5.19 The End of Profit

   Technology magnifies human choices but doesn’t make them. Last century, nuclear technology increased the physical power of war until the major powers had to choose to destroy each other by nuclear holocaust or not. Technology didn’t change the nature of war, which was always to lay waste, it just upped the ante. Mutually assured destruction (MAD) made clear to everyone that world domination was an inevitable all-lose endpoint. America and Russia chose not to destroy each other but the choice was made by people, not technology. Hitler’s myth of world control was seen for what it was – a pyramid scheme based on conquering countries, pillaging them and moving on. Just as financial pyramid schemes inevitably collapse, so Hitler’s scheme never produced anything but the collapse of the synergy of civilization.

The myth of profit. The myth of profit is that one can get profit for nothing. If profit is the goal, the ideal is to get it for nothing: Enron, World Corp and the credit meltdown banks all sought just this. Yet just as perpetual motion contradicts physical laws, so perpetual profit contradicts social laws because just taking from others isn’t sustainable. Today, we laugh at medieval efforts to build a perpetual motion machine but still believe in the myth of perpetual profit. If we use the power of technology solely for personal profit, a global social collapse is inevitable over time. The profit motive increases the gap between rich and poor and this is a recipe for disaster. As with nuclear weapons, technology has just upped the ante, as now we can collapse synergy not just for one country but for many.

   Profit and the Internet. When businesses first encountered the Internet many saw as a way to get rich quick. Then the Dot-Com collapse showed that people online were not as gullible as supposed. The Internet illustrated the flaw at the heart of perpetual profit – that no business can survive on stupid customers. If people could be manipulated to give away their money foolishly, they would soon go bankrupt and so no more be customers. A few con men can feed off a stable society but a con-society can no more succeed than a colony of parasites feeding off each other. At first e-commerce seemed like a sure thing, as both customers and companies benefited, but without trust this synergy was not possible. Online sales did not take off until sellers like Amazon and Ebay built up trust. Companies like Google and Facebook were even more daring: they used cheap technology to give a free service as per Rule 2 (give to others), built up a client base of millions, and then looked to profit as per Rule 1 (take for yourself). This give now, get later approach has worked brilliantly. The Internet way is to first get trust by offering some free service and then look to profit. In this give and take, synergy comes before profit.

   Advertising steals people’s time. In the old days, a thief would steal your money but today advertising steals people’s time. Why else are TV ads louder than the program content? If to watch an hour of TV I have to watch a half-hour of ads for products I dont want, it wastes my time. And ads often promote what harms me, like eating bacon and cheese burgers (obesity) or taking pain killers (the opioid crisis). As ads waste their time, people mute them or flip to other channels, so more ads are needed for the same effect, making the problem worse. As a result, the advertising that funds TV is slowly killing it. Young people dont watch TV because the Internet gives more for less time. Unfortunately now what killed TV for people under thirty is doing the same to the Internet. It started with popup ads that people learned to close without reading and now to watch a video you have to ignore a video ad first. Often half the screen is ads, and just as you start reading the article you came for, a pop-up interrupts to ask for something. On some websites, you get a video of someone in a loud voice selling something! Advertising is the slash and burn of the information age, because when ads grow like weeds, people stop visiting the garden. 

   Profit alone is not sustainable. Profit seekers are the hunter-gatherers of the information age who take and move on. This is not sustainable. To advance, the Internet needs cultivators who give and take fairly. The signs that profit corrupts are everywhere in developed society. Hospitals trying to make money run every x-ray, consult every specialist and give every pill “just in case”, giving a profit from sickness system not a health system. Pharmaceutical companies pushing pain pills for profit has created the opioid crisis, making them the biggest drug dealers in America. A food industry that peddles burgers instead of tobacco has created an obesity “epidemic” that kills more people than tobacco ever did. Academia is now about publications and grants not truth, so industry can buy “research”. Politics is now about money, as lobby groups give politicians no choice but to buy in or sell out. Selling as many guns as possible has made America the world leader in gun deaths. From gambling in sport to stock market scams, the profit motive is leading human society astrayThe profit motive is reaching the end of its useful social life because as an ideal, it is not sustainable.

   The profit motive end state. To understand the inevitable end state of the desire to profit, consider this story:

A man who worked hauling goods with a donkey had trouble making ends meet. He complained about this to a friend in the pub who told him he needed to improve efficiency by cutting operating costs. So the next day, instead of giving the donkey ten carrots a day he gave him nine. Since it then did as much work for less carrots, he believed the consultant and did the same the next day. A week later his friend found him again sitting miserably in the pub and asked what was wrong. The man replied: “Feeding him one carrot less each day worked well until he died. What bad luck! I nearly got him working for no carrots at all!” The man failed to see that he and his donkey were in a symbiotic relation.

   In this story, workers and customers are the donkeys that generate value and businesses seeking profit are the foolish owners that eventually kill them off. P. T. Barnum is reputed to have said “There’s a sucker born every minute” but today hi-tech firms need people not donkeys, hence Google gives its employees half a day a week to work on personal projects. A university provost complained that “Managing faculty is like herding cats” but hiring cats for their creativity then trying to herd them makes no sense – if you hire cats you should put out milk. Semler details how his company raised productivity by treating employees as people not donkeys (Semler, 1989). Clearly there is something at work beyond profit, as online systems like eBay treat customers not as the competition but as part of the business. Conscious capitalism is the explicit statement that good businesses give back to the community. Social level business models ask not how to dupe customers but how to work with them, because treating others as synergy participants generates value. The next section looks at how the Internet answers the biggest question facing humanity today, namely “What is beyond profit?.