Private Equity and Public Good

In: Dissent: a journal devoted to radical ideas and the values of socialism and democracy, Band 55, Heft 1, S. 52-60

Abstract

Examines private equity (PE) as a reflection of the latest stage of capitalism, asserting that an appropriate response to this new capitalism requires understanding the Adolf Berle-Gardiner Means paradigm (1932). This paradigm derives from an attempt to understand the public corporation's key governance problem -- ie, tensions between inside managers & outside investors -- & position a solution to that problem within their social democratic vision of governance. From this, emerged the idea of the principal (investor)-agency (manager) relationship & associated agency costs. The notion of eliminating agency costs is partly the impetus behind the rise of PE. The labor movement's ambivalent response to PE is discussed, highlighting the unions' focus on the role of debt. Attention is then given to the financialization of capitalism & the rise of industrial pluralism, rejecting the casting of PE as financialization & contending that PE is doing what capital has always done. D. Edelman