A very powerful editorial from Umair Haque, one of the brightest analytical thinkers of the day, see below.

But first: spend a few hours going through his blog, and read, and be convinced, why Facebook’s strategy can’t work, or why Google’s Knol is a dead-born baby even before it’s launched. Provocative, sometimes counter-intuitive stuff, but based on a fundamental understanding of the competitive advantage of openness, what I have called the law of asymmetric competition, nl. that companies that adapt open, participative and commons oriented strategies are poised to overtake those that doesn’t. Not always, not immediately, but in the long run, undoubtedly.

I can’t refrain from republishing a large excerpt, but please go read the whole page there.

Umair Haque:

“What’s gonna happen in 2008? The Macropocalypse.

It’s not a credit crunch, or a liquidity crisis. Unfortunately, it’s a lot deeper than most of us think.

Let me try and explain what’s really going on here.

The real problem is that the firm – the corporation, as the fundamental institution of production – is deeply and irrevocably broken. It’s DNA is in shock. The corporation we’ve created is a monster; a form of organization growing more pathological by the day.

BGSL studies industries, markets, firms, and their economics. So those (really) are strong words.

But the evidence is, at this point, almost impossible to refute.

Is there much difference between banks ripping off small towns, and Wal-Mart’s active exploitation of sweatshop labor?

No. They’re symptoms of a deeper cause: the decay of the firm itself.

These are brushstrokes in a larger, darker picture: moral hazard is rife across the productionscape.

To be blunt: today, every industry across the larger economy is marked by deep, systemic moral hazard.

That’s not just depressing: it’s shocking.

I started Bubblegen by studying the most flagrant example: record labels, the RIAA, and the MPAA.

But think about how food players have created an obesity epidemic. Or how pharma players have spent billions upon billions – to subvert and replace value creation in healthcare with push marketing. Or how Detroit spent continues to focus on coercing people, cities, states, and nations into consuming car afer car – instead of on durable, sustainable long-run productivity and efficiency gains.

The virus is rotting the system from inside. The hypercapitalist economy we’ve built isn’t about deep, sustainable value creation. It’s become about simply shifting value from one party to another.

Whether it’s from small towns to Wall Street bonuses, or from Chinese migrant workers to Wal-Mart’s income statement – what most firms are doing – what they are actively built to do – is exactly the same: actively and deliberately failing to create value.

But the game is fast coming to an end. The emperor has no clothes. The masquerade of value creation is can’t go on forever. No economy can survive where value doesn’t get created.”

If you want to know what Umair means by the Macropocalypse, read here:

“The Macropocalypse isn’t going to be just another recessionary period.

What the macropocalypse really means – and I’ve been remiss in not writing about it for a year or two now – is that nothing less than a fundamental redesign of the global financial system is necessary.

OK – honestly. That sounds a bit silly. I feel a bit retarded even writing it 🙂

But the reality is: the centre cannot hold – the current global financial system simply cannot allocate capital, assets, risk, or returns with any semblance of efficiency anymore.

And that means, in turn, that the ensuing period of instability is going to be – until the machine is reengineered – to put it bluntly, a time of global financial crisis.

The structural pressures are too great to bear, and there is a choice of discontinuities, each vying to be first to bring down a major global financial institution.”