A Critique of Shareholder Value
Our analysis of contemporary, ﬁnance-dominated capitalism has four results. The ﬁrst concerns the ﬁrm. In its technical, ﬁnancial, cognitive, and organizational aspects, the development of capitalism has reinforced its collective nature. The ﬁrm is a place of both cooperation, which underlies production, and conﬂicts of power; it is driven by interests that cannot be dissociated, but which are in part contradictory. In that respect, businesses are partnerships by their very nature. Therefore, the ﬁrst concern of governance is not control, but the formation of a collective interest, a goal recognized and accepted by the company’s stakeholders. The second result concerns ﬁnance. The last 30 years have seen a major evolution from intermediary ﬁnance towards market ﬁnance. This evolution signiﬁes a paradigm shift in risk assessment and management. The digital revolution allowed risk to be broken down into basic elements, arranged into tradable ﬁnancial products and transferred to all ﬁnancial institutions. The consequences of this revolution are far-reaching, yet ambivalent. This is not a linear evolution toward a utopia of perfect market systems. There are multiple possibilities for risk diversiﬁcation, but risk transfer creates interdependencies that provoke destabilizing feedback when macroeconomic problems arise. Available funds increase, but the strong link between indebtedness and the valuation of equity capital leads to ﬁnancial fragility. Reorganization of ﬁnancial portfolios seems limitless thanks to market liquidity. Liquidity, however, depends on the intersubjectivity between agents, which is aﬀected by ﬂuctuations in trust. The ﬁnal result is a ﬁnance that is more unstable,...
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