The Enron Model of Irresponsible Capitalism

[Makalakumu]

http://www.iht.com/articles/2006/05/26/news/edpfaff.php

The Enron verdicts are one more blow to a new American model of capitalism already heavily criticized for its gross abuse of common-sense moral values.

The American economist Robert Lekachman has written (in the admirable "Harper Dictionary of Modern Thought") that "the ideology of capitalism makes an implicit assertion that inequalities of income and wealth measure, however roughly, the economic contributions of the men and women who embark their energies and resources in the productive process."

The new American economic and corporate model grotesquely departs from such a moral foundation, doing so in a way that suggests damaging ultimate consequences for society.

The usual defense of billion-dollar rewards for executives, for example, is the nihilistic one that the market settles business morality. That is, you get away with what you can.

The theoretical argument is that such rewards for managers are a necessary element in a modern system where creating value for investors generates prosperity for everyone. Wealth "trickles down." The rising tide lifts everyone.

This today is untrue. The globalized corporation identifies labor as usually its largest production cost, and its easiest cost to cut. This means that management regards itself as obliged to restrict to the maximum the "trickling down" of value to workers.

Yup.