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This week a bumper-packed Tour d’Horizon/Tour de Force. William Lazonick is best known for his iconic “2014 Harvard Business Review’s best article” Profits Without Prosperity: Stock Buybacks Manipulate the Market and Leave Most Americans Worse Off

His essential insight is that “shareholder value” has become an ideology of value extraction entirely lacking a theory of value creation. In past decades Financialisation as a whole has led the US from being a “retain and reinvest economy” to a “downsize and distribute economy”.

We dive into not just the ideology of shareholder value which has turned out to damage society and help create massively increased inequality but also Bill’s theory of the Innovative Enterprise and how we might fix the broken system to produce more equitable growth. To quote wiki:

Much of his current work focuses on how the financialization of the U.S. industrial corporation, manifested in massive distributions of corporate cash to shareholders and the explosion of stock-based executive pay, results in employment instability and income inequity, while undermining the innovative capability of the U.S. economy.

Bill’s work, over nigh on five decades, has been most recently funded most recently by INET (whose Chairman Lord Turner was start of the show in LFP065). It covers three important super big-picture pillars for Fintech – innovation, solid economic growth, and how corporates (ie incumbents) have changed in recent decades. It also adds in the surely socially vital angle of inequality. No point a tiny few of you Fintechers achieving mega-wealth if in a decade or two the dispossessed start burning down your chateaux.

There is more than plenty discussed in the show. Topics include:  Continue reading →