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Published in:
2019 | OriginalPaper | Chapter
Ulrich Matter Recommends “Towards a Political Theory of the Firm” by Luigi Zingales
Author : Ulrich Matter
Published in: 21st Century Economics
Publisher: Springer International Publishing
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Abstract
Classical economic theory has used the term firm to describe atomic entities in free markets or simply equated the firm with a collection of contracts. Zingales contrasts this view with reality and draws two core conclusions. First, large shares of global economic activity take place within a few dozen firms. Second, he stresses that while this fact is largely ignored in economic theory, it poses the risk of a “Medici vicious circle,” in which economic and political power reinforce each other, threatening both free markets and democracy.