In the current issue of New York magazine, Benjamin Wallace-Wells takes a great in-depth look at Mitt Romney’s career with Bain Capital, where the GOP front-runner once helped pioneer the use of leveraged buyouts as a means of slimming down corporations and making them more efficient:

To other businesses, the buyout industry both presented a model for better profits and posed a take-over threat. “Having the private-equity guys out there disciplined other companies,” says Nick Bloom, a Stanford economist. Some techniques developed in the buyout laboratory spread. Productive workers and managers were rewarded, while unproductive ones were cut loose. Corporations realigned themselves to deliver more value to their shareholders, increasing dividend payments and stock buybacks. Within a decade, ordinary businesses were giving large stock and option packages to CEOs. Executive compensation soared.

“These Bain Capital guys,” says Neil Fligstein, an economics-sociology professor at the University of California, Berkeley, “were agents of the shareholder value revolution.” By the mid-nineties, The Business Roundtable had changed its definition of the role of a company, winnowing a broad set of responsibilities down to a single one: increasing shareholder value.

More importantly, what sort of economy did this movement leave in its wake? The economists that Wallace-Wells spoke with are split. For instance, Frank Levy of MIT gives the efficiency movement credit for the productivity boom and rapid economic growth in the 1990s. But there’s a dark side, too: “The trouble, Levy believes, was that this new shareholder-value-driven system had no built-in mechanism of regulation, and its incentives geared CEOs toward shortsightedness and recklessness.”