Businesses should try to be the best, not the biggest(joanwestenberg.medium.com)
joanwestenberg.medium.com
Businesses should try to be the best, not the biggest
https://joanwestenberg.medium.com/dont-grow-d7f87faeaf56
312 comments
Where I work is in the similar boat. Except we're 130 people and still private.
The company recently took a large cash infusion from a venture capital firm. The company said "yadayada you'll see small improvements how we work" - what that translates to is:
Our department is suffering. Badly. So are others. Complaints to upper management appear to go on deaf ears, or with ridiculous responses (like: well we saw one of you on your cellphone so you're not really busy).
And when we've asked for direct support for retaining customers (using their sales language), our team was told "just make less mistakes". And unsurprisingly, customers are getting more vocal about substandard service after the sale.
I'm looking elsewhere. Have been since this VC firm acquisition/funding was announced. (VC's are poison in every case I've seen.) But things are getting worse, with no end in sight - and I want out.
The company recently took a large cash infusion from a venture capital firm. The company said "yadayada you'll see small improvements how we work" - what that translates to is:
1. adding a new C level for sales
2. doubling the sales department
3. Metrics now for new customers is doubled
Our department is suffering. Badly. So are others. Complaints to upper management appear to go on deaf ears, or with ridiculous responses (like: well we saw one of you on your cellphone so you're not really busy).
And when we've asked for direct support for retaining customers (using their sales language), our team was told "just make less mistakes". And unsurprisingly, customers are getting more vocal about substandard service after the sale.
I'm looking elsewhere. Have been since this VC firm acquisition/funding was announced. (VC's are poison in every case I've seen.) But things are getting worse, with no end in sight - and I want out.
I worked at a company that started with a passionate founder who respected his users. Then he was ousted by the investors. Then the company was acquired by a giant corporation. It all went downhill from there. At some point I couldn't take it any more and quit. I couldn't bring myself to betray my users, I felt personally responsible for what I put out. Now, it's increasingly a money-making machine. Many sane people left. There are now KPIs tied to metrics. There are now managers and hierarchies. There are managers who have no clue what they're doing. There are now a/b tests, server-side settings, dark patterns, unwanted algorithms, omnipresent analytics, and user manipulation. It's effectively a B2B company now, and your attention is the product.
Even though I quit 5 years ago, it still pains me to see what has become of something I put my soul into, something I lived for, something I enjoyed using myself and recommended to everyone.
Even though I quit 5 years ago, it still pains me to see what has become of something I put my soul into, something I lived for, something I enjoyed using myself and recommended to everyone.
This is why I've been looking at how worker-owned cooperatives can be formed and work. The entry moats for tech businesses is low enough, and tech worker wealth is high enough that it really should be possible - or even common. One difficult part is that for the structure not to decay in the same way you're describing, you need truly shared ownership coupled with democratic decision making and that might be slower and less cleanly decisive than a typical hierarchy.
I’ve been thinking about the same. Starting a company with good intentions is all well and good but the founders won’t want to or be able to run it forever, and then it seems like your options are either selling to a big company or going public. I’m interested to know more about experiences and practicalities of handing ownership to the employees in a tech company.
As far as I can tell the most public examples are both larger and smaller than what I feel would end up where a tech coop company would end up. Larger because examples like Mondragon corp is just much larger and much more stable than a starting coop would be. Smaller because much coop organization and literature is oriented to something like a coffee shop or restaurant.
A direction might be putting together financing as a coop to purchase an ongoing company that a single founder is maybe ready to turn over or sell - lifestyle companies ready to turn over are maybe an interesting category for this kind of transition.
A direction might be putting together financing as a coop to purchase an ongoing company that a single founder is maybe ready to turn over or sell - lifestyle companies ready to turn over are maybe an interesting category for this kind of transition.
I would absolutely be interested in joining a worker cooperative in the tech industry.
There's a lot of those:
https://ioo.coop/directory/clouds/ https://dna.crisp.se/docs/index.html https://autonomic.zone/ https://vebit.xyz/ https://komun.org/?l=en
The deal with a lot of them is that they want to stay small, and others want to be local.
I'm involved in the early stage of a new remote-only co-op. If anyone in this thread is interested, my email is on my profile.
https://ioo.coop/directory/clouds/ https://dna.crisp.se/docs/index.html https://autonomic.zone/ https://vebit.xyz/ https://komun.org/?l=en
The deal with a lot of them is that they want to stay small, and others want to be local.
I'm involved in the early stage of a new remote-only co-op. If anyone in this thread is interested, my email is on my profile.
I had a SaaS vendor that followed that trajectory. The technical team was very dedicated but the president didn't even pretend to care about existing customers. The cost of leaving was assumed to be so high that he said out loud that they added features only to attract new business.
"Our department is suffering. Badly. So are others. Complaints to upper management appear to go on deaf ears, or with ridiculous responses (like: well we saw one of you on your cellphone so you're not really busy)."
"And when we've asked for direct support for retaining customers (using their sales language), our team was told "just make less mistakes"."
Wow, that's literally Dilbert-level of bad management. My condolences. Where I work (a large international corp.), the two or three levels of management above me are fairly reasonable and in touch with everyday reality. I guess I'm lucky.
"And when we've asked for direct support for retaining customers (using their sales language), our team was told "just make less mistakes"."
Wow, that's literally Dilbert-level of bad management. My condolences. Where I work (a large international corp.), the two or three levels of management above me are fairly reasonable and in touch with everyday reality. I guess I'm lucky.
I left a CTO role of a startup for similar reasons. We already had paying customers, and the company was doing OK, but there was always drive to do and more flashier things, rather than double down on helping our customers.
I remember the moment of epiphany when I realised that the company was not in fact working for customers, they were just a marketing sell to be able to attract more investors to grow the company even more.
While I was not naive even back then and knew that its mostly how the world works, I still felt the misalignment of incentives would generally mean I as a person would need to squeeze and disregard some people in order to accomplish the goals of others. Organizational incentives always win in the long run, however well meaning the people of it are. I'd much prefer to work for a client that gets its revenue directly from its customers, as that would mean helping them would help the company too.
I'm very happy that working in IT allows me to be a bit more picky in who I'm working for to enrich, and it was possible for me to leave, and be happy for it.
I remember the moment of epiphany when I realised that the company was not in fact working for customers, they were just a marketing sell to be able to attract more investors to grow the company even more.
While I was not naive even back then and knew that its mostly how the world works, I still felt the misalignment of incentives would generally mean I as a person would need to squeeze and disregard some people in order to accomplish the goals of others. Organizational incentives always win in the long run, however well meaning the people of it are. I'd much prefer to work for a client that gets its revenue directly from its customers, as that would mean helping them would help the company too.
I'm very happy that working in IT allows me to be a bit more picky in who I'm working for to enrich, and it was possible for me to leave, and be happy for it.
Shareholder value above all else is what is important. Unfortunately, VC money needs to be returned to their shareholders too. It's a ponzi scheme and somebodies next big idea will be the catalyst for additional money and so on and so on. It almost feels like startups are the get rich quick scheme of the moment.
> Shareholder value above all else is what is important
At Evilcorp, we are fanatically dedicated to the mission statement and core values articulated by our founder:
"To bring ever-increasing value to shareholders and upper-level managers by harming our customers, employees, and the communities and environment where we operate."
At Evilcorp, we are fanatically dedicated to the mission statement and core values articulated by our founder:
"To bring ever-increasing value to shareholders and upper-level managers by harming our customers, employees, and the communities and environment where we operate."
Bingo! I imagine this is what Facebook's mantra of 'Move Fast and Break Shit' has matured into over the years.
I know there was some grumbling recently about some folks on HN drubbing MBAs. But when I think of someone putting profit and servicing the shareholders over servicing the customers that's what I mean when I say MBA disease. IMHO redirecting the company's resources to favor sales vs service in order to fuel growth and pay shareholders will eventually result in a loss of customers, perhaps irreparably damaging the business as a result.
What you are experiencing is growthism, and it is directly tied to local incentives.
CEOs for publicly traded companies have only one goal in mind: make massive bonuses. The path to get to massive bonuses is to pump up the stock, which requires growth, or the appearance of growth.
CEOs for publicly traded companies have only one goal in mind: make massive bonuses. The path to get to massive bonuses is to pump up the stock, which requires growth, or the appearance of growth.
And to get there, they (instead of providing anything of actual value justifying the growth) play fast and lose with quality, reputation or respect for employees.
It's an overall loss for society and something that I notice has seeped especially into the gaming industry.
It's an overall loss for society and something that I notice has seeped especially into the gaming industry.
I wrote about this phenomenon at https://gavinhoward.com/2020/01/corporations-create-perverse... . I think it's a real thing.
"there IS no answer"
Sure there is.
'In the begging' it was was invariably led by some kind of founder/owners, and the values of the company were intimately related to their values. For better or worse.
A public or widely held company not led by founders tends to have a more political class of executives who are more likely to report to the board on the basis of 'making them money'. Maybe not, but probably a little more so than otherwise. Every situation is different.
So the answer to 'why' is simple: the board probably makes the expectation of the CEO, who requires that of the team, one way or another, and that trickles down into various plans of various kinds. It's really just that.
Sure there is.
'In the begging' it was was invariably led by some kind of founder/owners, and the values of the company were intimately related to their values. For better or worse.
A public or widely held company not led by founders tends to have a more political class of executives who are more likely to report to the board on the basis of 'making them money'. Maybe not, but probably a little more so than otherwise. Every situation is different.
So the answer to 'why' is simple: the board probably makes the expectation of the CEO, who requires that of the team, one way or another, and that trickles down into various plans of various kinds. It's really just that.
Publicly traded stocks will inevitably end up in the hands of whoever is more optimistic about a company's potential than everybody else with money to buy. It's like gravity.
If you had a company that could somehow produce a million dollars every time a magic button is pressed, you could get immensely rich. But you could get even richer by selling that company if you found someone sufficiently convinced that they'd be able to scale that magic to two buttons. If geese that lay golden eggs were real, stock exchanges would be their dedicated killing zone.
If you had a company that could somehow produce a million dollars every time a magic button is pressed, you could get immensely rich. But you could get even richer by selling that company if you found someone sufficiently convinced that they'd be able to scale that magic to two buttons. If geese that lay golden eggs were real, stock exchanges would be their dedicated killing zone.
Then your management aren't very good.
The reason is that every business, or system gets worse if you don't improve it. Call it entropy in physics.
If you don't try and improve, pay attention to the market, adapt, move, change, or at least maintain or build a moat, competition will inevitably want to have what you've got. It's why capitalism works. If you get old, and don't satisfy your customers, someone else will.
Now, if you plan on keeping your job for 1-2 years, then you don't really care. Fine, that's your point of view. But management and shareholders certainly would like the business to be around for as long as possible. And for that you always need to develop and change.
And this is not about some crazy capitalist mentality that destroys the planet. Nature is the same. Inevitably the tribe leading lion will get challenged and taken down. It's just what happens. Unless you at least try and work against it.
The reason is that every business, or system gets worse if you don't improve it. Call it entropy in physics.
If you don't try and improve, pay attention to the market, adapt, move, change, or at least maintain or build a moat, competition will inevitably want to have what you've got. It's why capitalism works. If you get old, and don't satisfy your customers, someone else will.
Now, if you plan on keeping your job for 1-2 years, then you don't really care. Fine, that's your point of view. But management and shareholders certainly would like the business to be around for as long as possible. And for that you always need to develop and change.
And this is not about some crazy capitalist mentality that destroys the planet. Nature is the same. Inevitably the tribe leading lion will get challenged and taken down. It's just what happens. Unless you at least try and work against it.
I have the impression that businesses that are not publicly traded are in a better position to plan for the long run instead of having to cater to the quartely whims of shareholders. As an example, see the family-owned businesses in Germany which are often doing quite well over generations in competitive international markets, despite only growing slowly or not at all. Innovation is the key factor to survival, but why should innovation be linked to growth? Why is "growth" even an indicator for success, isn't a big organization almost by definition much less efficient than a small one?
> But management and shareholders certainly would like the business to be around for as long as possible. And for that you always need to develop and change.
I agree with everything you said except this part. Maybe I'm jaded, everything I've read and seen on the market and job shows investors/management only really care about the next quarter, maybe a year the most. Only a few companies who are capable of looking at and committing to multi-year plans.
I agree with everything you said except this part. Maybe I'm jaded, everything I've read and seen on the market and job shows investors/management only really care about the next quarter, maybe a year the most. Only a few companies who are capable of looking at and committing to multi-year plans.
Be careful drawing conclusions from what you read on business. There are significant selection biases about what stories you hear. Anecdotally - whenever I have read about a company I work for (F500), the outside perspective gets a lot of very basic facts wrong. Often they take small incidences and turn them into broad generalizations. Sometimes their sources have agendas. Etc.
This is one case where it's important to tag information that comes in. The spectrum extremes, IMO, range from "did I observe this fact" to "is this someone else's conclusion". The more from the latter you have, the less faith you should put in your own conclusions drawn from it.
This is one case where it's important to tag information that comes in. The spectrum extremes, IMO, range from "did I observe this fact" to "is this someone else's conclusion". The more from the latter you have, the less faith you should put in your own conclusions drawn from it.
Agree. I don't pretend to know everything that's going on within a business. However, long term strategy/direction of a company is fairly easily observable.
"If you don't try and improve, pay attention to the market, adapt, move, change, or at least maintain or build a moat, competition will inevitably want to have what you've got. It's why capitalism works. If you get old, and don't satisfy your customers, someone else will."
So, the Traditional Sake corporation example aside, I agree - you do need to have some improvement over time.
This is not what public stockholders demand though. Public stockholders demand that intangibles be sacrificed in an attempt to improve tangibles. Sacrifice quality of service in an attempt to increase the profit margin. Sacrifice the lifetime of the product in an attempt to lower the RRP.
This isn't improving the product, it's just moving things around. At best it's shifting market demographic in hope that the new demographic is more profitable, at worst it's burning your customers for a short-term windfall.
The core issue here is that there are limits to what you can improve in a given timeframe, and if you don't respect those limits then you end up just making things worse. Management often just tells themselves otherwise and keeps pushing until they've already killed the golden goose. At that point, the lesson they've learnt is irrelevant - it's too late, customers are already leaving and their reputation is irreparably tarnished.
So, the Traditional Sake corporation example aside, I agree - you do need to have some improvement over time.
This is not what public stockholders demand though. Public stockholders demand that intangibles be sacrificed in an attempt to improve tangibles. Sacrifice quality of service in an attempt to increase the profit margin. Sacrifice the lifetime of the product in an attempt to lower the RRP.
This isn't improving the product, it's just moving things around. At best it's shifting market demographic in hope that the new demographic is more profitable, at worst it's burning your customers for a short-term windfall.
The core issue here is that there are limits to what you can improve in a given timeframe, and if you don't respect those limits then you end up just making things worse. Management often just tells themselves otherwise and keeps pushing until they've already killed the golden goose. At that point, the lesson they've learnt is irrelevant - it's too late, customers are already leaving and their reputation is irreparably tarnished.
This is a very simplistic take. Capitalism as it is practiced in its various forms across the world, has thousands of levers that are pushed in certain direction by laws and regulations, and by norms and cultural philosophy. If you change the latter, you change the values of the levers which changes how much businesses have to _compete_ and _grow_ in order to remain _profitable_ in the long term. So yes, the current climate is our choice, and we can make different choices if we decide to.
> If you don't try and improve, pay attention to the market, adapt, move, change, or at least maintain or build a moat, competition will inevitably want to have what you've got. It's why capitalism works. If you get old, and don't satisfy your customers, someone else will.
only in a competitive market. There are markets which don't behave freely, and some would call those market failures. Health insurance, and healthcare, for one, is like that.
only in a competitive market. There are markets which don't behave freely, and some would call those market failures. Health insurance, and healthcare, for one, is like that.
Fair point. Of course a lot of those industries have sown up regulation and spend enough of lobbying to not have to do shit. Unfortunately.
"The list must grow, the spice must flow"
"I want you to squeeze and squeeze and squeeze! Give me spice! Drive them. Drive them into utter submission! Do not show the slightest pity or mercy!"
I agree, the growth at all costs mentality has the ring of the frothing House of Harkonnen to it.
I agree, the growth at all costs mentality has the ring of the frothing House of Harkonnen to it.
And even the Baron Harkonnen himself didn't think that was a good way to govern. His plan was to let that run for a while, then have his favorite younger nephew take over, dial it back, and gain the people's support because he would be less bad by comparison.
I think I finally found out why this is often the case - took awhile to figure it out, and many people may intuitively know this without being able to articulate why.
There is a lifecycle in industries and within companies. The more the industry you are in is exposed to competition, the more obvious and unavoidable it is. Some, such as a Dr's office, or a field/industry with geo-local niches (a plumber, or a well drilling outfit, or a realtor), the less obvious it is/the more you can sometimes avoid it. The more you're part of the global marketplace (tech, manufacturing - especially mass manufacturing, food, etc.) the more obvious and unavoidable it is. The way this typically works is:
1) A new field is discovered, a major disruptive shift happens in a marketplace, or a new niche opens up. Everyone jumps on the new openings - new players often have an advantage as they can move quicker and are less 'stuck' in old ways. They also tend to be small. They also tend to be pretty inefficient, but the opportunity is rich enough, it usually has plenty of room - most companies that aren't complete disasters will thrive. Even those that ARE complete disasters can survive.
2) Companies that start iterating on more efficient ways to produce value (more value for less cost) get a lot of extra capital in cashflow, or those that seem most promising are able to leverage outside capital (investment) to increase in scale. This means the 'machine' consuming customer needs is able to take more input, produce more output at a given company. This machinery is expensive to operate, but a key part - produces economies of scale. This rarely is at any one company, it is often spread across many companies, with various degrees of success/copying. With any luck, this expands the market (more customers, more money coming in). This often results in shifts of customers, as those who have free capital have invested in serving the customer needs better or are able to provide lower prices due to their improved economies of scale. This is why folks get so worked up about market share.It is also why Monopolies are so dangerous.
3) This iterates for awhile, until the market stops growing much. You now have a set of companies with various degrees of market share, ability to execute, economies of scale, debt load, etc. Usually 1-2 that are REALLY good, and others that give them a bit of a leg up in a particular niche.
4) Now it gets hard - market stops growing, or even worse shrinks. You have a set of companies with great economies of scale who can cut prices (easy for them, hard for others without that scale). These companies are probably also pretty decent at execution as they have a lot of practice. They also probably have a lot of capital (due to excess from their operations - 10% of a billion is a lot more money than 10% of 1 million, even assuming similar margins), or have experience raising capital. You also have a bunch of smaller companies with none of those things, or that tried to get there, couldn't pull it off, and are loaded with debt (even worse).
Guess who loses? It is rarely the big co.
Long term, it's called a cycle because of the shifts in markets/opportunities. They make the parts that were the big corp competitive advantage in the old environment - all the CapEx sunk cost + operation tuning at the big co - into more of a harm than a help in adjusting to the new reality. Also, no one wants to kill the 'goose that laid the golden egg', so there is intense organizational pressure to even attempt a pivot. Kodak and their huge miss re: digital photos is a great example of that.
This also comes out a lot in things like forest growth, crop development, etc. If you're not racing to be the tallest tree around, or the tallest ear of corn - you're going to get starved out by those who will. Unless you're lucky enough to get a niche anyway they won't try to go after.
Intentionally setting a 'be the best, don't try to grow too fast' business strategy is not, IMO, a good idea to do blindly, any more than settling into your current job and not seeking to learn or grow career wise or eventually find something better. If you're 'lucky' you may end up stagnant and complaining about all the people who passed you by.
At the same time, job hopping between FAANG's every month will quickly run out of steam and leave you with nothing you've really accomplished, and impossible to meet deliverables (like a company that has overpromised/oversold itself without figuring out things like execution, sustainable company culture, etc.). It's a balance.
There is a lifecycle in industries and within companies. The more the industry you are in is exposed to competition, the more obvious and unavoidable it is. Some, such as a Dr's office, or a field/industry with geo-local niches (a plumber, or a well drilling outfit, or a realtor), the less obvious it is/the more you can sometimes avoid it. The more you're part of the global marketplace (tech, manufacturing - especially mass manufacturing, food, etc.) the more obvious and unavoidable it is. The way this typically works is:
1) A new field is discovered, a major disruptive shift happens in a marketplace, or a new niche opens up. Everyone jumps on the new openings - new players often have an advantage as they can move quicker and are less 'stuck' in old ways. They also tend to be small. They also tend to be pretty inefficient, but the opportunity is rich enough, it usually has plenty of room - most companies that aren't complete disasters will thrive. Even those that ARE complete disasters can survive.
2) Companies that start iterating on more efficient ways to produce value (more value for less cost) get a lot of extra capital in cashflow, or those that seem most promising are able to leverage outside capital (investment) to increase in scale. This means the 'machine' consuming customer needs is able to take more input, produce more output at a given company. This machinery is expensive to operate, but a key part - produces economies of scale. This rarely is at any one company, it is often spread across many companies, with various degrees of success/copying. With any luck, this expands the market (more customers, more money coming in). This often results in shifts of customers, as those who have free capital have invested in serving the customer needs better or are able to provide lower prices due to their improved economies of scale. This is why folks get so worked up about market share.It is also why Monopolies are so dangerous.
3) This iterates for awhile, until the market stops growing much. You now have a set of companies with various degrees of market share, ability to execute, economies of scale, debt load, etc. Usually 1-2 that are REALLY good, and others that give them a bit of a leg up in a particular niche.
4) Now it gets hard - market stops growing, or even worse shrinks. You have a set of companies with great economies of scale who can cut prices (easy for them, hard for others without that scale). These companies are probably also pretty decent at execution as they have a lot of practice. They also probably have a lot of capital (due to excess from their operations - 10% of a billion is a lot more money than 10% of 1 million, even assuming similar margins), or have experience raising capital. You also have a bunch of smaller companies with none of those things, or that tried to get there, couldn't pull it off, and are loaded with debt (even worse).
Guess who loses? It is rarely the big co.
Long term, it's called a cycle because of the shifts in markets/opportunities. They make the parts that were the big corp competitive advantage in the old environment - all the CapEx sunk cost + operation tuning at the big co - into more of a harm than a help in adjusting to the new reality. Also, no one wants to kill the 'goose that laid the golden egg', so there is intense organizational pressure to even attempt a pivot. Kodak and their huge miss re: digital photos is a great example of that.
This also comes out a lot in things like forest growth, crop development, etc. If you're not racing to be the tallest tree around, or the tallest ear of corn - you're going to get starved out by those who will. Unless you're lucky enough to get a niche anyway they won't try to go after.
Intentionally setting a 'be the best, don't try to grow too fast' business strategy is not, IMO, a good idea to do blindly, any more than settling into your current job and not seeking to learn or grow career wise or eventually find something better. If you're 'lucky' you may end up stagnant and complaining about all the people who passed you by.
At the same time, job hopping between FAANG's every month will quickly run out of steam and leave you with nothing you've really accomplished, and impossible to meet deliverables (like a company that has overpromised/oversold itself without figuring out things like execution, sustainable company culture, etc.). It's a balance.
[deleted]
There is a growing body of thought that capitalism and, more specifically, continued growth, is unsustainable. A lot of the literature focuses around the environment [1], but we should also think about businesses that perform a useful community service or product to their community - must they always grow? If not, must their competitor?
[1] https://www.tandfonline.com/doi/pdf/10.1558/jocr.v5i2.197
[1] https://www.tandfonline.com/doi/pdf/10.1558/jocr.v5i2.197
"We have a finite environment—the planet. Anyone who thinks that you can have infinite growth in a finite environment is either a madman or an economist." David Attenborough
That quote always bugged me because it disregards that our economic growth is not really tethered to natural resources. Sure a company like Coca-Cola can only grow so much before it effectively covers the entire planet, but they can still reduce costs to improve their profit margins and displace existing drinks from other companies with a new product.
The cloud as a business is mostly about building products that address ever changing needs and making the clients more dependent on said products. There are no environmental restrictions here you could grow for as long as user needs grow.
The cloud as a business is mostly about building products that address ever changing needs and making the clients more dependent on said products. There are no environmental restrictions here you could grow for as long as user needs grow.
> There are no environmental restrictions here you could grow for as long as user needs grow.
All this demand for software and ever changing needs, and more cloud computing environment is coming from somewhere. You want to know where?
Merely 2 decades ago, the average household had one computer in the house, and it was typically a desktop, and the adults and teenagers had had cellphones.
Now, almost everyone that is middle class or above has multiple computing devices in their possession at all times. Every member of the family has their own laptop or tablet and cellphone, probably even a smartwatch or two, even kids as young as 4. There's probably multiple TV screens and gaming consoles as well. Devices that are designed to be replaced in a mere 2-3 years through planned obsolesce. We have more cheap shit than ever before and it gets thrown in the trash at an ever increasing rate. There are screens literally everywhere now: My gas station pump, the wine and beer isle at my grocery store, at the checkout line, walking out into the parking lot, on my wrist, in my pocket, at my coffee shop, in my restaurants.
That results in more companies needing to have digital presences, more apps, more games, more features, more data collection and spyware tracking you around the internet, more ML models being trained and draining energy, more crypto-mining and 4,000 watt PSU's coming online, so on and so forth.
All this stuff requires an ever increasing amount of rare earth materials and burned fossil fuels to produce and operate.
All this demand for software and ever changing needs, and more cloud computing environment is coming from somewhere. You want to know where?
Merely 2 decades ago, the average household had one computer in the house, and it was typically a desktop, and the adults and teenagers had had cellphones.
Now, almost everyone that is middle class or above has multiple computing devices in their possession at all times. Every member of the family has their own laptop or tablet and cellphone, probably even a smartwatch or two, even kids as young as 4. There's probably multiple TV screens and gaming consoles as well. Devices that are designed to be replaced in a mere 2-3 years through planned obsolesce. We have more cheap shit than ever before and it gets thrown in the trash at an ever increasing rate. There are screens literally everywhere now: My gas station pump, the wine and beer isle at my grocery store, at the checkout line, walking out into the parking lot, on my wrist, in my pocket, at my coffee shop, in my restaurants.
That results in more companies needing to have digital presences, more apps, more games, more features, more data collection and spyware tracking you around the internet, more ML models being trained and draining energy, more crypto-mining and 4,000 watt PSU's coming online, so on and so forth.
All this stuff requires an ever increasing amount of rare earth materials and burned fossil fuels to produce and operate.
That kind of economic growth requires more resources, but not all does. When Google tweaks a caching algorithm to enable 10% more with the same hardware/energy input, that contributes to economic growth with less resources. Same as if we discovered a new steel smelting technique that uses 10% less coking coal for the same quality steel.
> When Google tweaks a caching algorithm to enable 10% more with the same hardware/energy input, that contributes to economic growth with less resources.
Sure, but that also increases Google's net profit and allows its users to make more queries. That profit is then maybe invested to penetrate new market segments like transportation or hardware production, or is distributed among CEOs who buy bigger houses and more cars.
In essence, the efficiency gains of improving the algorithm are lost because of the free-flowing streams of capital.
Sure, but that also increases Google's net profit and allows its users to make more queries. That profit is then maybe invested to penetrate new market segments like transportation or hardware production, or is distributed among CEOs who buy bigger houses and more cars.
In essence, the efficiency gains of improving the algorithm are lost because of the free-flowing streams of capital.
I don't think it allows its users to make more queries. When is the last time you've done a google search and have seen "too many queries, try again later"?
The efficiency gains of improving the algorithm ARE free-flowing streams of capital.
The efficiency gains of improving the algorithm ARE free-flowing streams of capital.
But when was the last time you went on a site like Reddit just to be greeted with a "Our CDN is overloaded" page or similar?
Fiat-denominated economic growth may not be tethered to natural resources, but real economic growth is.
We may well develop technologies that allow us to generate more with less, but there are limits to this.
Yes, Coca-cola may invent a new soda, but that soda will always have some material inputs.
Cloud computing most definitely does not escape this - it relies on massive networks of physical infrastructure that require huge investments of natural resources and human capital to build.
Even the monetization of things that appear at first blush to avoid this issue such as the monetization of human attention do not do so in reality as our mental faculties themselves rely on the continued sustenance of our physical bodies.
We may well develop technologies that allow us to generate more with less, but there are limits to this.
Yes, Coca-cola may invent a new soda, but that soda will always have some material inputs.
Cloud computing most definitely does not escape this - it relies on massive networks of physical infrastructure that require huge investments of natural resources and human capital to build.
Even the monetization of things that appear at first blush to avoid this issue such as the monetization of human attention do not do so in reality as our mental faculties themselves rely on the continued sustenance of our physical bodies.
It's a never-ending vicious cycle between the strive for more energy- and resource- efficient production of goods, and the dispersion of these efficiency gains through increased consumption and market expansion, both geographically and through new classes of products/services. The "airy" fiat currency together with the impersonal profit-seeking multinational corporations create this fairy-tale illusion of infinite growth, which may look efficient from the perspective of a single company, but isn't when viewed holistically on a global level.
> There are no environmental restrictions here you could grow for as long as user needs grow.
Computers need matter, energy, and space.
Computers need matter, energy, and space.
“There are no environmental restrictions here.”
Cloud is still computing. Computers with a finite life that need to be produced, from natural resources.
Computing that needs to be powered and cooled.
Those have environmental impacts and very much align with OPs quote.
Cloud is still computing. Computers with a finite life that need to be produced, from natural resources.
Computing that needs to be powered and cooled.
Those have environmental impacts and very much align with OPs quote.
This is a wildly out of touch view of how economic growth works.
First off, where do you think "the cloud" comes from? Even if we assume 100% renewable grid (which is currently impossible) the computers that run the cloud require an enormous amount raw materials and labor to manufacture.
But far more importantly, where does your clients capital come from?
The greatest accounting trick capitalism every pulled was to get people to think of individual parts of a system rather then the entire thing.
There's real magical thinking involved to think that capital just appears in these clients at now real cost. At some point labor and resource exploitation is required to create economic value which is then passed around throughout the system. Just because you can skim off some surplus value selling some SaaS product in the cloud doesn't mean that the value you are paid with doesn't come from the exploitation of resources.
Finally, you can easily dispel this myth by looking at the current state of our global environment. Show me any period of economic growth that isn't also tied to increased energy and resource usage.
First off, where do you think "the cloud" comes from? Even if we assume 100% renewable grid (which is currently impossible) the computers that run the cloud require an enormous amount raw materials and labor to manufacture.
But far more importantly, where does your clients capital come from?
The greatest accounting trick capitalism every pulled was to get people to think of individual parts of a system rather then the entire thing.
There's real magical thinking involved to think that capital just appears in these clients at now real cost. At some point labor and resource exploitation is required to create economic value which is then passed around throughout the system. Just because you can skim off some surplus value selling some SaaS product in the cloud doesn't mean that the value you are paid with doesn't come from the exploitation of resources.
Finally, you can easily dispel this myth by looking at the current state of our global environment. Show me any period of economic growth that isn't also tied to increased energy and resource usage.
Without farming you and everybody else would be naked and starving to death. I can guarantee you that no app will save you then.
>That quote always bugged me because it disregards that our economic growth is not really tethered to natural resources.
I really think the opposite is true, what makes you think that?
I really think the opposite is true, what makes you think that?
The only growth that could be tied to non-natural resources is something like the combinatoric possibilities between a set of options.
Everything else links back to matter. Even my "internet points" on HN are tied back to the food I had to eat to type in that sweet sweet snark.
This notion that economics isn't ultimately a resource scheduling theory that falls out of a base set of behaviors (commerce). If we removed choice, we get operations research.
Capitalism is akin to wanting to cook a hotdog on a campfire and burning down an entire house to do it.
Everything else links back to matter. Even my "internet points" on HN are tied back to the food I had to eat to type in that sweet sweet snark.
This notion that economics isn't ultimately a resource scheduling theory that falls out of a base set of behaviors (commerce). If we removed choice, we get operations research.
Capitalism is akin to wanting to cook a hotdog on a campfire and burning down an entire house to do it.
In a way, sure. The reality is they are mostly a consolidation play.
Lots and lots of apps are going to be rolled up into forms solutions, for example.
Lots and lots of apps are going to be rolled up into forms solutions, for example.
One thing this argument misses is that much of economic growth comes not from increasing consumption, but from making that consumption more efficient.
But the result is more consumption, because you spend the money saved on inefficiency on more consumption. If coca cola produces 1m bottles of coke in 1 year and finds a way to produce that many in half a year, they're not going to produce 1m bottles a year anymore, they're going to produce 2m bottles a year.
Probably not, no. They're already selling as many as they can at the current price -- there's no shortage of Coke out there. They might lower the price and thereby sell more (though they're unlikely to sell twice as much without more than halving the price), but that's not necessarily a bad thing; it means people are having to do less to get the same amount of Coke.
I know it is besides the point, but just to illustrate the scale of Coca-Cola, they produce 108 billion bottles per year.
The problem isn't solved while consumption of matter and energy grows exponentially.
Do you have any data to back this claim? Because Jevon's Paradox is a real, observed phenomenon. In reality, the only thing our economies optimize for is profit. Sometimes profit comes from reducing costs or increasing efficiency. Other times it comes from manipulating consumer psychology. Or did you think that Red Bull cans are tall and skinny because that's somehow an efficient use of aluminum?
[1] https://en.wikipedia.org/wiki/Jevons_paradox
[1] https://en.wikipedia.org/wiki/Jevons_paradox
I think in a Jevon situation where there is a game-changing technology jump in a consumable commodity, there will be pent-up demand being expressed at the same time better efficiency means prices can decline and profits can rise simultaneously. This can be more sustainable if these factors are better in balance to begin with and stay that way. The improved efficiency is then enjoyed and absorbed into the regular operation of everyone involved and soon or eventually becomes the new normal. Ideally the companies never need to go back to the old normal which may likely not be very economically viable any more so that becomes completely forgotten.
But with growth beyond a certain point, cash flow becomes so significant and so many fewer people are handling it that the room for misguided actions, not just unforseen but often hidden or obscured, can quickly overcome the profits from much earlier technology milestones which took much longer for the entire org to implement. Which can not be replaced unless more technology breakthroughs are forthcoming, but even when a steady stream of excellent new technology keeps coming down the pipeline it could still be a sinking ship. Then if only the top people think it's not seaworthy, or know what they've done that might make it so, they're going to completely deceive the rest of the crew as effectively as possible or all the lifeboats could be used up.
When it comes to building cash flow, profits, shareholder value, and overall company valuation not every economically sensible executive is going to pursue or achieve the same balance among these, regardless of motivation.
When a company originally thrives because the early talent can make profits that are good, it can be the firm foundation for what could be long-term, even exponential growth.
Later leadership which does not always have equal talent for profits will often have more experience utilizing cash flow itself to substitute as a resource for bonuses, dividends, and things like that when much needed technology boosts are not the windfall they once were.
The net effect is people make money for a while then the technology is wasted.
Because profits actually weren't pursued enough, and cash flow too much instead
Like when a huge company acquires a rapidly-progressing technology group but no more progress occurs after that, or progress becomes intentionally discontinued or even reversed.
Like a gravitational field so massive that it draws in other planets and absorbs their potential for continued growth, rather than leveraging progress using the overwhelming resources.
A smallco that made excellent profits primarily from innovation itself, looks excellent on paper because it is actually a good acquisition target. When absorbed into a bigco their impressive profits no longer add up to more than a drop in the huge bucket so focus ends up being placed elsewhere besides the profit-making innovation that was supposed to be so promising.
But with growth beyond a certain point, cash flow becomes so significant and so many fewer people are handling it that the room for misguided actions, not just unforseen but often hidden or obscured, can quickly overcome the profits from much earlier technology milestones which took much longer for the entire org to implement. Which can not be replaced unless more technology breakthroughs are forthcoming, but even when a steady stream of excellent new technology keeps coming down the pipeline it could still be a sinking ship. Then if only the top people think it's not seaworthy, or know what they've done that might make it so, they're going to completely deceive the rest of the crew as effectively as possible or all the lifeboats could be used up.
When it comes to building cash flow, profits, shareholder value, and overall company valuation not every economically sensible executive is going to pursue or achieve the same balance among these, regardless of motivation.
When a company originally thrives because the early talent can make profits that are good, it can be the firm foundation for what could be long-term, even exponential growth.
Later leadership which does not always have equal talent for profits will often have more experience utilizing cash flow itself to substitute as a resource for bonuses, dividends, and things like that when much needed technology boosts are not the windfall they once were.
The net effect is people make money for a while then the technology is wasted.
Because profits actually weren't pursued enough, and cash flow too much instead
Like when a huge company acquires a rapidly-progressing technology group but no more progress occurs after that, or progress becomes intentionally discontinued or even reversed.
Like a gravitational field so massive that it draws in other planets and absorbs their potential for continued growth, rather than leveraging progress using the overwhelming resources.
A smallco that made excellent profits primarily from innovation itself, looks excellent on paper because it is actually a good acquisition target. When absorbed into a bigco their impressive profits no longer add up to more than a drop in the huge bucket so focus ends up being placed elsewhere besides the profit-making innovation that was supposed to be so promising.
When efficiency is achieved, the economic growth is later converted to "everybody should use this new efficiency".
And more importantly, efficiency in the consumption is not translated in efficiency in the use of resources (which is the important one): transporting goods by horse vs faster transportation with combustion engines.
And more importantly, efficiency in the consumption is not translated in efficiency in the use of resources (which is the important one): transporting goods by horse vs faster transportation with combustion engines.
You can have unending growth even with finite resources.
It's Zeno's Paradox - if you have use half of the resources, and then half of the remaining, and then half of that remaining, you could continue forever.
It's Zeno's Paradox - if you have use half of the resources, and then half of the remaining, and then half of that remaining, you could continue forever.
SpaceX is trying to solve the finite environment problem.
Is it? Earth is, or was, extremely hospitable to humans. Mars is, and will be for a very long time, extremely inhospitable to humans. If we can't even take care of the Earth, what hope is there of taking care of Mars? The more likely scenario is that greedy Martians destroy their own Martian environment very quickly and make themselves extinct. It's much easier to destroy Mars (for human life) than it is to destroy Earth.
We need to focus on sustainability, otherwise Mars will also be unsustainable.
Just wait until oxygen itself becomes a commodity, like in the film "Total Recall". Except unlike in film, there's no deus ex machina native ancient technology to suddenly make the entire atmosphere breathable.
We need to focus on sustainability, otherwise Mars will also be unsustainable.
Just wait until oxygen itself becomes a commodity, like in the film "Total Recall". Except unlike in film, there's no deus ex machina native ancient technology to suddenly make the entire atmosphere breathable.
Your mistake is thinking that the plan is to move humanity away into space, instead of bringing space (or more accurately mineral-rich asteroids and solar energy) to humanity. That way we can just externalize all industry & pollution to a lagrange point somewhere and let the earth take care of healing itself.
If we continue like this, humans will be long gone before we reach that point (IF we reach that point at all).
Given the timescale of building an endurable self-sustaining civilization on another planet, and the speed with which we are destructing our own environment for humans to live in (and capability to provide high-tech support for this space adventure), my guess is that this is a pipe dream. And that the Mars thing is a nice rich man's hobby, scientists playground, and bread-and-games diversion tactic for the rest of mankind.
Taken to its absolute limit, space travel is limited by the speed of light. So when you get to that limit, you are limited by space, as you can only expand in a sphere--i.e. O(n^3). Space is so enormous that even the tiniest exponential will overrun O(n^3) before even getting out of our galaxy. Result. That exponential is going to flatten out and look more like a sigmoid.
That's good. It buys us more time. But we need to ease up on the exponent anyway.
That thought that continued growth is eventually unsustainable has been there since at least the 1840's. The core of Marxism is the idea that capitalism is the most effective method of increasing productive capacity, and that this is fantastic (the first chapter of the Communist Manifesto is fanboy-level praise for capitalism), until it runs out of room to grow into.
Whether or not you agree with the analysis, the core problem it posits - that capitalism will grow out of markets to expand into, and that once it does, it will fundamentally change the game - matters.
We can necessarily not have growth forever - if not before, eventually we run out of exploitable energy within our light-cone. In practice we'll hit limits far sooner that will cause competition to drive down production cost will be far harsher than it needs to be in an environment where you can compensate by expansion.
Marx thought that would happen "soon" - when capitalism has spread to the entire world. But it's a question when, not if, we hit a ceiling where further demand growth can't physically happen, and quite likely we'll reach a ceiling long before there where it's not happening fast enough to counter competitive pressure. The world population is expected to stabilise and start dropping - at least for a while - possibly as soon as towards the end of this century. What happens to growth then?
Whenever we reach a point where capitalism is no longer getting growth by growing into expanding markets, the question becomes whether capitalist competition will drive us to a level of automation that threatens to kill capitalism. Marx believed that would happen by causing crises of "overproduction", where improved efficiency would cause mass unemployment and by extension kneecap demand by taking away peoples incomes. Alternatively, whether we'll be able to as a society reign things in and ensure people share in enough of the improvements in efficiency for capitalism to survive - be it with UBI, or shortening working hours, or other means.
Because it's easy to forget that one of the "promises" of capitalist competitive pressure is to drive margins towards zero, because a company that can survive with lower margins can out-compete one that can't. And ultimately that means driving every cost that can be reduced down, and that means ultimately driving labour costs down as far as they can go...
Whether or not you agree with the analysis, the core problem it posits - that capitalism will grow out of markets to expand into, and that once it does, it will fundamentally change the game - matters.
We can necessarily not have growth forever - if not before, eventually we run out of exploitable energy within our light-cone. In practice we'll hit limits far sooner that will cause competition to drive down production cost will be far harsher than it needs to be in an environment where you can compensate by expansion.
Marx thought that would happen "soon" - when capitalism has spread to the entire world. But it's a question when, not if, we hit a ceiling where further demand growth can't physically happen, and quite likely we'll reach a ceiling long before there where it's not happening fast enough to counter competitive pressure. The world population is expected to stabilise and start dropping - at least for a while - possibly as soon as towards the end of this century. What happens to growth then?
Whenever we reach a point where capitalism is no longer getting growth by growing into expanding markets, the question becomes whether capitalist competition will drive us to a level of automation that threatens to kill capitalism. Marx believed that would happen by causing crises of "overproduction", where improved efficiency would cause mass unemployment and by extension kneecap demand by taking away peoples incomes. Alternatively, whether we'll be able to as a society reign things in and ensure people share in enough of the improvements in efficiency for capitalism to survive - be it with UBI, or shortening working hours, or other means.
Because it's easy to forget that one of the "promises" of capitalist competitive pressure is to drive margins towards zero, because a company that can survive with lower margins can out-compete one that can't. And ultimately that means driving every cost that can be reduced down, and that means ultimately driving labour costs down as far as they can go...
I agree with a lot of what you just said, I think Marx was correct about the idea that capitalism requires the growth. I would state his thesis as follows: If you reward continued production of goods (which requires investment) with property, eventually you will run out of property to give away.
I believe in the 20th century, this conundrum was resolved in enormous growth of what we consider to be property assets. We have not only reached the limit of exploitation of natural resources on the planet, but also added intelectual property, military-industrial complexes, various financial instruments, healthcare, and as of late, we have monetized human attention and behavioral data. On top of that, we monetized human servitude, now lot of well-off people are in debt (at least with mortgages and student loans).
I believe in the 20th century, this conundrum was resolved in enormous growth of what we consider to be property assets. We have not only reached the limit of exploitation of natural resources on the planet, but also added intelectual property, military-industrial complexes, various financial instruments, healthcare, and as of late, we have monetized human attention and behavioral data. On top of that, we monetized human servitude, now lot of well-off people are in debt (at least with mortgages and student loans).
It's not so much that you run out of property, but that you run out of ability to expand your customer base fast enough to see fast growth, and the slower growth capitalists can get from external factors, such as new markets, the more incentives they have to look to internal factors to maintain their competitive advantage.
Ultimately that means addressing labour costs. For an individual capitalist it makes sense to drive labour costs towards zero. But if everyone does it, then their markets shrink unless there are external factors (e.g. UBI or similar) that counters the market-wide effects of their reduction in labor costs.
This is also why UBI is a "liberal" (in the classical, not US sense) policy, and not something the socialist left is very interested in - from a socialist point of view UBI is bread and circus to keep capitalism from imploding.
Ultimately that means addressing labour costs. For an individual capitalist it makes sense to drive labour costs towards zero. But if everyone does it, then their markets shrink unless there are external factors (e.g. UBI or similar) that counters the market-wide effects of their reduction in labor costs.
This is also why UBI is a "liberal" (in the classical, not US sense) policy, and not something the socialist left is very interested in - from a socialist point of view UBI is bread and circus to keep capitalism from imploding.
I think capitalism is being misused in this sentence, and that is making it hard for people to make sense of. Capitalism is simply an economic system where the means of production are privately owned. Growth is not a requirement or even feature of capitalism. Being able to own companies, property and hold currency are all features of capitalism. If you are trying to say "infinite growth is unsustainable" that stands on it's own and is worth discussing.
Growth, is however, an emergent property of capitalism by virtue of the competitive model, that is very hard to counter.
> Capitalism is simply an economic system where the means of production are privately owned. Growth is not a requirement or even feature of capitalism.
The problem is that private ownership leads to the classic collective action problem, where actions that are individually rational to each private owner have consequences that are collectively irrational and make the world worse off.
This is not to say that private ownership should be abolished. But there has to at least be a heavy collective counterweight to self-interested wealth accumulation.
The problem is that private ownership leads to the classic collective action problem, where actions that are individually rational to each private owner have consequences that are collectively irrational and make the world worse off.
This is not to say that private ownership should be abolished. But there has to at least be a heavy collective counterweight to self-interested wealth accumulation.
A problem with capitalism may be that it is a very broad category, and that currently we have a particular nasty flavour of it, that deserves its own name (e.g. hypercapitalism?) to avoid the endless discussion & confusion whether its all good and natural, or utterly broken (at least for the common folks participating in it).
It seems to me we had a form of capitalism that flourished (piggy-backed) well on top of democracy, and now it has morphed into a form that thrives best in a plutocracy (where democracies are eventually just Putin-style husks of their former glory).
It seems to me we had a form of capitalism that flourished (piggy-backed) well on top of democracy, and now it has morphed into a form that thrives best in a plutocracy (where democracies are eventually just Putin-style husks of their former glory).
> currently we have a particular nasty flavour of it, that deserves its own name (e.g. hypercapitalism?)
Corporatism.
It's publicly-traded corporations that cause many of these negative effects:
* Since investors treat corporations as black boxes that are just numbers going up or down, they are separated from the non-financial ethical consequences of what the business does. We all, through our 401ks, probably own stock in companies doing outright horrendous things to human rights in developing countries or harming the environment.
* Investors put pressure on corporations to grow at the expense of all other things. Corporations that fail to prioritize that will be replaced by better-capitalized corporations that do. It is an evolutionary environment where the primary selection pressure is growth.
* An effective way for a corporation to grow is, instead of competing, simply acquire competition to reduce selection pressure and then do things like regulatory capture to rig the system.
Corporatism.
It's publicly-traded corporations that cause many of these negative effects:
* Since investors treat corporations as black boxes that are just numbers going up or down, they are separated from the non-financial ethical consequences of what the business does. We all, through our 401ks, probably own stock in companies doing outright horrendous things to human rights in developing countries or harming the environment.
* Investors put pressure on corporations to grow at the expense of all other things. Corporations that fail to prioritize that will be replaced by better-capitalized corporations that do. It is an evolutionary environment where the primary selection pressure is growth.
* An effective way for a corporation to grow is, instead of competing, simply acquire competition to reduce selection pressure and then do things like regulatory capture to rig the system.
> Capitalism is simply an economic system where the means of production are privately owned.
Just a nitpick, there is another condition, which is that the labor is traded on the free market under capitalism. I can imagine a society where everything is done in cooperatives where the workers are also the owners (they have shared private ownership).
Just a nitpick, there is another condition, which is that the labor is traded on the free market under capitalism. I can imagine a society where everything is done in cooperatives where the workers are also the owners (they have shared private ownership).
The natural state in capitalism is that a worker owns their own means of production - their time. If one wants to trade their time into a collective, that is their time to trade. Slavery breaks this, and one of the more interesting facets of the American civil war was that the North (anti-slavery side) was much more efficient than was the South (which favored slavery), even in agriculture.
Labor is not capital (means of production), it's not being "owned", since one cannot accumulate it. That analysis is deliberately obfuscating problems with capitalism, which stem from capital accumulation. (And if anything, it is slavery that turns labor into actual capital.)
You missed the point.
> There is a growing body of thought that capitalism and, more specifically, continued growth, is unsustainable.
Excuse my language but... who the actual fuck thinks otherwise? This is extremely perplexing to me.
How many layers of double speak must one hide behind before you can believe that sustained growth for its own sake can be a healthy, sustainable goal?
Excuse my language but... who the actual fuck thinks otherwise? This is extremely perplexing to me.
How many layers of double speak must one hide behind before you can believe that sustained growth for its own sake can be a healthy, sustainable goal?
People with no imagination, knowledge of history, or capacity to think about anything but themselves. People who think humans have a right to obliterate all other forms of life in order to carpet this planet with...whatever we want. People who go to zoos and watch Ow My Balls.
There are many flavours of Capitalism. Some work extremely well (Scandinavia) others less so (Russia/China). However Capitalism still beats anything else humans have ever tried.
Continued growth: absolutely. Capitalism itself only exists because resources are finite though. It's the most practical method we have right now for efficiently allocating those resources.
Allocating resources is a hard problem to solve. If we had infinite resources we would not need to solve it.
Allocating resources is a hard problem to solve. If we had infinite resources we would not need to solve it.
Unfortunately, a transition to a more planned economy is going to be necessary, because individual actors working independently of the needs of others might be a surprisingly good way to allocate resources, but it's not smart enough to be done sustainably.
It doesn't need to be planned. The markets just need to be constrained and regulated. In some extents they can be expanded. E.g. you can force companies to buy and trade quotas for different types of externalities to cover undoing those externalities and let the markets sort out the most efficient way of addressing them.
There is complexity there (you need to ensure there aren't any easily exploitable loopholes), but markets have lots of uses.
There is complexity there (you need to ensure there aren't any easily exploitable loopholes), but markets have lots of uses.
> It's the most practical method we have right now for efficiently allocating those resources.
This is where true why is our way of life less sustainable today than it was 1000 years ago?
Nearly all first nations tribes lived in a way of live that was sustainable indefinitely. In 250 years of developing capitalism we have destroyed most of the biosphere, and trigger climate change that has the potential to undo civilization as we know it.
Capitalism and rapid hydrocarbon extraction has allowed the species to surpass the carrying capacity of the planet in away that cannot possibly be sustained.
Personally, I think this was always our destiny, but to try to delude yourself into believing that capitalism is making things better is a strange form of denial.
This is where true why is our way of life less sustainable today than it was 1000 years ago?
Nearly all first nations tribes lived in a way of live that was sustainable indefinitely. In 250 years of developing capitalism we have destroyed most of the biosphere, and trigger climate change that has the potential to undo civilization as we know it.
Capitalism and rapid hydrocarbon extraction has allowed the species to surpass the carrying capacity of the planet in away that cannot possibly be sustained.
Personally, I think this was always our destiny, but to try to delude yourself into believing that capitalism is making things better is a strange form of denial.
Because there are many, many more of us than there were 1000 years ago. Per capita, sustaining the lifestyle of a 21st century Westerner requires less land than that of an 11th century peasant.
It requires less land because of the heavy use of fertilizers and non-reproducing hybrid grains. It's literally and unquestionably and unsustainable process.
The CO2 emissions per person, which is a much better way to measure how much energy it takes to sustain a persons life style is unimaginably higher.
The CO2 emissions per person, which is a much better way to measure how much energy it takes to sustain a persons life style is unimaginably higher.
I once worked at a company where I didn't understand why they took certain decisions. In the end, it all became very clear. My mindset from "these guys have no idea" shifted towards "wow, they are smart, I didn't get this part".
Basically, they were acquiring customers faster than anyone could follow. Our development goal was "fast and opportunistic". As you can expect, the product was full of bugs, and customer support had their hands full. It was a shitty product with a lot of customers.
I didn't see how this would ever turn into a success story. We were digging a grave. But I didn't realize 1 thing: we were not selling a product, we were selling the company.
In the end, a huge Canadian competitor wanted a foothold in the European market, and so they bought us (and our customers). They were going to introduce their own product to the customers, and so our product was thrown in the wastebasket.
In the end, it all ended as planned, and the founders walked away with a lot of money. Basically they built a customer base in EU, and sold that one to another company. Big eye opener for me.
Looking back, it is also very interesting to see how they positioned their company within that market, to be acquired.
Basically, they were acquiring customers faster than anyone could follow. Our development goal was "fast and opportunistic". As you can expect, the product was full of bugs, and customer support had their hands full. It was a shitty product with a lot of customers.
I didn't see how this would ever turn into a success story. We were digging a grave. But I didn't realize 1 thing: we were not selling a product, we were selling the company.
In the end, a huge Canadian competitor wanted a foothold in the European market, and so they bought us (and our customers). They were going to introduce their own product to the customers, and so our product was thrown in the wastebasket.
In the end, it all ended as planned, and the founders walked away with a lot of money. Basically they built a customer base in EU, and sold that one to another company. Big eye opener for me.
Looking back, it is also very interesting to see how they positioned their company within that market, to be acquired.
> I didn't see how this would ever turn into a success story. We were digging a grave. But I didn't realize 1 thing: we were not selling a product, we were selling the company.
why don't the executive making this goal clear to the "underlings"?
why don't the executive making this goal clear to the "underlings"?
"Hey developers, you will be out of a job when some other company acquires us. This is best case for us, because we will make a lot of money. Unfortunately for you, you don't have any shares, so you will probably just be fired or prodded to leave".
I think I was the first one to realize what was going on: we were the developers in Belgium, and we had some cheap developers in Eastern Europe. They had developers in US. They were going to continue developing their own product, and would "keep us all as developers".
But from their point of view, it didn't make much sense to me that "We have devs in EU, but those guys from Belgium are 4x more expensive than those from another country". I quit shortly after the acquisition, and my colleagues all left a year later. They kept the developers in Eastern Europe.
It makes total sense to me, and I'm not resentful about it, probably because it's so easy for developers to find a new job.
One other thing I want to mention: they were very transparent on the strategy when they were acquiring various smaller companies. Very insightful.
I think I was the first one to realize what was going on: we were the developers in Belgium, and we had some cheap developers in Eastern Europe. They had developers in US. They were going to continue developing their own product, and would "keep us all as developers".
But from their point of view, it didn't make much sense to me that "We have devs in EU, but those guys from Belgium are 4x more expensive than those from another country". I quit shortly after the acquisition, and my colleagues all left a year later. They kept the developers in Eastern Europe.
It makes total sense to me, and I'm not resentful about it, probably because it's so easy for developers to find a new job.
One other thing I want to mention: they were very transparent on the strategy when they were acquiring various smaller companies. Very insightful.
Because the "underlings", like the product, were part of the sacrifice. At best, they'd learned they just wasted a lot of time and energy trying to build a product (which was necessary for the scam). At worst, they'd find out they were all getting laid off as unnecessary to the purchaser's interests.
If the underlings know their product is intended to be trashed, do you really think they will suffer through the late evenings and weekends of gruelling overtime to patch ugly bugs in production?
I don't.
I don't.
I think programmers in general have an overly optimistic expectation of the lifespan of their works. "The great thing about software," they say, "as opposed to buildings or hammers, is that you can write code once and use it forever," as they ignore the dozens of applications and libraries which did nearly the same thing as the code they are writing.
> I think programmers in general have an overly optimistic expectation of the lifespan of their works.
I think programmers in general have an overly pessimistic expectation of the lifespan of their works. They write temporary, ugly hacks for the sake of expediency, and then 10, 20 years later the whole world is still suffering because of those "temporary" hacks.
I think programmers in general have an overly pessimistic expectation of the lifespan of their works. They write temporary, ugly hacks for the sake of expediency, and then 10, 20 years later the whole world is still suffering because of those "temporary" hacks.
Very good point. It was a very good lesson for many, that the company you work for is not your company, but theirs.
Most companies always talk about "us" and "our company". But once it gets sold, it will be very clear that it's not "us".
Most companies always talk about "us" and "our company". But once it gets sold, it will be very clear that it's not "us".
Because if they did, that info would most certainly get out and negatively affect the company’s reputation.
I don't know thei particular situation, but it can be many things. The executive might have a lare degree of congnitive disonnance (still fully beliving in the things they tell their employees in the moment). Alternatively they may judge that being fully open with their employees will have negative consequences. And, heck, I think many are fully transparent but some employees just turn a deaf ear to certain things in order to maintain some variety of identity.
I'm guessing you want to avoid word getting out that could spoil the deal / depress the price?
Because it's not their business!
(Sorry for the horrible joke, but it's Friday.)
(Sorry for the horrible joke, but it's Friday.)
No one wants to be a resident in a Potemkin village.
Anyone aiming for VC money should realize that this is what's coming, in the vast majority of cases, no matter how different expectations might be set initially.
Why only VC money? I don't understand, which person would invest their in your company so that the customer (rather than themselves) should get value from it?
From what I experienced (could be misrepresentative), larger banks don't tend to put that kind of pressure when they provide investment capital.
Could be that it's not that they don't care, just that they don't take that level of involvement with growth companies.
VCs tend to take a <5 y perspective, where banks and other investors can play more long-term games
Could be that it's not that they don't care, just that they don't take that level of involvement with growth companies.
VCs tend to take a <5 y perspective, where banks and other investors can play more long-term games
VC also tends to be looking for big, long tail wins. If you blow up 9 companies, but the 10th is a huge success - you're gold. If 10 of your companies are middling successful? You're not going to have the returns your investors were looking for, and you're toast.
That's so interesting! I wouldn't have the first idea how to pull off a plan like this; is this what people learn in the field of M&A?
For example, how can you be confident that someone will be interested in acquiring you, and for a good price, instead of one of your competitors, or just building their own? How do you know your customers will be happy to switch to the replacement product that gets put in front of them? (I'd be quite interested to know what they did to make themselves an attractive target for acquisition, as a practical example)
With reference to the main topic - I think there is a place in the market for both stable long-term and high-growth shorter-term businesses like this example. Sometimes the market is hungry for a solution right now, not something perfect in five years. Satisfying this demand is what causes high growth. And it's natural that we see a lot of this in the tech industry, since we're closer to the cutting edge than most.
For example, how can you be confident that someone will be interested in acquiring you, and for a good price, instead of one of your competitors, or just building their own? How do you know your customers will be happy to switch to the replacement product that gets put in front of them? (I'd be quite interested to know what they did to make themselves an attractive target for acquisition, as a practical example)
With reference to the main topic - I think there is a place in the market for both stable long-term and high-growth shorter-term businesses like this example. Sometimes the market is hungry for a solution right now, not something perfect in five years. Satisfying this demand is what causes high growth. And it's natural that we see a lot of this in the tech industry, since we're closer to the cutting edge than most.
Startups are sometimes not even doing the customer acquisition bit. I was part of an accelerator where the most common exit was acqui-hiring i.e. some big corporate is going to want to hire some smart ML types in the future with a cool brand behind them
> I once worked at a company where I didn't understand why they took certain decisions. In the end, it all became very clear. My mindset from "these guys have no idea" shifted towards "wow, they are smart, I didn't get this part".
How is this story is relevant to the linked article?
How is this story is relevant to the linked article?
"Go big or go home". This seems to be a uniquely north-American attitude. Germany, or maybe Europe, is full of so-called "Mittelstand" companies that are good in what they do, have 500-ish employees, have been in the same family ownership for generations and provide a good solid living for everyone involved. What is wrong with that? It goes without saying that staying mid-sized doesn't mean staying complacent, but you can innovate without growing huge.
Here in Ottawa, there was a debacle a few years ago. A typical such company, Swiss Pastries, changed ownership or at least management. The new attitude was "grow at all costs", they overextended themselves, went bankrupt, and Swiss Pastries is no more. Ottawa now has no local source of soft pretzels along with other delicacies that they made. It's almost a scorched earth approach. If you can't make the company huge, you might as well destroy it, because not being huge means you've failed.
The previous paragraph is based on reading a few news articles at the time. If I'm wrong, I'm guessing it still makes a textbook example of "go big or go home" going wrong and I'd love to see more details.
Here in Ottawa, there was a debacle a few years ago. A typical such company, Swiss Pastries, changed ownership or at least management. The new attitude was "grow at all costs", they overextended themselves, went bankrupt, and Swiss Pastries is no more. Ottawa now has no local source of soft pretzels along with other delicacies that they made. It's almost a scorched earth approach. If you can't make the company huge, you might as well destroy it, because not being huge means you've failed.
The previous paragraph is based on reading a few news articles at the time. If I'm wrong, I'm guessing it still makes a textbook example of "go big or go home" going wrong and I'd love to see more details.
> What is wrong with that? It goes without saying that staying mid-sized doesn't mean staying complacent, but you can innovate without growing huge.
There is nothing morally wrong with this and I think most Americans are entirely in support of this ethos. In fact it is a truism that politicians are always talking about how important "small businesses" are.
But the emergent property of our corporate finance system is that those businesses get swallowed up or crushed by huge conglomerates over time. We have a pretty toothless anti-trust regulation system these days and big corporations have enough economies of scale, regulatory capture, and other practices to destroy any business below a certain size.
It's as if there is no protected shallow water in the business ecosystem. You're always in a place where a shark can get you, so if you aren't as big as a shark, you're bait.
There is nothing morally wrong with this and I think most Americans are entirely in support of this ethos. In fact it is a truism that politicians are always talking about how important "small businesses" are.
But the emergent property of our corporate finance system is that those businesses get swallowed up or crushed by huge conglomerates over time. We have a pretty toothless anti-trust regulation system these days and big corporations have enough economies of scale, regulatory capture, and other practices to destroy any business below a certain size.
It's as if there is no protected shallow water in the business ecosystem. You're always in a place where a shark can get you, so if you aren't as big as a shark, you're bait.
Per my comment above - those industries tend to be government protected in a variety of different ways, and with all the fundamentals (sustainable company culture, most capital expenditures done, capital available as needed). It's essentially a sheltered niche.
Germany is also quite 'stodgy' and not adopting many of the changes (social, technical, etc.) until things have been worked out. Which just isn't the way the US works.
For better or worse, the US is the wild west in these issues. You end up with companies overextending themselves and blowing up (not just here of course), or companies not pushing hard enough and getting swallowed by or crushed by competitors - churn is harder, faster here, as is the adoption of new ideas.
There is a reason Germany has essentially zero interesting tech companies, and it isn't because engineers don't like beer.
Germany is also quite 'stodgy' and not adopting many of the changes (social, technical, etc.) until things have been worked out. Which just isn't the way the US works.
For better or worse, the US is the wild west in these issues. You end up with companies overextending themselves and blowing up (not just here of course), or companies not pushing hard enough and getting swallowed by or crushed by competitors - churn is harder, faster here, as is the adoption of new ideas.
There is a reason Germany has essentially zero interesting tech companies, and it isn't because engineers don't like beer.
I get the argument, but what’s the upside of the US approach? Germany is on par or better in society happiness (couldn’t find a metric to confirm that). Why do so many people feel the empty need for soulless growth of these monster companies?
Those companies provide the foundation of pensions (including German ones in many cases), give opportunity for people to move social ladders, provide jobs, etc.
Money also is the most universal proxy for value you're going to find anywhere, and for those seeking to maximize their chances to get the most of it - the US is the place to be right now.
Which is also why there is so much demand immigration wise (along with not terrible schools, reasonable social discourse, stable govern't comparatively, etc.) - if you're an up and coming, ambitious person looking to make it big, there is no better place in the world right now, with some notable edge cases. (China for instance, but only if you're Chinese).
Germans (and most Western Europeans, but definitely not Eastern Europeans from what I've seen!) currently prioritize social stability and a base level of comfort and care over over the possibility of getting (individually) filthy rich.
There are pros and cons to this, obviously, and different people will weight them differently based on their backgrounds.
Money also is the most universal proxy for value you're going to find anywhere, and for those seeking to maximize their chances to get the most of it - the US is the place to be right now.
Which is also why there is so much demand immigration wise (along with not terrible schools, reasonable social discourse, stable govern't comparatively, etc.) - if you're an up and coming, ambitious person looking to make it big, there is no better place in the world right now, with some notable edge cases. (China for instance, but only if you're Chinese).
Germans (and most Western Europeans, but definitely not Eastern Europeans from what I've seen!) currently prioritize social stability and a base level of comfort and care over over the possibility of getting (individually) filthy rich.
There are pros and cons to this, obviously, and different people will weight them differently based on their backgrounds.
"Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires." - Steinbeck
Very true - but it isn't just Americans, or even mostly Americans (by birth) playing this game, at least in tech.
I've worked with plenty of Indians, Germans, Chinese (fewer hard chargers though - they tend to stay in China more recently), French, Czech, Russians, all here to, for lack of a better phrase - to get paid. More than 'native born' Americans, that's for sure.
Even for 'native born' Americans, they almost all moved to the bay area (or the office/city they are in) from another state, sometimes half way across the country, and almost none grew up in the area the business or office is in. People who are ambitious will move to the opportunity.
I've worked with plenty of Indians, Germans, Chinese (fewer hard chargers though - they tend to stay in China more recently), French, Czech, Russians, all here to, for lack of a better phrase - to get paid. More than 'native born' Americans, that's for sure.
Even for 'native born' Americans, they almost all moved to the bay area (or the office/city they are in) from another state, sometimes half way across the country, and almost none grew up in the area the business or office is in. People who are ambitious will move to the opportunity.
[deleted]
[deleted]
I think one interesting way of looking at a company is as a power struggle between
The view that a company's sole duty is to provide value to shareholders (i.e. to grow) is blinkered and damaging. I'm tempted to heap blame for that way of thinking on the economics establishment and on anti-comunist sentiment from the 20th century but that's probably naive.
- the owners
- the employees
- the managers
- the clients
- (and sometimes) the government / general public
The view that a company's sole duty is to provide value to shareholders (i.e. to grow) is blinkered and damaging. I'm tempted to heap blame for that way of thinking on the economics establishment and on anti-comunist sentiment from the 20th century but that's probably naive.
I'm definitely with you on the last bit. As are plenty of others. Jack Welch famously called it the "dumbest idea in the world" and it has been widely panned: https://www.google.com/search?q=dumbest+idea+in+the+world+sh...
If I squint at it from the right angle, it's not terrible, in that in theory many of the other kinds of value should roll up to long-term company value. E.g., healthy employee relationships are a real asset. Being a good community member should pay off in the long term. Etc, etc.
But in reality, when you crossbreed this with the "efficient markets hypothesis" [1] and managerialism [2], it becomes dangerous. Mix in a live stock ticker plus ways for executives to cash out and a declining CEO tenure and you get an excuse for doing anything that boosts the share price long enough to unload the shares on a sucker. Or, at lower levels, anything that boosts a metric that drives stock price gains.
So instead of building long-term value, the "maximize shareholder value" mantra ends up doing the opposite. E.g., cutting long-term R&D spending to fund stock buy-backs. Laying off long-term employees in favor of an outsourcing deal that cuts short-term costs while raising them down the road.
[1] https://en.wikipedia.org/wiki/Efficient-market_hypothesis
[2] https://en.wikipedia.org/wiki/Managerialism
If I squint at it from the right angle, it's not terrible, in that in theory many of the other kinds of value should roll up to long-term company value. E.g., healthy employee relationships are a real asset. Being a good community member should pay off in the long term. Etc, etc.
But in reality, when you crossbreed this with the "efficient markets hypothesis" [1] and managerialism [2], it becomes dangerous. Mix in a live stock ticker plus ways for executives to cash out and a declining CEO tenure and you get an excuse for doing anything that boosts the share price long enough to unload the shares on a sucker. Or, at lower levels, anything that boosts a metric that drives stock price gains.
So instead of building long-term value, the "maximize shareholder value" mantra ends up doing the opposite. E.g., cutting long-term R&D spending to fund stock buy-backs. Laying off long-term employees in favor of an outsourcing deal that cuts short-term costs while raising them down the road.
[1] https://en.wikipedia.org/wiki/Efficient-market_hypothesis
[2] https://en.wikipedia.org/wiki/Managerialism
Sure there's the ongoing struggle. But the basic fact will always stay that the point of founding and putting in the effort to establish a commercial company in the first place is to "provide value to the shareholders" (i.e. the owner/founder). If not for that, why anyone go through that hassle?
All that Silicon-Valley-esque "We founded the company because we wanted to make the world a better place" is only when the company is also making money for the stakeholders. Once you take out that point, there goes you company. It is now officially a charitable organization (which, BTW also provides value to the "stakeholders", but that discussion is for a different time)
All that Silicon-Valley-esque "We founded the company because we wanted to make the world a better place" is only when the company is also making money for the stakeholders. Once you take out that point, there goes you company. It is now officially a charitable organization (which, BTW also provides value to the "stakeholders", but that discussion is for a different time)
There's a big difference between "provide a decent living for the founders of the company" and "provide ever-increasing profits to the already-wealthy shareholders", and I believe that difference is at the heart of the article's point.
I suspect the initial premise is incorrect.
The purpose of a company that makes widgets is to make widgets. Nothing more.
Some rent seekers realized that they could extract some of the wealth created by the company making widgets, and that they could manipulate various people involved in other enterprise to enhance and enforce their rent-seeking abilities. To that end, they have manipulated the various controls on the use of violence in our society such that they can not only continue to extra wealth from the labour of the widget-makers, but that the widget-makers are required to make more widgets and give up increasing portions of the wealth they create.
The cancer is not the company, whose purpose is not growth. The cancer is the rent seeker who sucks the life out of the company causing it to swell and fester and eventually autolyse.
The purpose of a company that makes widgets is to make widgets. Nothing more.
Some rent seekers realized that they could extract some of the wealth created by the company making widgets, and that they could manipulate various people involved in other enterprise to enhance and enforce their rent-seeking abilities. To that end, they have manipulated the various controls on the use of violence in our society such that they can not only continue to extra wealth from the labour of the widget-makers, but that the widget-makers are required to make more widgets and give up increasing portions of the wealth they create.
The cancer is not the company, whose purpose is not growth. The cancer is the rent seeker who sucks the life out of the company causing it to swell and fester and eventually autolyse.
I think the purpose of a healthy company is to make widgets. A company that's unsuccessful or on the path to failure will thrash about and, I think, eventually decide their purpose is simply "to make money".
Clearly we should invest in the former companies but even the latter, in some cases, stumble on something worthwhile and become successful.
Clearly we should invest in the former companies but even the latter, in some cases, stumble on something worthwhile and become successful.
When a company is founded, the purpose of it is whatever the founders want it to be.
After a while, there might not be a purpose anymore, just a thing that is.
After a while, there might not be a purpose anymore, just a thing that is.
[deleted]
I don't like invoking the word 'rent-seeking' because it's highly subjective. The formal definition is extracting value without providing any. One could easily make the argument that all business investors are like this. Why act like it's just a case of a few people then?
I don't think it's just a case of a few people. Rent-seeking by itself is morally neutral, like guns. Like a gun, it's how you use it that determines if you're contributing positive value to overall society.
The purpose of the economy is also not the accumulation of wealth by a few people. Having lots of money is nice but it turns out it's nowhere near the most important thing in life.
The purpose of the economy is also not the accumulation of wealth by a few people. Having lots of money is nice but it turns out it's nowhere near the most important thing in life.
> Rent-seeking by itself is morally neutral, like guns. Like a gun, it's how you use it that determines if you're contributing positive value to overall society.
This strikes me as a bad analogy. What differentiates your statement from
Theft by itself is morally neutral, [...] it's what you steal that determines if you're contributing positive value to overall society.
You might be willing to endorse that statement, but I think most people would not.
I think that if you want to assert that rent-seeking is tool-like, with multiple uses some positive and some negative, then the burden of proof is on you to provide some examples.
This strikes me as a bad analogy. What differentiates your statement from
Theft by itself is morally neutral, [...] it's what you steal that determines if you're contributing positive value to overall society.
You might be willing to endorse that statement, but I think most people would not.
I think that if you want to assert that rent-seeking is tool-like, with multiple uses some positive and some negative, then the burden of proof is on you to provide some examples.
The purpose for who?
When you run the company you yourself own, it hardly matters whether you are rewarded through salary, a dividend or stock appreciation, and presumably you care a lot about the actual product and not just about making money.
When you invest in a company you are not otherwise involved in, on the other hand, there's just no point to it unless you get back more than your initial investment, so either the company must grow or at the very least if it doesn't, it should be reliably profitable and share those profits with shareholders. Same thing when you lend out money. This isn't rent seeking: capital is crucial to any business and to provide it is to provide a valuable service. Which is not to say that there's not a lot of rent-seeking behavior in the stock market, or that modern capitalism is entirely sane, but that's a different topic.
When you run the company you yourself own, it hardly matters whether you are rewarded through salary, a dividend or stock appreciation, and presumably you care a lot about the actual product and not just about making money.
When you invest in a company you are not otherwise involved in, on the other hand, there's just no point to it unless you get back more than your initial investment, so either the company must grow or at the very least if it doesn't, it should be reliably profitable and share those profits with shareholders. Same thing when you lend out money. This isn't rent seeking: capital is crucial to any business and to provide it is to provide a valuable service. Which is not to say that there's not a lot of rent-seeking behavior in the stock market, or that modern capitalism is entirely sane, but that's a different topic.
We can get our analogy ducks in order:
- The economy is an ecology.
- A company is an organism.
- Rentiers are carcinogens.
It would be interesting to know if there have been models of economies that disallow usury and rent seekers. I know Michael Hudson has made the distinction between industrial and rentier capitalism [1], and there is also CASSE [2] (but that seems to be aligned with the "too many people" ideological line), but I am not aware of any contemporary writing on the nature and dynamics of economies that disallow usury and rent seeking in principle.
[1]: https://michael-hudson.com/2021/01/the-rentier-resurgence-an...
[2]: https://steadystate.org/
- The economy is an ecology.
- A company is an organism.
- Rentiers are carcinogens.
It would be interesting to know if there have been models of economies that disallow usury and rent seekers. I know Michael Hudson has made the distinction between industrial and rentier capitalism [1], and there is also CASSE [2] (but that seems to be aligned with the "too many people" ideological line), but I am not aware of any contemporary writing on the nature and dynamics of economies that disallow usury and rent seeking in principle.
[1]: https://michael-hudson.com/2021/01/the-rentier-resurgence-an...
[2]: https://steadystate.org/
Historically, even societies that disallowed usary still needed financiers - they would just hunt them down and kill them when it came time to pay the piper.
Not even attempts at communism have survived removing dynamic markets.
Not even attempts at communism have survived removing dynamic markets.
Market =/= Usury. Two entirely distinct concepts, with distinct names.
Usury in a basic definition means lending money with interest, and the collection of that interest. [1]
Lending money involves risk. The only way to offset risk is with potential gain - ie, interest. You're not going to loan someone a few million, knowing you might lose it all, and having no expected gain.
If you don't have loans of any kind, you basically don't have a market. You can't form most kinds of businesses, you can't invest in equipment, etc etc. Even in strict communism where the government owns the things that allows businesses to run you need capital to buy materials and perform research before you can sell products.
If you can't buy and you can't sell, you don't have any modern conception of a market.
[1]: It can also mean to charge exorbitant interest
Lending money involves risk. The only way to offset risk is with potential gain - ie, interest. You're not going to loan someone a few million, knowing you might lose it all, and having no expected gain.
If you don't have loans of any kind, you basically don't have a market. You can't form most kinds of businesses, you can't invest in equipment, etc etc. Even in strict communism where the government owns the things that allows businesses to run you need capital to buy materials and perform research before you can sell products.
If you can't buy and you can't sell, you don't have any modern conception of a market.
[1]: It can also mean to charge exorbitant interest
> Usury in a basic definition means lending money with interest, and the collection of that interest. [1]
Good. This is fine.
So we strike various other non-sequitors from your original reply:
> Not even attempts at communism have survived removing dynamic markets.
Free markets, profit making, private property, incorporation for making profit (by providing goods and services) are all entirely orthogonal to the very specific 'debt instrument' of "lending money at interest". Even the broad concept of 'debt' itself is not limited to a specialized form of debt that involves usury.
The solution space of financilizing an economic system is not limited to interest bearing debt instruments. And to insist that any alternative is "communism" does not bear scrutiny.
> Historically, even societies that disallowed usary still needed financiers - they would just hunt them down and kill them when it came time to pay the piper.
I assume you refer to the stormy relations between medieval European kings and their bankers. A gentle reminder that European history is not the entirety of human history. (Just as an aside, who besides the Templars got killed over defaulted debt?)
You mentioned "markets" also known as "bazaars". Did you know that while European kings were allegedly killing their bankers there was an entire thriving civilization next door that disallowed interest bearing debt instruments?
-
https://www.jstor.org/stable/3632489
There have been suggestions that usury was instrumental in the social dislocation that significantly contributed to the collapse of food supplies in Mesopotamia. (I can't find the link atm). Regardless, it is an intriguing fact that the 3 Semitic religions that arose in succession in the same "cradle of civilization" after the demise of Mesopotamia and neighboring bronze age civilizations -- that is Judaism, Christianity, and Islam -- all felt it necessary to put the injunction against usury in the proverbial mouth of God in primary scripture. Rather curious, don't you think?
Good. This is fine.
So we strike various other non-sequitors from your original reply:
> Not even attempts at communism have survived removing dynamic markets.
Free markets, profit making, private property, incorporation for making profit (by providing goods and services) are all entirely orthogonal to the very specific 'debt instrument' of "lending money at interest". Even the broad concept of 'debt' itself is not limited to a specialized form of debt that involves usury.
The solution space of financilizing an economic system is not limited to interest bearing debt instruments. And to insist that any alternative is "communism" does not bear scrutiny.
> Historically, even societies that disallowed usary still needed financiers - they would just hunt them down and kill them when it came time to pay the piper.
I assume you refer to the stormy relations between medieval European kings and their bankers. A gentle reminder that European history is not the entirety of human history. (Just as an aside, who besides the Templars got killed over defaulted debt?)
You mentioned "markets" also known as "bazaars". Did you know that while European kings were allegedly killing their bankers there was an entire thriving civilization next door that disallowed interest bearing debt instruments?
-
https://www.jstor.org/stable/3632489
There have been suggestions that usury was instrumental in the social dislocation that significantly contributed to the collapse of food supplies in Mesopotamia. (I can't find the link atm). Regardless, it is an intriguing fact that the 3 Semitic religions that arose in succession in the same "cradle of civilization" after the demise of Mesopotamia and neighboring bronze age civilizations -- that is Judaism, Christianity, and Islam -- all felt it necessary to put the injunction against usury in the proverbial mouth of God in primary scripture. Rather curious, don't you think?
http://SmartestMan.Ca/bankmath explains that interest is not usury when paid at the beginning of the contract, only usury when collection is attempted at the end. If you borrow 100 and at the end, owe 110, you can't pay it back. that creates a mort-gage death-gamble where not all can pay. If you borrow 100, pay the interest right away, you owe 100 and have 90 and the banker has 10 with which to buy your products and let you pay the bank back. Musical chairs with money only happens when you leave the interest to turn into usury at the end of the game.
Your own source:
``` We need not assume that interest rates were "economic" in the sense of being within the ability of most cultivators to pay. Abject need was the motive for agrarian debt. A key financial dynamic of ancient civilizations was precisely the problem of debt arrears (including unpaid tax collections) mounting up beyond the ability of many borrowers to pay. This is what led to the royal amargi, andurarum and misharum "Clean Slate" proclamations of Mesopotamia during 2400-1700 BC, cancelling agrarian debts (but not commercial obliga- tions, that is, the placement of money with tamkaru-merchantsto finance their trade ventures). ```
(Sorry for the long quote)
It then goes on to list the common interest rates of borrowing money for various markets which includes a listing for Mesopotamia. Just because they engaged in debt cancellation doesn't mean they didn't practice usury - quite the opposite, indicates they practiced it quite a bit.
Practically, the anthropological origins of usury prohibitions have very little to do with non-usury markets. Even those groups which you listed practice usury - they simply put those who practice it into secondary (or lower) social groups.
The reference to communism attempts isn't a non-sequitor since depending on the particulars of their brand of communism they either want to limit usury to only a national/popular entity or get rid of it entirely. When discussing non-usury based markets they are basically the closest modern examples we have - and it's worth noting the only surviving self-labeled communist country with a functioning economy is China, who allows usury!
``` We need not assume that interest rates were "economic" in the sense of being within the ability of most cultivators to pay. Abject need was the motive for agrarian debt. A key financial dynamic of ancient civilizations was precisely the problem of debt arrears (including unpaid tax collections) mounting up beyond the ability of many borrowers to pay. This is what led to the royal amargi, andurarum and misharum "Clean Slate" proclamations of Mesopotamia during 2400-1700 BC, cancelling agrarian debts (but not commercial obliga- tions, that is, the placement of money with tamkaru-merchantsto finance their trade ventures). ```
(Sorry for the long quote)
It then goes on to list the common interest rates of borrowing money for various markets which includes a listing for Mesopotamia. Just because they engaged in debt cancellation doesn't mean they didn't practice usury - quite the opposite, indicates they practiced it quite a bit.
Practically, the anthropological origins of usury prohibitions have very little to do with non-usury markets. Even those groups which you listed practice usury - they simply put those who practice it into secondary (or lower) social groups.
The reference to communism attempts isn't a non-sequitor since depending on the particulars of their brand of communism they either want to limit usury to only a national/popular entity or get rid of it entirely. When discussing non-usury based markets they are basically the closest modern examples we have - and it's worth noting the only surviving self-labeled communist country with a functioning economy is China, who allows usury!
> Just because they engaged in debt cancellation doesn't mean they didn't practice usury - quite the opposite, indicates they practiced it quite a bit.
Well that is the whole point! Mesopotamia invented usury, among other long standing contributions, including the Zodiac, and various mod 60 constructs. And that amazing civilization totally collapsed.
Btw, Debt cancellation ("jubiliee") is the cause celebre of the economist I cited in my OP. If you are interested in the topic, Michael Hudson is your man.
https://michael-hudson.com/2018/08/and-forgive-them-their-de...
> Practically, the anthropological origins of usury prohibitions have very little to do with non-usury markets. Even those groups which you listed practice usury - they simply put those who practice it into secondary (or lower) social groups.
This is a fair point and one never underestimates the hypocrisy of mankind. That said, the point remains that it is interesting that something in the collective memory of the region zeroed in on usury as a "sin".
> The reference to communism attempts isn't a non-sequitor since depending on the particulars of their brand of communism they either want to limit usury to only a national/popular entity or get rid of it entirely.
As CCP has demonstrated, Communism is apparently an extremely plastic concept. /g My objection to your OP was and remains this: removing usury from the political-economy regime does not mean "communism".
> it's worth noting the only surviving self-labeled communist country with a functioning economy is China, who allows usury!
I don't know about you my fellow human, but I place very little value in the pronouncement of highly placed individuals, protected by their police states, regarding their ideals and aspirations.
Well that is the whole point! Mesopotamia invented usury, among other long standing contributions, including the Zodiac, and various mod 60 constructs. And that amazing civilization totally collapsed.
Btw, Debt cancellation ("jubiliee") is the cause celebre of the economist I cited in my OP. If you are interested in the topic, Michael Hudson is your man.
https://michael-hudson.com/2018/08/and-forgive-them-their-de...
> Practically, the anthropological origins of usury prohibitions have very little to do with non-usury markets. Even those groups which you listed practice usury - they simply put those who practice it into secondary (or lower) social groups.
This is a fair point and one never underestimates the hypocrisy of mankind. That said, the point remains that it is interesting that something in the collective memory of the region zeroed in on usury as a "sin".
> The reference to communism attempts isn't a non-sequitor since depending on the particulars of their brand of communism they either want to limit usury to only a national/popular entity or get rid of it entirely.
As CCP has demonstrated, Communism is apparently an extremely plastic concept. /g My objection to your OP was and remains this: removing usury from the political-economy regime does not mean "communism".
> it's worth noting the only surviving self-labeled communist country with a functioning economy is China, who allows usury!
I don't know about you my fellow human, but I place very little value in the pronouncement of highly placed individuals, protected by their police states, regarding their ideals and aspirations.
I'm not the biggest fan of this analogy. I find it reductionist to the point it loses it's meaning.
Actually the whole human body is constantly growing, not just cancers. I'm am growing new skin cells as we speak, approximately every x3 weeks I shed old skin cells so need new ones. The problem with cancerous cells is that the body stops recycling them and so then they grow unchecked. Modern companies are more like skin cells, they need to grow new capabilities and shed old ones as the environment changes. If they don't then they will die, the same way I will die if my body stops growing new cells to replace the old one.
Saying a company purpose is merely growth is nonsense, different companies have different purposes, mostly they want to survive which involves both growth and decay.
>I find it reductionist to the point it loses it's meaning. Actually the whole human body is constantly growing, not just cancers. I'm am growing new skin cells as we speak, approximately every x3 weeks I shed old skin cells so need new ones.
That objection is already covered in the very title used by HN (" If the purpose of a company is merely growth"). It's also covered extensively in the article.
And your counter-analogy is wrong anyway: the whole human body is not "constantly growing" (it does this only or mostly for its first 2 decades, about the same time we stop getting any taller).
It's constantly renewing (in your words: "I shed old skin cells so need new ones"), which is different from growing (even if we say that we have to "grow" new cells - we also have to grow new plants to keep a farm going, but that doesn't mean that the farm itself has to grow - much less to endelessly try to find new profit avenues. It's the latter sense the article uses).
>If they don't then they will die, the same way I will die if my body stops growing new cells to replace the old one.
Which is neither here nor there, since "growing new cells" to replace old ones is not the same as growth in the commonly understood sense and the one used in the article. In the "growing new sells" sense, businesses without a "growth-above-everything" mission still "grow" (renew) lots of things: their stock, ocassionally introduce new products, find new customers, and so on.
And of course the examples the author gives of companies without "growth", have survived more (e.g. the Japanese companies operating for centuries), than companies that get gigantic and whose purpose is to maximize shareholder profit...
That objection is already covered in the very title used by HN (" If the purpose of a company is merely growth"). It's also covered extensively in the article.
And your counter-analogy is wrong anyway: the whole human body is not "constantly growing" (it does this only or mostly for its first 2 decades, about the same time we stop getting any taller).
It's constantly renewing (in your words: "I shed old skin cells so need new ones"), which is different from growing (even if we say that we have to "grow" new cells - we also have to grow new plants to keep a farm going, but that doesn't mean that the farm itself has to grow - much less to endelessly try to find new profit avenues. It's the latter sense the article uses).
>If they don't then they will die, the same way I will die if my body stops growing new cells to replace the old one.
Which is neither here nor there, since "growing new cells" to replace old ones is not the same as growth in the commonly understood sense and the one used in the article. In the "growing new sells" sense, businesses without a "growth-above-everything" mission still "grow" (renew) lots of things: their stock, ocassionally introduce new products, find new customers, and so on.
And of course the examples the author gives of companies without "growth", have survived more (e.g. the Japanese companies operating for centuries), than companies that get gigantic and whose purpose is to maximize shareholder profit...
I can assure you there are plenty of people growing well beyond their first 2 decades.
As far as I know we don't grow any new fat cells, it's just that the ones we do have get larger.
There is a maximum size after which individual cells will split. It becomes harder to regain your old shape because when you lose weight the existing cells shrink but never shed, so you can end up with new cells you can’t get rid of.
For the tiny minority of people who lift for hypertrophy, they do gain new myonuclei. That's probably the only real exception though
Do the skin cells to contain the fat also only get larger? And what about the beer drinking muscle ?
>> Actually the whole human body is constantly growing, not just cancers. I'm am growing new skin cells as we speak, approximately every x3 weeks I shed old skin cells so need new ones.
That's growth at a replacement rate. Cancer grows at the expense of, and with no regard for the cells around it.
Any investor with an "exit strategy" is similarly looking to exploit, not sustain.
That's not to say all growth is bad. People grow to adulthood. Similarly there is a natural size for a company. Beyond that growth is harmful.
Edit: replacement to avoid obsolescence is what engineering or product development does. Growth at companies is monitored by finance. Skin cells... Cancer.
That's growth at a replacement rate. Cancer grows at the expense of, and with no regard for the cells around it.
Any investor with an "exit strategy" is similarly looking to exploit, not sustain.
That's not to say all growth is bad. People grow to adulthood. Similarly there is a natural size for a company. Beyond that growth is harmful.
Edit: replacement to avoid obsolescence is what engineering or product development does. Growth at companies is monitored by finance. Skin cells... Cancer.
The human body is regrowing, to repair and replace the dying parts. But after reaching it's endgame (around mid-tweenties) it's not growing in size or complexity. Companies and cancer are different in that regard. Cancer is growing without aim and purpose for the host. Companies are similar, though not in all cases. Small companies need to grow to a point were they are safe to survive any little problem. Big companies sometimes reach a point of stability, and maintain their size for a long time. But in other times they grow and grow and grow without any real aim, just for the aim of growing and doing something.
The result is that you have companies playing on many fields, delivering low quality for the customer, but often still impacting the market because of their sheer size and market-power on other fields. It is indeed disputable whether this behaviour is really justified and good on for the customer, or more harmful.
The result is that you have companies playing on many fields, delivering low quality for the customer, but often still impacting the market because of their sheer size and market-power on other fields. It is indeed disputable whether this behaviour is really justified and good on for the customer, or more harmful.
> I'm not the biggest fan of this analogy.
Personally I find it very fitting and apt analogy for a lot of modern business practices. If the goal is growth only for the purpose of growth then that's pretty comparable to cancer.
Possibly even down to the ultimate consequences: Usually it's not the cancer itself that kills people, what's killing them is being starved by the cancer as they can't keep up supplying their body, and aggressive cancer, with enough nutrients.
Imho this analogy holds similarly true for businesses that have as their main focus perpetual growth, just like an economic system that's based on perpetual growth, while being stuck in a place where resources are actually finite and as such can't even realistically sustain perpetual growth.
Personally I find it very fitting and apt analogy for a lot of modern business practices. If the goal is growth only for the purpose of growth then that's pretty comparable to cancer.
Possibly even down to the ultimate consequences: Usually it's not the cancer itself that kills people, what's killing them is being starved by the cancer as they can't keep up supplying their body, and aggressive cancer, with enough nutrients.
Imho this analogy holds similarly true for businesses that have as their main focus perpetual growth, just like an economic system that's based on perpetual growth, while being stuck in a place where resources are actually finite and as such can't even realistically sustain perpetual growth.
completely agree
Actually your skin cell analogy is a good one, in that companies should also be constantly recycled by the market.
One of the major problems in the modern west, especially the US, is that when crises have hit we’ve conflated helping “the people” with saving their employer. Imagine how differently things would look today if in 2008 there has been no bailouts for corporations, only direct aid to affected individuals.
To me, “too big to fail” is when we’ve turned companies cancerous.
One of the major problems in the modern west, especially the US, is that when crises have hit we’ve conflated helping “the people” with saving their employer. Imagine how differently things would look today if in 2008 there has been no bailouts for corporations, only direct aid to affected individuals.
To me, “too big to fail” is when we’ve turned companies cancerous.
The same wrong incentives apply to individuals. It’d be better just not to tax people’s wages and also not bail failing companies or careers out, but let people and business find their own balance.
I'm not sure which careers you think have been bailed out. Politicians talk about saving certain professions (e.g. coal miners), but those bailouts end up being for the company.
Do you have a different example?
Do you have a different example?
I replied to a comment that wanted the government to demand money from innocent people to bail out people with obsolete careers, and the comment meant this was virtuous vs bailing corporations out, while in fact demanding money to bail out inefficiency is not virtuous regardless.
It’s better not to demand money from people and instead let them be free - the money you don’t tax will end up being spent on more goods and services, like how the average Swiss lives better than the average Norwegian, even if CH has no ports or natural resources, but instead has economic freedom
It’s better not to demand money from people and instead let them be free - the money you don’t tax will end up being spent on more goods and services, like how the average Swiss lives better than the average Norwegian, even if CH has no ports or natural resources, but instead has economic freedom
Sustainability does often not necessitate bullying, exploitation, massive wealth extraction or large economic risks.
Bullying/exploitation is something you are forced to do when you are backed into a corner and there is no way out. Still, fast growing companies and enormously large corporations do it on a regular basis.
Wealth extraction is something you can do when there is enough for everyone. Smaller communities, such as families, small businesses and so on understand this very well. But parasitic behavior is apparently accepted in larger communities as it can hide behind abstract notions of hierarchy and ideology.
Taking large risks is something you can do when you are punching up or when you charter into unknown territory, truly innovate things. Just because a business uses software doesn't make it innovative though.
Bullying/exploitation is something you are forced to do when you are backed into a corner and there is no way out. Still, fast growing companies and enormously large corporations do it on a regular basis.
Wealth extraction is something you can do when there is enough for everyone. Smaller communities, such as families, small businesses and so on understand this very well. But parasitic behavior is apparently accepted in larger communities as it can hide behind abstract notions of hierarchy and ideology.
Taking large risks is something you can do when you are punching up or when you charter into unknown territory, truly innovate things. Just because a business uses software doesn't make it innovative though.
The analogy is apt.
You’re not growing, if you were your energy consumption would raise in proportion. Your adult body is in a dynamic steady state.
You’re not growing, if you were your energy consumption would raise in proportion. Your adult body is in a dynamic steady state.
Yes – until you bring the stock market and investors into the picture. Oftentimes, companies will have a legal obligation to their stockholders to (attempt to) maximise profit…
> Oftentimes, companies will have a legal obligation to their stockholders to (attempt to) maximise profit…
Can you point me to an example of a company that has a legal obligation "to (attempt to) maximise profit"?
I suspect that, in fact, the legal obligations of any company include (but are not limited to) increasing profit whilst taking into account many other factors.
Can you point me to an example of a company that has a legal obligation "to (attempt to) maximise profit"?
I suspect that, in fact, the legal obligations of any company include (but are not limited to) increasing profit whilst taking into account many other factors.
Maximizing profit is a good thing.
Why? The only answer I see is that you make more money. But it is well understood that money doesn't lead to happiness.
What if your company was making enough money that you could pay everyone worked there generous salaries and your customers are happy. If you product is complete I don't see the need to add more. Why not let everyone work half time, and continue to deliver an excellent and focused product. Slowly adding features and integrations only as they make sense.
What we see instead by companies aiming to maximize profit is that they keep adding stuff that no one wants, hiring more people and squeezing every cent out of their customers. Sure, they make more money for a while but if you give me those two options I would much rather work half the hours and pay my employees more with happy customers.
What if your company was making enough money that you could pay everyone worked there generous salaries and your customers are happy. If you product is complete I don't see the need to add more. Why not let everyone work half time, and continue to deliver an excellent and focused product. Slowly adding features and integrations only as they make sense.
What we see instead by companies aiming to maximize profit is that they keep adding stuff that no one wants, hiring more people and squeezing every cent out of their customers. Sure, they make more money for a while but if you give me those two options I would much rather work half the hours and pay my employees more with happy customers.
In a perfectly competitive market, it leads to optimal allocation of resources - i.e. capital and human labour is used a way that is most beneficial to consumers.
The less competitive the market is, the less this is true But profit maximization = good should be the baseline.
I'm really confused that sometimes HN is full of libertarian comments but sometimes it suddenly turns to populist left. Mainstream economics is underrepresented on the internet despite it being most correct (imho obviously).
The less competitive the market is, the less this is true But profit maximization = good should be the baseline.
I'm really confused that sometimes HN is full of libertarian comments but sometimes it suddenly turns to populist left. Mainstream economics is underrepresented on the internet despite it being most correct (imho obviously).
We could add more people to share the happiness.
We could but at some point having 10x more people then you need working half a day a week doesn't seem optimal. Maybe it could work but it seems that there is some sort of workforce size that makes sense for a given amount of work.
I think that something like a universal basic income makes more sense here than to force a company to grow, possibly harming its product just to employ more people.
I think that something like a universal basic income makes more sense here than to force a company to grow, possibly harming its product just to employ more people.
>universal basic income
Its fake news similar to FTL.
Its fake news similar to FTL.
In the same way explosion is a good thing, if confined within and channeled by an internal combustion engine. Outside, usually not so much.
Not so much? The profit-driven economic progress over the last century is astonishing.
It is - that's because regulators managed to mostly keep the market smoothly running. Controlled combustion, not explosion and not choking the engine.
Sometimes, other times only if you ignore externalities
Assuming “profit” in the philosophical sense, yes. But human values are not Mammon.
It’s a virtuous cycle which allows anyone to spend part of their wage investing and one day retire.
In many cases, growth is evidence that you've solved a problem in a way people find compelling. Look at Signal. I think its growth is a really positive development.
But you can only grow for so long. There is a limited demand for basically any good. Signal is clearly not at that level, so I am glad that they are growing, especially if they aren't sacrificing much just for growth. (Although IM isn't the best example either because more adoption makes the product better in a way that many products don't).
However look at Apple. For a large part everyone in the US who wants an iPhone has one. Sure, there are some people who can't afford the high price but that seems to be a small portion. However because Apple wants to grow they are working on making their devices less repairable and implementing trade-in programs so that people upgrade more often (and they can destroy the old ones). Is this growth evidence that they solved a problem? It seems that the problem they are really solving here is raising the stock price. And I will argue that raising Apple's stock price doesn't really help the world at all.
I think the initial growth of the iPhone was a sign of a good product. However I think this demand for continual growth is harmful to society overall.
However look at Apple. For a large part everyone in the US who wants an iPhone has one. Sure, there are some people who can't afford the high price but that seems to be a small portion. However because Apple wants to grow they are working on making their devices less repairable and implementing trade-in programs so that people upgrade more often (and they can destroy the old ones). Is this growth evidence that they solved a problem? It seems that the problem they are really solving here is raising the stock price. And I will argue that raising Apple's stock price doesn't really help the world at all.
I think the initial growth of the iPhone was a sign of a good product. However I think this demand for continual growth is harmful to society overall.
It's true. At some point marginal incentives tilt away from problem solving and towards something else.
That, or they just hired an effecitve "growth hacker".
That metric has been successfully gamed in startup sphere over the past decade.
That metric has been successfully gamed in startup sphere over the past decade.
Replicators using directed mutation to compete in a free energy medium will inevitably discover uncontrolled replication. Doesn't matter whether its viruses or cells or businesses or memes.
Corporations aren't replicators though (thankfully).
I'd argue that they are. They physically split and merge via the creation os subsidiaries and mergers. They shaed and absorb "dna" (people, carrying their culture).
If we ever get to an _Accelerando_-type situation where businesses are spinning-off and merging thousands of times per hour then I'll get worried.
If we ever get to an _Accelerando_-type situation where businesses are spinning-off and merging thousands of times per hour then I'll get worried.
There are 2 states in the forest: growing trees and rotting trees. Nothing in between. So this cancer analogy is a bit absurd. The same with business: business is growing or dying, I am not buying “we don’t want grow” argument.
> The same with business: business is growing or dying
I know plenty of people with small businesses that are neither growing nor dying, just paying the bills and making enough money to live happily. I'm kind of scared that people can't even imagine this is a possibility to be honest...
Not everything has to be the next facebook and have 100% yoy growth
I know plenty of people with small businesses that are neither growing nor dying, just paying the bills and making enough money to live happily. I'm kind of scared that people can't even imagine this is a possibility to be honest...
Not everything has to be the next facebook and have 100% yoy growth
Maybe those companies don't have net growth, but they still need some sort of growth. Regardless of what industry you're in, every business will face inevitable losses—customers will decide to leave, inflation will occur, equipment will need to be repaired/replaced, etc. Those losses need to be offset by growth.
While net positive growth isn't necessary, it is a major motivator for launching your own business. If you don't have net growth, then you're exchanging both your efforts in working at the business as well as in the day-to-day running of the business in exchange for a relatively fixed income. I'm not sure that the risk involved combined with the income to hours-worked ratio is much more beneficial than just working as an employee with much lower risk and no responsibility to run/manage the business.
While net positive growth isn't necessary, it is a major motivator for launching your own business. If you don't have net growth, then you're exchanging both your efforts in working at the business as well as in the day-to-day running of the business in exchange for a relatively fixed income. I'm not sure that the risk involved combined with the income to hours-worked ratio is much more beneficial than just working as an employee with much lower risk and no responsibility to run/manage the business.
I wouldn't consider "replacing" a lost client or a broken tool as growing. A company with good finances should already have planned for that. Either way I highly doubt that's the "cancer" the article is talking about.
Right, the article is talking about a different sort of growth, but I'm responding to your assertion that there are companies that are neither growing nor dying. I agree that some companies may be sustainable while having net zero growth, as you stated. I disagree that these companies do absolutely nothing to attempt to grow their businesses and don't even think about growth. At minimum, these net zero growth companies must at least grow enough to offset their losses at a sustainable pace. That means these companies do have to participate in traditional growth activities.
Specifically, I'm responding to:
> I'm kind of scared that people can't even imagine this is a possibility to be honest...
From the outside looking in, a net zero growth company appears to be living happily as you stated, but I don't think this reflects reality on closer inspection. All net zero growth businesses exist in a dynamic equilibrium in which they're constantly facing losses and constantly finding ways to grow to (at minimum) offset those losses. And these are just considerations for your own business. What about the competition? If your competitor is willing to build a net positive growth company, what are your odds of survival in the long-term?
Specifically, I'm responding to:
> I'm kind of scared that people can't even imagine this is a possibility to be honest...
From the outside looking in, a net zero growth company appears to be living happily as you stated, but I don't think this reflects reality on closer inspection. All net zero growth businesses exist in a dynamic equilibrium in which they're constantly facing losses and constantly finding ways to grow to (at minimum) offset those losses. And these are just considerations for your own business. What about the competition? If your competitor is willing to build a net positive growth company, what are your odds of survival in the long-term?
That’s not what people mean by growth of a company. That’s maintaining a balanced, viable system.
"Growth" is used as a term for a particular property of every biological system https://basicbiology.net/biology-101/mrs-gren. Perhaps it would help if people in this discussion defined their terms.
It’s weird when 30 years old company has only 10 employees while working in wide industrial automation field. The owner is just too lazy to go out of town and look for some new customers.
What if the owner is perfectly happy with his position. Why would you increase your work load and working hours to "grow" if you're living a good life already ? fomo ? lack of other meaning in your life ?
If your business supports your lifestyle what's lazy about just ... enjoying it ? Isn't that the very purpose of "work" ?
If your business supports your lifestyle what's lazy about just ... enjoying it ? Isn't that the very purpose of "work" ?
Or maybe happy with earning enough for himself and 10 others. If that worked for 30 years, that owner achieved more than most. And might do so for the foreseeable future.
What an ignorant comment! Life is not only business struggle. Growing a company as a founder means you need to sacrifice some part of your personal life for the company, either stress, free time or money. There are people happy with their lives that don't want more stress or to lose more free time... and for what? a bit bigger bank account? i'm sure the founder is doing just fine financially already
Founder was doing fine. We worked on Dell laptops from thrift store with Ubuntu. And we were paid from government’s welfare program few months too. So I suggest to look very well at employers numbers from the past 5-10 years.
Please look at this list of the oldest companies in the world: https://en.wikipedia.org/wiki/List_of_oldest_companies
They are still operating, but they didn't grow. Even trees in the forest don't grow indefinitely...
They are still operating, but they didn't grow. Even trees in the forest don't grow indefinitely...
> Even trees in the forest don't grow indefinitely...
Their trunks keep getting wider.
Their trunks keep getting wider.
Kinda interessting how majority seem to be from japan or german countries. And they all have very specific business. I wonder how big they are, and whether their size is somewhat constant through their history. Also, how many of them are really the same company, and not actually a batch of different companies just operating under the same name..
Like if a company operated for some time before it goes bust and some years later a different company continues the operation under the same name, but with different people, concepts, etc. would it still be regarded the same companies on that list? In certain cases continuing the tradition and a good name is worth big money and asien companies seem to have traditions around this concept.
Like if a company operated for some time before it goes bust and some years later a different company continues the operation under the same name, but with different people, concepts, etc. would it still be regarded the same companies on that list? In certain cases continuing the tradition and a good name is worth big money and asien companies seem to have traditions around this concept.
A symphony orchestra does not grow or rot. It stays mostly the same. Of course the value of the institution and the quality of the output may fluctuate over time.
I don't think it's growth that is the key for healthy organization - it is the drive to deliver quality output. When that drive withers the rot start. I don't see the quality of output and the drive for quality necessary linked to a constant growth in terms of revenue and so on.
I don't think it's growth that is the key for healthy organization - it is the drive to deliver quality output. When that drive withers the rot start. I don't see the quality of output and the drive for quality necessary linked to a constant growth in terms of revenue and so on.
This isn't really biologically true though? Trees can be in a state of stasis where they are neither growing nor dying.
source: http://scienceline.ucsb.edu/getkey.php?key=642#:~:text=The%2....
source: http://scienceline.ucsb.edu/getkey.php?key=642#:~:text=The%2....
This is a very incorrect take on forests. They’re incredibly intricate ecosystems in balance. They are anything but black and white, grow or die situations. Cancer in a forest would be the invasive tree that wipes out all of the native species which can’t compete. Or a blight that destroys the dominant trees.
Your analogy does not work. The growth of a forest is different from the growth of a company, which seeks to maximize revenue and profit, often via more customers or exploring existing customers.
A forest on the other hand maintains a steady state. Okay, trees continue to grow, but forests have natural ways of ensuring that trees and the other flora do not over occupy. A forest maintains balance, whereas many companies want to eat the world.
A forest on the other hand maintains a steady state. Okay, trees continue to grow, but forests have natural ways of ensuring that trees and the other flora do not over occupy. A forest maintains balance, whereas many companies want to eat the world.
Businesses cannot and need not grow forever. I don’t buy your argument. Stable businesses can and do exist.
Let's take a natural monopoly. Like electric grid. Can these companies really grow forever? At some point they should have build transmission lines to everyone that they can profitably afford to. Then they can either expand to some other field or keep paying 5-20% to their owners as dividends each year...
I don't see later option as bad one. Clearly they can provide service and invest to keep it running or even to optimize it. But growth might be impossible.
I don't see later option as bad one. Clearly they can provide service and invest to keep it running or even to optimize it. But growth might be impossible.
A lot of successful businesses adapt constantly but they don't grow in size. If you define "growth" as constantly changing to adapt to circumstances then you are right. But if you define "growth" as becoming bigger in size, I don't agree.
trees 300-500 years old are not unusual. organisms can grow without blowing themselves or their ecosystems up.
That's a great article.
I'd rather see a market full of small independent, ever growing operators than zombies drinking VC money before getting sold for a billion to some giant and become terrible.
Those small independent companies are all people who traded a life of soul-less employment for the digital equivalent of a mom and pop store.
That's the life and the society I want.
An interesting question may be, how did we get here?
Why there is so much money to invest? In other words, why there is so much inequality?
Part of it is natural, the Silicon Valley created a lot of value through technology and it's been rewarded nicely. But I think the answer is deeper and lies in the centralised economy we have, in corrupted government officials assisting monopolies creation through regulation and the government being a monopoly itself.
I'd rather see a market full of small independent, ever growing operators than zombies drinking VC money before getting sold for a billion to some giant and become terrible.
Those small independent companies are all people who traded a life of soul-less employment for the digital equivalent of a mom and pop store.
That's the life and the society I want.
An interesting question may be, how did we get here?
Why there is so much money to invest? In other words, why there is so much inequality?
Part of it is natural, the Silicon Valley created a lot of value through technology and it's been rewarded nicely. But I think the answer is deeper and lies in the centralised economy we have, in corrupted government officials assisting monopolies creation through regulation and the government being a monopoly itself.
> An interesting question may be, how did we get here?
I think a very important factor in getting us where we are has been the Friedman Doctrine[0].
Its essence can be basically described using Friedman's words: "The Social Responsibility of Business is to Increase Its Profits".
- [0]: https://en.wikipedia.org/wiki/Friedman_doctrine
I think a very important factor in getting us where we are has been the Friedman Doctrine[0].
Its essence can be basically described using Friedman's words: "The Social Responsibility of Business is to Increase Its Profits".
- [0]: https://en.wikipedia.org/wiki/Friedman_doctrine
The title reminds me of a comment from a regional bank CEO during the mortgage bubble. When asked why his bank wasn't going whole hog for the newer sorts of loan, which were growing like crazy at the time, he said, "If it grows too fast, it's a weed." That's always stuck with me.
Do lifestyle businesses really have the negative connotation that I’ve been told they have? I’ve heard about this stigma of a lifestyle business numerous times, but everyone Ive ever actually talked to has said they sound lovely: you maintain a lot of control over your life and business, at the expense of perhaps more (unnecessary) money.
I had thought for a long time that lifestyle businesses which weren’t optimizing to grow would be looked down upon, but I’ve never seen that. I think maybe there is some bias because of course we will hear more about the Ubers and Doordashes of the world, rather than the Basecamps of the world.
I had thought for a long time that lifestyle businesses which weren’t optimizing to grow would be looked down upon, but I’ve never seen that. I think maybe there is some bias because of course we will hear more about the Ubers and Doordashes of the world, rather than the Basecamps of the world.
> Do lifestyle businesses really have the negative connotation that I’ve been told they have?
My cynical hypothesis is that it's 50/50 of a good chunk of tech community feeling FOMO ("I want to get rich quick too!"), and VCs creating this perception. VCs need fresh young blood to push through the startup grinder.
That said, I haven't noticed much of this connotation here on HN (which is ironic, this being ex-Startup News, and a board attached to an VC company). For this I have another hypothesis: HN has a slightly different bias when the EU is awake, which is now.
My cynical hypothesis is that it's 50/50 of a good chunk of tech community feeling FOMO ("I want to get rich quick too!"), and VCs creating this perception. VCs need fresh young blood to push through the startup grinder.
That said, I haven't noticed much of this connotation here on HN (which is ironic, this being ex-Startup News, and a board attached to an VC company). For this I have another hypothesis: HN has a slightly different bias when the EU is awake, which is now.
I never thought about the regional bias of HN. But it sounds reasonable. And being from the EU, I probably wouldn't notice.
First, stop calling any business a lifestyle business. Business is always hard no matter how much time you put into it. I run a bootstrapped SAAS bsiness that grew "only" 20% last year. I know that is not even close to what VCs want if I wanted money but that 20% growth was great for our team and we can continue to working on building a great sustainable and profitable business. However, I can assure you there is nothing "lifestyle" about it. As the founder, I grind my ass as much as the founder of a VC backed company.
To push the metaphor a bit further isn't humanity itself a kind of cancer of the earth?
That remains to be seen: It’s possible we are the reproductive system.
This is like a frame of reference thing. Your response is fascinating. It could spark hours and hours of debate. What an amazing response.
If life is growth, the goal is to spread as far and wide as possible. Life will spread to Mars, the moon, and beyond. (Or die trying, and inevitably, literally).
If life is balance, the goal is to exist as long as possible. To which we are not the reproductive system, but the cancer attacking it.
I believe there is a reasonable chance that the existing human generation is the one that will have a global discussion about this as a way to frame balance as a possible goal of humanity. And maybe that discussion will not go well, but simply to have it would be noteworthy.
If life is growth, the goal is to spread as far and wide as possible. Life will spread to Mars, the moon, and beyond. (Or die trying, and inevitably, literally).
If life is balance, the goal is to exist as long as possible. To which we are not the reproductive system, but the cancer attacking it.
I believe there is a reasonable chance that the existing human generation is the one that will have a global discussion about this as a way to frame balance as a possible goal of humanity. And maybe that discussion will not go well, but simply to have it would be noteworthy.
"I'd like to share a revelation that I've had during my time here. It came to me when I tried to classify your species and I realized that you're not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus. Human beings are a disease, a cancer of this planet." - Agent Smith, The Matrix
To this day I don't see how this "revelation" had an impact on anything. It's certainly interesting and I think it's inherently true (we're based of the same biology) but it doesn't change anything.
Agent Smith certainly was the most high-tech philosoph...
No, the current mainstream economic system is the cancer and it's killing the host.
Throughout history many civilizations based on endless growth started to collapse when they run out of territories to conquer or simply fuel. (e.g. the roman empire)
Throughout history many civilizations based on endless growth started to collapse when they run out of territories to conquer or simply fuel. (e.g. the roman empire)
It may have become, but it wasn't until we figured the physics out.
It was already. We've been a rolling ecological disaster way before we figured out writing. We just went from place to place, leaving burned forests and extinct species behind.
Grokking physics definitely accelerated this, but we have an opportunity ahead of us to stabilize. Not sure we'll be able to take it, though. Not with the systems of incentives that we have now.
Grokking physics definitely accelerated this, but we have an opportunity ahead of us to stabilize. Not sure we'll be able to take it, though. Not with the systems of incentives that we have now.
At that scale it's not much more than other species can do. I remember an article of the effects of less wolves on the eco system (yellowstone?). The whole area became a swamp. What changed since is the scale at which human societies impacted the ecosystem.
I think of this every time I’m in an airplane looking down. I can’t see the effects of all the other animals, but the effects upon Earth by humans is drastic and very infectious looking.
No. I feel like a lot of people aren't parsing the title correctly.
IF the purpose of the company.
Not the purpose of all companies. Humanity doesn't have purpose other than what we make of it. We can strive to maximize enjoyment while keeping population flat if we wanted to.
Edit: The title was changed, it was something like: If a company's sole purpose is to grow, then it is no different from a cancer.
IF the purpose of the company.
Not the purpose of all companies. Humanity doesn't have purpose other than what we make of it. We can strive to maximize enjoyment while keeping population flat if we wanted to.
Edit: The title was changed, it was something like: If a company's sole purpose is to grow, then it is no different from a cancer.
We can but we don't. Our biological drive, coupled with our lack of volition to reason about it, is to reproduce. Most people don't care if pumping out a unit is the worst thing contribution to the planet's environment, they'll do it just because.
This idea doesn't grok with falling birthrates in wealthy nations. People don't just live to reproduce. There is a biological drive to reproduce, but it is not unchecked. So the cancer metaphor is apt.
Island nations have always had to deal with the realities of Malthusian limits.
Yes it is
Not humanity, but capitalism. This need of constant growth is a phenomenon most other economic systems don't have.
How do these other economic systems you speak of ensure that reproduction remains below replacement levels?
Not below, but somehow balanced?
This explosion of growth we are seeing is relatively recent, and is due not only to advances in technology, but also to cultural changes which may perhaps have been more important to enable this relentless expansion.
What was the most recognized traditional means to become rich if not by pillaging and military conquest? The idea that you could (and should!) become rich by individual economic effort was not common at all. To the contrary, it was frequently taken to be immoral, like the Medieval condemnation of usury, or the ostracism of rich people in Ancient Greece.
This explosion of growth we are seeing is relatively recent, and is due not only to advances in technology, but also to cultural changes which may perhaps have been more important to enable this relentless expansion.
What was the most recognized traditional means to become rich if not by pillaging and military conquest? The idea that you could (and should!) become rich by individual economic effort was not common at all. To the contrary, it was frequently taken to be immoral, like the Medieval condemnation of usury, or the ostracism of rich people in Ancient Greece.
[deleted]
> The so-called accumulation of capital which gave birth to the bourgeoisie changed the very conception of property and wealth: they were no longer considered to be the results of accumulation and acquisition but their beginnings; wealth became a never-ending process of getting wealthier. The classification of the bourgeoisie as an owning class is only superficially correct, for a characteristic of this class has been that everybody could belong to it who conceived of life as a process of perpetually becoming wealthier, and considered money as something sacrosanct which under no circumstances should be a mere commodity for consumption.
[..]
> [Hobbes] even, through sheer force of imagination, was able to outline the main psychological traits of the new type of man who would fit into such a society and its tyrannical body politic. He foresaw the necessary idolatry of power itself by this new human type, that he would be flattered at being called a power-thirsty animal, although actually society would force him to surrender all his natural forces, his virtues and his vices, and would make him the poor meek little fellow who has not even the right to rise against tyranny, and who, far from striving for power, submits to any existing government and does not stir even when his best friend falls an innocent victim to an incomprehensible raison d'etat.
> For a Commonwealth based on the accumulated and monopolized power of all its individual members necessarily leaves each person powerless, deprived of his natural and human capacities. It leaves him degraded into a cog in the power-accumulating machine, free to console himself with sublime thoughts about the ultimate destiny of this machine, which itself is constructed in such a way that it can devour the globe simply by following its own inherent law.
[..]
> By "Victory or Death," the Leviathan can indeed overcome all political limitations that go with the existence of other peoples and can envelop the whole earth in its tyranny. But when the last war has come and every man has been provided for, no ultimate peace is established on earth: the power-accumulating machine, without which continual expansion would not have been achieved, needs more material to devour in its never-ending process. If the last victorious Commonwealth cannot proceed to "annex the planets," it can only proceed to destroy itself in order to begin anew the never-ending process of power generation.
-- Hannah Arendt, "The Origins of Totalitarianism"
Mind you, IIRC Arendt didn't argue that the above "leads to totalitarianism", it's just something she wrote about in that tome, too.
[..]
> [Hobbes] even, through sheer force of imagination, was able to outline the main psychological traits of the new type of man who would fit into such a society and its tyrannical body politic. He foresaw the necessary idolatry of power itself by this new human type, that he would be flattered at being called a power-thirsty animal, although actually society would force him to surrender all his natural forces, his virtues and his vices, and would make him the poor meek little fellow who has not even the right to rise against tyranny, and who, far from striving for power, submits to any existing government and does not stir even when his best friend falls an innocent victim to an incomprehensible raison d'etat.
> For a Commonwealth based on the accumulated and monopolized power of all its individual members necessarily leaves each person powerless, deprived of his natural and human capacities. It leaves him degraded into a cog in the power-accumulating machine, free to console himself with sublime thoughts about the ultimate destiny of this machine, which itself is constructed in such a way that it can devour the globe simply by following its own inherent law.
[..]
> By "Victory or Death," the Leviathan can indeed overcome all political limitations that go with the existence of other peoples and can envelop the whole earth in its tyranny. But when the last war has come and every man has been provided for, no ultimate peace is established on earth: the power-accumulating machine, without which continual expansion would not have been achieved, needs more material to devour in its never-ending process. If the last victorious Commonwealth cannot proceed to "annex the planets," it can only proceed to destroy itself in order to begin anew the never-ending process of power generation.
-- Hannah Arendt, "The Origins of Totalitarianism"
Mind you, IIRC Arendt didn't argue that the above "leads to totalitarianism", it's just something she wrote about in that tome, too.
"a Commonwealth based on the accumulated and monopolized power of all its individual members necessarily leaves each person powerless,"
? It was like that way before the 'bourgeois' ever even existed.
Roman Empire? Charlemagne? Louis XIV? Habsburgs?
The problem with these Enlightenment era definitions is they fail to take into consideration that the quest for power has been there since the start, it was just never generally available to the merchant class.
i.e. the notion that the Roman Empire wouldn't fit any of these social distinctions doesn't quite add up - it's just that those wanting power had to take on perfunctory civic roles and be involved in politics in order for their mercantile quests to thrive.
The other thing missing from these quotes is ahem Adam Smith: trade, economies of scale, division of labour, comparative value etc. create enormous value and most of that value ends up in the hands of consumers.
The Nobility were beaten by the Merchants because the Nobility were only interested in control, the Merchants created a lot of value.
? It was like that way before the 'bourgeois' ever even existed.
Roman Empire? Charlemagne? Louis XIV? Habsburgs?
The problem with these Enlightenment era definitions is they fail to take into consideration that the quest for power has been there since the start, it was just never generally available to the merchant class.
i.e. the notion that the Roman Empire wouldn't fit any of these social distinctions doesn't quite add up - it's just that those wanting power had to take on perfunctory civic roles and be involved in politics in order for their mercantile quests to thrive.
The other thing missing from these quotes is ahem Adam Smith: trade, economies of scale, division of labour, comparative value etc. create enormous value and most of that value ends up in the hands of consumers.
The Nobility were beaten by the Merchants because the Nobility were only interested in control, the Merchants created a lot of value.
> ? It was like that way before the 'bourgeois' ever even existed.
None of the examples you gave had the means to wield "the accumulated and monopolized power of all its individual members", not least because technological limits alone introduced massive logistical challenges to central control that made any empire of the time very much decentralised and dependent on the extent to which local representatives had their own agendas.
> The problem with these Enlightenment era definitions
Arendts book was published in 1951.
> it was just never generally available to the merchant class.
It's much bigger a distinction than that. The big change brought by the growth of capitalism was disconnecting responsibility for the population from the accumulation of capital. A feudal lord could squeeze his population hard, sure, but cause them to die of starvation and his output would drop - his power and ability to accumulate it was tied to land and tied to keeping the population living on them able to produce. With capitalism accumulation was disconnected from that feedback loop - the capitalist can optimise away the workers in a way those dependent on at least the survival of the workers can't, and that is real reason why the nobility was beaten:
The only way to beat the Merchants was to become one, and ditch the liability that having a notional responsibility for your workers provided.
But that also changed the nature of accumulation for those at the top from one naturally limited by being tied to a scarce resource (land) to being a near unlimited thread-mill. It's natural to then look at the side effects of that. They're all bad, but they're also not all good.
None of the examples you gave had the means to wield "the accumulated and monopolized power of all its individual members", not least because technological limits alone introduced massive logistical challenges to central control that made any empire of the time very much decentralised and dependent on the extent to which local representatives had their own agendas.
> The problem with these Enlightenment era definitions
Arendts book was published in 1951.
> it was just never generally available to the merchant class.
It's much bigger a distinction than that. The big change brought by the growth of capitalism was disconnecting responsibility for the population from the accumulation of capital. A feudal lord could squeeze his population hard, sure, but cause them to die of starvation and his output would drop - his power and ability to accumulate it was tied to land and tied to keeping the population living on them able to produce. With capitalism accumulation was disconnected from that feedback loop - the capitalist can optimise away the workers in a way those dependent on at least the survival of the workers can't, and that is real reason why the nobility was beaten:
The only way to beat the Merchants was to become one, and ditch the liability that having a notional responsibility for your workers provided.
But that also changed the nature of accumulation for those at the top from one naturally limited by being tied to a scarce resource (land) to being a near unlimited thread-mill. It's natural to then look at the side effects of that. They're all bad, but they're also not all good.
That the Roman Empire was to some extent decentralized doesn't matter though - they had all of the power and were able to extract all of the surpluses from their vassal states.
They definitely "the accumulated and monopolized power of all its individual members" -> 66% of Rome were slaves i.e. literally property!
They collected all of the surplus wealth of their vassal states through tributes and had absolute direct power. Imagine they 'owned' those entire national economies and accumulated wealth through those 'dividend payments' of tributes.
"the growth of capitalism was disconnecting responsibility for the population from the accumulation of capital. "
2 issues:
1) Since when did the Roman Emperors or the Feudal Nobility have any responsibility? The only thing they did was ensure that their territories were not invaded. That's it. Everyone was a serf.
By your own example of 'Feudal Lord' - his responsibility was to 'keep his slaves just barely alive'.
2) Again the Adam Smith: you're not counting surpluses. Economies create vast amounts of consumer surpluses. Whatever the capitalists are able to hoard away in their bank accounts is small in comparison to the value created by consumer surpluses.
eg: the guy and/or corporation who invented the dishwasher pocketed 0.001% of the value he unleashed by freeing up entire societies from having to wash by hand.
The Merchants beat the Nobility because they did useful stuff. Like make railroads. Dig mines. Transported food and materials. Make stuff like steam engines. Made grocery stores. Created financial services, banking, accounting. Made textiles. Built buildings.
From the entire history of Greek Antiquity up until probably about 1500 - GDP 'per capita' of most places economy barely grew an inch.
When merchants and capitalists took over, the economy skyrocketed and hasn't looked back.
It's not a paradox that people are immensely more wealthy in capitalism despite however 'unequal' the distribution of accumulated wealth is.
They definitely "the accumulated and monopolized power of all its individual members" -> 66% of Rome were slaves i.e. literally property!
They collected all of the surplus wealth of their vassal states through tributes and had absolute direct power. Imagine they 'owned' those entire national economies and accumulated wealth through those 'dividend payments' of tributes.
"the growth of capitalism was disconnecting responsibility for the population from the accumulation of capital. "
2 issues:
1) Since when did the Roman Emperors or the Feudal Nobility have any responsibility? The only thing they did was ensure that their territories were not invaded. That's it. Everyone was a serf.
By your own example of 'Feudal Lord' - his responsibility was to 'keep his slaves just barely alive'.
2) Again the Adam Smith: you're not counting surpluses. Economies create vast amounts of consumer surpluses. Whatever the capitalists are able to hoard away in their bank accounts is small in comparison to the value created by consumer surpluses.
eg: the guy and/or corporation who invented the dishwasher pocketed 0.001% of the value he unleashed by freeing up entire societies from having to wash by hand.
The Merchants beat the Nobility because they did useful stuff. Like make railroads. Dig mines. Transported food and materials. Make stuff like steam engines. Made grocery stores. Created financial services, banking, accounting. Made textiles. Built buildings.
From the entire history of Greek Antiquity up until probably about 1500 - GDP 'per capita' of most places economy barely grew an inch.
When merchants and capitalists took over, the economy skyrocketed and hasn't looked back.
It's not a paradox that people are immensely more wealthy in capitalism despite however 'unequal' the distribution of accumulated wealth is.
> That the Roman Empire was to some extent decentralized doesn't matter though - they had all of the power and were able to extract all of the surpluses from their vassal states.
Yes it matter, because it means you can't treat it as a singular entity. It never acted as one. The success of an emperor depended to a great deal on squeezing just hard enough to not give anyone designs on thinking they could do entirely as they pleased, yet not so hard it'd trigger rebellions. There was no capability to prevent all kinds of slack in the system in every layer.
They had "absolute direct power" as long as it was only ever exercised with restraint, or in limited areas.
> 1) Since when did the Roman Emperors or the Feudal Nobility have any responsibility?
Read the rest of what I wrote. The point is not that there was an explicit, stated responsibility, but that it is inherent in that those who mismanaged their workforce faced a declining workforce. You point out yourself that a large proportion of Rome's inhabitants were actual property. Let them die, and the value of your property and the profits you can extract from it goes down. You had no ready source of replacement. A feudal lord facing increasing demands for tributes could not meet it if he let his labour force die, because it's not like he could take out an ad and have a flood of new workers arrive.
That is the relationship that capitalism removed. That does not mean the feudal system was good. It was awful, and capitalism was a distinct improvement. But it means a fundamental change in the extent to which the parties could afford to attempt to extract maximal value from their workers at all cost, and that was a key driver in making capitalism viable until further automation and expansion into new markets made it less worthwhile to fight to retain that pressure. But the dissolution of those bonds remain, and it means the dynamics of how capitalism deal with growth are very different - for both good and bad.
> 2) Again the Adam Smith: you're not counting surpluses. Economies create vast amounts of consumer surpluses. Whatever the capitalists are able to hoard away in their bank accounts is small in comparison to the value created by consumer surpluses.
Surpluses are only relevant as long as you have money to access them. As such, talking of surpluses is irrelevant without addressing what happens to pressure on employment and wages once growth hits a wall. This is the main point of Marx criticism of capitalism: That capitalism does create vast amount of additional value - he was a massive fan, expressing absolute awe at the possibilities capitalism created - but the inherent competitive pressure in capitalism means that capitalism will eventually start to eat away at the need for labour. That's a good thing for society in the long run. But in the short run, it means addressing how to ensure access.
> It's not a paradox that people are immensely more wealthy in capitalism despite however 'unequal' the distribution of accumulated wealth is.
You're right, it's not, because capitalism still has room for growth, during which it has no incentive to squeeze everything it can out of efficiency improvements.
It has no relevance, however, to the question of what happens once further growth is impossible and competitive pressures have to turn inwards and focus on eliminating labor to squeeze out ever thinner margins (remember, Adam Smith also argued that profits were "always highest in the countries which are going fastest to ruin"; high margins are a sign of inefficient competition)
Yes it matter, because it means you can't treat it as a singular entity. It never acted as one. The success of an emperor depended to a great deal on squeezing just hard enough to not give anyone designs on thinking they could do entirely as they pleased, yet not so hard it'd trigger rebellions. There was no capability to prevent all kinds of slack in the system in every layer.
They had "absolute direct power" as long as it was only ever exercised with restraint, or in limited areas.
> 1) Since when did the Roman Emperors or the Feudal Nobility have any responsibility?
Read the rest of what I wrote. The point is not that there was an explicit, stated responsibility, but that it is inherent in that those who mismanaged their workforce faced a declining workforce. You point out yourself that a large proportion of Rome's inhabitants were actual property. Let them die, and the value of your property and the profits you can extract from it goes down. You had no ready source of replacement. A feudal lord facing increasing demands for tributes could not meet it if he let his labour force die, because it's not like he could take out an ad and have a flood of new workers arrive.
That is the relationship that capitalism removed. That does not mean the feudal system was good. It was awful, and capitalism was a distinct improvement. But it means a fundamental change in the extent to which the parties could afford to attempt to extract maximal value from their workers at all cost, and that was a key driver in making capitalism viable until further automation and expansion into new markets made it less worthwhile to fight to retain that pressure. But the dissolution of those bonds remain, and it means the dynamics of how capitalism deal with growth are very different - for both good and bad.
> 2) Again the Adam Smith: you're not counting surpluses. Economies create vast amounts of consumer surpluses. Whatever the capitalists are able to hoard away in their bank accounts is small in comparison to the value created by consumer surpluses.
Surpluses are only relevant as long as you have money to access them. As such, talking of surpluses is irrelevant without addressing what happens to pressure on employment and wages once growth hits a wall. This is the main point of Marx criticism of capitalism: That capitalism does create vast amount of additional value - he was a massive fan, expressing absolute awe at the possibilities capitalism created - but the inherent competitive pressure in capitalism means that capitalism will eventually start to eat away at the need for labour. That's a good thing for society in the long run. But in the short run, it means addressing how to ensure access.
> It's not a paradox that people are immensely more wealthy in capitalism despite however 'unequal' the distribution of accumulated wealth is.
You're right, it's not, because capitalism still has room for growth, during which it has no incentive to squeeze everything it can out of efficiency improvements.
It has no relevance, however, to the question of what happens once further growth is impossible and competitive pressures have to turn inwards and focus on eliminating labor to squeeze out ever thinner margins (remember, Adam Smith also argued that profits were "always highest in the countries which are going fastest to ruin"; high margins are a sign of inefficient competition)
Just remember that during the “growth” company apparently delivers useful goods and services (otherwise people wouldn’t pay it money). In the process company might increase customers’ standard of living and productivity which in turn causes positive effects and growth elsewhere.
A lot of companies in pursuit of "growth" provide their goods/services at a loss and/or break laws or behave unethically in the process.
Often when investors finally seek a return on their investment and the company adjusts their prices to a realistic level (or that law enforcement catches up) the company withers away, often leaving devastation behind (such as wronged employees, business partners or customers).
Often when investors finally seek a return on their investment and the company adjusts their prices to a realistic level (or that law enforcement catches up) the company withers away, often leaving devastation behind (such as wronged employees, business partners or customers).
I worked for 27 years, for a company (Japanese) that is over 100 years old. It is world-renowned, and one of the top brands in the world; a synonym for "Quality."
I won't name it, because I don't want them to have to deal with my random stuff (although I won't say bad things about them). It's easy to figure out, if you care enough to look at my profile.
Although I often had fierce disagreements with their management and engineering process, these folks had "Quality" in their DNA, and inculcated a basic mindset of quality in me.
To this day, I actually get physically uncomfortable, if I know of bugs in my work. My goal is to write 100% bug-free software. We all know that's basically impossible, but it is possible to write software of such Quality, that the bug count approaches zero. In most cases, I don't bother setting up bug tracking systems, because the reports are so few that it's not worth the agita. GitHub Issues is fine for me. Most of the interactions that I have are about usability and UX. These tend to be more casual, and "back-and-forth," than formal bug reports.
I have been sneered at for this attitude.
I find that annoying, but it doesn't stop me.
I'm currently working on a fairly ambitious project, where my approach is very much appreciated. I would be unable to do it, if I applied the typical "churn out crap to reach MVP" that seems to be de rigeur, in the industry. The Quality of my work, means that I can develop a platform, alone, that usually requires a team.
I won't name it, because I don't want them to have to deal with my random stuff (although I won't say bad things about them). It's easy to figure out, if you care enough to look at my profile.
Although I often had fierce disagreements with their management and engineering process, these folks had "Quality" in their DNA, and inculcated a basic mindset of quality in me.
To this day, I actually get physically uncomfortable, if I know of bugs in my work. My goal is to write 100% bug-free software. We all know that's basically impossible, but it is possible to write software of such Quality, that the bug count approaches zero. In most cases, I don't bother setting up bug tracking systems, because the reports are so few that it's not worth the agita. GitHub Issues is fine for me. Most of the interactions that I have are about usability and UX. These tend to be more casual, and "back-and-forth," than formal bug reports.
I have been sneered at for this attitude.
I find that annoying, but it doesn't stop me.
I'm currently working on a fairly ambitious project, where my approach is very much appreciated. I would be unable to do it, if I applied the typical "churn out crap to reach MVP" that seems to be de rigeur, in the industry. The Quality of my work, means that I can develop a platform, alone, that usually requires a team.
While this is an admirable approach in theory, I noticed you don't mention how much time (i.e., money) it takes you to implement a high-quality platform relative to people with lower quality standards.
There are massive economic benefits to shipping something early but a little buggy or even incomplete. Does it take some of the artistry out of being a programmer? Sure! In fact the ability to compromise on quality, to tolerate a little technical debt, is a sign of maturity I look for when interviewing senior engineers. In software it's possible to waste months and months of engineering time endlessly iterating on the implementation in the name of "quality" while realizing minimal value to the business. For example, obsessively aiming for 100% test coverage, rewriting working code in accordance with a new fad style or framework, adding a new abstraction layer where it isn't required, etc. An engineer who refuses to fix a minor bug in a "crufty" part of the codebase without spending a month rewriting it from scratch is not the kind of engineer I want on my team -- it usually goes hand in hand with a lot of nitpicking on pull requests, overambitious designs, derailing of technical discussions. In other words, ego.
It's not that I don't care about quality. It's just that I've worked with lots of people who equate quality with their own tastes, and they can be really unpleasant to work with.
(Note: none of this is meant as a criticism of you, OP, more a general rant about the flip-side of "quality" in software engineering.)
There are massive economic benefits to shipping something early but a little buggy or even incomplete. Does it take some of the artistry out of being a programmer? Sure! In fact the ability to compromise on quality, to tolerate a little technical debt, is a sign of maturity I look for when interviewing senior engineers. In software it's possible to waste months and months of engineering time endlessly iterating on the implementation in the name of "quality" while realizing minimal value to the business. For example, obsessively aiming for 100% test coverage, rewriting working code in accordance with a new fad style or framework, adding a new abstraction layer where it isn't required, etc. An engineer who refuses to fix a minor bug in a "crufty" part of the codebase without spending a month rewriting it from scratch is not the kind of engineer I want on my team -- it usually goes hand in hand with a lot of nitpicking on pull requests, overambitious designs, derailing of technical discussions. In other words, ego.
It's not that I don't care about quality. It's just that I've worked with lots of people who equate quality with their own tastes, and they can be really unpleasant to work with.
(Note: none of this is meant as a criticism of you, OP, more a general rant about the flip-side of "quality" in software engineering.)
Maybe you wouldn't like working with me, then. Not an issue. Problem solved.
I'm old, anyway, and I've already learned that's an automatic showstopper. No one wants to work with us older folks. It was pretty jarring, encountering that, as I had always worked on large, distributed, heterogenous, teams, my whole career, and was used to some basic respect. That seems to be something that isn't really practiced, these days. It's all about competing with each other.
I had to figure out how to do the kind of work that I need to do, alone. The only viable way, is to work with such a level of quality, that I can close the door on modules as I progress, and leave code of such quality, that I can go back and work on it fairly easily, as needed. It's actually done at a ferocious pace. I'm having to take a break, for a bit, as I'm leaving the rest of the team behind, and they need time to catch up. It's tax time, anyway, and I have a couple of businesses I need to get tied up.
Maybe that's not what you want, but it is what some other folks want. It is certainly what I want. I simply won't do bad quality work. It hurts, and I'm a wuss. I don't like pain.
I'm old, anyway, and I've already learned that's an automatic showstopper. No one wants to work with us older folks. It was pretty jarring, encountering that, as I had always worked on large, distributed, heterogenous, teams, my whole career, and was used to some basic respect. That seems to be something that isn't really practiced, these days. It's all about competing with each other.
I had to figure out how to do the kind of work that I need to do, alone. The only viable way, is to work with such a level of quality, that I can close the door on modules as I progress, and leave code of such quality, that I can go back and work on it fairly easily, as needed. It's actually done at a ferocious pace. I'm having to take a break, for a bit, as I'm leaving the rest of the team behind, and they need time to catch up. It's tax time, anyway, and I have a couple of businesses I need to get tied up.
Maybe that's not what you want, but it is what some other folks want. It is certainly what I want. I simply won't do bad quality work. It hurts, and I'm a wuss. I don't like pain.
That assertion is nothing new. I believe there were even studies made about that, comparing economies to organisms, and high-growth companies as cancerous manifestations. But don't ask me what and where.
One factor that plays an important role in justifying growth is scale. Scale provides lower costs so that sellers have more pricing flexibility. Pricing flexibility provides resilience. For example, Starbucks vs. Red Rock Coffee. Scale enables Starbucks to enjoy lower costs for just about all elements of their business and thereby withstand economic cycles. Scale enables them to introduce 'lifestyle' products into their stores. Scale enables them to experiment with more new ideas. It provides them with more data on customer behavior to guide pricing, product introduction, as well as on how to set wages and structure employee benefits.
To be sure, scale also presents business challenges that Red Rock will never see. Product consistency among stores, supply chain management, public financial reporting and all the associated liabilities are non-issues for Red Rock.
I'd also point out, as several others have, that electronics and computing introduce an element of ephemeris into all businesses. Drinking sake is almost a ritual. Ritual relies on heritage in order to be meaningful. Hence, by its nature, it's not to change and claiming an 850 year legacy makes it all the more meaningful. The smartphone in your pocket has the inverse attribute. The older it gets, the more likely you'll infer scorn from your colleagues.
To be sure, scale also presents business challenges that Red Rock will never see. Product consistency among stores, supply chain management, public financial reporting and all the associated liabilities are non-issues for Red Rock.
I'd also point out, as several others have, that electronics and computing introduce an element of ephemeris into all businesses. Drinking sake is almost a ritual. Ritual relies on heritage in order to be meaningful. Hence, by its nature, it's not to change and claiming an 850 year legacy makes it all the more meaningful. The smartphone in your pocket has the inverse attribute. The older it gets, the more likely you'll infer scorn from your colleagues.
"Infinite growth is the ideology of a cancer cell" was written by Edward Abbey a ecologist and author of the book Desert Solitaire. Might be worth looking into.
This is a sloppy argument that mixes virtue-signaling, cherry-picks anecdotes, and doesn’t address the core topic: is growth always good?
There are many reasons a company might grow. One is that a company, flush with VC funding, effectively gives away money to buy customers and growth. I’m skeptical that there is enough VC money to buy hockey-stick growth, but if I’m incorrect, then the real issue is, “VC money is poisonous to the free-market,” and not that growth is cancerous.
The other reason for growth is that a startup is making what people want. People might want it so badly that they will put up with buggy and incomplete products — as long as those products fulfill an unmet need.
If what people want is shortsighted (gas guzzling devices?) or just wrong (short selling?), then yes, growth is cancerous. But again, the real issue is “the failure of Governmental regulation against unsafe or unethical products is cancerous.”
The problems identified with growth are not essentially about companies. A company that is growing, given proper private and public regulation, is by definition providing more value to the world.
So in some sense at least, the article is right — there are more important things than growth, if you simply add an adjective: legitimate growth.
There are many reasons a company might grow. One is that a company, flush with VC funding, effectively gives away money to buy customers and growth. I’m skeptical that there is enough VC money to buy hockey-stick growth, but if I’m incorrect, then the real issue is, “VC money is poisonous to the free-market,” and not that growth is cancerous.
The other reason for growth is that a startup is making what people want. People might want it so badly that they will put up with buggy and incomplete products — as long as those products fulfill an unmet need.
If what people want is shortsighted (gas guzzling devices?) or just wrong (short selling?), then yes, growth is cancerous. But again, the real issue is “the failure of Governmental regulation against unsafe or unethical products is cancerous.”
The problems identified with growth are not essentially about companies. A company that is growing, given proper private and public regulation, is by definition providing more value to the world.
So in some sense at least, the article is right — there are more important things than growth, if you simply add an adjective: legitimate growth.
> is growth always good?
Perhaps we are glossing over the real question:
> is the pursuit of growth always good?
And perhaps even more accurately:
> is a strategy of not pursuing growth better for a company?
I think this might lead to a more relevant discussion than is happening elsewhere in this thread.
Besides--"perpetual growth" as a concept is on the same plane as "the customer is always right." It's not expected to be literally true, it's a mindset. If you're not trying to improve, you're likely stagnating or getting worse. If you're consistently at-odds with what your customer is expecting, it may mean you should be re-assessing how you're doing business.
I think ultimately it is healthy for businesses to be constantly re-evaluating whether they can do more, or do it for less. And that's all "perpetual growth" means.
Perhaps we are glossing over the real question:
> is the pursuit of growth always good?
And perhaps even more accurately:
> is a strategy of not pursuing growth better for a company?
I think this might lead to a more relevant discussion than is happening elsewhere in this thread.
Besides--"perpetual growth" as a concept is on the same plane as "the customer is always right." It's not expected to be literally true, it's a mindset. If you're not trying to improve, you're likely stagnating or getting worse. If you're consistently at-odds with what your customer is expecting, it may mean you should be re-assessing how you're doing business.
I think ultimately it is healthy for businesses to be constantly re-evaluating whether they can do more, or do it for less. And that's all "perpetual growth" means.
He's not wrong. Growth above all else is just toxic.
In the dot-com era, I worked for a custom software shop. This was a time when you could quote $1MM for a dynamic web site, and get it. We built fancy marketing sites and then moved into other bespoke systems using mostly Java and a little Cold Fusion, and we did well in this niche in our region.
But the C-suite got the growth bug, and I didn't have enough stock to stop it, and so we did this crazy land grab thing with outside investment and mergers with other smaller shops elsewhere (NYC, inevitably SF), and all of a sudden instead of a profitable regional player we were on a treadmill race with others (like Agency.com, etc) that really only had room for a couple "winners."
If we'd stopped at 100-150 people, we could have been a very successful profitable player in Texas. And we'd probably either still be in business, or would have been acquired by somebody who wanted our client base (heavy O&G, obviously), and I'd have seen some upside.
None of that happened because c-suite wanted to get big and go public and cash out with $20MM each or whatever. It was a dumb plan.
In the dot-com era, I worked for a custom software shop. This was a time when you could quote $1MM for a dynamic web site, and get it. We built fancy marketing sites and then moved into other bespoke systems using mostly Java and a little Cold Fusion, and we did well in this niche in our region.
But the C-suite got the growth bug, and I didn't have enough stock to stop it, and so we did this crazy land grab thing with outside investment and mergers with other smaller shops elsewhere (NYC, inevitably SF), and all of a sudden instead of a profitable regional player we were on a treadmill race with others (like Agency.com, etc) that really only had room for a couple "winners."
If we'd stopped at 100-150 people, we could have been a very successful profitable player in Texas. And we'd probably either still be in business, or would have been acquired by somebody who wanted our client base (heavy O&G, obviously), and I'd have seen some upside.
None of that happened because c-suite wanted to get big and go public and cash out with $20MM each or whatever. It was a dumb plan.
The purpose of every living being is to spread and grow. Bacteria, virus, animal, human even universe and unfortunately cancer. Companies are no different.
Author's statement reminds me of Agent Smith's statement about humans, virus and cancer. [1]
[1] https://www.youtube.com/watch?v=L5foZIKuEWQ&t
Author's statement reminds me of Agent Smith's statement about humans, virus and cancer. [1]
[1] https://www.youtube.com/watch?v=L5foZIKuEWQ&t
> The purpose of every living being is to spread and grow. Bacteria, virus, animal, human even universe and unfortunately cancer.
The purpose is to spread their genes and not to spread and grow themselves.
The purpose is to spread their genes and not to spread and grow themselves.
I meant growing your population when speaking about living begins. Author of the article probably implies growing in size (growing your company). Looking at the evolution [1] life evolved from single cells microorganisms to multi cellular complex organisms like for example mammals. Growth is the result of the evolution of those organisms and increased complexity of its parts and the whole system. If a company rapidly grows because of its success and increased complexity of doing business (Organic growth) then good if it is artificially inflated growth then it is bad and such company will collapse sooner or later. Organic growth is the most healthiest one but inorganic growth like acquiring market share by doing mergers and acquisitions can also be a way to grow.
[1] https://en.wikipedia.org/wiki/Abiogenesis
[1] https://en.wikipedia.org/wiki/Abiogenesis
I enjoyed the article and mostly agree with the authors opinions, but I think it glances over some important shifts in modern economies.
1) It is becoming increasingly hard to stay small if you have a competitor taking advantage of economies of scale and network effects. 2) It is becoming increasingly common for new sectors to discover economies of scale and network effects as digital transforms products and services.
So from a game theoretical point of view, it is kind of inevitable that "being the best" will start to be shadowed by "being big" if size becomes relevant for survival.
If you don't want to be part of something big, the alternative is to build something incredibly differentiated (like sake with 800 years of history).
Basecamp is cited in the article and their approach is exactly this. They build something incredibly differentiated like Hey (a 100 USD/year email service). But "email services" is not a market with significant economies of scale nor network effects, Google and Microsoft would not offer such service for free if it was.
But if you're interested in, say building a job board, where there are strong network effects. You'll never be able to be at peace regarding size. As soon as a direct competitor becomes bigger, you're in danger. There is room for a few medium size contenders, not infinitely many artisans with their slow-going shops.
The thing is: if you open a sake brewery today, can you survive long enough to make it highly differentiated and earn your place in the market? Not an easy task. So I don't blame founders if most companies today are born with growth in mind. Some if it might be tunnel vision and articles like these are good to remind everyone that "big" is not the only option, but it's not like the other options are always feasible either.
1) It is becoming increasingly hard to stay small if you have a competitor taking advantage of economies of scale and network effects. 2) It is becoming increasingly common for new sectors to discover economies of scale and network effects as digital transforms products and services.
So from a game theoretical point of view, it is kind of inevitable that "being the best" will start to be shadowed by "being big" if size becomes relevant for survival.
If you don't want to be part of something big, the alternative is to build something incredibly differentiated (like sake with 800 years of history).
Basecamp is cited in the article and their approach is exactly this. They build something incredibly differentiated like Hey (a 100 USD/year email service). But "email services" is not a market with significant economies of scale nor network effects, Google and Microsoft would not offer such service for free if it was.
But if you're interested in, say building a job board, where there are strong network effects. You'll never be able to be at peace regarding size. As soon as a direct competitor becomes bigger, you're in danger. There is room for a few medium size contenders, not infinitely many artisans with their slow-going shops.
The thing is: if you open a sake brewery today, can you survive long enough to make it highly differentiated and earn your place in the market? Not an easy task. So I don't blame founders if most companies today are born with growth in mind. Some if it might be tunnel vision and articles like these are good to remind everyone that "big" is not the only option, but it's not like the other options are always feasible either.
Funny that I've been using this analogy for a while in comments on HN. The perpetual growth model really is the root of most evil.
[deleted]
Growth doesn't necessarily mean being the biggest. Unbounded growth is strongly analogous to cancer, but bounded growth up to a certain point is a valid way of getting to an ideal team size/composition, economy of scale, or customer-base diversification to limit risk.
Back in 1989, I interviewed at a place called Daedalus something-or-other in Ann Arbor, MI. They had about a dozen employees crowded into an old Victorian house. They said that they had been around for more than a decade, never had anybody leave, and this was their first hire in a few years. They had a comfortable niche in desktop publishing (IIRC) and didn't particularly intend to grow beyond that. I guess nowadays we might call it a lifestyle business.
I ended up going elsewhere, but even then - at 24 - I could see the appeal and sanity of such an approach. I wish there were more such companies, but the existence of VC-funded behemoths leaves precious little oxygen for more than a few.
Back in 1989, I interviewed at a place called Daedalus something-or-other in Ann Arbor, MI. They had about a dozen employees crowded into an old Victorian house. They said that they had been around for more than a decade, never had anybody leave, and this was their first hire in a few years. They had a comfortable niche in desktop publishing (IIRC) and didn't particularly intend to grow beyond that. I guess nowadays we might call it a lifestyle business.
I ended up going elsewhere, but even then - at 24 - I could see the appeal and sanity of such an approach. I wish there were more such companies, but the existence of VC-funded behemoths leaves precious little oxygen for more than a few.
I think it's about the difference between having your goal be "growth" and having your goal be "(grow to) have X customers and Y employees" or "(grow to) have $X profit per year".
In the latter case, growth is a means to an end—a specific goal that is (at least potentially) achievable, and can yield a sustainable, profitable steady-state for the foreseeable future. In the former case, growth is seen as an end in itself—or, to the extent that it's a means, the end is simply "more profit, forever".
In the latter case, growth is a means to an end—a specific goal that is (at least potentially) achievable, and can yield a sustainable, profitable steady-state for the foreseeable future. In the former case, growth is seen as an end in itself—or, to the extent that it's a means, the end is simply "more profit, forever".
An example of post-growth entrepreneurship in the Netherlands is Radically Open Security, the world's first not-for-profit computer security consultancy company:
https://www.radicallyopensecurity.com/business-model.htm
An interview with CEO Melanie Rieback: https://www.codemotion.com/magazine/video/radically-open-sec...
Of course, a TEDx-talk: https://www.youtube.com/watch?v=uW8umQWXFIM
A longer video: https://www.youtube.com/watch?v=WkkyNG0IRd8
An interview with CEO Melanie Rieback: https://www.codemotion.com/magazine/video/radically-open-sec...
Of course, a TEDx-talk: https://www.youtube.com/watch?v=uW8umQWXFIM
A longer video: https://www.youtube.com/watch?v=WkkyNG0IRd8
Cancer is a concept with context: cellular behavior within a multicellular organism. Companies are not cells in a multicellular organism. They're a totally different thing, and you can't just drop context like that. Context-free reasoning by analogy is horrible.
To illustrate, I'll give a more obviously and dangerously wrong example: humans are cells in the body of humanity, so therefore we should kill weaker and older humans for the same reason the body disposes of senescent cells.
See the problem?
That being said: there are definitely valid social criticisms of the idea that the only purpose of a company is shareholder value for the sake of shareholder value. This is part of why Elon has stated that SpaceX will not go public until they are flying to Mars; SpaceX has a purpose beyond just making money.
To illustrate, I'll give a more obviously and dangerously wrong example: humans are cells in the body of humanity, so therefore we should kill weaker and older humans for the same reason the body disposes of senescent cells.
See the problem?
That being said: there are definitely valid social criticisms of the idea that the only purpose of a company is shareholder value for the sake of shareholder value. This is part of why Elon has stated that SpaceX will not go public until they are flying to Mars; SpaceX has a purpose beyond just making money.
Reminds of this discussion between a physicist and an economist:
https://dothemath.ucsd.edu/2012/04/economist-meets-physicist...
Consider reading The Growth Delusion by David Pilling
https://www.amazon.com/Growth-Delusion-Poverty-Well-Being-Na...
I agree with this article personally, but don’t economies (which comprise of businesses) have to grow to either compete or reduce inequality?
Seeing how China is continuously growing at a higher rate, eventually that growth will outpace other economies proving the country a higher standard of living, technological advancement, and power.
Vietnam just reported 3% growth which is good in 2020 when countries had negative growth, however, but it was growing at 7% the last few years. If it can’t sustain growth, the labour market won’t be healthy. In turn, inequality will rise, and social mobility will be depressed.
In the article it mentions Japan a lot. I love Japan, but the stagnating economy (and aging population) is a very visible reason why 0 growth is a big issue.
Seeing how China is continuously growing at a higher rate, eventually that growth will outpace other economies proving the country a higher standard of living, technological advancement, and power.
Vietnam just reported 3% growth which is good in 2020 when countries had negative growth, however, but it was growing at 7% the last few years. If it can’t sustain growth, the labour market won’t be healthy. In turn, inequality will rise, and social mobility will be depressed.
In the article it mentions Japan a lot. I love Japan, but the stagnating economy (and aging population) is a very visible reason why 0 growth is a big issue.
I'm no expert, so take what I say with a grain of salt.
There are two ways economies can grow:
* More customers.
* More value.
The first is obvious, just grow the population (and it's one reason a shrinking population is bad), but the second is more subtle.
When someone invents a new product, say when the vacuum cleaner was invented, whether or not it adds value is determined by how much the product helps its user either:
1) Save time (so that more time can be spent creating something else of value).
2) Make something else of value possible.
3) Increase the quality of life.
In the case of the vacuum, it does at least 2 and 3 (less dust is definitely better quality of life).
But when it comes to growing economies, things that do number 1 and number 2 are huge. That was why the Industrial Revolution and Computer Revolution were so huge; both produced things that did 1 and 2. And because time was saved and not things became possible, those things started to get done, growing the economy.
And all of that included companies growing big, but in the presence of 1 and 2, the growth of companies isn't necessary to grow the economy.
There are two ways economies can grow:
* More customers.
* More value.
The first is obvious, just grow the population (and it's one reason a shrinking population is bad), but the second is more subtle.
When someone invents a new product, say when the vacuum cleaner was invented, whether or not it adds value is determined by how much the product helps its user either:
1) Save time (so that more time can be spent creating something else of value).
2) Make something else of value possible.
3) Increase the quality of life.
In the case of the vacuum, it does at least 2 and 3 (less dust is definitely better quality of life).
But when it comes to growing economies, things that do number 1 and number 2 are huge. That was why the Industrial Revolution and Computer Revolution were so huge; both produced things that did 1 and 2. And because time was saved and not things became possible, those things started to get done, growing the economy.
And all of that included companies growing big, but in the presence of 1 and 2, the growth of companies isn't necessary to grow the economy.
A company is a balance of power between:
Owners, Debtors, Executives, Employees, Customers and Suppliers - and the Externalizations (i.e. governments, regulations, treaties).
The purpose is whatever the owners want it to be, in the context of that balance of power.
Sometimes Execs or Employees have incredible power.
As a supplier to a monopsony like Apple, the 'purpose' may largely be dictated by that relationship.
Company owners tend to want to make money, the do so typically by growing.
To the extent that externalizes are minimized, there's nothing wrong with that.
Sometimes externalizations are unavoidable (i.e. imagine a Starbucks on every corner of every street), ergo, it can't make sense, but it's not always the case.
Owners, Debtors, Executives, Employees, Customers and Suppliers - and the Externalizations (i.e. governments, regulations, treaties).
The purpose is whatever the owners want it to be, in the context of that balance of power.
Sometimes Execs or Employees have incredible power.
As a supplier to a monopsony like Apple, the 'purpose' may largely be dictated by that relationship.
Company owners tend to want to make money, the do so typically by growing.
To the extent that externalizes are minimized, there's nothing wrong with that.
Sometimes externalizations are unavoidable (i.e. imagine a Starbucks on every corner of every street), ergo, it can't make sense, but it's not always the case.
> Fashion changes all the time, but it does not last.
I am so stealing this quote. Now that I think of it, fashion does not last by definition and I feel stupid for not coming up with the same quote myself but oh well.
I am so stealing this quote. Now that I think of it, fashion does not last by definition and I feel stupid for not coming up with the same quote myself but oh well.
I have a feeling that historically, we've always put high-growth companies on a pedestal. It's not something that is unique or novel to this particular time. The way which companies GET there (via VC) is novel, yes, but companies have stood the test of time and toiled quietly building great products before, and they continue to do so now.
The only reason you don't hear much about them isn't because we hype on high growth companies, but because slow careful growth isn't sexy, that's all.
The only reason you don't hear much about them isn't because we hype on high growth companies, but because slow careful growth isn't sexy, that's all.
Is there a way to read this story without creating a Medium account?
In chrome "Settings" -> search for "Always clear cookies when windows are closed" and "Add" "medium.com"
Shareholders and worker are always in direct conflict. Shareholders are always prioritized first. If your company takes money from investors, their wishes are always going to take precedent over everything else. And they want money. (Not that being self-funded is immune to wage theft. What we really need is more employee-owned cooperatives.)
> If your company takes money from investors, their wishes are always going to take precedent over everything else.
i think this is a big part of where the "capital" in "capitalism" comes from. ownership and return on said capital ownership is the primary concern
> And they want money.
not just money, they want money as capital for further investments....
i am not an economist, but this seems to me where over financialization starts to loose the plot and go off the rails imo... eveything becomes about finanicial tools and "ownership" control to accumulate more capital, for capitals sake... this wrecks companies and economies alike
i think this is a big part of where the "capital" in "capitalism" comes from. ownership and return on said capital ownership is the primary concern
> And they want money.
not just money, they want money as capital for further investments....
i am not an economist, but this seems to me where over financialization starts to loose the plot and go off the rails imo... eveything becomes about finanicial tools and "ownership" control to accumulate more capital, for capitals sake... this wrecks companies and economies alike
>this wrecks companies and economies alike
I don't think it has to be this way, there was once more structural soundness.
A good reason to get more consistent with terminology where the capital in capitalism actually just means "other peoples' money" and everything that implies which is different when other peoples' money is not involved.
This never means that evil or greed needs to be involved in any way.
Even Mr. Wonderful is not evil or greedy except when he wants to be.
Those defects can be leveraged by capital or other resources to the same degree that beneficial characteristics could be.
Now the other resources I like to look at as simply resources.
When an entrepreneur makes a million after starting with $20,000 in wage savings that doesn't make him a capitalist to me even if he did it swimming in the same sea as capitalistic sharks, well though there can still be capitalistic lifebuoys sometimes too. They did it with their own resources, often with a rate of return which investing capitalists hardly ever get.
So as much as you would like to think of yourself as a capitalist, if you are just a wage earner or at the other end of the spectrum, a resource heir who is not deploying their resources at the time under other peoples' (hopefully) responsible management, I don't think so.
This really narrows the field since even the most capitalistic countries have only a very small percentage of citizens, especially among wage earners, benefitting the most from the direct use of other people's money, so it can drive entire financial systems to prosperity without including wage-earners.
Capitalism can be the best thing since sliced bread while still being out-of-reach for those who don't already have the resources to make it to the bread line.
It's not very much of a capitalist country if there's only a very small minority of citizens benefitting from the capitalism. Shadow of what it could be.
When a non-capitalist entrepreneur does take on funds from other people, that can turn them into a capitalist for the first time in their life. This is not always looked at this way but it can have some interesting effects.
They and their funder become capitalists together, and should have a forseeable bright future together but it's not supposed to be the same after that.
Limited runways, more consequential deadlines or milestones, new and different financial controls and more are often all normal expectations.
The requirement for good stewardship and growth of the capital as intended by the entrepreneur can sometimes best be unlike the handling of other key resources, bigger or smaller, whether cash or not.
On the other side of the coin the investing capitalist should take growing responsibility for good stewardship of the relationship with the entrepreneur that made it possible for the investment to be made in the first place. And good stewardship of backup resources if further capital deployment is intended, or to avoid the need for unanticipated capital withdrawl.
So that new coin can be utilized in the most worthwhile way possible for all concerned.
It doesn't need to grow beyond belief, but if it shrinks too much too long it's gone.
Either way financial failures can occur that would not have to happen.
So I always prefer value-added action over pure financial positioning.
That way the bigger it gets more wealth can actually be created compared to that banked, as opposed to merely taking a cut when previously existing wealth is just creatively reshuffled.
I don't think it has to be this way, there was once more structural soundness.
A good reason to get more consistent with terminology where the capital in capitalism actually just means "other peoples' money" and everything that implies which is different when other peoples' money is not involved.
This never means that evil or greed needs to be involved in any way.
Even Mr. Wonderful is not evil or greedy except when he wants to be.
Those defects can be leveraged by capital or other resources to the same degree that beneficial characteristics could be.
Now the other resources I like to look at as simply resources.
When an entrepreneur makes a million after starting with $20,000 in wage savings that doesn't make him a capitalist to me even if he did it swimming in the same sea as capitalistic sharks, well though there can still be capitalistic lifebuoys sometimes too. They did it with their own resources, often with a rate of return which investing capitalists hardly ever get.
So as much as you would like to think of yourself as a capitalist, if you are just a wage earner or at the other end of the spectrum, a resource heir who is not deploying their resources at the time under other peoples' (hopefully) responsible management, I don't think so.
This really narrows the field since even the most capitalistic countries have only a very small percentage of citizens, especially among wage earners, benefitting the most from the direct use of other people's money, so it can drive entire financial systems to prosperity without including wage-earners.
Capitalism can be the best thing since sliced bread while still being out-of-reach for those who don't already have the resources to make it to the bread line.
It's not very much of a capitalist country if there's only a very small minority of citizens benefitting from the capitalism. Shadow of what it could be.
When a non-capitalist entrepreneur does take on funds from other people, that can turn them into a capitalist for the first time in their life. This is not always looked at this way but it can have some interesting effects.
They and their funder become capitalists together, and should have a forseeable bright future together but it's not supposed to be the same after that.
Limited runways, more consequential deadlines or milestones, new and different financial controls and more are often all normal expectations.
The requirement for good stewardship and growth of the capital as intended by the entrepreneur can sometimes best be unlike the handling of other key resources, bigger or smaller, whether cash or not.
On the other side of the coin the investing capitalist should take growing responsibility for good stewardship of the relationship with the entrepreneur that made it possible for the investment to be made in the first place. And good stewardship of backup resources if further capital deployment is intended, or to avoid the need for unanticipated capital withdrawl.
So that new coin can be utilized in the most worthwhile way possible for all concerned.
It doesn't need to grow beyond belief, but if it shrinks too much too long it's gone.
Either way financial failures can occur that would not have to happen.
So I always prefer value-added action over pure financial positioning.
That way the bigger it gets more wealth can actually be created compared to that banked, as opposed to merely taking a cut when previously existing wealth is just creatively reshuffled.
In business school, we'd say that, for growth to be value-creating, the return on invested capital has to exceed cost of capital. All that means is that a dollar invested in a company has to turn into something more than a dollar in earnings, by how much more depends on what rate you estimate your cost of capital to be.
With respect to money-consuming, high growth tech companies, we have to figure out if they're cable companies or airlines. Cable companies required lots of capital to grow for a number of years. Once they built out their networks, their capital expenditures went down and they could post major profits. But airlines, probably since deregulation and perhaps even since their invention, have likely been net capital destroyers: they keep having to buy/lease new aircraft to keep up with the competitors. Even prior to COVID, airlines had to buy new planes or risk losing money on each flight due to higher operational costs vs. the competition.
Tech companies that lose gobs of money, if they want to avoid becoming airlines, need to be building some sort of moat. Too often, investors and founders look at 20+% revenue growth and think that's good in itself. Or they think "industry X is going to be huge in the future" and they invest willy-nilly in companies in that industry (often at seemingly any implied valuation). But even if they're right about massive industry growth, they could still lose money if competition is high enough. In 1999, tons of people believed the internet was the future and they were right. But very few people realized which companies would succeed and even fewer people held on long enough to realize the gains of the ultimately successful companies.
With respect to money-consuming, high growth tech companies, we have to figure out if they're cable companies or airlines. Cable companies required lots of capital to grow for a number of years. Once they built out their networks, their capital expenditures went down and they could post major profits. But airlines, probably since deregulation and perhaps even since their invention, have likely been net capital destroyers: they keep having to buy/lease new aircraft to keep up with the competitors. Even prior to COVID, airlines had to buy new planes or risk losing money on each flight due to higher operational costs vs. the competition.
Tech companies that lose gobs of money, if they want to avoid becoming airlines, need to be building some sort of moat. Too often, investors and founders look at 20+% revenue growth and think that's good in itself. Or they think "industry X is going to be huge in the future" and they invest willy-nilly in companies in that industry (often at seemingly any implied valuation). But even if they're right about massive industry growth, they could still lose money if competition is high enough. In 1999, tons of people believed the internet was the future and they were right. But very few people realized which companies would succeed and even fewer people held on long enough to realize the gains of the ultimately successful companies.
Its basic evolution - any successful species is programmed to increase in numbers. A species that aims to stay static will die off when conditions change, and of course one that aims to shrink in size will not last. The cancer word is just clickbait.
A species that grows so much that it outgrows its own habitat will often end up destroying said habitat due to overpopulation, with ramifications usually going way past the species that actually triggered it.
That's why not everything that is natural is automatically "good"/sustainable.
Because if we go about it that way we might as well never have come down from those trees, as humans we can think ahead and conceptualize possible long-term consequences of our actions. That's an advantage not many animals have, we best make some proper use of it.
That's why not everything that is natural is automatically "good"/sustainable.
Because if we go about it that way we might as well never have come down from those trees, as humans we can think ahead and conceptualize possible long-term consequences of our actions. That's an advantage not many animals have, we best make some proper use of it.
Evolution pressures reward adapting and surviving. Unlimited growth is fatal. Bacteria in a closed jar will consume all resources put inside then die out.
Sentient species can learn to limit their consumption to maximize their survival.
Companies with sentient leadership can too.
Sentient species can learn to limit their consumption to maximize their survival.
Companies with sentient leadership can too.
Oh my god, I needed that. I always felt that there's something wrong with this obsession with growth but could put it into worlds. Bit thank you to that human being for doing that for me.
Clearly the purpose of a company is to provide value to customers that they are willing to pay for. Any company where the sole purpose is to grow will find itself out of business quickly.
There should be more incentives to keep businesses small. That way there wont be an incentive to 'grow for money'. The little guy has a disproportionate amount of struggle.
One of my all-time favourite quotes:
> Jim Buckmaster, the chief executive of Craigslist, caused lots of head-scratching Thursday as he tried to explain to a bunch of Wall Street types why his company is not interested in “monetizing” his ridiculously popular Web operation. Appearing at the UBS global media conference in New York, Mr. Buckmaster took questions from the bemused audience, which apparently could not get its collective mind around the notion that Craigslist exists to help Web users find jobs, cars, apartments and dates — and not so much to make money.
> Wendy Davis of MediaPost describes the presentation as a “a culture clash of near-epic proportions.” She recounts how UBS analyst Ben Schachter wanted to know how Craigslist plans to maximize revenue. It doesn’t, Mr. Buckmaster replied (perhaps wondering how Mr. Schachter could possibly not already know this). “That definitely is not part of the equation,” he said, according to MediaPost. “It’s not part of the goal.”
https://dealbook.nytimes.com/2006/12/08/craigslist-meets-the...
> Jim Buckmaster, the chief executive of Craigslist, caused lots of head-scratching Thursday as he tried to explain to a bunch of Wall Street types why his company is not interested in “monetizing” his ridiculously popular Web operation. Appearing at the UBS global media conference in New York, Mr. Buckmaster took questions from the bemused audience, which apparently could not get its collective mind around the notion that Craigslist exists to help Web users find jobs, cars, apartments and dates — and not so much to make money.
> Wendy Davis of MediaPost describes the presentation as a “a culture clash of near-epic proportions.” She recounts how UBS analyst Ben Schachter wanted to know how Craigslist plans to maximize revenue. It doesn’t, Mr. Buckmaster replied (perhaps wondering how Mr. Schachter could possibly not already know this). “That definitely is not part of the equation,” he said, according to MediaPost. “It’s not part of the goal.”
https://dealbook.nytimes.com/2006/12/08/craigslist-meets-the...
Exactly. And this is why our economy (?? society) is terminally ill. It is full of tumors.
Purpose of a company is to create value in whatever way it has identified. Growth is a corollary of that purpose. Once the company has identified what value it provides, creating more of that value is the next logical step - hence the pursuit of growth.
No. A growing company can enrich society. There’s nothing intrinsically wrong with growth.
A civilisation where the only firms allowed to operate were small 500-year-old artisans would be–let’s face it–absolutely crap.
A civilisation where the only firms allowed to operate were small 500-year-old artisans would be–let’s face it–absolutely crap.
Being good is hard. Being big is easy.
Life is cancer
There is no need to be the best, either. Look at an ecosystem. Do organisms need to try to be the "best"? Of course not.
Businesses are similar to organisms. They compete in an ecosystem to convert syntropy to entropy.
Businesses are similar to organisms. They compete in an ecosystem to convert syntropy to entropy.
Biology metaphors are similar to cancer.
But the universe is growing.
OMG THE UNIVERSE IS A CANCER!
The article didn’t say “If a company is growing”, but “if the purpose of a company is merely growth”.
Fair enough, but to survive a company needs to aim to grow - existing customers will always leave (die or go out of business). Making products that make their customers lives better, providing a living for its employees, and a service to its community, are by-products of survival and of the process of growing.
A well run 'evil' company that just cares about growing may do more good because of the people it gives a good living to than a poorly run social enterprise.
A well run 'evil' company that just cares about growing may do more good because of the people it gives a good living to than a poorly run social enterprise.
You probably noticed that I didn’t really object to any content in the article or your comment. It was all about the way you created an incorrect analogy to make fun of the article.
Don’t do that.
Don’t do that.
Could you say that the only purpose of the universe is to grow? Not at all - so the analogy wouldn't apply. As someone else said above, this actually is more relevant to publicly traded companies, which by law have an obligation to maximize shareholder value - or even more precisely, to the ethos that greed should be welcomed because it will lead to wealth and well-being for all. Sure, there's more nuance to it, so it's not a perfect analogy (no analogy is) but there's definitely some relevance to the comparison.
From the point of view of an observer INSIDE the universe.
You have no idea how it looks like outside the universe, so you can't really say that.
Paywalled. But the claim sounds a bit dubious. A cancer is not the same as a company, and the growth of a cancer is not the same as a growth of a company.
Living things increases entropy faster than dead things[1][2], and companies or organized economic activity increase entropy faster than non organized economic activity, and better (more profitable) companies do this better than less profitable ones, and bigger ones do this faster than smaller companies.
On average, the amount something costs is highly correlated to the how much it increased the entropy of the universe, where something that was more expensive than something else usually resulted in a higher increase in entropy.
This does not make companies that grow cancer any more than it makes life that evolves to increase entropy faster is cancer, it just in line with the universe's tendency to transition to states of higher entropy and to select for processes that increase entropy faster, like life on earth, which is much better at increasing entropy now than 4 billion years ago.
[1]: https://www.youtube.com/watch?v=yKbJ9leUNDE&list=PLoaVOjvkzQ... [2]: https://en.wikipedia.org/wiki/Entropy_and_life
Living things increases entropy faster than dead things[1][2], and companies or organized economic activity increase entropy faster than non organized economic activity, and better (more profitable) companies do this better than less profitable ones, and bigger ones do this faster than smaller companies.
On average, the amount something costs is highly correlated to the how much it increased the entropy of the universe, where something that was more expensive than something else usually resulted in a higher increase in entropy.
This does not make companies that grow cancer any more than it makes life that evolves to increase entropy faster is cancer, it just in line with the universe's tendency to transition to states of higher entropy and to select for processes that increase entropy faster, like life on earth, which is much better at increasing entropy now than 4 billion years ago.
[1]: https://www.youtube.com/watch?v=yKbJ9leUNDE&list=PLoaVOjvkzQ... [2]: https://en.wikipedia.org/wiki/Entropy_and_life
Ugh.
This person is kinda suggesting that companies should have some noble higher purpose.
Companies are entities for making money for investors and employees and maybe having fun doing it.
The irony is this person is suggesting companies should be “changing the world” a la Silicon Valley TV show. The author probably had no idea.
This person is kinda suggesting that companies should have some noble higher purpose.
Companies are entities for making money for investors and employees and maybe having fun doing it.
The irony is this person is suggesting companies should be “changing the world” a la Silicon Valley TV show. The author probably had no idea.
> Companies are entities for making money for investors and employees and maybe having fun doing it.
Not necessarily. Companies are entities composed of people for some purpose or another. If a company is privately owned, while profit is probably in there somewhere, the actual goal is up to the owners. Maybe the owners want to make the game they always dreamed of, and prioritise that over extra profit.
Not necessarily. Companies are entities composed of people for some purpose or another. If a company is privately owned, while profit is probably in there somewhere, the actual goal is up to the owners. Maybe the owners want to make the game they always dreamed of, and prioritise that over extra profit.
Shouldn't they? The world would probably be a nicer place if companies had goals other than profit. The fact that this is how companies currently operate has no bearing on how they should operate.
Corporations have charters, and historically a lot of jurisdictions placed a whole lot of limitations on corporate charters, ranging from time limiting them, to holding the corporations to their charter - that is, limiting them to do what they were chartered to do. It has not always been a given that you would just get a charter, because a corporate charter imbues a corporation with rights that affects society that only exists by society deciding to honour them.
So this idea of making demands of corporations to have charters that maintains some balance of public benefit is not at all new (that is not to say that a corporation that primarily focuses on making profit does not provide some benefit, but it's not some sort of automatic given that is enough).
There's a whole movement around the idea of pushing governments to revoke corporate charters that do not benefit the public beyond the immediate economic effects (effectively dismantling the corporations in question). You don't need to agree with them, but it's worth realising that the history of the modern, purely profit-seeking corporation with expansive rights is not a very long one, and not at all the only model of how to deal with corporations.
So this idea of making demands of corporations to have charters that maintains some balance of public benefit is not at all new (that is not to say that a corporation that primarily focuses on making profit does not provide some benefit, but it's not some sort of automatic given that is enough).
There's a whole movement around the idea of pushing governments to revoke corporate charters that do not benefit the public beyond the immediate economic effects (effectively dismantling the corporations in question). You don't need to agree with them, but it's worth realising that the history of the modern, purely profit-seeking corporation with expansive rights is not a very long one, and not at all the only model of how to deal with corporations.
> This person is kinda suggesting that companies should have some noble higher purpose.
Not necessarily. There's nothing inherently wrong with making money. What's wrong is never being satisfied no matter how much money you make. "Growth, where it no longer serves a purpose beyond the accumulation of more growth", "endless growth", "growth unchecked". The author doesn't say that growth itself is bad. If you're a sole proprietor, it's not necessarily bad to grow and hire employees. The question is, at what point do you stop prioritizing growth and start prioritizing other things in life — happiness, love, friendship, leisure, ethics, the environment, etc. At some point there are diminishing returns to accumulating more wealth, but there's a collective insanity that says no accumulation is too much. Society celebrates the ultra-wealthy, but to me the ultra-wealthy seem more like gluttons. Would you celebrate someone who eats constantly and weighs 500 pounds? That's not healthy.
Look at Warren Buffett. Dude doesn't even know what to do with all of his money. He only knows how to accumulate, he knows nothing else. He's pledged to give away most of his fortune to the Bill & Melinda Gates Foundation... which means he's delegating the spending of his wealth to someone else... after his death! Buffett literally has no idea how to spend the wealth he has accumulated. Doesn't that seem bizarre to you? Why does he keep accumulating?
Some people will claim that if you don't constantly strive for growth, then you're "complacent" and "lazy". But that's completely false, because financial wealth is only one aspect of life. If you only strive for financial growth, then you are one-dimensional; you're lazy and complacent about the non-financial aspects of your life.
Not necessarily. There's nothing inherently wrong with making money. What's wrong is never being satisfied no matter how much money you make. "Growth, where it no longer serves a purpose beyond the accumulation of more growth", "endless growth", "growth unchecked". The author doesn't say that growth itself is bad. If you're a sole proprietor, it's not necessarily bad to grow and hire employees. The question is, at what point do you stop prioritizing growth and start prioritizing other things in life — happiness, love, friendship, leisure, ethics, the environment, etc. At some point there are diminishing returns to accumulating more wealth, but there's a collective insanity that says no accumulation is too much. Society celebrates the ultra-wealthy, but to me the ultra-wealthy seem more like gluttons. Would you celebrate someone who eats constantly and weighs 500 pounds? That's not healthy.
Look at Warren Buffett. Dude doesn't even know what to do with all of his money. He only knows how to accumulate, he knows nothing else. He's pledged to give away most of his fortune to the Bill & Melinda Gates Foundation... which means he's delegating the spending of his wealth to someone else... after his death! Buffett literally has no idea how to spend the wealth he has accumulated. Doesn't that seem bizarre to you? Why does he keep accumulating?
Some people will claim that if you don't constantly strive for growth, then you're "complacent" and "lazy". But that's completely false, because financial wealth is only one aspect of life. If you only strive for financial growth, then you are one-dimensional; you're lazy and complacent about the non-financial aspects of your life.
Companies are there to make money to shareholders. Still I see huge difference in paying dividends and having growth in tune of general economy and massive VC funded growth with end goal of pawning it all of to someone else or being last player on the market and hiking prices up. The later one might not ever actually be net positive.
I've gone a bit off track there, but the point being, there IS no answer when I've explicitly asked "why" with regards to these things. Nobody knows. They just know they have "targets" and the targets are constantly moving.
/rant over