Managed by the Markets: How Finance Re-Shaped America (Hardcover)

~ (Author)
Key Phrases: mortgage bubble, corporate feudalism, takeover wave, Wall Street, New York, Bank of America (more...)

Editorial Reviews

From Publishers Weekly

This academic analysis of our evolution from an industrial to a postindustrial portfolio society offers provocative clues for anyone seeking to understand the current financial crisis and Americans' financial security. Davis, professor of management at the University of Michigan, asserts that in the eras of financial capitalism (1900–1930) and managerial capitalism (1930–1980), Americans looked to the corporation and long-term savings to provide them with security. In the wake of the takeovers and financial move to high risk savings in the 1980s, and deregulation and corporate scandals in the late 1990s, however, Americans have become disillusioned with the corporation as a source of lifetime employment and retirement capital and have instead relied on financial markets for security and wealth creation. In describing George W. Bush's ownership society, Davis notes that when individuals come to see themselves as free agent investors, the consequences for society can be dire. While a compelling read, this book offers few predictions for the new investor society, suggesting only that big government might have to clean up the mess that individual Americans have made. (May)
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Review

"An ambitious, magisterial, and yet not-too-long effort to sketch the social consequences of a finance-driven economy."--The American Prospect
"A compelling read...offers provocative clues for anyone seeking to understand the current financial crisis and Americans' financial security."--Publishers Weekly
"Timely and thought-provoking."--CHOICE
"The meltdown of American financial markets has been catastrophic but the cause elusive. In Managed by the Markets, Gerald Davis offers a compelling explanation for it and so much more. To understand the disintegration of big corporations, securitization of just about everything, and transformation of our zeitgeist from producing products to making money, this is the book, a gripping portrait of the triumph of financial markets over all else."--Michael Useem, Professor of Management and Director of the Leadership Center at the Wharton School, University of Pennsylvania
"In this intellectual tour de force, Jerry Davis describes the evolution of the American economy to where we are now-where everything is a security or an option and, therefore, tradable in some sort of market. He also details the profound costs we have paid for this evolution. Timely, engaging, and filled with facts and analysis, Managed by the Markets explains how we got to where we are and maybe, just maybe, where we need to go next."--Jeffrey Pfeffer, Professor of Organizational Behavior at Stanford University and author of What Were They Thinking? Unconventional Wisdom About Management
"Davis's book is as compact and clear a description of how we screwed up a fine economy as you will find...Managed by the Markets is not some mere Progressive or left-liberal polemic against Wall Street manipulators. Because it is based in an accurate historical review of the stepwise process by which financial considerations replaced virtually every other concept of economic or social good, Davis's book delivers a solid, and negative, verdict against management by unregulated markets, which always crash." --Maui News
"This is a valuable and novel perspective...In contemplating the wreckage of the crisis, one should follow Davis's example, and ask whether this was either inevitable or desirable, and what, if anything, we might learn from it." --Strategy+Business

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Product Details

• Hardcover: 320 pages
• Publisher: Oxford University Press, USA (June 15, 2009)
• Language: English
• ISBN-10: 0199216614
• ISBN-13: 978-0199216611
• Product Dimensions: 9.2 x 6.5 x 1.1 inches
• Shipping Weight: 1.6 pounds (View shipping rates and policies)
• Average Customer Review: 4.1 out of 5 stars  See all reviews (40 customer reviews)
• Amazon.com Sales Rank: #265,090 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

3 of 3 people found the following review helpful:

4.0 out of 5 stars Managed by the Markets, or by the Financial Oligarchs?, June 18, 2009

By	Patrick M. Hussey (Baltimore, MD, United States) - See all my reviews (REAL NAME)

(What's this?)

Managed by the Markets is an exquisite overview of modern finance-based "capitalism" as defined by most mainstream observers. The author shines when discussing corporate governance, as he has specialized in this area. The author also provides a strong overview of securitization, although his coverage of derivatives was weaker than hoped. The author covers a bit of the dot.com bubble as well, which would make this a useful text for younger students who missed that era, though older observers might skip it. The author flirts with mentioning the Money Trust that created the Fed, by citing Brandeis' classic "Other People's Money, and How the Bankers Use it". However, he dismisses the conspiratorial view that financial elites may have deliberately imploded the economy in order to own a larger portion of it.

"From Sovereign to Vendor-State" was a useful chapter, but the following chapter, "From Employee and Citizen to Investor" was not. Although people may have defined themselves in such terms circa 2005 or even 2007, the vast loss of wealth since then has introduced a new frugality. People are reconsidering their status as financial cogs, and rediscovering the human element. I have noticed this in previous recessions as well - perhaps the personal empire building reverses when one's financial coliseum collapses.

For this reason, and a few others too detailed to cover here, the Conclusion seems inaccurate and premature. The pervasiveness of finance has not created a portfolio society, but rather has been revealed as tremendously destructive force when coupled with extremely loose monetary policy. Modern cowboy finance as practised by the large banks has become a wealth destroyer and a parasite, not a wealth enhancer. The author seems to have a Keynesian bias, which may be why agrees with the bailouts and does not seem to foresee the imminent demise of the present monetary order. From an Austrian perspective, it seems obvious that the cost structure of the US economy has become bloated from inflation and over-taxation, and has to contract consumption to remain competitive at the international level. This will require a devaluation of the dollar, and possibly a loss of reserve status.

In spite of a few minor shortcomings at the analytical level, Managed by the Markets is a wonderful title with a very good summary of events up to November 2008. Consequently, it deserves a strong four stars.

4 of 5 people found the following review helpful:

5.0 out of 5 stars Smart, Savvy and An Absolute Essential, June 5, 2009

By	javajunki "javajunki" - See all my reviews (TOP 100 REVIEWER)

(What's this?)

This is hands-down one of the most well written books covering the current economic crisis that I've read to date...and as a college instructor (business) and writer, I've read more than my share. It's intelligent, well organized, clear and right on the mark.

Those that are trying to make sense of what is taking place and why will find the background information easy to understand without insulting ones intelligence...however, unlike the vast majority of writers, the author doesn't stop with the basics. He takes time to explore where we came from, where we are today (as a nation and globally) and where we are likely heading in the future but without giving into the "easy money" hype of trying to forecast the future or make wild claims. Instead, he presents the information in a factual manner that allows the readers to draw their own conclusions and spot opportunity as well as risk inherent in the system itself.

During every major transition there are those that continue to work/invest from the former perspective while others realize that change is taking place. This is not an investment book per se but rather an in-depth exploration of the transition along a likely continuum.

Who Will Like This Book...
-Investors - those that want to understand the investment environment not merely those searching for a 'how to' or checklist.
- Business Owners
- Government Officials
- Political and/or Social Science Buffs
- Anyone seeking to better understand how we got here and were it heads into the future

Plain and simple, this is for those that don't mind to think...and think you will because the information, direction and long term consequences will not be easily digested - or resolved. Inform yourself.

1 of 1 people found the following review helpful:

5.0 out of 5 stars A View from Above, December 14, 2009

By	E. Swope (Kaneohe, HI USA) - See all my reviews (REAL NAME)

(What's this?)

In Managed by the Markets, Gerald Davis provides a thorough, lucid and intelligent explanation of the forces shaping the financial markets and, more significantly, how the financial markets have become a force which is shaping American society.

The book is presented much like a dissertation. In the introductory chapter Mr. Davis provides a historical overview of the broad forces which have shaped American life in the past century; how the corporation was pivotal during the industrial revolution; providing work, security, goods, and for many, pensions, health care and even housing. The central thesis of this book is that in "post-industrial" America financial markets have become our new center resulting in the securitization of everything. He then outlines the content of subsequent chapters, in which he examines:

The expansion of financial markets and shift in focus (on the part of corporate boards) from substance to market signals".

The corporation and its transformation from a producer of goods and services to a "nexus" of contracts in which the flow of information and building of a brand become more significant than actual production.

The changing role of Banks; the blurring of boundaries and conflicts of interest it creates.

The way in which the need to attract business has altered how states define themselves and the law that govern them.

How the "portfolio" or "individual investor" view has led to a redefininition of self, family, frindship as commodities.

In the final chapter he allows himself some speculation on where we are and where we are going as a society.

It is difficult to provide a terse summary of the ground covered in this book. It is immense.

If you have tried to make sense of the blow up of the markets, this book will give you some perspective. In addition, he provides straight forward explanations of some of those exotic instruments we've heard about, but few understand, as well as a some insight into what is behind those securities you hold.

I believe this is an important book because it shines a light on some disturbing trends and undercurrents in our society. The view he presents of where we are as a society is not unlike "1984," but in this case truth is stranger than fiction.