Investing in Innovation: Confronting Predatory Value Extraction in the U.S. Corporation

Business corporations, government agencies, and household units work together to invest in productive capabilities to generate innovative goods and services. The Biden administration's Build Back Better agenda focuses on investment in these capabilities, but policy initiatives to ensure governance supports investment in innovation are absent. Corporate financialization, manifested by predatory value extraction, undermines investment in innovation. A policy framework, including a ban on stock buybacks, is needed to address this issue and promote sustainable prosperity.

Format: Unspecified
Length: 75 pages
Publication date: 30 November 2023
Publisher: Cambridge University Press

Business corporations engage in intricate interactions with household units and government agencies to invest in the productive capabilities necessary to generate innovative goods and services. When these three types of organizations collaborate harmoniously, they form the investment triad, a powerful force driving economic growth and progress.

In the United States, the Biden administration's Build Back Better agenda has placed a significant emphasis on investment in productive capabilities through government agencies and household units. This agenda aims to restore sustainable prosperity and foster economic recovery in the country.

However, it is important to note that the Biden agenda has largely overlooked policy initiatives to ensure that government and household investment in productive capabilities translates into support for investment in innovation within major U.S. business corporations. This omission has raised concerns about the potential barriers to innovation and the need for targeted policies to promote a vibrant and dynamic economy.

Corporate financialization, characterized by predatory value extraction in the name of maximizing shareholder value, has emerged as a significant obstacle to investment in innovation in the United States. This phenomenon has led to a concentration of wealth among a small elite, while the benefits of economic growth have not been evenly distributed across society.

To address this issue, it is crucial to develop a policy framework that confronts predatory value extraction and promotes sustainable prosperity. One potential approach is to ban stock buybacks, which have been criticized for their role in driving short-term profits at the expense of long-term investment and innovation. By prohibiting stock buybacks, corporations can be encouraged to focus on creating value for their stakeholders, including employees, customers, and the broader community.

Furthermore, the policy framework should prioritize the establishment of social institutions that support sustainable prosperity. This includes measures such as universal healthcare, education, and social safety nets that ensure that all individuals have access to the resources they need to thrive. Additionally, policies that promote worker ownership, employee empowerment, and fair labor practices can help to create a more equitable and sustainable economy.

In conclusion, the investment triad of business corporations, government agencies, and household units plays a critical role in driving economic growth and innovation. However, the Biden administration's Build Back Better agenda has overlooked the need for policies to ensure that government and household investment in productive capabilities translates into support for investment in innovation within major U.S. business corporations. By addressing corporate financialization and promoting social institutions that support sustainable prosperity, we can create a more equitable and dynamic economy that benefits all members of society.

ISBN-13: 9781009410731