On the Origins of The Modern Corporation and Private Property

The Modern Corporation and Private Property (MCPP) by Adolf A. Berle Jr. and Gardiner Means, published in 1932, is undisputedly the most influential work ever written in the field of corporate governance. In a nutshell, Berle and Means argued that corporate control had been usurped by a new class of managers, the result of which included (1) shareholder loss of control (a basic property right), (2) questionable corporate objectives and behavior, and (3) the potential breakdown of the market mechanism. In this paper, I examine the origins of MCPP, paying particular attention to the authors’ underlying motives. I argue that shareholder primacy was not the principal motive. Rather, the principal underlying motive was the well-documented growing gap between potential gross domestic product (GDP) and actual GDP in the 1920s, a problem they, like myriad other period writers, attributed to managerial behavior—in short, a breakdown of governance. In this regard, MCPP should be seen as analogous in scope to the period writings of Thorstein Veblen, Paul Douglas, Henry Ford, Edward Filene, Rexford Tugwell, and many others in the 1920s

The Problem of Money Illusion in Economics

Money illusion in economic theory has been an assumption rejected for academic economists for quite some time. However, with the gradual diffusion of behavioural economics based on experimental research this has changed. Now, it has become a respected fact to accept money illusion as a stylized fact of human behaviour. However, it still needs a better understanding why monetary phenomena especially related to financial markets play an important role in understanding the real economy, the production, consumption and exchange of commodities and services. The author of this paper suggests that financial markets are particular engaged in intertemporal valuation problems which are common to any kind of economic activity. Since money is the unit of account, accounting problems related to the uncertain nature of future economic development makes a continuous readjustment of valuations in money units necessary. However, financial markets are imperfect as Minsky has pointed out. Because of these imperfections the possibility of significant long-lasting valuation problems emerges. One reason for this is that in standard economic reasoning the problem of intentional cheating is neglected. Furthermore major innovations like e.g. the ICT revolution with the Internet or the introduction of securitization as a means to redistribute risk as general purpose innovations make valuations of the long term to medium term impacts on the economy extremely difficult. The recent financial market bubbles are significantly related to such general purpose innovations. If monetary policy fails to control for irrational exuberance of investors about the future benefits and profits of such innovations, this inherently embodies the risk of a financial market shock, if expectations of the general public have to adjust after overoptimistic prediction about the future economic development. The author, however, considers that there are some early warning indicators which would give the possibility of timely action of policy makers to control financial market bubbles. The complacency of monetary authorities of the past decades to do so, has not primarily a diagnostic problem to deal with money illusion, but even more so with vested interests of insiders of private investors on the institution to control unlawful behaviour. By weakening the regulatory framework, failing to establish transparency and accountability of agents eager to get rich as fast as possible without taking into regard the rules of good governance the current global financial crisis of institutional failure to contain the instability of financial markets to an acceptable social level. Money illusion is so as well an expression that unfounded optimism about the self-regulatory discipline of market participates is sufficient to stop financial markets get out of control to an historical unprecedented level.Money Illusion; Imperfect Financial Markets; Regulatory Failure; Behavioural Finance

Atlantic Drift: Supranational and American Think-Tanks in Comparison

While there has been a significant amount of scholarship on think-tanks in the United States, attention to these same organizations in the European Union has been scant. In particular, there has been a dearth of scholastic treatment of think-tanks operating with an EU-level mandate within Brussels, which this study has termed supranational think-tanks. This study pursued an original comparative analysis between both of these diverse think-tank models. In particular, the principal research questions guiding this study concern the differences that exist between these think-tank models and, more importantly, why these divergences have manifested. In terms of their differences, it was revealed that American and supranational think-tanks diverge through three principal aspects: their roles, priorities, and main constituencies. In offering an explanation as to why these differences have emerged, this study pinpointed two principal variables: institutional credibility and political culture. From an institutional perspective, supranational think-tanks have been afforded an inherent credibility by the institutions of the EU, and have therefore been able to direct their resources and efforts to those activities and outputs in which they have a comparative advantage and can add value to the EU policy-making community. American think-tanks, on the other hand, do not have such institutional credibility, and therefore need to provide evidence of their credibility to their main constituencies, especially in making their case for funding. Further, for American think-tanks, an adversarial and individualistic political culture has informed the ambit of think-tank norms and activities, while the consensus-driven and collectivist political culture of Europe has similarly impacted supranational think-tanks

Post-Soviet management and critical agency theory.

This paper intends to explore issues of trust and control, as they emerged from the labour process debate, in the context of management restructuring in Transformation Economies. On the basis of ethnographic research in post-soviet manufacturing industry, the paper will present problems faced by managers and owners in carrying out restructuring, unveil the contradictions that constrain their relationship and identify the nature of the social transformation at work in the process. The paper will contend that critical agency theory (Armstrong 1984, 1989, 199) is the best suited tool in problematising the ownership-management relationship in this context. The post-soviet context in turn, with capitalist transition still in its early stages, represents an ideal field for operationalising this approach. The peculiarity of the soviet economic system rests in the limited control by the elites over the production process, which, in turn, translates into a conflictual and mistrustful relationship within management. The emergence of outside ownership in privatised enterprises introduces a new dimension to this contradiction. This calls for problematising managerial issues of control and decision-making, keeping in sight the way in which managerial work occurs in the circuit of capital

AN APPROACH FOR THE DEVELOPMENT OF COMPUTER BASED BEST PRACTICE DELIVERY MECHANISMS FOR SMALL AND MEDIUM SIZED MANUFACTURING ENTERPRISES

Changes in the competitive environment have strongly influenced manufacturing companies to adopt and develop best practice. Best practice is usually imported into companies using the services of consultancy organisations. The use of consultancy services does not guarantee success however, and inadequate results have been obtained by practitioners who have engaged in client-consultant relationships. The inadequacy of these results may be explained by the installation of pre-defined solutions by consultants as opposed to the adaptation and implementation of solutions to meet the specific requirements of practitioners. Tills may in part be explained by a lack of understanding of 'best practice'. Tills work presented in this thesis investigated the feasibility of computer based mechanisms for intervention in small and medium sized enterprises (SMEs) for the delivery of best practice. The research was undertaken using a prototyping approach. Three prototype computer based tools (CBTs) were developed by the author and tested by practitioners. The prototypes were designed based on a set of objectives and a framework of features which was developed. These frameworks were constructed from a synthesis of the research findings which included a study of best practice, the identification of characteristics of types of intervention, the identification of SME characteristics, and inhibitors of change in SMEs. The research has indicated that an approach using computer based tools is appropriate for intervention in SMEs and for adapting best practice to meet specific requirements. A structured project management approach is required with identifiable goals and benefits. An exploratory learning environment should be used to deliver complex best practice concepts and to support the goal oriented approach. Tools and techniques provided by the CBT enable the achievement of methodological tasks and facilitate experimentation and learning. The approach should not prescribe solutions, but should provide information through computer generated analyses to support decision making. The research suggests that the proposed approach may support a workbook based methodology, or may encapsulate a process methodology. The originality of this work is in the provision of a definition of best practice, an explanation of the deficiencies of existing mechanisms for the transfer of best practice to SMEs, and the specification of the features required by a new computer-based approach. Tills provides new knowledge for the field of production and operations management

The Vertical Integration Strategies Approach for Organizational Risk Reduction

The vertical integration decision poses strategicchallenges for a firm’s marketing channels’decision prerogatives which drive its businessstrategy. This paper explicates those putativebenefits of vertical integration as organizationalstrategy adopted by firms for alleviatingrespective transaction costs and optimizingfunctional governances of the business system inthe enterprise. The discourse concentrates on thedynamics of the varied vertical integrationmechanisms like joint ventures, mergers, andcontracting agreements practiced by firms toserve as risk reduction strategies in the businessexchange process