American life, with its twin engines of suburbanization and factory production of consumer goods for the […] world, became so quickly and obviously successful that a new consensus formed supporting the value of the dollar and its paper accessories in capital markets, chiefly stocks, and bonds. This is not to say that the securities markets boomed in the 1950s and 1960s—it took until then just to recover the value levels of the pre-1929 crash—but stocks and bonds did regain respectability, [and] legitimacy. Those who had lived through the Great Depression, meaning virtually all the men who had served in the wartime army, had very modest expectations about the role of finance in the postwar economy. In the 1950s and 1960s, Americans bought stocks for the annual dividends they paid, not to flip them for a quick profit. In fact, share prices remained […] very flat during this period. The whole notion of investment was different than it would become later in the twentieth century. In the 1950s and 1960s, stock and bond values were linked much more directly with the successful production of real goods. General Motors derived its profits and paid its dividends on the basis of auto sales, not as today, primarily from leveraging interest rates and other abstract numbers' games removed from the actual making of products. In sum, the public attitude about the role of finance was extremely conservative. Finance was not an “industry” per se, but a set of institutions designed to keep the idea of money and its accessories credible, […] to allow real industries to function.

Economics will have ceased to be mainly connected with finance in peoples’ minds, because all that concerns finance now will have undergone such radical changes that the word itself will no longer have the same meaning. Finance, as we have known it, established a false set of values in the public mind. It was concerned with money and the things that could be bought with money. Money has been considered to be the first thing of value, or the thing that embodied all value in the world. It will later be realized that the thing of value on this earth is the human being, in so far as he is fit and fully developed.

The finance conception of the modern corporation, which currently dominates, emphasizes control through the use of financial tools which measure performance according to profit rates. Product lines are evaluated on their short-run profitability and important management decisions are based on the potential profitability of each line. Firms are viewed as collections of assets earning differing rates of return, not as producers of given goods. The firm is not seen as being a member of only one industry. Consequently if the prospect of an industry in which it participates declines, the firm disinvests. The problem for management from this perspective is to maximize short-run rates of return by altering product mix, thereby increasing shareholder equity and keeping the stock price high

The basic insight of the finance conception was that such a firm could be more tightly controlled by strict accounting. This progression does not imply, however, that one conception of control caused the emergence of its successor. New conceptions of control evolved out of key interactions among firms and between firms and the state.

If the present faulty system is more profitable to a financier than a more perfect system would be, and if that financier values his few remaining years of personal profits more highly than he would value the honour of making a contribution to the life of the world by helping to erect a better system, then there is no way of preventing a clash of interests. But it is fair to say to the selfish financial interests that, if their fight is waged to perpetuate a system just because it profits them, then their fight is already lost. Why should finance fear? The world will still be here. Men will do business with one another. There will be money and there will be need of masters of the mechanism of money. Nothing is going to depart but the knots and tangles. There will be some readjustments, of course. Banks will no longer be the masters of industry. They will be the servants of industry.

Finance is the art and science of watching the money flowing into and out of a business, then deciding how to allocate it and determining whether or not what you’re doing is producing the results you want.

Productivity is money. A CRAZY IDEA

Well, you know, the irony is, it’s one of the bizarre ways an economy works. There was no incentive to take all that money and go in and produce things that might have driven up prices and so on, because the people in America can’t afford to buy it. Our wages have been stagnant. The debts have been so big that people are afraid to borrow the way they once did, even though they still do, but not at the growing scale as before. So, all that extra money kind of went into the stock market to make itself make quick money by buying shares, hoping that they would go up. And if all the rich people who get it into their hands do that kind of thing, you see the stock market go up, but the underlying economy doesn’t go anywhere. And again, after a while, that’s not a sustainable arrangement.

The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version. All financial innovation involves in one form or another, the creation of debt secured in greater or lesser adequacy by real assets.

[I]n sectors of our economy where there is not a lot of room for utility-increasing innovations, we see an evolution towards ruthlessness... and that has interacted with... the central flaw in... our global system, with the U.S. at its head. What we have... are loops... Wealth that is made in the market is capable of increasing one's power over regulation. Power over regulation allows increased opportunity to make money in the market. This is a positive feedback loop. That should scare any engineer of biologist because positive feedback loops that are not bounded by some negative feedback force are unstable. They detonate. They explode.

Productive assets such as farms, real estate and, yes, business ownership produce wealth — lots of it. Most owners of such properties will be rewarded. All that’s required is the passage of time, an inner calm, ample diversification and a minimization of transactions and fees.

If the goal is to make money, then (putting it in terms Jonah might have used), an action that moves us toward making money is productive. And an action that takes away from making money is non-productive.

The pressure for shareholder returns is, however, just one manifestation of how financial gain drives growth. Indeed this expectation of gain is so ingrained that we hardly notice its most unusual feature: it runs counter to the fundamental dynamic of our world.

During the lengthy process of production the business world is incurring outgoings in terms of money-paying out in money for wages and other expenses of production-in the expectation of recouping this outlay by disposing of the product for money at a later date. That is to say, the business world as a whole must always be in a position where it stands to gain by a rise of price and to lose by a fall of price. Whether it likes it or not, the technique of production under a regime of money-contract forces the business world always to carry a big speculative position; and if it is reluctant to carry this position, the productive process must be slackened.