In comments, Arin says,
my view of the world is that there were (at least) two distinct phases … First was the emergence of a market for corporate control through hostile takeovers in the 1980s, which may have changed managerial incentives to basically ward off such possibilities. However, it didn’t lead to greater power of shareholders over management … consolidation and mergers over time ended up actually increasing managerial prerogatives. However, it was of course a very different type of management … one whose incentives were quite aligned with short term capital gains which were also potentially helpful to ward off challenge for control… So yes, the market for corporate control changed the world – but ironically it changed it by passing more rents to managers, not less.
I don’t know that I agree — or at least, it depends what you mean by managerial prerogatives. Relative to workers, to consumers, to society at large? Sure. Relative to shareholders? I’m not so sure. But let’s say Arin is right. I don’t think it fundamentally changes the story. What I’m talking about isn’t fundamentally a conflict between two different groups of people, but between two functions. Capital, as we know, is a process, value in a movement of self-expansion: M-C-C’-M’. The question is whether capital as a sociological entity, as something that act on its own interests, is conscious of itself more in the C moments or in the M moments. Do the people who exercise political power on behalf of capital think of themselves more as managers of a production process, or as stewards of a pool of money? The point is that sometime around 1980, we saw a transition from the former to the latter. Whether that took the form of an empowering of the money-stewards at the expense of the production-managers, or of everyone in power thinking more like a money-steward, is less important.
I heard a story the other day that nicely illustrates this. Back in the Clinton era, a friend of a friend was on a commission to discuss health care reform, the token labor guy with a bunch of business executives. So, he asked, why don’t the Big Three automakers and other old industrial firms support some kind of national health insurance? Just look at the costs, look at how much you could save if you focus on making cars instead of being a health insurer. Well yes, the auto executives at the meeting replied, you make a good point. But you know, our big focus right now is on reducing the capital gains tax. Let’s deal with that first, and then we can talk about health insurance.
If you’re an executive in neoliberal America, you’re an owner of financial assets first and foremost, and responsible for the long-term interests of the firm you manage second, third or not at all.