Efficient, Cheap, and Soulless: The Global Afterlife of Capitalism

Donating to the problem

In an NPR story this morning, The Global Afterlife of Your Donated Clothes, we learn yet more about the dark side of our cultural addiction to cheapness.  Some 80% of donated clothes ends up in the hands of the textile recycling industry, which simply puts those materials back into the wicked cycle.  Twice in the past half-year manufacturing facilities in Bangladesh have collapsed/caught on fire, killing scores of innocent people in the process.  In what can only be described as slave-labor conditions, workers in this Bangladesh facility were required to return to work even when employees at the bank in the same building were told to stay home because of safety concerns with the building.

Cheap costs dear

Sadly this is nothing new.  This is the stuff of Wal Mart’s “everyday low prices,” or of its more recent promise- Save Money, Live Better.  In her book, Cheap, Ellen Ruppel Shell documented the interconnections between our addiction to cheap and the global labor conditions that make cheapness possible.  Her book is informative, depressing, and important.

At Foxconn’s manufacturing facility in Shenzhen Province, where yours and my iPhones were made, 17 people committed suicide in 2010-2011.  With little to no social mobility, and unable to ever buy the products they make, workers there are caught, like their peers in Bangladesh, in the crossfires of our love of cheapness. And efficiency.

What’s Wrong with Efficiency?

So why is this a problem?  From a managerial perspective, of course, this is not a problem at all.  Rather, it is a reality, the realization and application of principles of efficiency carefully taught and learned in business schools around the world.  Even more to the point, it is the realization of a management agenda dictated, in large part, by the triumph Wall Street and their Economist lovers (see the Chicago School here).

Ronald Coase, 1991 Nobel Laureate in Economics, has recently been worrying about this too.  In his 2012 Harvard Business Review article, Saving Economics from the Economists, Coase challenges the hegemony of economistic thinking, suggesting that what he calls Blackboard Economics has replaced our understanding of how people and culture, not numbers and statistics, actually sit at the center of any economy.  “Coase argues that in the early 20th century, economists began to focus on relationships among statistical measures, rather than problems that firms have with production or people have with decisions.”  “It is suicidal for the field to slide into a hard science of choice,” Coase writes in HBR, “ignoring the influences of society, history, culture, and politics on the working of the economy.”

Humanistic Economics

As a remedy, Coase and a few colleagues have proposed a new economics journal, one that focuses on the human side of global business, in addition to (and not necessarily opposed to) the more narrowly defined principles of efficiency that tend to predominate today.  At the end of the day, the challenge of humanizing economic transactions won’t occur in the classroom or in a new academic journal, it will happen only through the behavior of American (and other Western) consumers.  If we were to care enough to break our addiction to Cheap, and in doing so stop rewarding the scientists of efficiency, fewer real-life tragedies like those in Bangladesh and Shenzhen would occur.

DJ