Industrialists Versus the Rest of Us Capitalists

Predictability and uncertainty. Those are the two forces competing for our support. We are torn between our desire for safety and our yearning for adventure. We attempt to balance the tradeoff between risk and reward but understand, warily, that greater rewards generally come from taking greater risks.

There may be no sure thing. No free lunch. But that hasn't stopped us from looking.

The economy and its potential for growth are caught right now, this very minute, between the desires of the industrialists for stability and the demands of the capitalists for higher returns based on the assumption of risk. American corporations, among others, have parked hundreds of billions in cash in relatively safe investments as they wait for the future to become clearer.

This, rather than investing in new products, services, enterprises and the other means by which growth is facilitated. Executives' compensation designs reward them for such an approach even though their customers, employees, stockholders and the society that supports them may not share in that largesse. Preservation of capital rather than the use of it dominates an economy afraid of its future and no longer sure of its ability to influence it.

Most of us are capitalists. Because we have to be. We have limited resources. We have to put them to work. We can not afford to wait for better times, or more certainty or a sympathetic politician. We have to put our money where our mouths are. And we have to take risks. Because if we dont move and grow, we die.

The following article explains why industrialists have gotten their way for most of the past generation. And why that may not be optimal for the economy or, ultimately, even for them. JL

Seth Godin comments in his blog:

Industrialists are not capitalists.
Capitalists take risks. They see an opportunity, an unmet need, and then they bring resources to bear to solve the problem and make a profit.

Industrialists seek stability instead.

Industrialists work to take working systems and polish them, insulate them from risk, maximize productivity and extract the maximum amount of profit. Much of society's wealth is due to the relentless march of productivity created by single-minded industrialists, particularly those that turned nascent industries (as Henry Ford did with cars) into efficient engines of profit.

Industrialists don't mind government regulations if they write them, don't particularly like competition or creativity or change. They are maximizers of the existing status quo.

Of course, they can't abide humanity when it comes to work, because humanity is inconsistent and interested in things other than the last zero. The best employee is a robot that can be plugged into a wall.

The stock market rewards the single-minded industrialist with short-term applause and then the relentless desire for ever more of the same growth and productivity that got them applause yesterday.

Today's industrialists define our economy, but they offer very little promise for tomorrow. They've long bought ads to polish their image, but mostly work to alter the culture in ways that will ensure they'll get just a little bit more yield out of each of us. 64 ounce Coke, anyone?

As long as industrialists are measuring productivity, engaging in scientific management and focused on ROI and predictability, there will always be a gap between the dreams of those they interact with and the demands of their shareholders.

There are lots of ways to justify the work of industrialists, to point to the efficiencies and productivity they create. That doesn't mean that we must aspire to nothing more.