Defining Capitalism

[Max Sawicky]

My guess is that financial reporting is highly susceptible
to poetic license, hence the intense shareholder interest
in said rates goes through some filtering before
influencing managers.  Secondly, the choice among
assets w/respect to non-cash ROR is sufficiently
complicated by additional factors (risk, long v. short
term, etc.) that managers still have a lot of freedom
of action.

In principle profit *levels* would seem to be meaningless.
Other things equal, I'd rather own a small company making
10% than an equivalent piece of a large company making 5%.
What should matter is return to capital, but measuring
capital is not casually done.

I would add that the past 10 years show shareholders like
to gamble plenty.  The market for shares of, say, IBM is
competitive in the sense of a uniform product, but the
market for *streams of future income* is a jungle.

mbs

Doug Henwood wrote:


>Yeah. They always had the potential power, but it didn't become
>actualized until the late 1970s/early 1980s (in the U.S., that is).
>Though in the old days, shares were held mainly by individuals; as
>institutional investors came to account for a larger portion of
>shareownership in the 1960s and 1970s, it became easier for
>shareholder to organize and lobby.

and


>Increasing shareholder value basically means doing everything you can
>to boost profits - cutting employment, busting unions, reducing
>social responsibilities, shutting divisions, abandoning risky
>long-term projects, outsourcing, etc.