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  • June 2017
  • Article
  • History of Political Economy

The Social Trajectory of a Finance Professor and the Common Sense of Capital

By: Marion Fourcade and Rakesh Khurana
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Abstract

This paper traces the career of Michael Jensen, a Chicago finance PhD turned Harvard Business School professor to reveal the intellectual and social conditions that enabled the emergence and institutionalization of what we call the “neoliberal common sense of capital,” what others have called the “shareholder value” view of the American firm. Jensen's work was embraced by a generation of corporate raiders aggressively advancing new financial practices and discourses. His contribution, commonly understood as “agency theory,” was intertwined with the transformations in corporate management and governance of the last decades of the twentieth century—from the junk bond market in the 1980s to the exponential growth of CEO pay in the 1990s to the shareholder value management strategies of the 2000s. While debates about the spread of neoliberal ideas and governance tools have largely centered on the transformations of the state and international institutions or the role of actively organized intellectual networks, this essay emphasizes the importance of identifying specific carriers of particular transformations within the space of American “business discourse.”

Keywords

Executive Pay; The Firm; Michael Jensen; Neo-Liberalism; Shareholder Value; Agency Theory; Corporate Governance; Executive Compensation; Business and Shareholder Relations; Transformation

Citation

Fourcade, Marion, and Rakesh Khurana. "The Social Trajectory of a Finance Professor and the Common Sense of Capital." History of Political Economy 49, no. 2 (June 2017): 347–381.
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About The Author

Rakesh Khurana

Organizational Behavior
→More Publications

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More from the Authors
  • Philanthropic Conditions for Diffusion: Theoretically Mediating the Diffusion of Economics and How it Superseded the Rise of Executive Education in Business Schools By: Kenneth C. Kimura, Rakesh Khurana and Marion Fourcade
  • How Foundations Think: The Ford Foundation as a Dominating Institution in the Field of American Business Schools By: Rakesh Khurana, Kenneth C. Kimura and Marion Fourcade
  • Still Leading Series—Issues in Transitioning to New Forms of Service Later in Life By: Rosabeth Moss Kanter, Rakesh Khurana, James Honan and Ai-Ling Jamila Malone
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