The Past Speaks

AS: A fascinating conference took place in London in late November. The workshop on Financial Governance for Innovation and Social Inclusion dealt with some of the most pressing politico-economic issues of our time. In recent years, people have begun to debate whether we have experienced a slow-down in technological and economic progress. Many of those who do believe that such a slow-down is indeed taking place attribute it to the misallocation of capital away from R&D and towards to financial services of dubious social utility. Some authors have attributed rising income inequality of financialization. The point of the workshop was to discuss whether reforming the financial system might allow us to achieve more rapid growth and greater equality. The workshop was funded by the Reforming Global Financial Governance  initiative of the Ford Foundation.   

One of the speakers at this conference was  Bill Lazonick  University of Massachussets-Lowell, who is well-known to people in the business history community. His talk, which brought a historical perspective to this topic,  criticized economists and policy-makers for a failure to distinguish between value creation and value extraction in the operation of the economy. He argued that the relation between the two phenomena – one that generates output and the other that distributes income – is increasingly being determined by powerful business executives who use the ideology of the market to extract value for themselves that taxpayers and workers helped to create.

You can watch his talk below: