A Critique of Shareholder Value
The Cournot Centre series
The starting point of this book lies in an observation: the rise to power of market ﬁnance since the mid-1970s has radically altered the characteristic traits of contemporary capitalism. This process of ‘ﬁnancialization’ is driven by two movements. The ﬁrst is the growth in the liquidity of capital markets, expressing increases in the breakdown and transfer of risks. The second is the upsurge, in these same markets, of investment funds, responsible for the management of continually increasing savings. Far from remaining limited solely to the ﬁnancial sphere, these changes have profoundly aﬀected listed companies, the main players in the world economy. In this respect, the ideology of ‘shareholder value’1 has played and continues to play an essential role. The concept of ‘ﬁnance-led capitalism’ can be used to describe this new growth regime, in which a decisive role is given to the proﬁtability of stock market assets, in both the creation and distribution of value added. Our aim here is to grasp the principal moving forces behind this ‘ﬁnance-led capitalism’, in other words to understand not only the regularities which maintain its functioning, if not its durability, but also its most widely recognized weaknesses – factors of instability. To this end, we concentrate on two questions. The ﬁrst deals with the dynamic induced by the continual expansion of risk transfer in the ﬁnancial markets. The second explores corporate governance, and the governance of listed companies in particular. The term ‘governance’ covers all the measures, procedures, institutions and practices that determine...
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