Why large corporations will disappear, after all...

Posted by VISITOR on Oct 17, 2004 8:24 AM EDT
; By Charles-H. Schulz
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A Darwinian-like post in response of the "Open Source and Post Capitalistic Society" article, that may show how to reach this conclusion while being fairly capitalist.

In his article "Open Source and Post Capitalistic Society", Daniel Orsolic assumes that the Capitalistic society has come to an end, and why FOSS will eventually lead us to a new kind of society, the "Post Capitalistic" Society, the Information age.

I won't go as far as Daniel in saying that countries may somewhat disappear or lose their power. That I don't know, because, unlike the Marxists or the communists, I do not think that everything revolves around economy, production, money, and greed. Well, much turns around that, for sure. But not everything. We live in a world that gets crazier day after day since 9/11. We live in a world where there is a clear revival of religious feeling, in one sense of another.

Yet, we live in one of the most terrible and exciting worlds ever.

And now some start to see some unexpected revolutions and outcome to it.

One of the evolution of the "Post Capitalistic" society is the doom of large corporations.

(I hear voices in the audiences wondering if I'm mentally sane). Well, large global groups are going to their own doom, even though they never seemed as powerful as today. They will eventually, however, disappear, at least in terms of size and power. I've always thought that it's when somebody shouts in the loudest way that it is in trouble. Well, look at the RIAA now. Look at the intense lobbying of major corporations. They seem huge and invincible, but if they really were that strong, they would not shout. They would relax and shut up. But the world has become a dangerous place for them too. One of the cause of this instability and danger is technology. Another one is their structure and process.

I'll start with the last of the factors, "structure and process".

Structures of big corporations are complex, hugely complex, and these corporations are constantly trying to come up with new process in order to operate seamlessly and effeciently. But they're facing two major adverse forces. One is the market (i.e concurrence and challengers) and the other one is... themselves, that is, their stockholders. To be a stockholder and having the last word in a business is not a bad thing. It's actually the way it is supposed to work. Businesses are not like social security. They're not here for you and me, they're here to make money, and if it pays their employees well, so be it, but the money ultimately goes back to the stockholder. The problem today is that when you're a stockholder who invested x amount of money in a company 10 years ago, you were promised a dividend rate, called "y". But as business goes on, successfully in theory, you expect to gain a rate of dividend that's growing with the years. Now, with the time passing by, you may expect a dividend rate at 2y this year. The consequence of this is simple. You come to get more money out of your company. And more money means that there will be less money to hire people, and less cash reserve to sustain a possible downfall in the market activity. This simple point lets you see a problem: corporations are pressurized.

That's where the corporations stand these days. You are stressed to generate always more money while facing ever-growing competitors' threats. That's not necessarily a bad thing. After all, capitalistic economy has the ultimate goal to make the owners richer. But today it starts to be a problem, as stockholders and stockbrokers at the stock exchange expect always more performing figures. Yet, companies never made as much money as these days. But nobody seems to have a clue about where this money goes. This money is immaterial, and is increasingly meaningless. I was shocked to hear once that the Oracle corporation stocks had dropped once two years ago because of earnings that were inferior to the analysts'expectations: Oracle had earned 65 billion dollars while expectations had put it in a range of 67 billion dollars. In pure benefit, Oracle was still making a dozen billion dollars, so the difference was not "that big". But it causes the Oracle shares to drop.

I'll let you imagine how some people have lost any sense of reality when it comes to money. Does 65 billion dollars really mean 650 dollars? Am I getting pissed off because I'll make 10 millions instead of 12 millions this year? Come on, this is sick...

Now that one can see how corporations are getting weaker and weaker, while showing the contrary in appearence, I'll focus on technology.

Technology has an evolution that has started an exponential curve since the late sixties or so. Aided by capitalism, we're only seeing, through FOSS that it is quickly disrupting all the "old" rules and structures. It's just a beginning.

Enter NanoTechnology. In case you don't know what this is, it is a set of technologies that will/may allow humanity to manipulate matter one atom at a time. This has, among other things, a huge influence just in terms of production and goods manufacturing. We will come to it, and we already use it, albeit in a very limited way. Nanotechnology will dramatically reduce the costs of production of nearly every goods, making it reachable for the average citizen in Europe to produce its own set of cars for, say, 50 euros. Now you get the point. Big corporations will fall down at that time, just because it won't be relevant for them to hire 10, 20, 60 thousands employees. It will be too much. So they'll get thinner... But aside the individual drama of unemployment, people, individuals, will start ventures and sell goods themselves that only large industrial groups today can build.

I believe only services'businesses will be left pretty much unaffected by this revolution. Big corporations won't exist anymore. But an economy of free trade, networked business among individuals or small groups will exist. And that is called progress, my friends.

Charles-H. Schulz.

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