William Lazonik, a professor of economics at UMass Center for Industrial Competitiveness, has written a short essay titled, "How American Corporations Transformed from Producers to Predators." (You can read it here, at the website, 'Naked Capitalism.')
I do not recommend this article as being one that is deeply insightful (in contrast to references I have made to other professional economists such as Henry Hazlitt, Paul Craig Roberts, or other worthy men), but I do recommend it as somewhat enlightening as to what is going on in ivory towers, or in the blogosphere, concerning the very unquiet financial state of The Union. And even more enlightening than the article, perhaps, is the set of comments that it generated.
Mr. Lazonik's main point about "what went wrong" is that a "fundamental transformation in the investment strategies of major U.S. corporations is a big part of the story." I think that he is correct, and that we pretty much all understand that, at this point. The weakness of his viewpoint, as I see it, is that it pretty much confines the problem to the past thirty or forty years. The fundamental problems in Anglo-American, um, "economics" (I was going to say, "mercantilist capitalism") are much older, and much deeper, than this latest (admittedly disastrous) phase and its peculiarities.
Mr. Lazonik seems to imagine an older good time of American corporate responsibility -- he cites the 1950s, when Charles Wilson famously said (slightly misquoted, but only slightly) that what was good for General Motors was good for America -- when the economic welfare of big corporations and the economic welfare of America, or of the world, were supposedly harmonious. I'd have to say, there was no such time. Corporatism as the embodiment of usury-based finance has generally (always?) been antagonistic to equality, equity, and the liberties of the common people.
For explanations, we must be willing to go at least as far as Ron Paul goes, and turn the clock back to 1913 and the creation of the Federal Reserve as a permanent legal establishment.
Or better, we could go with Murray Rothbard to explore the rise of the great banking houses in the United States during and after the Civil War. Or even to the Nicholas Biddles or the Boston Brahmins and the Panic of 1837.
Or to the 1780s, with the political rise of Alexander Hamilton and the Federalists and their Wall Street allies.
You can even run the clock back to before the beginnings of the United States. The establishment of the Bank of England in 1694. The British East India Company. The Virginia Company. The financing of Florence, Venice, and the Crusades. Go back even farther to the empires of the ancients.
An imperial economy is, by its very name and nature, a command economy. Corporations are simply the current name for how that command economy is administered. They serve the emperor. And if not him, then they serve the real powers behind him. They do not serve the people. So far as I can tell, they never have.
So: I think Mr. Lazonik's article lacks a bit in terms of context and historical perspective. But it does give us clues that there is trouble in the Establishment. And the comments which follow the article tell us that there are some informed and articulate critics, which offers a ray of hope -- or maybe just the comfort of shared concern.
I think it was well worth the read. Thanks for the link, Peter.