Transaction Man | Nicholas Lemann

Summary of: Transaction Man: The Rise of the Deal and the Decline of the American Dream
By: Nicholas Lemann

Introduction

Welcome to the engaging summary of Nicholas Lemann’s seminal work, ‘Transaction Man: The Rise of the Deal and the Decline of the American Dream.’ As you dive into this insightful narrative, you will embark on a historical journey filled with economic doctrines, their influence on US government and business policy, and the subsequent rise of corporations. You will explore issues surrounding big business, regulation, and social stability while examining the transition from corporate accountability to a more individualistic pursuit of profit. Neck-deep in the current era’s economic disruptions, this book raises questions on the role of governments, corporations, and community-driven solutions amidst a rapidly changing world.

Economics in a Democratic World

Nicholas Lemann’s “Transaction Man” explores the history of economic doctrines and argues that pluralistic democratic processes are the best for economies and societies. The book offers an engaging perspective on the world economy in flux, and the author’s insightful observations have brought rave reviews from leading economists. Readers seeking companion works to explore economic disruptions may also benefit from Binyamin Appelbaum’s “The Economists’ Hour” and Daniel Markovits’ “The Meritocracy Trap.”

Tackling Concentrated Wealth

In “The Big Test,” Nicholas Lemann portrays the 1890s as a period of turmoil that raised concerns about the compatibility of concentrated wealth and ordinary citizens’ freedom and welfare. Adolf Berle, one of President Roosevelt’s advisors, contended that corporations had unlimited size and power and were answerable to no one, proposing intervention to regulate them. Berle’s suggestions, such as separating investment banks and regulating corporate stocks and bonds, were eventually implemented as laws. Lemann illustrates that Berle believed that the government needed to have more power than corporations to maintain social stability, coherence, and economic security.

The Evolution of American Capitalism

Nicholas Lemann delves into the transformation of American capitalism by contrasting the opposing views of Karl Polyani and Peter Drucker. While Polyani argued that governments should regulate capitalism, Drucker contended that corporations didn’t need regulation. Their ideas, as Lemann argues, influenced US government and business policy in the ensuing decades. Lemann also observes the shift of American values from individualism to conformity due to corporate culture, with corporations taking care of workers while being held accountable by government and labor unions.

US Economic Setbacks

Lemann discusses the different economic issues that affected the US economy in the 1970s. The emergence of Japanese car manufacturers, oil-supply crises, and inflation resulted in financial hardships. However, the author points out that mutual funds offered an avenue for maintaining the value of one’s money, while junk bonds presented opportunities for high returns despite their high risks.

Wall Street’s Shifting Priorities

Lemann explores how Wall Street’s focus changed from serving the needs of corporations to becoming responsive to large institutional investors, leading to a shift in corporate mission from social purpose to serving shareholders. The practice of augmenting executive pay with company shares, transforming managers into owners, raised concerns.

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