48/YOUR MONEY OR YOUR LIFE!
A DRAMATISATION OF THE EFFECTS OF
FINANCIALISATION ON THE BIG INDUSTRIAL HOUSES
The scenario that follows Illustrates the kind of decisions that have to
be made to settle conflicts of interest within a company. The scene is
a board of directors meeting at General Motors, the world's top auto
company. The scene opens with the head of sales.
Mr Fenderbender. 'In recent months, we have observed an increase
in domestic sales for both our economy family models and our light
transport vehicles. The increase is due to a recovery in household
spending. The overall climate of increased economic growth,
greater job security linked to forecasts of continued expansion, and
wage increases obtained by workers in certain sectors - not "ours",
of course! - have convinced a number of households that now is
the time to replace their old cars. They were reticent just six
months ago, not any longer. The increase in household spending
has also had positive effects on the retail sector generally speaking.
As a result, small and medium-sized retailers are themselves
ordering light transport vehicles. Let's hope that the Clinton
administration sticks to its current expansionary policies.'Attention now turns to Mr Greenbacks, head of GM's financial
division.Mr Greenbacks: 'Unfortunately, I cannot share my esteemed
colleague's optimism. Household spending is up because interest
rates were slightly lowered in response to signals sent by the
Clinton administration to the Federal Reserve. True, households
can now take out consumer loans; nevertheless, this drop in
interest rates is not all good news for us. Indeed, 48 per cent of our
assets are now invested in the financial sector. The drop in interest
rates is a blow to the profitability of these investments on financial
markets. Let me remind you, dear members of the board, that you
decided to invest an increasing share of liquidities deriving from
vehicle sales in financial operations, so that the company's money
would not be left to stagnate. Of course, this is the way all big cor
porations the world over run their affairs.
'Keep in mind another point. If household spending continues
upward, if there is further expansion, we will be able to increase