"To plug this hole in profitability, the job of "manufacturing engineer" was invented, specifically to shave away all that unnecessary quality and build the minimum product possible."

Not just products, they've figured out how to do it with whole companies. Even whole industries.

During the early days of a market, there are bursts of innovation and creativity; people take chances, make mistakes, and sometimes have bursts of genius. We've been going through one of these heady times lately with software, and to a certain extent, with consumer electronics. The stuff is damn good and remarkably cheap, but things are fluid and sometimes you can get burnt.

As a market matures, only the strong competitors survive and they've gotten good at their jobs. Market niches are carved out and the competitors settle down to conflicting only at the boundaries of those niches. Products are solid and dependable, relatively inexpensive, and compete primarily on styling and other inconsequentials. Innovation suffers, and the products start to fail to adapt to new market conditions. The US automotive and appliance industries in the early 60s comes to mind.

When a market becomes decadent, the pressure to increase profitability and market share every year eventually leads to a condition where efficiency and productivity can no longer be increased without cutting corners and deterioration of long term quality begins. Short term profitability takes over, and advanced marketing techniques, like demand curve manipulation start trading off total sales against unit profit in order to maximize total profits. The goal is not to improve the product, sell more of it, or lower the price; it's to manipulate all three and find the resonance point where total profit is maximized. Unfortunately, this point is highly unstable and can usually be achieved only at the expense of future sales. The home mortgage lending industry is a contemporary example (it's not just hard products which are affected, it's "services" too).

Much has been said about the similarities between companies and species, and economies and ecosystems. But species do evolve, and sometimes go extinct, and ecosystems collapse. What most capitalist analysts fail to take into account is that they are ideologically locked into the idea of a microeconomic entrepreneurial firm, it's the free-enterprise analogue of the kibbutz. A dynamic entrepreneur brings committment, talent, and courage to the task of taking great risks to launch a company he believes in and to fulfill a market need he has identified. In mature and decadent macroeconomic markets, there are no owners, only hired managers with no committment to the industry, company or the product. To them, companies are just machines for converting capital into profit, and the true capitalist/entrepreneur is replaced by an accountant. These men are hired guns, samurai, and they pride themselves on their ability to manage companies, not understand industries. To these people, running an airline is no different than managing a chain of supermarkets, they simply don't care what the firm sells or makes. They just want to generate revenue. And when the firm burns out, they move on to someother firm.

I've seen this progression, like the growth of a climax forest, in one particular industry I'm fairly familiar with: the yachting industry. Time and again, a talented boatbuilder will put together a company, design and market a novel boat or innovative construction technique that really takes off with the customers, become remarkably successful for a short time, and either go broke trying to keep up with stiff competition, burn out, or retire to enjoy the fruits of his labors. The firm gets taken over by some holding company that runs it into the ground, ruining the reputaion of the boat yard while it feeds off its past reputation and the brand name. Meanwhile, the craftsmen that work there wind up on the street, replaced by shabby automated methods and unskilled workers that do the job cheaper.