50/YOUR MONEY OR YOUR LIFE!
setbacks, as in the case of shareholders at the perpetually troubled
private consortium Eurotunnel.
COMPANY FINANCIALISATION: THE EXAMPLE OF
FRANCE
One of the features of globalisation is the increased financialisation
of MNCs. They increasingly resemble financial houses even if a
majority of their operations continue to be in industry. They offer a
variety of financial services and make significant forays into
exchange markets.
Between 1982 and 1989, the share of productive investment in
the operations of French corporations fell from 76 to 47 per cent.
Their strictly financial assets grew as a proportion of total assets, from
2.9 per cent to 35 per cent. This tendency was further accelerated
from 1989 onwards.
French companies have progressively expanded their involvement
in French financial markets. By April 1989, they had invested S45
billion; S107 billion by April 1992; and S143 billion by April 1995.
In 1993, the big French industrial houses engaged in financial
operations worth more than Ffr500 million (about S85 million)
every single day. Such exchange market operations are worth at least
five to ten times more than what companies actually need for settling
trade contracts.
Has productive investment declined as a result of this growing
company involvement in financial markets? Probably. Big companies
have a growing tendency to hold significant financial assets. By
1988,30 companies held more than 40 per cent of all financial assets
in France. The strictly financial dimension of capital flows has
developed by leaps and bounds. This has created tension in
companies between those who depend on industrial activities and
those who are more concerned with the 'ledger' that spells out what
will be paid out to shareholders in quarterly dividends (Serfati, 1996,
in Chesnais, 1996).
There are companies whose industrial operations have run
aground (Renault in 1997) while actually increasing their strictly
financial profitability. In February 1997, Renault announced the
shutdown of its Belgian operations (where more than 100,000
vehicles were manufactured each year); in response, its share price