November 24, 2010
Iron Law of Institutions - Management Variation
3QD featured the Tablet interview with Chompers. From the comments thread there comes a link to this interview at TruthOut, more standard subject matter for the Prof than the Tablet piece but nonetheless interesting:
During the Depression and the War, there was a real radicalization of the population -not just here but all over the world. And the post-War system was designed to reflect that. That's why you get welfare states developing in the '50s - a lot of popular pressure you couldn't escape. Changes have taken place since then and there's actually been a return to an extreme form of predatory capitalism, which means that not only will I close my business or move if I don't like what you do, but something else that's been happening, which is interesting. In the financial institutions, which by now dominate the economic system, the management level repeatedly acts in ways which will destroy their own institutions if it'll increase their benefits, and benefits are not small. You know, you take a look at the revenue of, say, Goldman Sachs - a very high percentage of it just goes to payment of management and bonuses. There was a time traditionally - say, GM in the 1950s - it was trying to develop a consumer base that would be loyal and lasting and they were thinking in terms of an institution that would remain and grow and thrive in the society. By now, a lot of the investment firms - bankers, hedge funds - are perfectly happy to destroy what they're in and come out with huge, tremendous benefits. That's a new stage of capitalism.