Watching an Ad from the Investment Fund That Bought My Wife's Company Made Me Think About Capitalism

The other day, I was watching YouTube when an advertisement for an investment company appeared.

The ad was filled with admirable language about maximizing investment returns and contributing to society.

Then I saw the company’s name and could not help laughing.

It was the foreign investment fund that had acquired the company where my wife works.

My wife has told me what the fund has been doing since the acquisition.

Relentless cost cutting and staff reductions.

It reduces the workforce and gives more work to the employees who remain. Performance targets have become stricter, and the people on the front lines have less and less room to breathe.

It does not appear to be forcing employees to work illegal unpaid overtime. It simply makes them work as efficiently as possible within the limits of the law.

I see. So this is what the advertisement meant by “maximizing investment returns.”

From an Investor’s Perspective, This Is Excellent Management

From the investment fund’s perspective, what it is doing is rational.

It acquires a company, reduces labor costs, and raises the profit margin. If the company’s value increases, the investors make money too.

For example, if work previously done by 10 people can be handled by eight, then two people can be removed.

If seven people can still handle it, one more can be removed.

Wonderful.

At that rate, the company may eventually be left with a single employee and achieve the highest profit margin in its history.

Of course, the moment that employee collapses, the company will end too.

Capitalism Was Not Designed to Make People Happy

Come to think of it, capitalism is not a system that someone designed with the goal of making humanity happy.

Private property, commercial activity, the accumulation of capital, and other practices developed over the course of history, eventually forming the economic system we have today.

Companies pursue profit, and investors seek returns. That competition has increased productivity and made society wealthier.

But economic growth and the happiness of the people living within that economy are two different things.

Cutting staff improves the profit margin. Investors are pleased. Executives are rewarded.

Meanwhile, the remaining employees become busier and more exhausted.

Under the rules of capitalism, there is no contradiction here.

After all, there is no rule requiring the system to maximize human happiness.

Was the “Waste” in Traditional Japanese Companies Really Wasteful?

Traditional Japanese companies once contained enormous amounts of what would now be considered waste.

They carried excess staff, kept employees in departments with little work, and did not dismiss people easily.

To a management consultant, such a company would probably look like a treasure trove of opportunities for cost cutting.

But some people were able to make a living because of that waste.

Human beings are not machines. Some days we feel unwell, and some days family circumstances make it difficult to concentrate on work.

If an organization is designed on the assumption that everyone will perform at 100 percent capacity at all times, the absence of a single person creates a crisis.

Traditional Japanese companies had plenty of problems, but perhaps some of their inefficiency was the breathing room human beings need in order to work.

Modern management calls even that breathing room “waste.”

Employee fatigue and stress do not appear directly on a financial statement.

Who Is Capitalism For?

I am a freelancer, so I see work simply as a means of earning the money I need to live.

But when I hear what is happening at my wife’s company, I realize that some things cannot be solved by an individual’s attitude alone.

The investment fund pursues returns for its investors. Executives improve the profit margin. Employees complete the work assigned to them.

Everyone is fulfilling their role, yet the people on the front lines become increasingly exhausted.

It is not so much that someone is acting with malice. The system itself moves in that direction.

Capitalism is excellent at creating wealth. But creating wealth and making people happy are not the same thing.

As I thought about this, I remembered the advertisement again.

The investment fund had claimed that it was “contributing to society.”

It is certainly making a major contribution to its shareholders.

I only wish it would let my wife rest for at least as long as the advertisement is playing.