When Managerial Capitalism Embraced Shareholder-Value Ideology

Gérard Duménil and Dominique Lévy state that, in analyzing the forces underlying the Piketty et al. data on U.S. income distribution, their paper will shed “new light … on the historical transformation of U.S. capitalism and the most recent trends in neoliberalism, the new phase into which capitalism entered in the 1970s or 1980s.” Based on my own research, however, the Duménil and Lévy analysis suffers from a deficient understanding of (a) when, how, and in whose interests managerial capitalism took root in the first half of the twentieth century; (b) the reasons for the growing importance of the “salaries” component in the incomes of corporate executives who occupy positions in the highest-income fractiles in the Piketty et al. data set; and (c) the particular neoliberal ideology, known as “maximizing shareholder value” (MSV), that has legitimized a mode of corporate resource allocation that since the mid-1980s has been integral to both the explosion of executive pay and the erosion of the American middle class. In my view, a comprehension of these issues is of utmost importance for explaining the sources of income inequality in the world’s largest national economy in the twenty-first century.