Surely we are all tired of the mantra that everything should be “run like a business.” Surely we all realize that the government, or the health care system, or the education system, or your family are not businesses and should work according to their own immanent logic rather than according to the norms of business.
Yet it occurs to me: is anything inherently a business? We normally think of a bakery as a business, for example, but isn’t it actually a place where people bake things? One can imagine a bakery operating under many different economic systems. The examples multiply. A clothing retailer is a place where people come to get their clothes. A convenience store exists to provide people with easy access to frequently used items. A car factory exists to make cars. Even a bank exists primarily to intermediate between people’s different financial priorities (e.g., saving vs. spending), rather than to make money as such. All of those things are typically “run like a business” in Western countries, but that doesn’t mean that they directly “are” businesses.
Only one type of pursuit is inherently a business: hedge funds. Hedge funds avowedly exist for no other purpose than to turn money into more money. They are indifferent to the means by which that is accomplished — they will buy and sell anything, from an oil drum to a government bond to a complex bet to pay out if a certain asset reaches a certain price. For all the advanced math and physics deployed, the basic logic is simple. Buy low, sell high — minimize your costs while maximizing your revenue. That’s what it means to run something “like a business.”
From this perspective, it’s clear that most businesses are not run entirely “like a business.” People have goals other than simply making money as such — after all, they did pick some specific endeavor when they started their business, and in many cases a profession is a source of pride and identity. The bakers want to make money, for example, but they also want to bake well. In many cases, the norms of “business” provide a kind of guardrail, a supplement to help guarantee that the primary activity can continue.
But we all know how dangerous supplements are. Money does have its own inherent charm, as does high-stakes gambling — and it can be difficult for the more modest satisfactions of a job well done to compete.
Let’s take the example of Roger Smith, the CEO of GM who was the subject of Michael Moore’s Roger and Me. He was presiding over a huge operation that made cars, provided good jobs, and supported the livelihood of commmunities throughout the United States. And at the end of the day, I think he found that to be pretty boring. He started cutting his costs through outshoring, to get that rush of higher profits, and he started using the big pool of money that GM controlled to start making speculative bets (like buying defense contractors). He took something that had been run like a stable institution and made it run like a business. I’m sure it was fun for him, though the results were less favorable for the laid-off workers and blighted communities.
You see something similar with universities, though the situation is more complicated insofar as no one ever expected universities to be economically self-sufficient before relatively recently — rich patrons and then the state subsidized their operations. Under those conditions, they plugged away educating people and producing valuable research. Boring! So people started running the place like a business. They cut their labor costs as much as possible (aside from “top talent” like the football coach) and ran their endowments like hedge funds. Faced with a huge pool of money that had to be turned over for a profit, they invested in capital-intensive projects like campus expansions and online endeavors to help them “grow market share.” I’m sure it’s all pretty thrilling for those visionary leaders, though it’s perhaps less fun for the indebted students and their impoverished teachers.
The irony, of course, is that “business” logic can kill its own host, like any parasite. When taken as an end in itself, it destroys everything — and then there’s nowhere else to invest, no more areas producing real values that can be syphoned off into the giant pool of money. The imaginary values that finance has racked up then become the object of a game of hot potato, furiously churning through the system until the point when they simply disappear (i.e., lose all their value). That’s what running everything “like a business” does — it trades real value for imaginary value that is then destroyed.
That’s the problem the world as a whole is facing: not scarcity, but a certain type of excess. There’s too much money sloshing around without any real value to attach itself to. World leaders are furiously trying to keep the game of hot potato going for as long as possible, when they should really be promoting a return to the boring activities that produce actual value and meaning in people’s lives. Instead of toying with monetary policy or coming up with complex ways to create a market for “toxic assets” everyone knows to be worthless, they should be setting the example of doing really boring things: filling in potholes, repairing sewer systems, driving buses, teaching kids.
Given the way things are set up, this will be just another phase in the cycle, a long-term bet on the part of the system to build up capacity that can be syphoned off in the next generation. But there’s a utopian moment here as well. When the messiah comes, everything will be boring, nothing will be run like a business. It will be like this world, the exact same world — just a little different.