This article is the continuation of a discussion I had with Bob about the evolution of capitalism in the last thirty years. As he said, today investors and capital holders are acting like gamblers of a huge world-wide stock exchange market. Very few are committed on long term investment with a Business.
However, meanwhile, the enterprises are continuing to produce as long as consumers continue to have needs; sometimes, they even over-produce in order to comply with their corporate sales forecasts. This situation, combined with repetitive economic crisis lead to an absurd dynamics of three domains running a vicious circle: financial activities, manufacturing & service industries and social politics.
Actually, each component of the CPS triplet [Capital, Production, Society] is developing (or regressing) concurrently. The coupling between them is getting looser and looser!
Examples of such situation are multiple:
– The Internet start-up companies that have on the one hand, a lot of free users and very few paying customers and on the other hand an attractive Business Model on which investors are betting! This situation remains unchanged after the “Internet Bubble” explosion at the beginning of the millennium.
– On the contrary, some old unattractive Business could raise the quotation of their Stock Share only by artificially improving their operational margins, during just the time to get rid of key investors’ shares.
– Some regions of Europe painfully suffer of the off-shoring of their industries.
Strangely, in some of them household consumption is sky-rocketing because:
1) Social subsidies replace a great part of their wages,
2) Their daily expenses for going to work and their taxes are at the minimum,
3) Idle people tend to spend more time in malls and buy more!
In the past, it was easy for political authorities to rule the once-virtuous CPS circle: inter-relations between their components were logical. Today, the shape of this circle becomes deeply uncertain and political decisions apply no more efficiently.
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Economies & Economics, Past & Future 