What’s Wrong with the World

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This is not what capitalism should be

I have said elsewhere that, though it is too vague as it stands, the following slogan seems to me to express an important truth: Things should be themselves. I've even gone so far as to imply that this slogan applies to such mundane enterprices as widget factories and hot dog companies. Such factories should be what they are, and they should be the best they can be, in their circumstances, of their kind.

Human activities that are worth doing have their several excellences, and it's important to pursue and maintain the standards of those several excellences. Put more fuzzily, things should be themselves. An activist should be an activist. A soldier should be a soldier, a doctor, a doctor, a judge, a judge. A teacher of literature should be a teacher of literature. And, even, a widget-maker should be a widget-maker.

If it is worthwhile having widgets and hot dogs in the world, then it is worth having good ones, and it is worth having competition to offer the best ones at the best prices. And we are incredibly fortunate and should be incredibly grateful for all the wonderful stuff that human action and the free market have given us by means of people's doing things they want to do, doing them well, and profiting from the labor of doing them well. I, for one, am intensely grateful for all of this.

It's for that very reason that I am distressed by a conversation I had recently with a corporate employee of a to-remain-unnamed large company that gave me a window into a corporate world that seems to me far removed from this set of capitalist ideals--doing what one does well and what one wants to do, offering something worth having to the customer at a competitive price, and keeping on doing so as well as one can, and perhaps even better as time goes on, for as long as possible.

He told a story of corporate employment that at first didn't surprise me, though it saddened me to hear it straight from the horse's mouth--political correctness forced upon employees at every level in the name of "values." Things like tolerance, diversity, eco-friendliness, and so forth, all offered in the smarmy form that many of us are familiar with--such pablum-like slogans that one can't quite get a grip on them to disagree, but they feel vaguely wrong, and saying shibboleth to them feels like being turned into a zombie, and forcing other people to say shibboleth to them feels like playing Secret Police. And behind them, of course, concrete propositions that one knows one disagrees with, like "Homosexuality is just an alternative lifestyle," "Man-caused global warming is an undeniable scientific fact," "It is objectively morally important for a company to have a racially diverse employee group," "Women are no different than men." But none of this, of course, stated outright. Just those ubiquitous "values" slogans. The religious creedal statements of a secular world. Yuck.

That part, I already knew something about. But the next part was new to me (with my sheltered life, knowing about my own home, about home schooling, and about philosophy departments, but almost nothing direct about the corporate world). He explained that in his area there is intense pressure constantly to be changing one's role in the company. This is billed as "developing," "advancing." "Move up or move out," is the basic message. Even if, as does sometimes happen, you do well at your job and would prefer to keep doing it, and even if your immediate superior likes you and would like to keep you in your present position, the superior himself comes under pressure for not "developing his people." Ambition is treated as worthwhile in itself, and its absence as a sign that there is something wrong with you as an employee. Not even a sign, really--as definitionally something wrong with you as an employee. Finding something you like and trying to keep doing it well, perhaps even learning to do it better and better? How passe! How quaint! How regressive!

I kept mentioning, in a puzzled way, the idea that surely the employer should want his employees to learn their job well, to become experienced at it, and then to go on working at something they enjoy and do well. Why mess with success? But he kept shaking his head. That notion might apply at the purely technical level, he explained, but not beyond that. Everyone must keep moving.

I was thus confronted with an image of some previously unknown circle in Dante's Inferno, a place of ceaseless, meaningless motion for the sake of motion. For this motion does not enable the hot dog company to make better hot dogs, nor to make them more efficiently, nor to serve their customers better. It doesn't enable the computer company to make a more user-friendly product or a product that makes its customers' lives better. Such motion from role to role in a company, even if labeled "upward," does not or certainly need not mean that the employee is really growing, is really becoming better at what he does, is really helping his company to do what it does better. It need not even mean that he is doing better at some intangible work such as helping the company to advertise or market its product. On the contrary, he has to keep learning to do something new every few years, just when he was getting wise and experienced in his old role. And yet it is labeled "development" and its absence treated as an objective defect. So it seems to me that it is just a lie imposed upon employees and giving their lives an edge of anxiety for the security of their jobs and their families, which anxiety is utterly unnecessary and unhelpful from the perspective of efficiently making and selling good widgets, hot dogs, or anything else useful even to the purely material life of mankind.

In fact, this "move up or move out" imperative makes the old idea of being a cog in a machine look rather pleasant by comparison. Do you want the cogs in your car to keep randomly evolving into something different? Not at all. You might end up with a car that didn't run at all, or that ran much worse than before. If the employees were cogs in a machine, their employers would be grateful that they keep on playing their coggish roles efficiently and well and that they do so indefinitely, making the company like a machine that just keeps on forever running sweetly on well-oiled wheels. If the model of employees as cogs in a machine is modern, it seems to me that the corporate world of "move up or move out" is post-modern, a world where everything must morph for the sake of morphing and where this grotesque and pointless movement is called "growth."

Humbug should be anathema to all good conservatives. For that matter, humbug should be anathema to all good capitalists. And even to all good people. And this notion of hollow ambition as employee development is humbug. It is irrational, and it is anti-capitalist, in the sense that I have tried to give to the ideals of capitalism above. I wish that it were possible to get rid of it entirely from our system.

And meanwhile, my heart goes out to everyone upon whom such humbug is being imposed. May you have many areas of your life, even if not the job that brings your daily bread, in which things are themselves.

Comments (40)

It makes one wonder whether or not capitalism is what capitalism should be. The problem with your hotdog company is that either they never went into business for the love of hotdogs in the first place, or somewhere back in their history is a family business who did, but were bought out (or forced out) by some big man whose primary interest was profit. As a wise man once said, apples are for eating, not selling. The "widget" it seems to me, is a term invented by the corporatist who knows that the important thing is to sell something--it doesn't matter what. So he invents a term that stands for nothing in particular, since his interest is in nothing in particular, just money. At this point, the hotdog business doesn't serve the customer, or even serve the (perhaps dubious, I'll grant) cause of putting a tube of processed and artificially flavored animal waste parts (not so much in the case of kosher Hebrew Nationals) on the table of every American at dinner time. The business just serves itself, which is to say the few Big Men at the end of the line. And then, naturally, we need an entirely new sort of business called "marketing," the purpose of which is to use the technology of base psycho-emotional manipulation to convince would-be customers that money should be spent on widgets. How could one really love their marketing job?

"I just love convincing people to buy things."

"What things?"

"Oh, nothing in particular. Just whatever my boss tells me I'm supposed to be selling this year."

But this goes back to the question of whether or not capitalism, as it is today, is a corruption of the ideal, or whether or not capitalism itself is a corruption. I take Lydia to side with the former. I'm not qualified to take an opinion, although I wonder if a truly moral capitalism would really be much of anything recognizable as capitalism by most folks today.

Sounds like another way for liberals to knock down the intrinsic order in man and society.

Sounds like another way for liberals to knock down the intrinsic order in man and society.

Do you mean to say that a recognition of the weaknesses of capitalism is exclusively the province of liberals (or Marxists), or do you mean to say that capitalism itself is an attack on the intrinsic order in man and society?

In a sense, I admit to being an idealist. I'd like to imagine somebody who enjoyed marketing for his company because he believed in the product. So then he tries to think of ways either a) to make more people aware of the existence, nature, availablility, price, etc., of the product, which is perfectly legitimate if the product is legitimate or b) to show people who would be reasonable to buy the product that, in fact, they would be reasonable to do so, that the product meets a legitimate purpose for them. All very strange-sounding these days, I suppose.

If you don't like my hot dog example, pick one of your own where you admit that the product is legitimate--bread, ball bearings, venetian blinds, etc.

Part of my point here is that I have *no problem at all* seeing man's material well-being as a good thing. As anybody probably remembers who has hung around here to see some of our older pro. vs. con. discussions on capitalism, I'm usually the one insisting that material goods are, in their own realm and sphere, goods, and that we shouldn't put them down just because they aren't the highest goods. They are things to be grateful for. I'm grateful for clean water, paper towels, my new kitchen floor, the kitchen table I recently ordered, and potato chips. I'm grateful for Aunt Millie's brand bread, for the opportunity to get my hair permed at a price I can afford without straining my conscience, and for the steaks they sell at the local Meijer store. I'm grateful to the man who got container shipping up and running in the 1950's (I just looked him up recently but can't recall his name), because he is partly responsible for the affordable prices of so many good things. I just won't have any truck with putting all of this down as merely material.

But that's actually tied in with the point of my post: I cannot for the life of me see where forcing people to change their jobs in their company *just for the sake of it* advances any of this in itself. It seems to me like an entirely false value, like a self-deception based on the illusion of improvement when what's happening is really just meaningless, stressful, and unpleasant (for the employee) forced change. It isn't even advancing the cause of making better bread, or making bread available to more people, or making curtains more affordable, or anything with any value to it at all, however minor a type of value in the grand scheme of things. It just means nothing--the addition of made-up value based on the fact that people _think_ having employees move up constantly in the company in a never-ending game of musical chairs is a good thing in itself. It's just...creepy.

thebyronicman:

If one believes in intrinsic order, would not the idea of promoting the "changing of roles" within that order be a protest to the order itself, or quite possibly a protest to the fact that the order itself even exists?

If the marketing was done in-house, then you'd have a better chance of getting employees who not only wanted to "go into marketing," but who wanted to go into marketing item X, which they believed was a good product in itself. But now marketing is an industry of its own. It's just marketing. Selling. Selling is the skill. What you sell isn't the point at all, since a good salesman is the one who can sell ice cubes to eskimos. Bigger is better, isn't it? Why be the best bread-maker on the block when you can be the biggest bread-maker in the state? And for that you need specialized marketing, and so you hire it out. If you're not growing, your dying, right? So what you need is not merely skilled people, you need ambitious people. You need ambitious managers if you want to grow. And you cultivate ambition by building a competition culture within your company. You have to find out who is made for success and who is content with the status quo. I think this is what is meant by the phrase "develop your people." You have to get your small-to-medium size company into position to be bought out by a big one or to go public, since the real money is made in speculative trading. So you've got to do what you have to do to foster growth.

I am qualified to post on this topic by virtue of having seen the movie WALL STREET about 12 times. Greed is good.

If one believes in intrinsic order, would not the idea of promoting the "changing of roles" within that order be a protest to the order itself, or quite possibly a protest to the fact that the order itself even exists?

Are you saying that things have always been as they are, or that they simply must be as they are, or that they ought to be just as they are? Otherwise, I'm not sure I understand either of your posts. If I believe in an intrinsic order, I might also advance the notion that things have become intrinsically disordered, and that this fact is nothing relatively new, but that things are in many ways relatively worse than they used to be, and much worse than they could be.

You have to get your small-to-medium size company into position to be bought out by a big one or to go public, since the real money is made in speculative trading. So you've got to do what you have to do to foster growth.

I am qualified to post on this topic by virtue of having seen the movie WALL STREET about 12 times.

I don't even have that qualification. :-)

But a couple of points do come to mind: First, it seems just possible that one's company could grow in the old-fashioned way of having more and more people like what you do and buying it. In fact, I'm not sure what other ways there are for it to get actually bigger, though that is very likely a sign of my abysmal ignorance of the business world (seriously). Second, it doesn't see to me that in itself making people move in the company all the time makes the company bigger. People aren't going to like your bread any better or buy any more of it because you asked Joe what his "advancement plan" is and fired him when he said, "Why do I need an advancement plan? I'm darned good at materials procurement, I like my co-workers, I make a good wage, and I'd like to keep doing a good job for you here in this position for the next thirty years until I retire."

Now, suppose we do talk about a company's growing in quite a different sense--its being more valued as a company by prospective buyers of the company, aside from its actual profits. (I learned about this possibility from a real expert. I wouldn't have known anything about it otherwise, so don't get the idea that I really know what I'm talking about from my mentioning it.) And suppose that forcing all the Joe's of your company to have an advancement plan or get fired increases your company's potential buying-out value because, for God knows what reason, the people who might want to buy your company value it more if you can point to a highly upwardly mobile employee force. Well, I mean, even if that's true, that just seems to me irrational at what I might call the meta-capitalist level. The company isn't _really_ any more valuable in any concrete sense because the employees have been chivvied in this way _out_ of the jobs where they have experience and _into_ new roles every few years. In fact, that sounds darned inefficient to my totally inexperienced ears. If that's what buyers are looking for, then this is some sort of weird fetish for change at the level of buying and selling companies. It certainly doesn't in itself do any good to the world at the ordinary level of buying and selling bread.

(I think Jd means that the phenomenon I'm bemoaning sounds like another way for liberals to tear down order in the world--by forcing people to change their positions every few years.)

This sort of incessant pressure to be moving onward and upward, lest one fall back, presumably into the primordial ooze of contentment, is perverse, but it is, first, a reflection-in-microcosm of the macro-scale political economy of the age, which institutionalizes this restlessness and instability (man remains the microcosm, even when his political metaphysic is perverted and destructive); second, it is a reflection of the ethos and lifestyle of the new meritocracy, who are perpetually on the make, searching out the latest opportunity, and regarding each position as intrinsically transitory, a vector for social networking and CV and experience that can be parlayed into a bigger payday in the Next Big Thing (elites always create the culture).

The perversity is multilayered, each stratum disclosing its own obscenities, but two further things are noteworthy. First, this sort of mandated restlessness creates a sociological version of the disorder of the passions; it obliterates the teleological goods of the work itself, reducing the work to a mere instrumental good, the drudgery we must perform in order to earn the money with which to purchase the stuff that bestows an identity upon us. The identity we once acquired, in part, through our work. When the work itself is thus devalued, there isn't anything left save one's grosser passions and impulses, which are potentially limitless: onward and upward so that you can acquire more, more, more! Second, as befits a political economy bereft of a sense of the teleology of specific tasks, in which performing them competently might mean regarding them as more than temporary employment waystations, there is a "just because" arbitrariness to the process, a sense that it is done this way we want it this way; and we want it this way because it affords us the opportunity to acquire more (or at least some of us....), which we want because we want it. It's a bit like pagan metaphysics, in which creation and destruction are twinned; as the gods create, so they destroy, and as they destroy, so they create. Just because. It just is, world without end, because they, and we, simply want what they, and we, want, and won't think much about it. But it must be so, inasmuch as any 'order' predicated upon fathomless will and desire must be irrational.

This sort of incessant pressure to be moving onward and upward, lest one fall back, presumably into the primordial ooze of contentment, is perverse,...

People say that, but I don't think it is at all perverse within the internal logic of capitalism itself. I've argued before that PC tyranny makes workforces more liquid (more interchangeable and interoperable with other workforces), and therefore increases real returns to investors. Localized inefficiencies are more than counterbalanced by global liquidity, and in any case the fruitcakes and nuts who refuse to light their pinch of incense to the PC gods tend to weed themselves out anyway.

This relentless pressure for employees to advance is a similar phenomenon on the value (as opposed to liquidity) side; an observation which probably deserves its own post. But it is most emphatically not illusory or pointless. This is done because in the aggregate it increases real investment returns. I will explain in more detail in a forthcoming post.

Like Lydia I think material prosperity is good, and I think capitalism has produced a tremendous amount of it, for which I am also grateful. But the perversities are built in, intrinsic, not irrational impositions from outside.

I don't disagree with any of that at all. I intended my remarks to imply it. I do believe that this aspect of capitalism is more pronounced now than in earlier ages, though I'm dubious that it was ever entirely absent.

My only point is that if these perversities are intrinsic, then to that extent capitalism is perverse.

Since I'm not going to get to write a new reasonably well thought out post tonight, I'll briefly address this:

Now, suppose we do talk about a company's growing in quite a different sense--its being more valued as a company by prospective buyers of the company, aside from its actual [current] profits.

It should be noted that the shares of publicly traded companies undergo this buy-the-company sell-the-company phenomenon in thousands or in some cases millions of transactions every single day that Wall Street is open (and even when it is closed, for that matter, in after-hours trading). It isn't just a matter of the entire company being bought or sold in some rare large transaction. Every single time a share of stock in the company is traded, someone bought an interest in the company from someone else. Publicly traded companies are evaluated on the basis of whether they are growth companies (commanding high price-to-earnings ratios, or sometimes a high valuation even while losing money) or cash cows (commanding low price-to-earnings ratios) thousands of times every single day.

I thought of saying something about "buying stock in the company," Zippy, and I had had actually written the comment that way originally. Then I thought it sounded wrong, so I changed it. I quite take your point.

What's interesting here is this: If you told me, "People like blue cars best," I'd shrug my shoulders. Okay, so suppose they do. I wouldn't get up on my high horse about how this is unreasonable because blue cars don't run any better than grey ones.

But if I'm understanding what you're saying here correctly (and I may just not be, because this is all rather a foreign area to me), I do feel an inclination to get up on my high horse and say it's unreasonable for people to pay more for stock in companies (_or_ for whole companies) where the junior corporate workers are constantly being made to change their positions in the company "just because." For one thing, it seems to me plausible that that will actually make the "car" (the company) run _worse_ in terms of doing whatever it is that it does. It precludes the gaining of long-term experience, which seems to me would at least often be valuable for the company's actual object-level activity, whatever that is. It's bad for morale. It requires lots of unnecessary learning curves to be going on all the time. And so forth. And, since apparently it doesn't represent any actual increased productivity or being-better-at-the-work by the employee, it is a pointless and hence perverse sort of mental harassment of the employee. Therefore people _shouldn't_ pay more for stock in companies just because they impose this mandate. Or so it seems to me. It's like valuing a car better because it has the doors put on so that they can't open and you have to climb in through the windows or even because it has nasty words scrawled on the outside or something. It's not just a neutral preference.

Again, or so it seems to me. I'm unable at this metacapitalist level to take the same casual attitude I would take to trivial buyer preferences at the ordinary capitalist level. I don't mind if shoe buyers prefer pink shoes. So sell pink shoes, if you make shoes. I don't mind if house buyers like ranch-style houses instead of two-stories. And so forth. But this buyer preference in stock buyers I mind, since this is the kind of weirdly meaningless company behavior it is encouraging.

I'd perhaps feel a bit better if I could see some way in which such moving up _isn't_ a "just because" thing, some way in which it actually even is a reliable indicator of increased productivity of (or efficiency in producing, or even help in selling to customers) whatever goods the company provides. But it just seems to me obvious that it isn't, and so far, I haven't been corrected on that point.

I'd perhaps feel a bit better if I could see some way in which such moving up _isn't_ a "just because" thing, some way in which it actually even is a reliable indicator of increased productivity of (or efficiency in producing, or even help in selling to customers) whatever goods the company provides. But it just seems to me obvious that it isn't, and so far, I haven't been corrected on that point.

You can't think of a company as a 'fixed' entity like a car, or even like a cow (a "cash cow" company will get a low market value even if it has high profits, while a growth company will get high market value even with relatively low [current] profits). It is a false analogy. Every 'human resource' in the company is an asset, and assets that do not appreciate in value over time actually lose money for the company when measured against inflation; so they have to be gotten rid of. Just because they store some value 'in place' doesn't mean they are worth keeping around: storing value 'in place' is money in a mattress, worth far less than productive, growing capital. (The only time this ceases to be the case is when economic hard times hit. Then everyone wants to store value and doesn't care if it is growing as much as that it isn't losing value. Usually cash is the hedge against downturns though, since cash is far more flexible than less fungible human-units. PC tyranny helps with the fungibility of the human-units though).

An engineer who does the same job for forty years is a dead asset. We have to keep putting money into him, usually increasing amounts over time, and get some marginal benefit from his increased experience but no true upgrade in his productivity which translates to the bottom line. Rather he needs to be constantly thinking about how to obsolete himself, replace himself with machines and cheaper less skilled labor so he can move up to the next thing. Upward mobility pressure on employees is not pointless. Growth-oriented ambitious people will do well in an environment of continual upward pressure. People who enjoy what they do and want to do it for the rest of their careers and live like human beings may be made miserable by that situation, but they aren't the ones who will contribute large leaps of growth to the business anyway, so they don't matter. It is more profitable to get rid of them and staff with the other kind of people.

Step back for a second and think about the logic of earning profits from capital. If you invest your money and earn 10% simple non-compounding interest, your money doubles in ten years. At the end of that ten years you can invest it again and earn twice as much for the next ten years. The same asset now has to be twice as productive. This upward pressure applies to all investment assets, and employees are investment assets: it costs money to acquire them and keep them around just like anything else. It is true that many assets depreciate -- lose value over time. Obviously a company in the business of making money (which is reflected in share prices) wants all of its assets to depreciate in real terms as little as possible, and to appreciate in value if possible.

So an employee who produces X today had better produce 2X ten years from now, just to keep up. Why, you ask? Because they can. And if they can't, someone else will replace them. Every asset in a company has this upward bias against depreciation and in favor of appreciation.

The reason PC tyranny and continual upward pressure are features of modern capitalism is not because they are irrational liberal prejudices or mere tastes. The reason they are features of modern capitalism is because they are profitable, at least in the time frames that matter to modern capitalism. PC tyranny improves workforce liquidity; continual upward pressure improves workforce value. This is how capitalism-qua-capitalism ideally should work, and does work absent adult supervision. That this results in an inhuman nihilistic existence for the actual human beings involved isn't something that enters into the 'logic' of it.

That this results in an inhuman nihilistic existence for the actual human beings involved isn't something that enters into the 'logic' of it.


Echoes von Mises. Good reply.

Lydia and gang,

Most of this post and the comments seem strange to me, because I'm always thinking about capitalism and corporations from a broad market perspective. By this I mean one thing only -- that if corporations (or more properly the individuals who run the corporation) think a particular management strategy makes sense -- then "makes sense" in this context means only that they will be more profitable in the long-run than their competitors. So to use Lydia's example, if a corporation thinks that its employees must constantly be "changing one's role in the company", then they must think these changes will make the company better in some way at what it does. Who knows how this works, but these ideas are not hatched in some sort of nursery for bad ideas sure to make your company fail in five years. Remember that Lydia's example is based on one conversation she had with one individual -- do you really think there aren't companies out there who value the employee who wants to "learn their job well, to become experienced at it, and then to go on working at something they enjoy and do well"? My father's CPA firm has employees like this (my Dad's only requirement is that his employees keep current with tax regulations -- something that unfortunately does require a lot of lifetime learning!) and my brother who works at a very successful manufacturer making seals here in a suburb of Chicago (the company itself is owned by a British conglomerate, you can read about them here: http://www.johncrane.com/cgi-bin/jcaprod/pagepro_disp.w?clt=us&pagepro=history) claims that he knows many employees who have been with the company for years doing basically the same thing. So these are two examples to compare to Lydia's one example; but again, all this anecdotal evidence feels a little silly to me. The question is whether or not in the long-run a particular company will be successful at making money -- that is all capitalism requires and there is nothing perverse about this arrangement in my mind, but unlike Maximos, I don't worship at the altar of work as a "teleological good". To me, we all enjoy our work to varying degrees and I would bet my life on the notion that in the supposed good old days when we acquired our "identity...in part, through our work" the same was true. Romanticizing the family farmer or medieval guild worker is just plain silly when you actually read what their lives were like (nasty, brutish and short in many cases).

I do agree with Lydia on one point, however, and that is I think we should let capitalists be capitalists without much government interference. All the PC requirements imposed on corporations (and sometimes even small businesses) for the most part only muck up their ability to maximize profits. I do think there is a role for the government to enforce social equality through laws making it illegal to discriminate against a particular type of customer if that type is not relevant directly to the type of business you are running. So for example, if you run a diner that is supposed to be open to the public and then you refuse to serve a gay couple that walks in the door, I would say the government is right to force you to serve that couple. But if you want to open up a unisex hair salon for women, you should not be forced to then provide men haircuts. This idea is trickier when we look at particular examples, (e.g. a Bed and Breakfast that refuses to serve unmarried couples) but I support the broad notion of enforcing social equality through government laws, which is really a separate and I'm sure for the WWWTW gang, more contentious subject.

Until we meet again, onward and upward!

All the PC requirements imposed on corporations (and sometimes even small businesses) for the most part only muck up their ability to maximize profits.

I think that initially corporations reacted to impositions of PC as unwelcome outside interference. In my experience though they have now come to understand that PC tyranny is profitable, because it makes workforces more liquid: makes them easier to integrate with and exchange with other workforces without running into any 'cultural' clashes. In currency we standardize on the dollar to make exchange easy, and in corporate culture we standardize on PC to make exchange easy.

Zippy,

Perhaps, although I'm not totally convinced. At the end of the day, Microsoft needs good programmers and if all the really good programmers are Asian or white men, then they shouldn't be forced to go looking for that one exceptional woman or African-American programmer (those folks will naturally rise to the top anyway and seek out Microsoft on their own). A corporation wants a PRODUCTIVE workforce more than a liquid workforce. Corporations wouldn't be opening all those factories in Malayasia, Vietnam, or China if those workers didn't produce!

I just have to laugh at the fact that when it comes to the economy, Maximos and I are truly polar opposites. I just saw this comment from the Lincoln thread: "Neither an internal improver, on the Northern, Hamiltonian model, nor an economic globalizer be, say I." Since I just finished Brookhiser's delightful short biography of Hamilton and thought to myself Hamilton was right about all the big issues of the day (and I'm glad Washington listened to him), it was funny to read that Maximos comment. I came away from the book with a lot more admiration for Washington and Hamilton and a lot less for Jefferson and Madison. At least Jefferson abandoned his principals and bought the Louisiana Purchase! Adams and Franklin, of course, remain sui generis.

For the record, Jeff, I've always regarded Hamiliton as the most brilliant of the Founders. He was desirous, however, of replicating in America the Whig system from the Old Country, which was/is basically governance by moneyed elites through the medium of a representative government.

A corporation wants a PRODUCTIVE workforce more than a liquid workforce. Corporations wouldn't be opening all those factories in Malayasia, Vietnam, or China if those workers didn't produce!

Of course. But the Americans these foreigners replaced as producers weren't unproductive. It's simply more profitable to pay third-world wages for first-world goods.

A corporation wants a PRODUCTIVE workforce more than a liquid workforce.

We shouldn't think about it as an either/or proposition. We are not talking about crisp categories and laws of excluded middle, but biases and tendencies. PC tyranny makes the workforce more liquid; therefore there is an intentional bias in its favor against any other cultural 'options'. Does that make particular skills (and any implicit but real ties those skills have to ethnicity, culture, etc) completely irrelevant? Of course not. Do American corporations refuse to do business in the Yen, just because the international system of currencies is less liquid than a single global currency? Of course not. Business is a matter of pressures and tendencies, gradients and resistances. And as a pressure or tendency PC tyranny makes large-scale businesses more liquid, and thus more profitable. From the standpoint of the internal logic of capitalism it is better and more efficient to have uniform PC culture than a random mix of disparate cultures. PC tyranny is good for business.

Maximos,

You say "But the Americans these foreigners replaced as producers weren't unproductive. It's simply more profitable to pay third-world wages for first-world goods." I agree that if two workers are equally productive, then it is better to hire the cheaper worker. But this is true if and only if the two workers are truly equally productive and the costs of transportation are low enough to make it worthwhile to build a factory in Vietnam. America still makes all sorts of manufactuered goods because our workers remain MORE productive than many third world workers (do to their ability to use high-tech machinery including computers). I had a crazy grandfather who always told me I should become a tool & dye worker -- surprisingly, these folks still make a good living: http://www.careeroverview.com/tool-and-dye-maker-careers.html.

Finally, the fetish for manufactuered goods is not one I share. As long as our knowledge workers continue to churn out high-value products like Microsoft Office or the iPod, America will continue to do well in the global economy and our living standards will continue to rise. The trick is figuring out how to help those at the left-hand side of the IQ bell curve.

As for Hamilton, I think he had a more general suspicion of democratic mobs and a general appreciation for elites, whether moneyed or not. He believed very strongly in a mericratic system as it was through his own merit (and the generosity of others who recognized his merit) he was able to emmigrate to America and succeed at the law and journalism as well as he did.

But this is true if and only if the two workers are truly equally productive and the costs of transportation are low enough to make it worthwhile to build a factory in Vietnam.

Were it not for the relatively low costs of energy - a phase of history which may presently be grinding to a halt - as well as the various transportation-related tax incentives afforded such corporations, globalization would be infeasible.

As long as our knowledge workers continue to churn out high-value products like Microsoft Office or the iPod, America will continue to do well in the global economy and our living standards will continue to rise. The trick is figuring out how to help those at the left-hand side of the IQ bell curve.

In any ostensibly knowledge-based economy, increasing rewards will accrue to a cognitive elite, while the remainder of the population will gradually suffer the diminution of its living standards, under the pressures of globalization. There is no helping the left half of the bell curve, even much of the right half

, unless we permit them to exercise their skills in somewhat-sheltered markets. Meritocracy is every bit as nihilistic and inhuman as any other ism or ideology when unmonitored by more substantive considerations.

People who enjoy what they do and want to do it for the rest of their careers and live like human beings may be made miserable by that situation, but they aren't the ones who will contribute large leaps of growth to the business anyway, so they don't matter. It is more profitable to get rid of them and staff with the other kind of people.

That's assuming there are "the other kind of people". An equilibrium is presumably reached at some point in between the corporation's desire to get a 10% rates of return on people and the 0% rate of return much of the workforce may want. GE's Jack Welch was famous for his occasional firing of the bottom 10% of his workforce, but to avoid being in the bottom 10% is relatively easy. 90% succeed after all.

Robert Ringer made the case years ago that as education standards and work ethic decline over time, the value of a longterm employee can appear to go up simply by standing still.

I make a distinction between free markets and capitalism. I've no problem with the idea of free markets for the sale of products, but it seems that the free market sale of corporations (capitalism) produces unhealthy distortions.

In free markets (sans capitalism), the product is the focus.

In capitalism, profitability is the focus. In theory, capitalism seems sweet. The leverage a company gets from the ability to raise capital sounds like a great idea. But with the focus on capital, it seems that corporations engage in some fairly unhealthy things to increase profitability. The overall health of a company may not be the primary concern of an investor who is engaged in speculative trading. In a nutshell, I don't think greed (love of money) is such a great thing. Perhaps a more virtuous society would reduce the negative effects capitalism, I don't know.

It seems that there should be something more than the choices of communism, socialism and capitalism.

Roughly four decades ago a germ was incubated in the hothouse/laboratories that our colleges were then becoming. Absent a Latin name the germ could be called "transferability of managerial skills" and naturally, as germs must, found a home, in this case our elite [beg your pardon] business schools. The idea was that if you could run an airline you could run a brokerage, knowledge being secondary to the skills being dinned into your head by your underpaid, as always, but eminently wise professor.

Putting questions of efficacy aside for a moment, the genius behind this approach was the built in self flattery that perforce accrued in the minds of students anxious to
resuscitate a business culture suffocating in the absence of their textbook skills.

If I may, thus was born the transient class of manager, bags packed, resume updated and inflated endlessly, one eye always cast on brighter horizons. Such a class will hardly cast benign gazes on those slugs, or cogs, mired in their corporate ruts, happy even while forswearing the regular opportunity to switch employers and thus create and leave behind the debris of a once well run firm.

There are other and more profound cultural reasons for the narrowness, broad ignorance, and myopic tunnel vision prevalent in the corporate world. The grossness, the selfish man or person of the moment who lives in but one time frame is everywhere, not just in boardrooms.
But we all know that.

TSO -- very true, one has to work with the raw materials one has.

johnt, thanks. That's very informative. The whole policy I'm discussing (which I can get others at most to refer to as ham-handed) to me _reeks_, simply _reeks_ of some sort of pseudo-scientific self-delusion of exactly the sort I might expect to arise, not in business, but in business school. "Business" as an academic discipline has always seemed to me ersatz. And I have a theory that in education, nature abhors a vacuum. If you don't have legitimate academic content with which to fill what purports to be an academic class, nonsense will come in to fill the gap.

Zippy knows a heck of a lot more about this than I ever will and says I'm dead wrong. I'm trying to be convinced that this is really a matter of making your workers make your company do more, _really_ do more, at the object level, just making them do so in a rather unkind manner, but I'm not quite seeing it yet.

The whole policy I'm discussing (which I can get others at most to refer to as ham-handed) to me _reeks_, simply _reeks_ of some sort of pseudo-scientific self-delusion of exactly the sort I might expect to arise, not in business, but in business school. "Business" as an academic discipline has always seemed to me ersatz. And I have a theory that in education, nature abhors a vacuum. If you don't have legitimate academic content with which to fill what purports to be an academic class, nonsense will come in to fill the gap.

Actually, these things had been/is being taught in business school and, accordingly, realized in the business world.

Well, yes. My question was who first came up with this idea, and whether he was in a school or in the rest of the world. If the former, well, the idea might have a clout it does not deserve.

An analogy, for which I give my husband credit: A barber pole appears to be moving upward.

GE's profits under Jack Welch are not business school theory. They are real profits. Jack Welch isn't famous for coming up with theories, he is famous for producing massive actual investment returns. People care about his practices because they worked.

The reason I speak against treating PC tyranny and the accelerating treadmill as irrational abberations is not because I think they are good, but because thinking about them as irrational abberations is a misunderstanding; and whatever value judgements (or practical judgements, for that matter) we make should not be based on a misunderstanding of the actual situation.

I see what you're saying, Zippy. Causality can be pretty hard to pin down, though. I gather, if I understand correctly, that the profits are being attributed to his forcing everybody to change jobs every couple of years and his firing the bottom 10% automatically every few years. I also understand that this is thought of as trying to force people to work harder for you and constantly find ways of making the company bigger and better. But I'm just stuck in the situation of having, at the most, to take this on faith, because the policies themselves sound so dumb to me and the mechanisms suggested to connect them with really producing and selling more (in GE's case) electrical appliances, etc., do not sound to me like they really connect the policies with the dryers and washers. Making somebody change his job just isn't the same thing as making him be creative about making the company work better, making him invent new and better ways of doing things, making him produce more for the company. It would be a bit like in medicine being told that bleeding people is really good for the patient because it rids him of excess humors, and being presented with a list of patients who made spectacular recoveries after being bled. The recoveries are undeniable; the theory to explain them and the recommendation of the treatment remain open to doubt.

But I know a lot less about business than I do about medicine and the human body, so I just remain skeptical but puzzled.

...do not sound to me like they really connect the policies with the dryers and washers.

We really can't think of the GE story as washers and dryers. Welch created about $400 billion in shareholder wealth over about 15 years (that is about a thousand times what I did in five), and turned GE into the most valuable (measured by adding up the value of all the stock) company in the world.

Yes, causality can be hard to pin down. But there is not a single iota of doubt in my mind that the accelerating treadmill - including lateral cross-functional job fluidity - drives real investment returns.

today's subject; Management Consultants.
Well actually it's not today's subject, rather it's a subject more fitting for days of yore, when employee's were treated with a modicum of consideration. The idea of having to bring in an outside firm unfamiliar with your operations and service/products in order to make senior staff more efficient is, with a milliseconds thought, grotesque.

The efficiency experts, so they are mysteriously named, were or are the same beardless youth referred to in my previous post. But they served a valuable purpose, even while they pretended to understand what they were observing. They provided an excuse to corporations for releasing staff.

Management then could say that after enormous effort the consultants had recommended staff reduction and who were they, the senior management, to disagree?

Harsh as this may seem, and truth be told it wasn't always harsh, even in this the managers of bygone days evinced a certain reluctance, or shame, or even a hint of consideration.

But that was then. Today you may expect a sultan of business to inform you, or your entire department, that this is their last day and would you mind going quietly. After all, operations are being transferred to Idaho. Better Idaho than Bangladesh. Or maybe there's been a merger, or a corporate sale with an eye to asset stripping, er, acquisition and woe to the employee's of the acquiring company.

People are expenses, today they are expected to work harder, but that's secondary to managing your P&L, or operating statement. It's important but it's derivative.

The morals, and a humane concern is part of a constitution of the moral framework, I have referred to earlier.
Do we, can we, expect in a time and society approaching the borders of moral exhaustion and collapse expect better? And if so, how much? I do not mean to say there is no honor or consideration in business but slippage there is also. And why not, given the larger whole.

Just a note to say that I've appreciated Johnt's comments in this thread. His observations are consistent with what I have observed of business-school graduates and those who studied business as undergraduates: a cultivated impertinence and a dogmatic certitude that a bit of book-learning and a few theories are more relevant than 40 years' experience in an industry.

GE's profits under Jack Welch are not business school theory. They are real profits. Jack Welch isn't famous for coming up with theories, he is famous for producing massive actual investment returns. People care about his practices because they worked.

AMEN to that!

The following attests this fact:

"Welch in his restructuring process was met with unparalleled success, as well as numerous obstacles. In order to put them into perspective we must understand how the company was like before Welch started his structural revolution. When Welch become the CEO, GE’s performance was mediocre: they had an average earnings growth, low cash flows due to diverse capital expenditures, a core business that had reached a slow growth, productivity growth was a mere 1%-2% a year. Furthermore managers were content with a 7%-9% growth in margins, the company was too bureaucratic with decision process taking a long response time, the company was inwardly focused and there were no technical innovations being implemented.

Welch on the onset decided that he needed radical changes in the all value chain of the company by setting high standards and redesigning the business culture. The first step was to make each of their business Number 1 or 2 competitor in the industry; if such goal could not be reached then he got rid of the business. He used most of the capital to reinvest in productivity and quality and R&D. During this process he sold roughly 200 businesses however he spent $21 billion to acquire 370 businesses which strengthened their core competencies and turned the remaining business more agile, with higher quality and unparalleled performers.

The new process therefore shift gears and focused on being lean and agile. The weaknesses and threats to such process were: job insecurity due to massive lay offs i.e. in 1981 GE had 404000 workers, in 1994 they had close to half of that number ( 221000), by 2000 GE, mainly because of acquisitions had 313000 workers; a culture shock and management exhaustion as result of constant pressure to become the top performer in the respective industries. The statues quo of measuring performance based on internal results was no longer adequate, managers and line workers had to focus on adding value and look at the overall marketplace to evaluate their performance."


That is why the company keeps trimming the "fat" periodically (in addition to making the balance sheet look more attractive to Wall Street) and although we often thought we'd be in danger as a consequence since it seemed to us that we were cutting to the bone (as it were); we inevitably became more and more efficient more so by the very necessity to perform at higher levels of output with more limited resources. This often meant, unfortunately, more overtime and assuming greater responsibilities amongst other duties previously assumed by former FTEs.

I have often thought about this question: is capitalism immoral? The Catechism of the Catholic Church essentially claims that complete reliance on capitalism (that is a free market) is completely at odds with the Christian world-view. It makes sense: at the core of the capitalism of Adam Smith is the attitude that profit is the driving motive. With Profit as a motive, people will do whatever they can to get more of it. Most of the time, this results in an increase in the number, quality, and choice of goods and services to buy, which results in a net increase of the quality of life for humans. However, this also results in the use of humans as cogs in a machine designed to increase profit. It is the materialism of Smithian Capitalism that causes such problems and demotes humanity into mere tools. Consider the case of the Lowell textile factories in the 1830s: when the factories opened, the girls were paid decent wages, given on-site housing, educated and cultured (shown plays and operas and such). However, when faced with hardship, rather than sacrifice their profit in order to maintain the humane treatment of the employees, the owners cut wages and removed the perks of the jobs. Eventually, the jobs were given to unemployed immigrant women who required less than half the pay of the former employees.

The movie [u]Beautiful Mind[/u] presents the attitude of John Nash, Nobel Prize Winner for economics, who suggests something along the lines of competitive cooperation: understanding that people are intrinsically tied to my success, it is valuable for me to treat them as partners rather than as tools. Henry Ford understood this (despite the rest of his faults): he paid his factory workers a "living wage" with the understanding that his employees could then buy Ford cars (thus helping out the bottom line and their own job security).

Do I condemn capitalism? No. Capitalism is a economic theory based on the natural economic order of things, as outlined by Adam Smith. It is based on the attitudes presented in the OP (specialization in goods deemed necessary or desired by a populace), as well as the observable connections between supply, demand, and price. At its core, capitalism is about about helping our fellow man: providing the goods and services desired, or needed, to (seemingly) benefit mankind. Along those lines, it is about freedom: we are free to choose the best way to meet our needs (either sinful or upright). Capitalism is only as evil as we make it. If we condemn capitalism, we must first condemn ourselves. If we are to heal capitalism, we must first heal ourselves (through Reconcilliation).

Aaron,

Capitalism is a economic theory based on the natural economic order of things, as outlined by Adam Smith.

What you've mentioned above is kinda ironic given the fact that: 16th-century Catholic theologians in Spain -- and not Adam Smith two centuries later -- were the real founders of modern economics. It was they who set forth accurate theories of value, price, government intervention, monopoly, entrepreneurship, and money and banking -- while avoiding Smith's errors, such as his mistaken labor theory of value.

Refer to the book "How the Catholic Church Built Western Civilization" by Thomas Woods, Jr.

Also, you might want to refer to this article Three Catholic Cheers for Capitalism

I have no problem--or at least, I don't have the problem I'm discussing in this post--with pressuring people to perform better in the sense of "perform[ing] at higher levels of output with more limited resources." I have an instinctive desire to praise any attempt to make a decision process in a company less "bureaucratic." Although I do not fully understand this line, "...focus on adding value and look at the overall marketplace to evaluate their performance," it at least sounds like it has something to do with selling GE's product. And trimming "fat" in the sense of cutting out people without whom the company could get along, while it might or might not be moral in terms of loyalty to the employees involved, is at least not "postmodernly immoral" in the sense I was worrying about in the main post.

But all the things you've described, aristocles, in the quote do not involve this "everybody's gotta move up internally every two years or move out" policy in themselves. I suppose I could see where a massive restructuring and lots of layoffs might look something like that temporarily, but it sounds to me like you are talking about layoffs and such that had some sort of motives for them besides just "you haven't moved to a new job in the company in three years."

Lydia,

My apologies for the tangent. I was more so focussed on Zippy's previous statement on Welch's management style at GE.

For what it's worth, the policy you originally described in your post is not unlike ours in our company.

The general mindset is that it would be detrimental to both the company and to the individuals themselves if they remained at the position they're at for too long.

I believe Zippy had already unravelled, for the most part, the reasons why in his post that came out of this one.

In other words, there needs to be interalia a constant movement of the company to keep its workforce from the "fat, happy and stupid" status quo in order for the company to grow (and, coincidentally, that pertains to the individual as well).

Put it this way, most in-house labor attorneys and responsible business decision-makers frown upon an employee who's been at their position doing the same ole thing for more than 5 years.

Moreover, they're more likely to promote those who have been at several parts of the company working in a diverse number of positions for a given period of time (as opposed to short-timers, of course) since it shows growth on the part of that employee and, more often than not, that employee proves to have a greater organic understanding of the corporate framework of that company (at least, we hope so) and its businesses and, therefore, will be able to make greater contributions (or else if s/he does not provide such value, off with his/her head!).

In short, there is always the need for continuous improvement not just at the corporate level but, most certainly, on the individual level as well in order to realize the goals and objectives of the company from all points of the corporation since they tend to tie in together in the end.

Here's a few sentences from a Muramaki novel ("Dance, Dance, Dance") that I'll toss into the mix here:

That's when I proffered my words of wisdom, that waste is the highest virtue one can achieve in advanced capitalist society. The fact that Japan bought Phantom jets from America and wasted vast quantities of fuel on scrambles put an extra spin in the global economy, and that extra spin lifted capitalism to yet greater heights. If you put an end to all the waste, mass panic would ensue and the global economy would go haywire. Waste is the fuel of contradiction, and contradiction activates the economy, and an active economy creates more waste.

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