The Pathology of Financialization
We all know the story of enclosure as it applies to the commons. The lesser-known story is that businesses are enclosing themselves – aggressively cannibalizing their own internal productive capacities in order to maximize short-term profits.
Harvard business guru Clayton Christensen argues in Forbes magazine that business executives are so habituated to seeing the world through a scrim of financial abstractions that they are blindly undercutting their own long-term productive capacities. The problem is so pervasive, says Christensen, that “whole sectors of the economy are dying.” (The full column, by Steve Denning, is headlined, "How the Pursuit of Profits is Killing Innovation and the U.S. Economy.")
A good example, he says, is the American personal-computer industry. It slashed costs by aggressively outsourcing to foreign companies the manufacturing of PC components, final assembly and even design. This has reduced costs and improved profitability – Wall Street cheers! – but it has also hollowed out the internal capacities of companies themselves. At this point, Dell Computers is little more than a brand; most everything else is outsourced. The same dynamic is practiced in a range of American industries – steel, auto, oil, pharmaceutical and software. As if to replicate the Cartesian split of body and mind on a global scale, the "advanced" countries have cast themselves as the "mind" and relegated all the dirty work of production to "the body" in the poorer regions of the world.
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