Tipperary Live Column: In society, we are often paid as little as is legally allowed

‘Money is the root of all evil’ is a popular aphorism, but it’s not actually the full saying, which reads ‘The love of money is the root of all evil’ writes Karl Clancy in his Tipperary Live column.

Milton Freidman, a 70's economist wrote a piece he called The Responsibility of Business. It gave us the blueprint for what we now call capitalism. ‘Maximise profit within the rules’. It advised that as long as there was no law against a practice that anything was acceptable in the pursuit of profit, leading to a mind-set where the ends justified the means.

Before this, capitalism worked differently. The 18th century philosopher Adam Smith used the term “commercial society,” a phrase that emphasised his belief that the economic is only one component of the human condition. The idea was that if a producer or manufacturer made the very best product they would outsell their competitors. The net result is that the customer gets the very best on offer and the best companies prosper.
After this, beginning in the 80's, companies began looking at maximising profit by supplying inferior products meaning greater profit margins. The net result of this is that the customer gets a worse product and we’ve been in a quality race to the bottom ever since.

Ask yourself, if one section in the supermarket sells ‘health food’ or ‘whole foods’ what is the rest of the supermarket selling?
It’s no coincidence that advertising agencies are paid ever higher sums to market products. We probably wouldn’t buy them otherwise, and we certainly wouldn’t buy them if we knew what was in them!

Take sucralose for instance. It sounds like something that might be a kind of sugar, and sugar is natural right? It’s actually a derivative, processed to replace three of sugar’s molecules with chlorine, making a kind of ‘diet sugar’. Some studies have linked it with depression, disrupting gut biome, damaging DNA and cancer, yet it’s in almost every juice drink on the market.
This is just one of thousands upon thousands of ways companies are maximising profits while delivering products that while legal, are not moral.

So what is my point? That food quality is getting worse? That product quality is getting worse? Well yes, but that’s just the result of a way of thinking. The capitalist model we are pursuing asks for the impossible, more profit year on year, to infinity. One local business I spoke to recently told me that their sales target for this year is up another 10%, despite only barely making last year’s target. That means selling more volume or raising prices and we get to suffer as a result. Infinite expansion on a finite earth is impossible. At some point something had to give and what gave was the corporation’s morality. The placing of maximum profit benefiting the very few above the well-being of the many has created a sick, depressed, anxious and wholly broken society.

So what is the answer? We have seen various ideologies come and go. Communism doesn’t work because it doesn’t incentivise labour or productivity, socialism works to a degree but its critics point to slow economic growth, less entrepreneurial opportunity, competition and motivation.

I propose that traditional capitalism is a pretty good model in that it incentivises work and meets the human need for accumulation. However, it must be tempered with a co-operative mind-set where maximum profit is sacrificed to ensure that everyone can live comfortably. Co-operative capitalism espouses that production is predicated on care for the individual, for the customer, the producer and the environment. Profit is made certainly, but not at the expense of those labouring or that purchasing. In our society we are often both and so we are paid as little as is legally allowed and charged as much as the market will bear. I’m reminded of the comedian’s quip, ‘minimum wage is an employer’s way of telling you that if he could legally pay you less, he would’.

Irish small businesses, often family run affairs, in many instances tend toward this model of co-operative capitalism. They take care of their employees and try their utmost to produce quality goods and services. It’s one reason so many of them struggle in our current capitalist model. They have not abandoned morality and ethics. They have values where they see themselves as part of a community not preying upon it.

One last note and it’s about India, where the courts will grant indigenous companies licences to make generic pharmaceutical products if the international company’s product is too expensive. This leads to affordable medication for the populace. In one case it was the difference between $69,000 in the USA and $167 in India for the same product. In contesting the ruling the CEO of the US company said they didn’t make drugs for India, but for westerners ‘who could afford them’. Clearly this man’s moral compass is broken. His humanity and values extend only to those in his circle.

If you tell me your values as a company I will accept them, but if your company doesn’t make enough profit as dictated by our infinity model and as a result those values are re-evaluated, you don't have values, you have slogans. If you exploit workers or customers for more profit than can ever be spent you are guilty of selling your humanity and your soul.

Co-operative capitalism, where everyone wins because everyone is important, from the CEO to the most humble worker, can only ever happen if the CEO understands that the humble worker is just as important as they are. What are the odds of that kind of miracle happening in a world where self importance is lauded as the only road to success?