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Review of Radical Political Economics
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The Neoliberal Paradox: The Impact of Destructive Product Market Competition and Impatient Finance on Nonfinancial Corporations in the Neoliberal Era

James Crotty

Department of Economics, University of Massachusetts, Amherst, MA 01003, USA

The evolution of financial markets in the neoliberal era has created serious problems for large nonfinancial corporations already harmed by the slow aggregate demand growth and destructive competition of the period. Financial market pressures led to shorter planning horizons, a declining allegiance of stake-holders to long-term corporate goals, and a large increase in the percentage of cash flow paid to financial market agents. The net result is a "neoliberal paradox": financial markets demand that corporations achieve ever higher profits, while product markets make this result impossible to achieve. The neoliberal paradox helps explain the outbreak of financial accounting fraud in the late 1990s.

Key Words: neoliberalism • financialization • corporate governance

Review of Radical Political Economics, Vol. 35, No. 3, 271-279 (2003)
DOI: 10.1177/0486613403255533
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