The New Investors
The fourth shift in the role played by money in our postmodern societies concerns the growing size and economic power of pension funds. Peter Drucker has noted that:[xi]
“[t]he world’s fastest-growing and most prosperous industry in the closing thirty years of the 20th century has not been Information. It has been Financial Services—but Financial Services the like of which did not exist at any earlier time, that is, retail services to provide an affluent, aging population in the developed countries with financial products to provide retirement income. . . . [I]nstitutions representing the future pensioners now own at least 40 percent of all American publicly listed corporations, and probably more than 60 percent of the big ones.”
Placing considerable emphasis on the changing demographics throughout the world, Drucker suggests that money assumes a new form and function when placed in the hands of men and women in the last decades of their life. As a result of the graying of many societies, money is being saved not for the purchase of homes or new businesses but to sustain men and women in their old age. While some societies (particularly in Asia) continue to assume that children will support parents when they retire, most societies have abandoned this premodern notion, leaving the elderly to fend for themselves economically.
This sets the stage for an emphasis on diversified portfolio investments and movement away from tangible premodern investments (land, real estate) and even modern investments (organizational ownership, stock investments in specific corporations). The new postmodern forms of investment are highly volatile and vulnerable—as the rollercoaster ride of the stock market during the last few years has so dramatically demonstrated. Furthermore, this reliance on virtual money may, as Drucker suggests, leave not just retirees but also entire national economies quite vulnerable:
“Every country . . is awash in money that is not invested in property, in businesses, in manufacturing or in service enterprises, but kept in liquid and volatile “portfolio” investment. . . And very few countries have enough of a surplus in their balance of payments to service the interest on this “portfolio investment,” let alone to pay it out should it take flight. Every country’s currency, in other words, is at the mercy of short-term movements of money for which there may not be any economic rationale whatever.”
Money thus continues to play an important role in our emerging postmodern societies. However, it is playing a quite different role. It is often invisible (credit cards, debtor society), malleable (e-commerce), linked with postmodern capital (information), or virtual. Our postmodern societies have not yet learned collectively how to live with or act responsibly in managing this postmodern money. The financial instability and crises we now face suggest that we will have to become fast learners about money if our societies are to survive. Drucker concludes that “[u]nless these [financial] challenges can be met successfully, no enterprise can expect to succeed, let alone to prosper, in a period of turbulence, of structural change and of economic, social, political and technological transformation.”[xii]
Information as Capital
Though money continues to play an important (though often different) role in postmodern societies, the role played by information and knowledge on a daily basis in most contemporary organizations is quite remarkable independent of its pairing with money. Venture capitalists may create the dazzle of big corporate deals and outrageous profits; however, knowledge and information have moved to the heart of many contemporary organizations and now commands more respect than does money as a vehicle for influencing the decision-making processes of these organizations.
