From Financial Capitalism to a Renewal of Social-Democracy

prisme5Prisme N°5 October 2004

Michel Aglietta & Antoine Rebérioux

Prisme N°5 October 2004 (206.6 KiB)



Recent corporate governance scandals have brought to the fore the inherent contradictions of a capitalism dominated by financial markets. This text argues that capitalism’s basic premise – that companies be managed in the sole interest of their shareholders – is incongruent with the current environment of liquid markets, profit-hungry investors and chronic financial instability. In this context, this text also analyses the financial scandals of the Enron era, going beyond the malfunctioning of the gatekeepers (auditors, financial analysts, ratings agencies) to stress the failure of shareholder value and the inadequacy of measures intended to prevent such scandals.

A company should be managed as an institution where common objectives are developed for all stakeholders, and this democratic principle should be extended to the management of collective savings to reduce macro-financial instability. These two conditions could make contemporary capitalism a vehicle for social progress, giving shape to a new kind of social democracy.

This Prisme presents the conclusions of Corporate Governance Adrift: A Critique of Shareholder Value, published by Edward Elgar Publishing in 2005.