A Critique of the Anglo-American Model of Corporate Governance
University of Technology, Sydney
July 29, 2009
CLPE Research Paper No. 15/09
There is a developing literature comparing different models of capitalism from alternative analytical frameworks highlighting the strengths and weaknesses of diverse forms of capitalism, and the prospects for institutional diversity when confronted with growing pressures for international economic integration.
This paper examines how different varieties of capitalism produce different levels of inequality. Specifically how the Anglo-American variant of corporate governance in its US manifestation afforded CEOs of large corporations inordinate power and wealth, and the consequences of this for inequality in wider society. Arrogation of an increasing share of the wealth of corporations by CEOs impacts upon relationships with other stakeholders and displaces CEOs objectives. The significance is that this is precisely the model of capitalism that is being propagated vigorously throughout the world.
This dynamic induced the present international financial crisis, in which investment bank executives were massively incentivised to pursue vast securitization and leverage which hugely enriched themselves, but caused the collapse of financial institutions worldwide, the violent instability of financial markets, substantial damage to the real economy, and impacted severely on the employment security and living standards of working people.
Number of Pages in PDF File: 34
Keywords: Anglo-American Corporate Governance
JEL Classification: P16, P12
Date posted: July 30, 2009