It’s not the economy, stupid, it’s the corporation.

That’s what McGill University management guru Henry Mintzberg argues in the latest issue of the Economist.

GET it America. The problem with the economy is not economics but enterprises. Accordingly, no manner of economic intervention will put an end to this “recession”. The problem has been created in corporate America, and that is where it will have to be solved.  It is the enterprises that play the game of business, while the economists keep score. Too many corporate “leaders” have trashed their enterprises, taking with them America’s legendary sense of enterprise. The scorekeepers cannot fix that. . . .

There are two basic ways to increase the price of the stock: by exploring and by exploiting. Explorer companies achieve this by doing better research, making improved products, and offering superior service. This is hard work, and it takes time. Exploiter companies have it easier: they depreciate the brand, cut investments in research, confuse the customers with bamboozle pricing, and stay as close as possible to the letter of the law while lobbying politicians to reduce its level. These behaviors can raise the price of the stock long enough for the executives to cash in their bonuses and run, as have so many in the large American companies.

An interesting theory.  (But why has Henry written this piece in a style reminiscent of Hans & Franz from Saturday Night Live? “Get it America?”)  And while the line of argument is interesting, it is hardly new.  J. K. Galbraith was essentially making the same point in his 1967 tome, the New Industrial State.  And if both of these gentlemen are right, the despicable, bloated “technostructure” causing the current problems seems to be equally capable of producing the robust growth of the 1960s and 1990s.  So what’s to worry?

Enhanced by Zemanta

Tags: , , , ,

Top