Wednesday, March 01, 2006

The greediest guys in the room

Last night, I had the good fortune of seeing the documentary Enron: The Smartest Guys in the Room. I'll say right off the bat that I would like to have heard more from the workers whose pensions and retirement plans got scuttled along with the company. Beyond that, though, the documentary provides a pithy look into the world of unmitigated corporate greed.

First, I'm just fascinated by Enron's use of "mark-to-market" accounting, which essentially allowed it to claim earnings on investments that hadn't yet generated any revenue--and in many cases never generated any revenue at all. As it happens, a few days ago I happened to be reading over one of's annual shareholder reports. (No...I'm not a shareholder. I was referring to it for book-related research.) There I discovered--and the company doesn't try to hide this fact--that it's remained afloat in part through infusions of venture capital, but also, and more importantly, by maintaining positive cash flow. It's done so by keeping a "negative operating cycle," which, I gather, means that the company collects on payments from customers weeks before it ever has to make payments on its loans. Essentially, Amazon gets a free, short-term cash "loan" every time someone makes a purchase.

So where's all this going? I'm beginning to believe that those of us interested in cultural studies need to become more mindful of these kinds of accounting tactics. They seem to me part and parcel of the new capitalism, and any political-economic analysis that doesn't "get" modern accounting is likely to come up short in the end. It's not, for example, all about bio-power and affective labor, as important as those "public" activities might be. I'm not saying that we need to become accountants, but we do need to understand the extent to which accounting constitutes knowledge work integral to capitalism's continued wellbeing. We need, in effect, a better understanding of what goes on in capitalism's back office.

The other thing that struck me about the documentary was what it had to say about "free market" economics. Evidently, there's no such thing. Enron and others pushed hard for California to de-regulate its energy market, claiming that government only stultified possibilities for keeping prices down and letting profits soar. Yet, the documentary clearly showed how Enron intervened in the California energy market to manipulate electricity supply and demand, with the intention then of inflating prices. Those who champion the "free" market, it seems, really want to pull the market's strings themselves.


Greg said...

Hi Ted,

Agreed on the Enron movie. But really e-mailing to tell you that my copy of Lefebvre's Critique Vol 3 shipped today (so so long on backorder) according to an Amazon message to me. Wheee!

Ted Striphas said...

Hey Greg,

Yes! That's great news. Mine's shipped, too....