Your Money or Your Life!

FINANCIAL GLOBALISATION/49

our sale prices in step with the competition. That is as it should be.

But this will push up inflation. And increased inflation means a

symmetrical decrease in the yield of our financial investments in

the country.'

At this point, the chairman of the board takes the floor.

MrHedhonshow: 'If I understand correctly, we are caught in a trap.

The increase in sales has created an increase in profits from our

industrial division, but has also provoked a drop in profits from our

financial division. At the end of the day, we're just going round in

circles. Worse, if inflation picks up we might even register losses.

What do you suggest we do, Mr Greenbacks?'

Mr Greenbacks: 'I propose a compromise. We pocket the new profits

stemming from the increase in sales. Then we contact the other

companies, including the competition, and propose that we all put

pressure on the Clinton administration to nudge interest rates back

up in four months' time. My colleague in sales will have enough

time to offload all his stock of unsold vehicles and whatever is

manufactured at the present pace in the meantime. As a result, no

one new will have to be hired to increase production. We come out

ahead on all fronts, since inflation will be curbed and our capital

gains on financial markets will be only slightly cramped between

now and then.'

This is, of course, a highly simplified portrayal of corporate
dilemmas that are much more complicated in real life. It does,
however, provide some idea of key changes that have taken place in
the business world - in particular, the growing contradiction within
industrial houses between the interests of industrial and financial
capital. Decisions favouring one or the other division are made with
the optimisation of investment yield in mind. Companies seek to
resolve the contradiction illustrated in our mini-sketch above. For
this to happen smoothly, MNC strategists have to have near-perfect
knowledge of the market, of current, short-term and medium-term
tendencies. In actual fact, of course, they do not. Forecasting errors
regularly set MNCs back some distance, at which point they often
approach government for various forms of aid. They also demand
sacrifices from their workforce in order to keep their business afloat.
Small shareholders are also often called upon to pay for such