Ch10: Footnotes
What is Ownership?
Natural Size Limit
A Cancerous System
Exclusive Minority
Minimising Costs
Cause of Conflict
The Unfree Market
Geo-Constraints
Monopoly Cliques
Negative Equity
Limited Liability
A Mere Resource
Business Flow Model
Maximising Profit
Wealth For The Few
Student Accomm.
Trickledown Theory
One buys a product to perform a task as well, for as long and as cheaply as possible. One sells a product to make as much profit as possible as often as possible. The competitive free market thus perpetuates a conflict of interest between producer and consumer, which the producer is always bound to win.
The whole essence of the global capitalist competitive free-market economic system is the selling and buying of products and services. Perhaps the most familiar of these are the home and the things within it — house, car, boiler, cooker, kettle, washing machine, vacuum cleaner, telephone, refrigerator, freezer, television, video recorder, personal computer, dishwasher, clothes dryer, lawn mower, hedge trimmer, strimmer, fax, cell phone and many more.
My motive for buying any of these things is for it to do something for me — to shelter my family from the weather, to get me from A to B, to warm my home, to cook my family's food, to boil water for a cup of tea, to wash my family's clothes, to clean my home, communicate with distant friends, to preserve my family's perishable foodstuffs, entertain and inform me, keep my software skills up to date, wash the dishes, dry our clothes on a damp winter's day, mow the lawn, cut the hedge, trim the boarders, send and receive documents, and so on.
I want each to perform its respective task as well, as long and as cheaply as possible. I want each to perform its task to my complete satisfaction. I want it to last. I want it to be easily and modularly updateable, and thereby future-safe against obsolescence. I want it to be trouble-free, requiring a minimum of maintenance which I can opt to do myself cheaply and with ease if I wish. I want to be able to choose what I buy from a wide variety of designs to suit my needs as closely as possible. From the capitalist free market, however, this is never what I get.
I am only a powerless individual. Those who provide these things are large powerful corporates. In the capitalist free-market, might is right. I have to accept and buy what they offer me. What I get is therefore something quite different from what I want. This is because the capitalist supplier is working to an entirely different agenda. His motive is to maximise the profit he makes by selling me his product. To do this he must:
To minimise his production cost, he must make his product to as basic a specification as he can get away with, using the cheapest possible materials and the lowest possible labour skills. To maximise his selling price, he must make his product as attractive and as appealing as possible at the point of sale — shop window, showroom, catalogue or advertisement. How well it performs, once sold, is of importance only in so far as it should not be so bad as to damage his commercial credibility or reputation.
Once he has sold his product, he stands to make no more profit from the consumer to whom he has sold it until that consumer wants to buy another one from him. That is only likely to happen once the one he has already sold to him wears out. To maximise his profit, therefore, the producer must design his product to last as little time as possible after sale. This he can do in two ways.
Consumer pressure has forced governments to enact legislation which imposes a statutory warranty period. In the United Kingdom, as I understand it, the statutory period is currently 12 months. This legislation decrees that if a product wears out or becomes faulty within that period from the date of purchase, the seller must repair or replace it free of charge. The producer's objective must therefore be to employ all diligence and technical sophistication to make his product fail as soon as possible after the statutory warranty period has expired. Untold millions are spent on research and development into limited life-span technologies.
There does not appear at the moment to be any statutory warranty regarding built-in obsolescence. The producer will therefore change the appearance and design of his products regularly and create a fashion-driven market eager to be seen with the latest version of the product — everybody wants to be seen to have the latest clothes, the latest technology smartphone, the latest model of car with the most recent 'year letter' on its number plate.
Looking at the market nowadays, I cannot find a motor car which I can honestly say is anything approaching the specification I would ideally like — irrespective of price. The design and specification of today's family car has focused on the three primary requirements of speed, acceleration and aerodynamic sex-appeal demanded by the young generic consumer's macho self-image. For me, they are too fast, they are awkward to drive at sensible suburban speeds. They tend to make drivers itch to go too fast. They have vastly insufficient cabin space. They are awkward to park and to get in and out of. They are unnecessarily and deliberately difficult to service. And above all they cost too much.
Designers have not provided a spread to cater for everybody's best needs: they have aimed at the market 'point-attractor' which yields the maximum profitability. They do not serve the customer: the customer has to take what the manufacturers offer. The rich diversity of car design which could have been ours today was lost during the great motor industry shake-out of the 1930s and 40s when the innovators and specialists were driven out of business by the emerging motor moguls. All we have left are the monotonic computer-generated offerings of cloistered engineers within the surviving automotive multinationals.
A personal computer is too complex to mess about with life-span-limiting techniques. A personal computer nowadays tends to be robust and to last indefinitely. The way the producer renders these products obsolete is by driving technology as far and as fast as possible so that older computers, though they still work perfectly, simply cannot run the resource-hungry software the current models can. The consumer — be he a domestic or commercial user, or a professional developer — is thereby forced to buy the latest or get left behind and out of touch.
The result is that the consumer has foisted upon him an over-dressed tinsel wrapped piece of junk which:
Though slightly different in detail, these same principles apply also to services, for example, car insurance. During the recent period of political free-market extremism, these same insidious principles have even been applied to areas of fundamental social infrastructure like the health service. So when a similar colour of government gains power again, there is nothing to prevent the same socially destructive forces from becoming unleashed again.
Products and services do not start off as narrowly-focused profit generators. They start off as commendable pieces of engineering optimally designed to perform their intended functions for the benefit of those who will use them. They are, in the first instance, designed and produced by artisans, not profiteers. However, as has been seen in the evolution of every industry since the industrial revolution, one does not prosper in a free market by making good products or providing good services.
A new type of product first sees the light of day from the hands of the artisan. Other artisans produce variants and improvements. A high-choice market develops. Then along come the profiteers with their vast capital. They take over the market, replacing choice with a single highly-tuned market-central generic. As a result there are some goods and services the consumer desperately wants, which are simply unavailable just because it would not be quite as profitable for the supplier to provide them separately. The artisan who once provided the original variety has been driven out of business.
Sadly, over the past two decades, this same shake-out has occurred within my own industry. Goodbye to the rich diversity of what is best for the customer. Hello to the monolithic sameness of functionality-starved software flaunting over coloured punter hooking screen presentations which would look less out-of-place on a Christmas tree. Now it is the turn of the company web-site. Standard hyper-links are replaced by incomprehensible animated gizmos. Instead of being able to read a short paragraph and click one of its links, the perplexed surfer is left to figure out which one of Mini Mouse's tits he is supposed to click to get to the next piece of pointless presentation. It looks as if it has been designed by a 13-year-old. It probably has!
The capitalist ethos penetrates every nook of society right down to the individual. Whenever the opportunity arises, almost anyone will jump straight onto the capitalist bandwagon. Perhaps one of the best examples of this nowadays is the petty landlord with a spare house to rent out in a big city.
I see showrooms full of brand new cars, which seem increasingly difficult to sell. I see hundreds of people — some in professional jobs — lying in their driveways, struggling by all means to keep an ageing car road-worthy. They cannot afford to have a garage do the job for them. They certainly cannot afford to buy a new car. But society has long ago burned its bridges. Many people simply cannot get to work without one.
The capitalist free market system has created a forced dependence on a whole host of modern products. This has put the poor in an inescapable trap. These products are necessities. In order to remain functional elements of the society of which they are a part, the poor are therefore obliged to buy them. Officialdom, on the other hand, still ignorantly classes these products as luxuries. It therefore excludes any provision for them when calculating what 'the law says' the poor 'need to live on'. As a result, the poor cannot afford them, and so become, and forever remain, socially dysfunctional.
What should be its prime directive: clinical need or corporate profit — transplants for terminally ill children or face-lifts for the ageing wealthy?
When what remains of the publicly-owned NHS becomes simply a public buying brokerage for privately supplied medical services, which of the private suppliers is going to provide vital life-saving but low-demand low-profitability operations when they could stick to high-demand fast-turnover high profitability cosmetics?
Who, of the greed-driven elite share-owning population, would invest in such a business? Such vital low-profitability operations will simply become unobtainable: there is no commercial motive for providing them at all.
In my opinion the prime motive of the NHS should be to provide what each individual has been clinically diagnosed to need: not what yields the highest return on investment to the share holders of medical service businesses. [back]
An example of the poor being made to subsidise the rich.
The price of my insurance, like everybody else's, has just leaped. But I am wooed by the gift of three extra services which are now provided 'free'. One is that I am now covered to drive my car on the Continent for up to three months in any one year. As one who is condemned to live forever on State welfare, I obviously cannot afford to go gallivanting around on the Continent for any time at all.
There is no such thing as a free lunch. As ought to be abundantly obvious to every customer, the extra services are not free at all: their cost is simply loaded into the new higher price. It is a way of forcibly selling extra services on the back of a basic service one cannot do without. When I told the insurance company they said that of course I was right, but that was their policy and they could not unbundle it just for me. Take it or leave it. I tried other insurance companies, but as expected, they have all come up with similar schemes.
It is another case of large corporates getting their own way. It is also a case of the insurance industry tuning its policies to the needs of Mr & Mrs (double-income) Average, with the result that Mr & Mrs (State welfare) Pauper end up subsidising the motor insurance of those who can afford to take their cars to the Continent. A case of market forces forcing the poor to subsidise the rich simply because it is not quite as profitable to cater for the poor as well. [back]