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Predatory Value ExtractionHow the Looting of the Business Corporation Became the US Norm and How Sustainable Prosperity Can Be Restored$
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William Lazonick and Jang-Sup Shin

Print publication date: 2019

Print ISBN-13: 9780198846772

Published to Oxford Scholarship Online: January 2020

DOI: 10.1093/oso/9780198846772.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 14 August 2020

The Growing Imbalance between Value Creation and Value Extraction

The Growing Imbalance between Value Creation and Value Extraction

Chapter:
(p.1) 1 The Growing Imbalance between Value Creation and Value Extraction
Source:
Predatory Value Extraction
Author(s):

William Lazonick

Jang-Sup Shin

Publisher:
Oxford University Press
DOI:10.1093/oso/9780198846772.003.0001

This introductory chapter explains how the US economy has transitioned from the “retain-and-invest” regime to the “downsize-and-distribute” regime, resulting in the growing imbalance between value creation and value extraction. It posits that this corporate-governance regime change was integral to the explosion of the incomes of the richest households and the erosion of middle-class employment opportunities through three major structural changes, “rationalization,” “marketization,” and “globalization.” It also highlights the academic roots of the regime change, that is, the nonsensical theory of the “unproductive firm” in neoclassical economics and the maximizing shareholder (MSV) view of the world that builds on it. The chapter then summarizes the contents of each chapter of the book.

Keywords:   Retain-and-reinvest, downsize-and-distribute, unproductive firm, middle class, corporate governance, rationalization, marketization, globalization

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