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Fisher-Modigliani-Miller organisational finance theory and the financialisation of contemporary societies

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  • Tiago Cardao-Pito

Abstract

Apart from followers as Milton Friedman, Paul Samuelson, Ronald Coase, and Maurice Allais, most economists abandoned Irving Fisher’s economic framework after the post-1929 Great Crisis. Without citing Fisher however, in 1958 Franco Modigliani and Merton Miller reutilised his framework to found the organisational finance theory awarded several Nobel prizes. This organisational finance theory is highly supportive of the financialisation of societies. It advocates that organisations exist to maximise their owners’/shareholders’ wealth, a ‘perfect markets fallacy’, and the elimination of taxes and regulations. Furthermore, it contends an unverified separation theorem between financial and productive sectors, or among financial, investing, and operating decisions.

Suggested Citation

  • Tiago Cardao-Pito, 2021. "Fisher-Modigliani-Miller organisational finance theory and the financialisation of contemporary societies," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 28(4), pages 499-522, July.
    • Handle: RePEc:taf:eujhet:v:28:y:2021:i:4:p:499-522
    DOI: 10.1080/09672567.2020.1840604
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    Cited by:

    1. Tiago Cardao-Pito, 2023. "How to identify norms, laws, and regulations that facilitate illicit financial flows and related financial crimes," Journal of Money Laundering Control, Emerald Group Publishing Limited, vol. 27(4), pages 674-686, August.
    2. Tiago Cardao-Pito, 2017. "Classes in Maximizing Shareholders’ Wealth: Irving Fisher’s Theory of the Economic Organization in Corporate Financial Economics Textbooks," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 11(4), December.
    3. Tiago Cardao-Pito, 2021. "An embezzler test for norms, standards and regulations," Journal of Financial Crime, Emerald Group Publishing Limited, vol. 29(3), pages 878-889, August.

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