Will managers be the real victims of the unlikely duo?
Just a few weeks ago we seemed to be facing economic Armageddon. For the short term we've been saved from meltdown thanks to George W Bush, Gordon Brown and other western leaders following in Lenin's footsteps and nationalizing many banks.
Whatever happens, it's going to be a long time before trust in financial institutions is restored. And, lest we forget, our faith in Wall Street was already pretty fragile after the accounting scandals of Enron and the rest. I wonder if these crises are merely symptoms of something rather more profound.
There's a real chance we may be reaching the end of managerial capitalism or Capitalism 2.0 after 150 years or so. Let me explain what I mean with some gross oversimplification. But, hey, this is a blog not a masters dissertation.
Knowing who is boss
Capitalism 1.0 was personified by the boss who was both owner and manager. He made all the decisions, hired, fired and kept the profits or suffered the losses. It was nice and simple, but it couldn't stay that way.
The cost of the machinery and new production techniques of the Industrial Revolution of the 19th century meant bigger was almost always better or at least more profitable. So bosses started selling a share of their businesses to banks, other companies and individuals to fund expansion.
Eventually many bosses owned only a minority stake in their businesses. Their companies had also often become so big they were beyond the control of one person. So managers were hired to run the businesses and managerial capitalism or Capitalism 2.0 was born.
It's been a remarkably successful and resilient economic system for over 150 years. The ability to adapt to has been managerial capitalism's greatest strength, but as it's developed the division between ownership and control has become both wider and more blurred.
As a result more 'ordinary' people have a direct stake in their economy than ever before. In many countries the majority of the population have borrowed the money to own the homes they live in. Their savings are often invested in pension funds which are among the most powerful institutions driving the world's stock markets.
Despite the broadening of ownership most people have little influence on the running of the businesses they have a share in. In fact this downturn will see people laid off by companies they partly own through their pension funds.
Of course nobody worried too much about all this while the global economy was booming. It all looks a bit different as we peer over the edge into a recession of uncertain depth and length. But we do know that nothing will ever be the same. Trust in banks and other Capitalism 2.0 institutions has been damaged, perhaps fatally.
Taking back control
From the chaos something new will rise, perhaps Capitalism 3.0 or 'Collaborative Capitalism' as it's being dubbed. The underlying forces that could create this new way of working have been developing for years and they can fundamentally alter the economic forces that have made managerial capitalism so successful.
In many knowledge industries economies of scale have been turned on their head. Individuals and small businesses can compete with corporations on price and earn a reasonable return.
The key force in this is the Internet. It's given knowledge workers access to many of the tools which were until recently only available in large offices with sophisticated data networks. All freelancers are missing are corporate overheads and real estate costs. Big business should be worried.
Ki workers of all countries unite
Look at the corporate success stories of the digital age such as Google, eBay and Amazon. All collaborate with their customers. In fact the divisions between customers, suppliers and competitors can be so blurred as to be meaningless. For instance, on an Amazon product page you'll find outside companies offering prices below Amazon's own.
Have a look inside at ki work's platform. See how collaborative capitalism 3.0 can provide a platform for professionals to work together and create their own virtual businesses than can undercut bricks-and-mortar corporations bidding for major projects.