Social Darwinism and corporate sociopaths
Dec. 29th, 2014 10:19 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
blatherskiteDarwin's original theory of evolution largely assumed competition and a zero-sum game, hence the oft-paraphrased and poorly understood* phrase "survival of the fittest". Darwin provided a reasonable description of evolution, but like all version 1.0 theories, it was an incomplete description of reality. Subsequent research revealed many interesting variations on this theme. In particular, the field of sociobiology added the concepts of cooperative behavior, altruism, and other interesting notions to evolution 1.0; modern genetics further refined these ideas by clarifying the underlying mechanisms, and provided additional support for Darwin's insight. Evolution 2.0 is much richer and more nuanced than Evolution 1.0. That's how science works.
* Most non-biologists have accepted a connotation for this phrase that assumes normative or moral characteristics: the fittest survive because they are in some way more desirable or have morally superior characteristics. In fact, fitness is heavily context-dependent, and what is fit in one context may lack any survival value in another. Human lice, for instance, are elegantly evolved to survive on human hosts, but cannot survive for long in the absence of human hosts. And not all survival relates to fitness; being removed from the gene pool by a falling aircraft results from bad luck, not any inherent fitness.
Unfortunately, Western corporate economics remains largely mired in the Carboniferous swamps of Evolution 1.0: Market capitalism implicitly (and sometimes explicitly) emphasizes the notion of a zero-sum game -- that is, for every winner, there must be one or more equal and opposite losers -- and seems to have largely (but not entirely) ignored the insights of Evolution 2.0, namely that cooperation is often a superior strategy. Thus, I hypothesize that many of a corporation's sociopathic characteristics, discussed in the previous entry in this blog, arise from a fixation on the concept that only the fittest individuals should survive and ignorance of other possibilities. This has led to dubious corrective measures such as the anti-trust legislation implemented in the U.S. that have been implemented to prevent "survival of the fittest" from reaching its logical conclusion: single-corporation monopolies that control an entire market segment and face no competition. Unfortunately, this is treating the symptoms rather than the underlying disease, and is therefore both ethically and economically inefficient.
How could we move Western economics towards a less sociopathic state? By incorporating some of the insights from Evolution 2.0 into the rules that govern how corporations function. For example, the concept that cooperation can improve fitness compared with competition is embodied in the economic notion of "co-opetition", a clever neologism that combines the concepts of cooperation and competition. (This isn't a new concept; it existed in its embryonic form more than 70 years ago in the field of game theory, though it didn't reach its full flowering until relatively recently.) The basic notion is that even competing corporations share certain common interests, such as preserving the underlying resources that both corporations exploit and avoiding "the tragedy of the commons". Working together for a common goal increases the benefits to both competitors, and can produce results superior to what happens if all competition were eliminated by the victory of a "fitter" corporation.
This isn't just little old me, a conservative-leaning Canadian socialist, hypothesizing about things that would be irrelevant in the real world. The notion is supported by countless real-world examples. The most obvious to anyone reading this on their computer is the various industry standards councils that have "evolved" over the years to create consistent interfaces and software guidelines for a wide range of computer applications. Consider, for example, that pretty much any computer or tablet or smartphone can display this blog post correctly because of the HTML standard. Consider that any USB device, including the keyboard I used to write this, can be plugged into any USB-equipped computer and that any monitor can be plugged into the display port on my computer. Although each operating system requires a different implementation of the software drivers required to communicate with a USB device or monitor, the device can be counted on to operate reliably once the connection has been made. I'm old enough to remember when you couldn't in any way take this for granted, and when connecting computers and components was an adventure attempted only by the brave and the foolhardy.*
* For the economists in the audience, it's also worth noting that replacing proprietary standards with open standards has both decreased the costs and improved the performance of computer peripherals. Cooperation wins again!
As a specific example in which I participated, consider the example of research conducted by the Canadian forest industry. At my former employer, the Forest Engineering Research Institute of Canada (FERIC), now "FPInnovations"*, the goal was to bring the forest industry together to solve problems ranging from economic to environmental. Although there was often cut-throat competition among corporations in this industry, some persuasive researchers clearly demonstrated the benefits of pooling the industry's resources to solve problems that the whole industry faced. This was far more economically efficient than establishing a separate research and development program at each corporation, and when we did return-on-investment (ROI) calculations for some of our key members, we routinely found annual returns of 10 times the original investment for corporations that implemented our advice. Those returns continued in perpetuity even with no further investments in FERIC research. As these calculations were extremely conservative and designed to be unchallengeable even by skeptics, the real returns were undoubtedly much higher.
* A snarky side note on marketing professionals and corporate branding: Right before the name changed, "FERIC" had nearly 30 years of international name-recognition as the source for forestry operations research, and thus, a highly valuable brand. But preserving a brand provides no income to a marketing consultant: nobody will pay you thousands of dollars to be be told "keep doing what you're doing, it's working great". If you don't tell them to change the brand, you don't get paid. Thus, some marketing Einstein destroyed 30 years worth of good will from FERIC's audience simply to bolt on a new nameplate that in no way changed the corporation's underlying nature.
Another example is the concept of eco-industrial parks. Here, the basic notion is that the wastes and byproducts of one industry are often essential and valuable inputs for other industries. These inputs include waste heat, slag produced from smelting, wastewater, scraps from trimming product parts, and many other things. Denmark's Kalundborg complex was one of the first examples, and it evolved somewhat spontaneously before managers realized what they'd done and began actively promoting these inter-corporation interactions. This approach is slowly becoming a really big thing, particularly in developing countries such as China that face severe waste-management problems. (Several of my Chinese colleagues are working in this area.) The end result is decreased input prices for many corporations and decreased waste disposal and treatment costs for all of the linked industries. The potential environmental benefits are huge, and rather than being seen as a cost, cooperative resource recycling and exchanges are seen as a huge economic benefit. This represents a sea change from seeing environmental issues as the enemy to seeing them as an ally, and is therefore a win-win solution both for the industries and the environment.
It's time we started looking for ways to "evolve" Western capitalism from Evolution 1.0 to Evolution 2.0. This doesn't mean competition is inherently evil; on the contrary, it's a major source of innovation and leads to improved quality of life in many cases. Rather, the goal is to move beyond seeing competition as the only game in town. This isn't an abstract concept. The examples of FERIC and eco-industrial parks provide clear proof of how well this works, but there are many other possibilities that have not been exploited. Consider, for example, if the automobile industry pooled their resources to create the equivalent of FERIC for research designed to increase fuel economy and improve driver safety, instead of having separate and largely isolated groups working on these topics in each corporation -- figuratively, reinventing the wheel at each corporation. Consider, for example, if research on urban water management (obtaining and using water, and treating and recycling the resulting wastewater) were handled by an industry-funded national research agency. It's easy to find other win-win solutions that curb a corporation's inherently sociopathic tendencies and lead to a more humane and socially useful marketplace.
All we need to do is start identifying these opportunities and finding ways to clearly explain their advantages to the corporations that could benefit from them.
* Most non-biologists have accepted a connotation for this phrase that assumes normative or moral characteristics: the fittest survive because they are in some way more desirable or have morally superior characteristics. In fact, fitness is heavily context-dependent, and what is fit in one context may lack any survival value in another. Human lice, for instance, are elegantly evolved to survive on human hosts, but cannot survive for long in the absence of human hosts. And not all survival relates to fitness; being removed from the gene pool by a falling aircraft results from bad luck, not any inherent fitness.
Unfortunately, Western corporate economics remains largely mired in the Carboniferous swamps of Evolution 1.0: Market capitalism implicitly (and sometimes explicitly) emphasizes the notion of a zero-sum game -- that is, for every winner, there must be one or more equal and opposite losers -- and seems to have largely (but not entirely) ignored the insights of Evolution 2.0, namely that cooperation is often a superior strategy. Thus, I hypothesize that many of a corporation's sociopathic characteristics, discussed in the previous entry in this blog, arise from a fixation on the concept that only the fittest individuals should survive and ignorance of other possibilities. This has led to dubious corrective measures such as the anti-trust legislation implemented in the U.S. that have been implemented to prevent "survival of the fittest" from reaching its logical conclusion: single-corporation monopolies that control an entire market segment and face no competition. Unfortunately, this is treating the symptoms rather than the underlying disease, and is therefore both ethically and economically inefficient.
How could we move Western economics towards a less sociopathic state? By incorporating some of the insights from Evolution 2.0 into the rules that govern how corporations function. For example, the concept that cooperation can improve fitness compared with competition is embodied in the economic notion of "co-opetition", a clever neologism that combines the concepts of cooperation and competition. (This isn't a new concept; it existed in its embryonic form more than 70 years ago in the field of game theory, though it didn't reach its full flowering until relatively recently.) The basic notion is that even competing corporations share certain common interests, such as preserving the underlying resources that both corporations exploit and avoiding "the tragedy of the commons". Working together for a common goal increases the benefits to both competitors, and can produce results superior to what happens if all competition were eliminated by the victory of a "fitter" corporation.
This isn't just little old me, a conservative-leaning Canadian socialist, hypothesizing about things that would be irrelevant in the real world. The notion is supported by countless real-world examples. The most obvious to anyone reading this on their computer is the various industry standards councils that have "evolved" over the years to create consistent interfaces and software guidelines for a wide range of computer applications. Consider, for example, that pretty much any computer or tablet or smartphone can display this blog post correctly because of the HTML standard. Consider that any USB device, including the keyboard I used to write this, can be plugged into any USB-equipped computer and that any monitor can be plugged into the display port on my computer. Although each operating system requires a different implementation of the software drivers required to communicate with a USB device or monitor, the device can be counted on to operate reliably once the connection has been made. I'm old enough to remember when you couldn't in any way take this for granted, and when connecting computers and components was an adventure attempted only by the brave and the foolhardy.*
* For the economists in the audience, it's also worth noting that replacing proprietary standards with open standards has both decreased the costs and improved the performance of computer peripherals. Cooperation wins again!
As a specific example in which I participated, consider the example of research conducted by the Canadian forest industry. At my former employer, the Forest Engineering Research Institute of Canada (FERIC), now "FPInnovations"*, the goal was to bring the forest industry together to solve problems ranging from economic to environmental. Although there was often cut-throat competition among corporations in this industry, some persuasive researchers clearly demonstrated the benefits of pooling the industry's resources to solve problems that the whole industry faced. This was far more economically efficient than establishing a separate research and development program at each corporation, and when we did return-on-investment (ROI) calculations for some of our key members, we routinely found annual returns of 10 times the original investment for corporations that implemented our advice. Those returns continued in perpetuity even with no further investments in FERIC research. As these calculations were extremely conservative and designed to be unchallengeable even by skeptics, the real returns were undoubtedly much higher.
* A snarky side note on marketing professionals and corporate branding: Right before the name changed, "FERIC" had nearly 30 years of international name-recognition as the source for forestry operations research, and thus, a highly valuable brand. But preserving a brand provides no income to a marketing consultant: nobody will pay you thousands of dollars to be be told "keep doing what you're doing, it's working great". If you don't tell them to change the brand, you don't get paid. Thus, some marketing Einstein destroyed 30 years worth of good will from FERIC's audience simply to bolt on a new nameplate that in no way changed the corporation's underlying nature.
Another example is the concept of eco-industrial parks. Here, the basic notion is that the wastes and byproducts of one industry are often essential and valuable inputs for other industries. These inputs include waste heat, slag produced from smelting, wastewater, scraps from trimming product parts, and many other things. Denmark's Kalundborg complex was one of the first examples, and it evolved somewhat spontaneously before managers realized what they'd done and began actively promoting these inter-corporation interactions. This approach is slowly becoming a really big thing, particularly in developing countries such as China that face severe waste-management problems. (Several of my Chinese colleagues are working in this area.) The end result is decreased input prices for many corporations and decreased waste disposal and treatment costs for all of the linked industries. The potential environmental benefits are huge, and rather than being seen as a cost, cooperative resource recycling and exchanges are seen as a huge economic benefit. This represents a sea change from seeing environmental issues as the enemy to seeing them as an ally, and is therefore a win-win solution both for the industries and the environment.
It's time we started looking for ways to "evolve" Western capitalism from Evolution 1.0 to Evolution 2.0. This doesn't mean competition is inherently evil; on the contrary, it's a major source of innovation and leads to improved quality of life in many cases. Rather, the goal is to move beyond seeing competition as the only game in town. This isn't an abstract concept. The examples of FERIC and eco-industrial parks provide clear proof of how well this works, but there are many other possibilities that have not been exploited. Consider, for example, if the automobile industry pooled their resources to create the equivalent of FERIC for research designed to increase fuel economy and improve driver safety, instead of having separate and largely isolated groups working on these topics in each corporation -- figuratively, reinventing the wheel at each corporation. Consider, for example, if research on urban water management (obtaining and using water, and treating and recycling the resulting wastewater) were handled by an industry-funded national research agency. It's easy to find other win-win solutions that curb a corporation's inherently sociopathic tendencies and lead to a more humane and socially useful marketplace.
All we need to do is start identifying these opportunities and finding ways to clearly explain their advantages to the corporations that could benefit from them.