Publications

William H. Lazonick

  • Book Series | February 2001
    Edited by William Lazonick and Mary O’Sullivan
    Corporate Governance and Sustainable Prosperity

    How can we explain the persistent worsening of the income distribution in the United States in the 1980s and 1990s? What are the prospects for the reemergence of sustainable prosperity in the American economy over the next generation? In addressing these issues, this book focuses on the microeconomics of corporate investment behavior, especially as reflected in investments in integrated skill bases, and the macroeconomics of household saving behavior, especially as reflected in the growing problem of intergenerational dependence of retirees on employees. Specifically, the book analyzes how the combines pressures of excessive corporate growth, international competition, and intergenerational dependence have influenced corporate investment behavior over the past two decades. Part One sets out a perspective on how corporate investment in skill bases can support sustainable prosperity. Part Two presents studies of investments in skill bases in the machine tool, aircraft engine, and medical equipment industries. Part Three provides a comparative and historical analysis of corporate governance and sustainable prosperity in the United States, Japan, and Germany. By integrating a theory of innovative enterprise with in-depth empirical analyses of industrial development and international competition, Corporate Governance and Sustainable Prosperity explores the relation between changes in corporate resource allocation and the persistence of income inequality in the United States in the 1980s and 1990s. Contributors to the volume include Beth Almeida, Robert Forrant, Michael Handel, William Lazonick, Philip Moss, Mary O’Sullivan, and Chris Tully. Editors Lazonick and O’Sullivan are Levy Institute research associates, as is contributor Handel.

  • Public Policy Brief No. 48 | December 1998
    Adapting to Financial Pressures for Change

    Despite the crisis in the Japanese financial sector, prolonged recession, and competitive challenges, Japan’s formidable productive system remains strong. Nevertheless, the system of corporate governance, which has pursued a strategy of retaining corporate revenues and reallocating labor resources and returns to labor in order to invest in productive capabilities, faces short-term pressures from a transformation of the financial sector and long-term pressures from the growth of intergenerational dependence. Current reforms seek to generate funding for the pension system and profits for financial enterprises from international securities and money markets. These reforms seem to work within the corporate governance framework that emphasizes the retain-and-reallocate strategy, but the question is whether they will create powerful pressures to extract returns from the domestic economy, thereby affecting how corporations are managed and resources allocated.

  • Public Policy Brief Highlights No. 48A | December 1998
    Adapting to Financial Pressures for Change
    Despite the crisis in the Japanese financial sector, prolonged recession, and competitive challenges, Japan’s formidable productive system remains strong. Nevertheless, the system of corporate governance, which has pursued a strategy of retaining corporate revenues and reallocating labor resources and returns to labor in order to invest in productive capabilities, faces short-term pressures from a transformation of the financial sector and long-term pressures from the growth of intergenerational dependence. Current reforms seek to generate funding for the pension system and profits for financial enterprises from international securities and money markets. These reforms seem to work within the corporate governance framework that emphasizes the retain-and-reallocate strategy, but the question is whether they will create powerful pressures to extract returns from the domestic economy, thereby affecting how corporations are managed and resources allocated.

  • Working Paper No. 227 | March 1998

    Before the Japanese stock market crash of 1990, Japanese industry was a phenomenal success. A recent unemployment rate of under 4 percent, although low by world standards, is the highest Japan has experienced since the current mode of calculation began in 1953. Japan's industrial dominance, sustained prosperity, and commitment to lifetime employment seem to be in danger. Research Associate William Lazonick, of INSEAD and the Center for Industrial Competitiveness at the University of Massachusetts–Lowell, takes issue with this perception. He finds that the Japanese economy is in a better position than the United States to achieve sustainable prosperity, which he defines as "the spreading of the benefits of economic growth to more and more people over a prolonged period of time."

  • Working Paper No. 201 | August 1997
    The Skill-Base Hypothesis

    Over the last three decades, despite economic growth, the United States has experienced both increasing relative inequality and an absolute decline of real wages. Explanations sometimes offered for this inability to achieve sustainable prosperity are a weakening of innovative ability (a result of reduced expenditures on training, education, and research) and international competition from low-wage countries (forcing down wages). Research Associate William H. Lazonick, of the University of Massachusetts Lowell and INSEAD, champions a third explanation: the skill-base hypothesis.

    The skill-base hypothesis defines two strategies of human resource investment: a broad and deep skill base uses skilled work by many people, at different levels of the organizational hierarchy, and across organizational functions; a narrow and concentrated skill base uses skilled work by a small and elite portion of the labor force. According to the hypothesis, changes in technology and international competition have been important factors relating to level of sustained prosperity, but not for the reasons usually given. Lazonick observes that US firms are still innovative, but tend to invest in technologies that require a narrow and concentrated skill base. International competition has been important, not primarily because foreign wages are lower, but because other high-wage nations, such as Japan, have chosen superior corporate strategies. Lazonick uses a case study of the automobile industry in the United States and Japan to demonstrate that investment in technologies that rely on a broad and deep skill base will lead to more international competitiveness, economic equality, and sustainable prosperity.

  • Working Paper No. 183 | January 1997
    Is Prosperity Sustainable in the United States?

    Unless American corporations change their structure of governance, it is unlikely that many will remain prosperous in this age of global competition, argue Research Associates William H. Lazonick and Mary O'Sullivan. US companies are not being hurt by low-wage competition but by their failure to invest in the organizational learning required to remain competitive. US corporate managers have become increasingly concerned with providing returns to stockholders, while their foreign competitors, especially the Japanese, invest in innovative thinking in order to provide higher-quality products at lower prices. If US corporations are to remain competitive, the authors say, they must invest in organizational learning—the acquisition by members of the corporation of the knowledge to solve problems collectively. The goal of all should be improving the business as a whole.

Publication Highlight

Public Policy Brief No. 157
Is It Time for Rate Hikes?
The Fed Cannot Engineer a Soft Landing but Risks Stagflation by Trying
Author(s): Yeva Nersisyan, L. Randall Wray
April 2022

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