In my experience within the corporate world, I’ve observed that companies often exist on two distinct levels: one defined by the work and collaboration of their employees, and another driven by stock values and market performance. Especially in large industrial groups, these realities can be quite separate. While the majority of employees view the company through the lens of their work and the products or services they produce, a smaller group sees the company primarily as a financial asset.
The term “financialization of the economy” refers to the increasing dominance of financial objectives over productive ones within companies. This phenomenon appears to be an experiment in economic and social engineering, consciously or unconsciously promoted by national governments and central banks. Policies aimed at GDP growth, such as low interest rates, have facilitated easy access to capital for banks and investors. This influx of money isn’t tied to current productive activities but is more akin to “falling from the sky,” leading investors to channel it into companies, thereby influencing their behavior.
As more companies are viewed primarily as investment vehicles rather than productive entities, the maximization of profit becomes the prevailing management philosophy. The abundance of money in the system pressures companies to go public, making them accountable to a broad base of investors. This shift often leads to decision-making processes that prioritize financial returns over the core productive and human aspects of the company. The focus becomes on generating as much profit as possible, benefiting everyone from the state to large investors and small shareholders, often by increasing returns and reducing labor.
In striving for a decoupling between economic growth and environmental impact, we often overlook the decoupling occurring between labor and the generation of money. This raises the question: as long as not working yields more than working, how can we expect the real economy to reach its full potential?
This shift also contributes to increasing income inequality globally. Anglo-Saxon countries, in particular, are increasingly concerned with issues of inequality, a topic recently addressed by economist Thomas Piketty. The conscious or unconscious economic engineering favoring investment over labor marks two phases in the development of capitalist systems:
- First phase:
- Encourage production → Tax production → Redistribute the proceeds of production within society
- Second phase:
- Encourage investment → Benefit from investment → Redistribute the proceeds of production (and only part of investment) within society
In the first phase, national states maintained a distance from markets, whereas in the second, states participate directly in markets, becoming part of them. This involvement creates a conflict of interest: on one hand, states are expected to promote redistribution for the benefit of workers; on the other, they are aligned with financial interests that benefit investors.
Furthermore, the excess liquidity in financial markets leads investors to seek higher returns, often by investing in increasingly risky assets, fueling bubbles and speculation. Meanwhile, millions of people remain excluded from access to credit and basic financial services. There’s an imbalance: excess money flows where it’s not needed, causing instability, while it’s scarce where it could foster real economic growth and job creation.