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American business is built on a rock of lawfulness and trust between companies and those who hold a stake in them. But when avarice grows out of proportion, cracks start to appear in the foundation. "Greed can be good," says M.I.T.'s Modigliani, when it spurs profitable and productive growth. "But it can also be bad," he warns, when it outpaces all other considerations.
In the fight for RJR Nabisco, that seems to have happened in spectacular fashion. No matter how the battle turns out, the unseemly scramble for riches has, for the moment at least, given overreaching a bad name. In the end, the RJR brouhaha may turn out to be a useful testing of the limits: of greed, of debt, of dealmaking. The resulting outcry may prove an effective regulating device. "In its own way, the deal has been typically American, where nothing is in moderation, including the enormous selfishness of management," notes James Bere, chairman of Borg-Warner. "It's touched a nerve. Sometimes we have to do things in extremes before we can put the total in perspective." Without that perspective, the wages of greed may be a less productive and ever more debt-ridden economy.
CHART: NOT AVAILABLE
CREDIT: TIME Chart by Nigel Holmes
CAPTION: A Leveraged Buyout in Action
CHART: NOT AVAILABLE
CREDIT: TIME Chart by Cynthia Davis
CAPTION: CORPORATE DEBT