Where have the companies of yesteryear gone?
Do stock markets still play their traditional role in the economy? Subsidiary question: do businesses make use of stock markets to fund and invest in improvements to their productivity? The response to these two questions must be negative since the shareholders of yesterday have now simply become speculators! Whereas conventional wisdom have wished for sums to be invested in businesses by way of stock markets so as to benefit production plants and their workers, these modern-day gamblers only seek to extract the wealth from their share purchases on the stock market and are not concerned with, or interested in, creating added value. This volte-face and obsession with the short term are in turn draining business’ abilities to innovate, generating nauseating instability on the labour market and exacerbating income inequalities. Businesses are therefore espousing a whole range of morally reprehensible – and sometimes even criminal – behaviour in order to satisfy the cupidity of today’s investor.
Distributing handsomely generous dividends to their shareholders, orchestrating or even manipulating the market price of their shares – and therefore their shareholders’ underlying profit – by buying back their own shares, free handouts to their board of directors in the form of shares causing their beneficiaries to fixate on the progress of the these shares’ market price… This irrational generosity that businesses are making customary comes at the expense of training programmes and the production force, and now explains the hyper-concentration of wealth, indeed the gradual disappearance of the middle class in industrialised areas. It is an unremitting logic that demands the sacrifice of expensive but experienced workers, despite them being skilled innovators and creators of value. These share buybacks are effectively bulldozing over careers while at the same time subverting the regulatory role of stock markets.
This monopolisation by speculators of the heart and soul of businesses – with their board’s complicity, motivated by the personal profit made from the appreciation of their share prices – does in fact weigh heavily on the decisions that are made within the company concerning organisation, investment and technological research and development. Stock market prices are now strictly no longer the right – or the wrong – way to do business, but are the foolish result of hundreds of millions – sometimes even billions – of stocks being reinjected into markets by businesses in order to swell the price of their own shares. With the utmost passivity, we have therefore aided – and sometimes even actively abetted – this reversal of values since stock markets are, now, no longer interested in playing their crucial role whereby they once – helped by the transmission belt of prices – oversaw the vital responsibility of ensuring companies’ health. This predatory attitude that is wielding itself alongside the complacency of governments is therefore turning companies into cash cows and breaking beyond repair their ability to innovate.
In short, for the last twenty years it’s the companies that have been financing the stock markets and not the other way around!