Republicans are using words like Communism and Socialism to denounce the Obama Administration even before it takes office and that his election will lead to the Death of Capitalism. Capitalism has already died. It was killed the casino mentality that has infected the nation's economy.
Buying shares in a business and being rewarded with periodic dividends from the profits is such as 19th Century notion. Today its all about capital gains - stock is bought to be sold for a profit (or sold to be bought later for a profit if you are a short-seller). It doesn't matter if the stock market goes up or down, gamblers can make money in both directions. What the business does, or whether it does any business at all, is a meaningless distraction.
Back when capitalism was alive the leaders of businesses were visionaries. Creative men who made things. Today most businesses are run by accountants. Creativity is reserved for ever more exotic debt instruments and derivatives. For every Bill Gates and Steve Jobs there are a thousand G. Richard Wagoners.
The Chairman and CEO of General Motors is the quintessential bean counter. A bookkeeper who reached the top. In his entire life he has never built anything, designed anything, thought of anything. He achieved his status by being a loyal company man and playing the politics of advancement well. Having no history in his life of creating anything of value his effect on GM was predictable.
Wagoner took his post at the head of GM in 2000. That year GM's market cap reached $50 billion. In the eight years of his tenure GM has lost 95% of its value and is now worth $1.7 billion. During that time Wagoner has made multiple millions of dollars. He is not unique. Look at the leadership of most American corporations and you find Richard Wagoners, men of no imagination but who have a penchant for gambling.
Capitalism is dead. It was killed by oligarchical corporatism. A handful of CEOs gambled with the world's economy for their private gain. They served on each others boards and always their first priority was grow each others wealth. Whether the businesses thrived or collapsed was meaningless so long as their bonuses and golden parachutes grew. And while the world has lost, those CEOs are still extremely wealthy. They won.
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2 comments:
I think you overreach with your premise, but not by much. I don't think capitalism is dead, but neither do I think we're practicing it much any more.
What has really damaged capitalism, and led to the condition you decry in which the bean-counters rule, is the quarterly report, and the system that goes with it. If company management fails to produce higher profits this quarter than last, some sleazy lawyer comes along and files a class action lawsuit on their behalf. I'm exaggerating, but not by much.
What that does is to produce the slot-machine environment you describe. A second, and equally bad result, is that it keeps companies from managing for the long term. They don't try to produce the best product, merely the one which will profit the most in the short term. They slack on innovation, research, materials, and training. They have a disincentive to create a strong workforce.
It's still capitalism, but it's one governed by way too much of the wrong kind of feedback.
"... some sleazy lawyer comes along and files a class action lawsuit on their behalf."
Their: the shareholders.
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