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Means and Purposes of the Money Manager Capitalism

In the money manager stage, financial and non-financial companies are interwined. Their portfolios are made up of a mixture of capital and financial assets. Non-financial companies depend on interest income and deal in currency and financial derivates. Financial companies are investment-oriented and offer greater support to trade than in the early 20th century. These large financial conglomerates as institutional asset holders significantly affect the corporations' way of work. At this stage, another important institutional change takes place. As the financial institutions have an increasing power in corporate governance and increasing amounts of money commited by clients, the functions of ownership and control over enterprise are more and more integrated. Regulatory changes, which expand the rights of major shareholders to influence the companies' decisions and at the same time reduce the dominance of management in the proxy machinery, also significantly contribute to these processes. However, money manager capitalism creates negative social and economic implications. Narrowing the focus of corporate governance to the enhancement of shareholder value and directing the corporations on to shorter-term financial performance criteria goes directly to the detriment of workers and communities. In the last two decades, money manager capitalism has supported the concentration of wealth in the top 20% of the population in the U.S., on the one hand by promoting the restructuring of corporations and global investment, and on the other by distributing money-management services and savings vehicles in the direction of the individuals with the highest earnings. The end result has been the development of an economy which entirely depended on a relatively small group of people.

Money manager capitalism; Financial institutions; Non-financial companies; Social implications

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