Friday, September 18, 2009

M-shaped recovery?

"Under the rules of financial capitalism, corporations have become experts at extracting value — but not at creating it. Prosperity wasn't shared because 20th century organizations weren't built to share it. 20th century organizations were built to create value for shareholders, by acting "strategically" at anyone and everyone else's expense, by any means necessary: through lobbying, monopoly power, cost-shifting and hiding, or, most recently, trillions in bailouts.

"Who is it that organizations have become experts at extracting value from? It's, well, the rest of us: society. Whether as employees, taxpayers, or consumers, the gains that accrue outside the boundaries of the organization are small indeed. Bailing out Wall Street has already cost every American household thousands of dollars — and that's just for the latest crash. Capitalism 1.0 — financial capitalism — impoverishes everyone who isn't a financial capitalist.

"Our great challenge isn't "recovering" from a financial crisis. It is rehabilitating an economy. What we've really got to recover from isn't yesterday's financial crisis, but a century of toxic, self-destructive industrial-era business as usual. Without rehabilitation, tomorrow's crises will make today's look like a walk in the park."


Umair Haque
at Harvardbusiness.org


3 comments:

Mark said...

Under the rules of financial capitalism, corporations have become experts at extracting value — but not at creating it.

If corporations don't create value, how then is it that a share can increase in value? Investors buy shares either because they expect dividends or capital appreciation.

Prosperity wasn't shared because 20th century organizations weren't built to share it...

Is it the payment of dividends or the capital appreciation that this Marxist thinks isn't "sharing"? Or does he lament that corporations aren't "sharing" their profits with the people who didn't share in the risk, i.e., non-shareholders?

Who is it that organizations have become experts at extracting value from?

Of course, corporations don't 'extract' value from society, they provide value in return for consideration, usually monetary in nature. A person exchanges a piece of paper, which by itself has no value, for something which they desire more than the currency itself. And for performing this valuable task they are excoriated.

Bailing out Wall Street has already cost every American household thousands of dollars — and that's just for the latest crash.

The bailout-which is socialism at its finest-will undoubtedly make things work and transfer the losses from the group which willingly undertook them (the shareholders) to those who decided not to (the rest of society), so it is complete nonsense to describe this as capitalism. It is merely the same bureaucrats whom Haque would have make every economic decision deciding to prop up those industries they favor.

I believe you Brits would call this "Rubbish".

El Blogador said...

Bollocks, even.

El Blogador said...

"Umair Haque is Director of the Havas Media Lab, a new kind of strategic advisor that helps investors, entrepreneurs, and firms experiment with, craft, and drive radical management, business model, and strategic innovation.

Prior to Havas, Umair founded Bubblegeneration, an agenda-setting advisory boutique that helped shape the strategies of investors, entrepreneurs, and blue chip companies across media and consumer industries. Bubblegeneration’s work has been recognized by publications like Wired, The Red Herring, Business 2.0, and BusinessWeek, and in Chris Anderson’s Long Tail, to which Umair was a contributor."

Doesn't sound like much of a Marxist to me!