Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States

Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States

Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States

Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States

Excerpt

As I write this preface in March 2009, the United States is in the midst of the worst economic crisis since the Great Depression. The Obama administration has established a massive stimulus package to get the economy back on track. As I show in this book, however, there are fundamental problems with the U.S. economy that predate the current crisis. Even in recovery, the U.S. economy will not generate stable and equitable growth—or what I call “sustainable prosperity”—unless these problems are fixed.

For the past three decades the distribution of income in the United States has become more unequal, with a hugely, and some might say grotesquely, disproportionate share of total national income now going to the very richest households. Over the same period, the U.S. economy has experienced an inexorable disappearance of “middle-class” jobs—stable employment opportunities that provide a decent standard of living. A key finding of this book is that even when economic conditions are generally prosperous, economic insecurity afflicts well-educated and highly experienced members of the U.S. labor force. Yet these are the people who should be best positioned to make a good living.

In this book, I analyze the ways in which the “New Economy business model” in the information and communications technology (ICT) industries has contributed to this instability and inequity. In the last decade, U.S.-based ICT companies have been replacing well-educated and highly experienced U.S. workers with qualified labor in lower-wage nations such as China and India. The contribution to the growth of these developing economies represents progress. The problem is that rather than use the profits from globalization to sustain and upgrade the employment of U.S. workers, companies like Cisco Systems, Hewlett-Packard, IBM, Intel, and Microsoft have been using these profits to repurchase billions of dollars annually of their own outstanding shares in an effort to boost their stock prices.

Underlying this mode of corporate resource allocation is the corporate governance ideology that contends that to achieve superior economic performance companies should “maximize shareholder value.” In this book, I expose the fallacies of this argument, and I show how in practice shareholder-value ideology contributes to instability and inequity in the economy and tends to undermine the accumulation of innovative capability. This book provides an alternative perspective on how corporate resource allocation can contribute to the achievement of sustainable prosperity.

The research that underpins this book goes back some two decades, when I first started analyzing the financialization of the U.S. corporate economy and the consequent decline of what the eminent business historian Alfred Chan-

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