There are many reasons that the corporate model stinks. It stinks as a paradigm for running a society, but it also (maybe surprisingly to some) stinks just as a model for business. Today, let’s just look at one of the reasons that the smell is rising and getting worse.
It’s just not good enough, for a corporation, to make something, sell it, and make money. That would lead to a somewhat stable share price for the corporation’s stock, which would certainly lead to the CEO getting fired from his ridiculously overpaid job.
To make the stock’s price rise, changes have to take place and profits increased pretty much all the time. There are two basic ways to increase profits – increase revenues or cut costs. Let’s look at the cost-cutting side. On the surface, it might appear that cutting costs is a good thing. This would certainly line up with the mythology that we often swallow without question. After all, efficiency is good, right? But efficiency in business is measured only in dollars – not in resource use or (God forbid!) something like overall drain on a society.
As a result, corporations are always looking to substitute cheaper materials into their products and looking for cheaper labor, even if that means hiring unqualified workers at low wages in a developing country or taking away benefits from workers here at home. They also lobby the government to reduce regulation (or not to create it in the first place) so that they can freely dump waste into the air and water.
OK, so sue me… I’m digressing a little into social issues here. Let’s get back to materials and labor. Corporations’ own systems often drive them to produce shoddier and shoddier products, even while the bells and whistles keep piling up. How long do you expect a computer printer to last? Or the computer itself, for that matter? TVs, DVD players, car stereos, (frying pans even!) and thousands of other things are all just expected to stop working or fall apart after a couple of years. Why? Is technology getting worse?
Of course not. But workmanship is, and it’s because everything has to be made faster and cheaper. These days, you sell products by adding gizmos and through a mind-numbing barage of marketing. We have all been convinced that we won’t want our products in a year or two anyway, because by then a new model will come out that jumps up from the table and does a touchdown dance or something.
The effect is that the products of corporations constantly slide toward “just barely good enough.” Excellence as a manufacturing pursuit is limited to things sold for the express purpose of showing off, like a Rolex watch (some car manufacturers have also done some good work).
Coincidentally, the time when products were getting better across the board (1940’s, 50’s, and 60’s) was the time when the American worker was sharing in the prosperity enjoyed by corporations. The “race to the bottom” didn’t exist. Now it seems we just can’t wait to get there.
Tom Rossi is a commentator on politics and social issues. He is a Ph.D. student in International Sustainable Development, concentrating in natural resource and economic policy. Tom greatly enjoys a hearty debate, especially over a hearty pint of Guinness.
Tom also posts on thrustblog.blogspot.com