Financial assets tend to be antagonists to material assets. The inflexibility of having to pay back debts and interest or the pressure to grow the return on equity drive the managers of the material assets to extract the value more rapidly than is sustainable.
There is, of course, nothing preventing the managers from behaving that way even if there is no financialization pressure. In fact, if the managers initial intent is extractive, it will probably lead to them applying financialization in order to lever their results up. Same end result, different starting point on the cause and effect circle.
ReplyDeleteManagers of material assets tend to be bound to the enterprise through cultural connections that come of the joint endeavor of building the company. Those cultural connections tend not to be as intense with the financial types.
ReplyDeleteOf course, if a manager wants to be extractive, he/she can be extractive and they don't need an excuse. The question is what makes someone tend to the extractive. One answer is financialization. It is easier to accelerate the flow of money than it is to accelerate the flow of physical goods. The greater the acceleration, the higher the tendency to extraction.