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The profit problem

December 18, 2010 1 comment


In the modern day, there is a great deal of public criticism in regard to “abuse” within the financial system. Toxic derivatives, CEO Bonuses, Madoff pyramid schemes, Goldman Sachs fraud, etc.. These near-constant occurrences are traditionally considered “anomalies” within the current order, tossed on to the front pages of our papers as though we should be surprised by these realities. What you don’t see on the cover of newspapers in regard to such “corruption” are those actions which are, in principle, equally as corrupt – but have been accepted as “normal” under the guises of “marketing strategy” and the “competitive nature” of the marketplace. These include various forms of dishonestly, such as the deliberate withholding of efficiency of a given good for the sake of reducing it’s “cost basis”, to the protectionist tendency of any company to preserve itself, regardless of social function or the advent of innovations which might inhibit a currently profitable practice.

It is important to point out that the motivations, and hence actions, of any human being within a society can only be a consequence of that society’s influence. Stealing, for example, is not a “genetic” trait. It is the product of a culture. Human motivation is complex and the study of human behavior should be at the forefront of criminology, with all relevant attributes of the social system considered as a possible cause. It is no revelation of human psychology, and hence sociology, that if a certain act does not offer a proper reward, then naturally there will be little motivation to carry out such an action. Likewise, if personal gain/reward can be attained through what society even condemns as an “unlawful action”, that distinction truly changes nothing if there is a level of desperation within a given person to require whatever that action may be.

Now, historically, the public assumes that certain actions are “moral” and others are not. Lying, for example, is considered “amoral”, both by common religious and legal codes. But what exactly are they referring to? What level of lying is “real”? The fact is, every single act of monetary gain is based on a form of dishonesty, only this dishonestly is simply re-termed as “competitive”. In the marketing world, everything is driven by “advantage”. The “competitive edge” is nothing more than a passive corruption where competing companies seek to “out do” each other in whatever way they can for the sake of market share. The very act of seeking differential advantage is to be engaged in the abuse of another person or group. Regardless, our social system at large chooses to collar this understanding and instead imposes punitive reactions to what the system defines as “socially offensive behavior” (or crime) while, in fact, ignoring the root causes of most of these so-called “criminal” actions – along with overlooking the other “accepted” forms of dishonesty present.

As an aside, the resolution of “offensive” human behavior can only come from an adjustment of the social system. There is no such thing as a “criminal”, as we are all products, and hence the victims, of the culture in which we are born into.

Now, before we begin, there is one more thing I would like to hesitantly point out. Criticism of the current financial order, and hence the profit problem, does not automatically mean the person presenting such a challenge is a “Marxist” or a “Communist”. Yes, the preceding statement is likely comical to those who are accustomed to thinking critically, but sadly, I need to point this out, for we can rest assured that a great number of people reading this article will simply try to find a way to reduce it to “Marxist Nonsense” – a thoughtless, capitalist catchphrase I have grown quite bored with. One of the greatest forms of imposed inhibition comes from creating associations that have been traditionally defined as “disproven”, “discredited” or the like. This is an age-old propaganda tactic to create uncomfortable, inconvenient and controversial associations in order to derail critical thought about specific “taboo” issues. Like a religion, the monetary system and the “theology” of the “free market”, is no exception. The high priests of our current economic model naturally come in the form of “monetary economists” which work in a field that is provably decoupled from any type of natural scientific order in regard to what actually sustains human life on this planet – which are natural resources and the scientific method. The only viable economic model that can possibly exist in any civilization must be explicitly based on resource management and preservation. The market system that currently exists in the world today is an utter failure in this regard and, in fact, works in a reverse capacity – perpetuating exploitation, pollution, and psychological neuroses.

Here are six problematic attributes of the market system:

1. A “Corruption Generating” Incentive System. It is often said that the competitive marketplace creates the incentive to act for the sake of social progress. While this is partially true, it also generates an equal if not more pronounced amount of corruption in the form of planned obsolescence, common crime, wars, large scale financial fraud, slave labor and many other issues. Well over 90% of the people in prisons are there because of monetary-related crime or non-violent drug offenses. The majority of legislation exists in the context of monetary-based crimes. Also, if one is to critically examine history and peer into the documented biographies/mentalities of the greatest scientists and inventors of our time, such a N. Tesla, A. Einstein, A. Bell, the Wright Brothers, and many others, it is found that they did not find their motivation in the prospect of monetary gain. The interest to make money must not be confused with the interest to create socially beneficial products. In a sustainable society, human motivation would be driven by contributions to society, and hence ‘themselves’ – not abstractly “making money”. The system would be designed to best facilitate the needs of the population directly. Yes, this is that dangerous phenomenon we hear so much about, with the image of blood engulfing the planet Earth, denoted as “socialistic”. God forbid society might actually be ‘designed’ to benefit the people which live inside of it. The fact of the matter is, the profit motive incentive, and hence our competition oriented system, is entirely “anti-society”. It is a pure corruption. The entire point of a social organization is to facilitate and perpetuate the well-being of its citizenry. In society today, the exact opposite is true. People are told they must “earn a living”, which perpetuates a form of superstition that only certain people deserve the “right of life” and others do not.

2. The need for infinite growth. Infinite economic growth is not only mathematically unsustainable, but it is ecologically detrimental. While people can debate the theoretical nature of “capitalism” and how it is “supposed” to function, one thing is historically clear. It perpetuates/requires constant growth and consumption. The entire basis of the Market System is not the intelligent management of our mostly finite resources on this planet, but rather the perpetual extraction and consumption of them for the sake of profit and “economic growth”. In order to keep people employed, people must constantly buy and consume, regardless of the state of affairs within the environment and often regardless of product utility and basic necessity. This is the absolute reverse of what a sustainable practice would require, which is the strategic preservation and efficient use of resources. In a sustainable society, a “steady-state” economy would be in order. This would mean that there is no pressure to consume, as labor is not linked into the feedback loop. While it is very difficult for most people today to imagine a world which does not impose the need for “labor for income”, it needs to be pointed out that the constant requirement for labor is nothing but detrimental in the modern day, especially in light of the growing efficiency of mechanization of labor across developed nations.

3. A disjunct, inefficient industrial complex which wastes tremendous amount of resources and energy. In the world today, with the advent of Globalization, it has become more profitable to import and export both labor and goods across the globe, than to produce locally. We import bananas from Ecuador to the US, bottled water from Fuji, Japan, while western companies will go to the 3rd world to exploit cheap labor, etc.. Likewise, the process of extraction, to component generation, to assembly, to distribution of a given good might cross through multiple countries for a single final product, simply due to labor and production costs / property costs. This is extreme inefficiency and only justifiable within the market system for the sake of “saving money”.

In a sustainable society, the focus would be maximum efficiency. The production process is not dispersed, but made as centralized and fluid as possible, with elements moving the very least amount, saving what would be tremendous amounts of energy and labor when compared to methods today. Food is grown locally whenever possible (which is most of the time given the flexibility of indoor agriculture technology today) while all extraction, production and distribution is logically organized to use as little labor/transport/space as possible, while producing the *best possible goods. (*see more below) In other words, the system is planned to maximize efficiently and minimize waste.

4. A propensity for “Establishments”. Very simply, established corporate/financial orders have a built in tendency to stop new, socially positive advents from coming to fruition, if there is a foreshadowed loss of market share, profit and hence power. It is important to consider the basic nature of a corporation and its inherent need for self-perpetuation. If a person starts a company, hires employees, creates a market and becomes profitable, what has thus been created, in part, is the means for survival for a group of people. Since each person in that group typically becomes dependent on their organization for income, a natural, protectionist propensity is created whereas anything that threatens the institution thus threatens the well-being of the group/individual. This is the fabric of a “competition” mindset. While people think of free market competition as a battle between two or more companies in a given industry, they often miss the other level – which is the competition against new advents which would make them outright obsolete. The best way to expand on this point is to simply give an example, such as the US Government and ‘Big Oil’ collusion to limit the expansion of the fully Electric Car (EV) in the US. This issue was well presented and sourced in the documentary called “Who Killed the Electric Car?”. The bottom line here is that the need to preserve an established order for the sake of the well-being of those on the payroll, leads to an inherent tendency to stifle progress. A new technology which can make a prior technology obsolete will be met with resistance unless there is a way for the market system to adsorb it in a slow fashion, allowing for a transition for the corporations ( i.e. the perpetuation of “Hybrid” cars in the US, as opposed to the fully electric ones which could exist now, in abundance.) There are also large amounts of evidence that the FDA has engaged in favoritism/collusion with pharmaceutical companies, to limit/stop the availability of advanced drugs which would void existing/profitable ones.

In a sustainable society, there is nothing to hold back developmental/implementation of anything, once it has been tested thoroughly. There could be no “Established Institutions”. New methods would immediately be implemented into society, with no monetary institution to thwart the change due to their self-preserving nature.

5. An inherent obsolescence which creates inferior products immediately due to the need to stay “competitive”. This little recognized attribute of production is another example of the waste which is created in the market system. It is bad enough that multiple companies constantly duplicate each others items in an attempt to make their variations more interesting for the sake of public consumption, but a more wasteful reality is that due to the competitive basis of the system, it is a mathematical certainty that every good produced is immediately inferior the moment it is created, due the need to cut the initial cost basis of production, and hence stay “competitive” against another company which is doing the same thing for the same reason. The old free market adage where producers “create the best possible goods at the lowest possible prices” is a needlessly wasteful reality and detrimentally misleading. It is impossible for a company to use the most efficient material or processes in the productions of anything, for it would be too expensive to maintain a competitive cost basis. They very simply cannot make the “strategically best”, physically – it is mathematically impossible. If they did, no one would buy it, for it would be unaffordable due the values inherent in the higher quality materials and methods. Remember: People buy what they can afford. Every person on this planet has a built in limit of affordability in the monetary system, so it generates a feedback loop of constant waste via inferior production, to meet inferior demand.

In a sustainable society, goods are created to last, with the expansion and updating of certain goods built directly into the design and recycling strategically accessed as well, limiting waste. You will notice the term “strategic best” was used in a statement above. This qualification means that goods are created with respect to state of affairs of the planetary resources and with the quality of materials used based on an equation taking into account all relevant attributes, rates of depletion, negative retro-actions and the like. In other words, we would not use TITANIUM for every single computer enclosure made, just because it might be the empirically “strongest” materials for the job. That practice could lead to depletion. Rather, there would be a gradient of material quality which would be assessed through analysis of, again, relevant attributes such as comparable resources, rates of natural obsolescence for a given item, statical usage in the community, etc. These properties and relationships could be assessed through programming, with the most strategically viable solution computed and output in real time.

6. The market system is driven, in part, by scarcity. The less there is of something, the more money that can be generated in the short term. This sets up a propensity for corporations to limit availability and hence deny production abundance. It is simply against the very nature of what drives demand to create abundance. The Kimberly Diamond Mines in Africa have been documented in the past to burn diamonds in order to keep prices high. Diamonds are rare resources which take billions of years to be created. This is nothing but problematic. The world we live in should be based on the interest to generate an abundance for the world’s people, along with strategic preservation and streamlined methods to enable that abundance. This is a central reason why, as of 2010, there are over a billion people starving on the planet. It has nothing to do with an inability to produce food, and everything having to do with an inherent need to create/preserve scarcity for the sake of short term profits. Abundance, Efficiency and Sustainability are, very simply, the enemies of profit. This also applies to the quality of goods. The idea of creating something that could last, say, a lifetime with little repair, is anathema to the market system, for it reduces consumption rates, which slows growth and creates systemic repercussions (like a loss of jobs, etc.). The scarcity attribute of the market system is nothing but detrimental for these reasons, not to mention that it doesn’t even serve the role of efficient resource preservation, which is often claimed. While supply and demand dictates that the less there is of something, the more it will be valued (and hence the increased value will limit consumption, reducing the possibility of “running out”), the incentive to create scarcity, coupled with the inherent short term reward which results from scarcity-driven-based prices, nullifies the idea that this enables strategic preservation. We will likely never “run out” of oil, in the current market system. Rather, the prices will become so high that no one can afford it, while those corporation who own the remaining oil, will make a great deal of money off of the scarcity, regardless of the long term social ramifications. In other words, remaining scare resources, existing in such high economic value that it limits their consumption, is not to be confused with preservation that is functional and strategic. True preservation, which must be strategic, can only come from the direct management of the resource in question in regard to the most efficient applications of the resource in industry itself; not arbitrary, surface price relationships, absent of rational allocation.

Peter Joseph