Transaction Man: The Rise of the Deal and the Decline of the American Dream

New Yorker staff writer Lemann (The Promised Land) describes the evolution of American corporate culture in this excellent and unusually framed economic history. Lemann describes how the American worker once dedicated his or her life to a single company, receiving generous benefits, career-long job security, and a pension, whereas the transaction man labors at the mercy of corporate shareholders who may sell, break up, or merge a company to maximize share price. Lemann attributes this change to the work of economists Milton Friedman, who believed the sole function of corporations was to maximize profits for shareholders, and Michael Jensen, who justified rapacious junk bond trading, hostile takeovers, and debt-leveraged buyouts. Lemann also depicts this transformation of the American economy at the micro level through its effect on one neighborhood, Chicago Lawn, which saw the disastrous dissolution of its auto dealerships after General Motors’ bankruptcy. He thoughtfully links income inequality to the transactional theories of the corporation and looks ahead to a possible future model for “pluralism,” wherein political and economic power is diffuse and distributed, rather than held in “institutions, transactions, or networks.” This concise and cogent history of the theories that have transformed the American economy makes a potentially dry subject fascinating. (Sept.)