Brad Delong has an excellent discussion of profit margins in big business. It’s moderately technical, but worth reading as a rebuff to voluntarist and culturalist explanations (e.g. Thomas Frank) of why shareholders take a higher share of profits than before.
You will observe that I give 0% weight to the hypothesis that it was a shift in culture–a rise in the belief that managers had “primary responsibility to the shareholders”–that was responsible for the very real change that you ask about. This is a professional deformation: for 27 years I have been trained to look first at changes in technologies, resources, institutions, forms of organization, and incentives, and only after all of these have failed to give answers to throw up my hands and disappear in a “blaze of amateur sociology.”
One of the chapters of my dissertation examined the welfare capitalism and managerial economy that held sway in the postwar years. (I ended up drawing a lot from Galbraith’s New Industrial State, which Delong references here.) Looking back from the vantage after a twin crisis — the political crisis of the welfare state and a shareholder revolution — the postwar situation seems an anomaly today. But it should make us ask why one corporate economy produces radically different results than another.
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