The Speculation Economy

The Speculation Economy

How Finance Triumphed Over Industry

Book - 2007
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American industry once focused on providing the best goods and services, but today, business success is measured almost exclusively by the price of a company's stock, forcing executives to keep the share price as high as possible and leading to neglect of long-term strategic planning. Mitchell (business law, The George Washington University) explains when, how, and why the stock market became the driving force of the American economy. Starting in the first decade of the 20th century, he tells the story of the legal, financial, economic, and social changes that allowed financiers to create large corporations for the main purpose of manufacturing stock and dumping it on the market. He shows how the federal government, wedded to an outdated economic model, failed to regulate finance and thus missed the chance to control corporations. Annotation ©2007 Book News, Inc., Portland, OR (

Ingram Publishing Services
American companies once focused exclusively on providing the best products and services. But today, most corporations are obsessed with maximizing their stock prices, resulting in short-term thinking and the kind of cook-the-books corruption seen in the Enron and WorldCom scandals. How did this happen?

In this groundbreaking book, Lawrence E. Mitchell traces the origins of the problem to the first decade of the 20th century, when industrialists and bankers began merging existing companies into huge “combines”—today’s giant corporations—so they could profit by manufacturing and selling stock in these new entities. He describes and analyzes the legal changes that made this possible, the federal regulatory efforts that missed the significance of this transforming development, and the changes in American society and culture that led more and more Americans to enter the market, turning from relatively safe bonds to riskier common stock in the hopes of becoming rich. Financiers and the corporations they controlled encouraged this trend, but as stock ownership expanded and businesses were increasingly forced to cater to stockholders’ “get rich quick” expectations, a subtle but revolutionary shift in the nature of the American economy occurred: finance no longer served industry; instead, industry began to serve finance.

The Speculation Economy analyzes the history behind the opening of this economic Pandora’s box, the root cause of so many modern acts of corporate malfeasance.

Publisher: San Francisco, CA : Berrett-Koehler Publishers, c2007
Edition: 1st ed
ISBN: 9781576754009
Characteristics: xiii, 395 p. ; 24 cm

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Jul 08, 2009

excellent research, would be a useful reference book, but far too detailed for a general interest reader, the political process in the US has changed very little in the past 100 years, and that is why securities regulation remains a huge challenge (money talks and it also buys much influence in Washington)


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