norms and policies and with an increasing tendency towards deregulation. But the book demonstrates that the result of shareholder primacy, in conjunction with neo-liberal economic and political norms, has been increasing economic volatility and inequality, systemic fragility, and financial risk that is increasingly being transferred to individuals to manage, given the collapse of many collective bargaining agreements and collective arrangements for pensions. The congruence of theory and evidence suggesting weaknesses in shareholder driven corporate governance as expressed in the U.S. and U.K. give rise to questions of how policy and research can best be harnessed to develop more stable systems of corporate governance, and how these goals may best be aligned with government policy. Since it is naïve to think that continental European stakeholder systems, also under pressure, could be transplanted into the United States or the United Kingdom by legislative fiat, the book concludes with suggestions for research and policy development to address the instabilities shareholder corporate governance systems create, while still relying upon existing models within liberal market economies.
Zumbansen, Peer and Williams, Cynthia A., "The Embedded Firm: Corporate Governance, Labor, and Finance Capitalism" (2011). Comparative Research in Law & Political Economy. Research Paper No. 18/2011.