As Stafford Beer quipped, the purpose of a system is what it does. The purpose of the SP economy to create massive collections of financial value (i.e. the ziggurats) or in other words, asset bubbles. Bubbles can pop and give rise to financial crises.
As I pointed out in the ziggurats post, building that monument involved extracting 3.2% of GDP (relative to the old SC system) from the peasantry (i.e. working and middle classes) and using it to construct the monument.
The resources used to build the ziggurat could have been used to produce economic growth. A quick back of the envelop calculation suggests the cost of monument building is about 0.8 points of GDP growth. The US would still be the most powerful country in the world had we chosen that path (as the Chinese are clearly doing).
This is why nations and empires fall. Their leaders choose with eyes wide open, the path towards decline. To build virtual monuments that don't even have corporeal reality rather than real national strength. Why do they do it? Well, most of that monument represent the cumulative surplus income of rich people. They don't NEED that income or it wouldn't be surplus. So they invest it, what else can you do with it. As for why this seek to build up their fortune, it is a form of social signaling moderated by capitalism
The naturalness with the idea of investing your extra money is the core of what capitalism is Before capitalism was invented this was not natural. Take the Italian Renaissance merchants. They did not invest in more ships, because it would drive down prices to the ruination of all. Rather they spent the surplus profits on patronage of the arts as a form of social signaling rather than capitalist who would invest the money instead, also for social signaling. The pre-capitalist merchant's choice gave us the Renaissance. OTOH the capitalist merchants gave us either the industrial revolution and modern prosperity (under SC) or ziggurats of finance (under SP).
Stakeholder capitalism seems so obvious but Uncle Milt is sooooo addictive. He was wrong then, he is still wrong. But his theories and that idiotic Laffer curve is just so easy for the investor class to hear.
It benefits the investor class. Under shareholder primacy (SP), the economy builds "ziggurats of finance"
https://mikealexander.substack.com/p/ziggurats-of-finance
As Stafford Beer quipped, the purpose of a system is what it does. The purpose of the SP economy to create massive collections of financial value (i.e. the ziggurats) or in other words, asset bubbles. Bubbles can pop and give rise to financial crises.
https://mikealexander.substack.com/p/how-sp-culture-produces-financial
As I pointed out in the ziggurats post, building that monument involved extracting 3.2% of GDP (relative to the old SC system) from the peasantry (i.e. working and middle classes) and using it to construct the monument.
The resources used to build the ziggurat could have been used to produce economic growth. A quick back of the envelop calculation suggests the cost of monument building is about 0.8 points of GDP growth. The US would still be the most powerful country in the world had we chosen that path (as the Chinese are clearly doing).
This is why nations and empires fall. Their leaders choose with eyes wide open, the path towards decline. To build virtual monuments that don't even have corporeal reality rather than real national strength. Why do they do it? Well, most of that monument represent the cumulative surplus income of rich people. They don't NEED that income or it wouldn't be surplus. So they invest it, what else can you do with it. As for why this seek to build up their fortune, it is a form of social signaling moderated by capitalism
The naturalness with the idea of investing your extra money is the core of what capitalism is Before capitalism was invented this was not natural. Take the Italian Renaissance merchants. They did not invest in more ships, because it would drive down prices to the ruination of all. Rather they spent the surplus profits on patronage of the arts as a form of social signaling rather than capitalist who would invest the money instead, also for social signaling. The pre-capitalist merchant's choice gave us the Renaissance. OTOH the capitalist merchants gave us either the industrial revolution and modern prosperity (under SC) or ziggurats of finance (under SP).
Love it.
Stakeholder capitalism seems so obvious but Uncle Milt is sooooo addictive. He was wrong then, he is still wrong. But his theories and that idiotic Laffer curve is just so easy for the investor class to hear.