Our world is nothing but a sick combination of Wall Street and Las Vegas. My students as well as the managers in companies I consult may testify that the last couple of years I was constantly warning that the digital stock market balloon must burst. And now it is happening, dramatically. Just look at the table below:
The most valuable companies on the NYSE are forced to lay off significant portion of their workforce, and it is just a beginning of the balloon breaking process. Only in the last couple of months the market capitalization of the six leading digital companies (Apple, Microsoft, Amazon, Alphabet, Meta, and Tesla) dropped by 3.800 billion US$, which equals to annual GDP of Germany or to 2,7% of annual global GDP. The biggest loser was Facebook (Meta) with its market value lowered three times in a year. No wonder these companies had to lay off between 5% and 50% of the workforce, and some like FTX went bankrupt. Only Apple is lagging, and Tesla has just announced to lay off 10% of its workforce (7.000 employees) early this year.
Why is all this happening? One answer is simple, it is the end of the pandemic era, and the process of digital transformation is stalling. The other answer is more serious and deeper, it is a normal and expected outcome of the global financial infrastructure. Instead of servicing the economy, it has become its master, a tail waving the dog. Instead of an artless and austere infrastructure, providing money to business, it has been turned into an elaborate gambling machine, a sick combination of Wall Street and Las Vegas. As if, when you want to withdraw $100 from an ATM, the payoff is delayed by an offer: Double or nothing!
The system, originally intended to provide individuals, industry, and the economy with a flow of necessary money and credits, evolved into a sophisticated playground for gamblers, speculators, and profiteers. Continuously inventing options, funds, futures, derivatives, and other “innovations” to play irresponsibly with risk, financial institutions have created a morbid world of instant, often undeserved, gain and loss. It was particularly obvious in the digital world, and on the cryptocurrency market. As an outcome, speculation (not prudence) has been proclaimed a virtue and greed (instead of living within one’s means) has become the norm of life.
This all happened with full public and government support and was fueled by unconstrained consumerism, something a writer John Steinbeck used to call the Domino effect of materialism: “The more things I possess, the more things I want, until I become their prisoner.”
The spirit of consumerism turned the rich into filthy rich and exposed the rest to potential borrowers’ slavery. The concept of the “free market” has become a tool to carry out a coup against individuals and society. For decades, politicians and bankers have managed to gamble away the government budget, and big businesses were the first to gain from an abundant flow of printed money.
Are we approaching the end of an era? Not likely, for that we would need a refolution, a combination of deep reforms and revolutionary changes in business, politics, market economy and parliamentary democracy.