The corporate leviathans which oppress the real economy and bully its participants are no longer industrial firms concerned with customers, technologies and people. They are merger and acquisition deal making financial entities. Their oppression and bullying is justified and encouraged by a discredited neoclassical economic ideology which is accepted and promoted by political, media and financial system establishments. The core of that ideology is that economic prosperity is achieved through the individual pursuit of self-interest. Greed is not just good, but a duty, and a social responsibility for the wealthy to fulfil both as individuals and as members of the financial establishment.
According to that ideology, the limitation of greed, especially by statist intervention, must be resisted. The redistribution of its resulting excesses must be prevented. Only the most inhumane resulting poverty and distress should be moderated at public expense. The free working of markets must be allowed to produce the optimum allocation of all resources. Because markets work.
But we know markets, especially financial markets, don’t work. That’s why we are in the mess we are. The truth is that economic prosperity results from the efforts of real people, working hard to survive and progress, both individually and as a society. Society does exist. Almost two thirds of them work in small and medium sized enterprises (SMEs) which provide the jobs, goods and services for real people in the real economy.
Successful SMEs achieve long term progress as independent entities, providing jobs, goods and services, as well as contributing to the common good through the payment of taxes. But today, successful SMEs are threatened and bullied by the big corporates which have achieved monopolistic control over their chosen markets in a now globalised economy which facilitates their avoidance of taxes. Most SMEs don’t survive the onslaught. Of those that do, the few really successful ones are marked for acquisition by the corporate bullies, intent either on exploiting the SMEs’ unique contributions for the benefit of their own shareholders, or eliminating the competitive threat by a swift asset strip and close down.
The establishment hopes it can continue to get away with its bullying and greed. Its current leaders were mostly indoctrinated into neoclassical economics as first year undergraduates and have never learned any better. So dominant has the dogma become that any deviant, no matter how rigorous and soundly based their reasoning, will find themselves frozen out of a fulfilling career in their chosen area.
Many practical steps have been identified that could be taken to improve the situation; many on this website. But the most fundamental and essential change is the rejection of neoclassical economics. Sumantra Ghoshal highlighted the damage being done by this ‘bad theory’ and suggested the first step to its replacement must be that universities and business schools stop its promulgation. Economics is not a science. The mathematical modelling of economic actors and processes is simplistic in the extreme, and has been shown, time and again, to be dangerously misleading.
If the next generation of establishment leaders experience a more enlightened, pluralistic economic education, then maybe the behaviour of big corporates might be successfully modified. Instead of the rape and pillage of the real economy, on behalf of their wealthy few shareholders, they might be refocused on developing technologies and products that contribute progressively to a sustainable economy, and to the common good.