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Bets that take place entirely within the secondary market are largely (to low order, at least) irrelevant to mature industrial enterprises. The shareholders can go long, go short, tie themselves into a knot or scream until they are blue in the face. It does not matter.

What matters is a) institutional shareholders (pension funds, investment trusts, etc.) who can actually amass sufficient power to hamstring the company (whether by short-termist outlooks, outright looting or simply making decisions that they are not competent to make). And b) creditors who are sufficiently big to do the same thing.

I actually think that this may be the mechanism I was looking for earlier: Between WWII and Ronnie Raygun, the investment trusts were fairly well suppressed, and the large banking consortiums were spayed and neutered.

With deregulation of the financial sector and the privatisation of pensions, money markets saw a rise of large, organised shareholders and large, organised creditors, who, however, did not have any idea about how to actually run the companies they were investing in/lending to. So they looted them instead - whether by accident or design.

This led to a breakdown of intra-corporate solidarity - a sense that with every man for himself, the only sensible thing to do was to strip as many assets as one could carry and leg it with the proceeds before anybody got wise to your operation.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 26th, 2009 at 11:23:10 AM EST
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Marx might have said a thing or two about the development of monopoly capitalism as well...

notes from no w here
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Jun 26th, 2009 at 11:27:49 AM EST
[ Parent ]


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