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Power of the Middlemen

In: Cliques and Capitalism

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  • Deborah E. Lange

Abstract

In this part of the book, Part 3, I will apply the model of the firm, described in previous chapters, to particular aspects related to the recent financial crisis. Chapter 7 will address a crucial factor and that is the power of the middlemen who were identified earlier as the financial bureaucracy that sits between the shareholders and management. They use their expert power and connections to keep unsure, dispersed shareholders and upper management informed as they would like them to be. They create “innovations” to confuse and complicate markets so as to assert their usefulness as experts. Regulators cannot keep up with them or completely comprehend them either so, the innovations are useful for keeping the regulators at bay. Moreover, through connections and lobbying, they corrupt regulatory systems; they can do this because of their clout.

Suggested Citation

  • Deborah E. Lange, 2011. "Power of the Middlemen," Palgrave Macmillan Books, in: Cliques and Capitalism, chapter 0, pages 121-127, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-01619-5_8
    DOI: 10.1057/9781137016195_8
    as

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