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.
34 thoughts on “Like a business”
Largely agreed. Politically, this has import inasmuch as the “business community” as a political entity is not really as coherent as we might be led to believe. After all, a bakery has interests related to baking, and a clothing store has interests related to clothing, and it’s a particular kind of polticial-ideological frame to assume that those interests can entirely or largely be subsumed under the category of “business interests”. (Or even, e.g., “small business” interests.) In other words, all that you say is true, and it’s not an accident that we talk about ti that way. Organizations like the Chamber of Commerce have gone to a lot of expense and trouble be be sure that we do.
I edited the post because the original draft had too simplistic a view of the role of finance. We know from historical experience that financial intermediation can be provided on something like the “public utility” model.
Like a business,
run for the very first time.
Like a business,
feel your value
Maybe after “Creepiness” you should write a book on “Boredom.” It seems like a value that is demonized and not given any credit in our capitalist age. You should never be bored! You should be doing something, being productive, all the time!
I don’t think the moral intuitions and economic activities in play here map neatly onto one another at all:
1. Lots of “good” businesses that make profits but do so nicely, with care for the quality of their output etc., could easily be and often are exploiting some monopoly on existing capital. Rentiers with smiles on.
2. Maybe the most fundamental activity of banks and hedge funds – maturity transformation, borrowing short-term and lending long-term – provides the liquidity that allows bakers to set up shop in the first place.
3. An un-bored, nihilistic speculator who pours capital into an IPO is nevertheless expanding the capital stock and, despite himself, doing just as much good, pending the nature of the business I suppose, as any given employee at Noble Artisans LLC.
4. A successful portfolio manager for the endowment of 2nd-tier Research University makes the university less subject to the whims of state budgets, federal grants, and private donors … and so directly improves the ability of the school to keep teaching humanities.
It also seems a bit more likely that General Motors and various university presidents pursued profit- and reputation-maximizing strategies because of competition from other firms than because they were just bored. Even a “Larry Summers has a huge ego” story is more plausible.
Yeah I’m with Stan. “Like a Business” has been stuck in my head all day. Weird Al, where are you?
It’s not a moral intuition I’m playing on, Jared, so much as an eschatological one. I promise I understand how capitalist investment works, in the broad outlines! I’m also aware that every productive activity needs to appropriate resources from somewhere. And yet…
In all seriousness, though, I think we need to have a bit more of a push-back — maybe not moralistic “bankers are greedy”-type stuff, but definitely something that highlights the fact that human free will and responsibility are at work in economic decisions. Indeed, the people who are supposedly prisoners to market forces are precisely the people with the least “skin in the game” in terms of their long-term prospects. CEOs can fail miserably and still be multi-millionaires who can live the high life and still have tons of money to pass on to their kids. The traders who supposedly “have to” keep up, etc., are in a similar position.
There’s no utility involved here, and no necessity. They’re playing a game. Sure, things are set up such that we need them to keep playing, but why should that be the case? In other settings, including in our own not-so-distant past, things were set up so that we weren’t so dependent on, say, hedge funds. We should be fighting to limit the damage their game does, but instead we’re letting them expand their nihilistic logic into everything. The current finance regime was created by public policy and can and should be undone by public policy — i.e., by free, responsible human beings who have control over their own actions. What is gained by acting like it’s all a matter of lockstep material necessity when it clearly isn’t?
There was a fascinating article in Harpers a few years ago about how our society, meaning roughly post-Vietnam, is the first to completely dispense with a moral discourse surrounding (and laws preventing) usury. It was a simple but powerful point.
Maybe this is obvious and goes without saying, but I think that the current set-up goes well beyond public policy in its origins and potential remedies. A view of the current state of affairs that includes in the intellectual hegemony of certain economic set-ups helps, I think, to explain why looking at alternative set-ups is so hard: It’s not that we find it possible to look at other ways of thinking and doing, and find them wanting, it’s that we literally can’t conceive of them. (“We” meaning “most of us, on average”.)
Which is odd, when you think about it, given how sympathetic America is to fundamentalist readings of the Bible and the anti-usury raw material there.
Or we can’t recognize them when we see them — as China’s still basically centrally-planned command economy is called “capitalist” simply because it leaves room for market forces.
You know, the more I think about Jared’s comment, the more I think it’s impossible to think of an economic practice that doesn’t have any beneficial spillover. I mean, just think of all the liquidity that Tony Soprano is providing to Newark-area small businesses!
I’m talking in terms of net effects, obviously. Nobody is defending the bank that blows itself up, or the baker that accidentally poisons everyone after ten years of “baking well”.
I’m not sure what an “eschatological intuition” is. Presumably, after the revolution, only truly valuable and enjoyable and eudaimonic activities will be pursued by humans, is that the idea?
My point is that our value judgments about which activities are worthwhile don’t submit to this facile division between the “real” economy of local people making things vs. the “false” universalized realm of placeless, “parasitic” finance.
Do you not see that I explicitly included banking in the “not inherently a business” category? Just because people simplistically say that all finance is parasitical, that doesn’t mean it never is. Under neoliberalism, it has gotten more and moreso.
Honestly, it pisses me off that you’re reading my post through that dumb cliche. You know I’m not a localist, you know I am not ignorant of finance — cut me some fucking slack.
Yes, I saw that, but the description of banking as “primarily to intermediate between people’s different financial priorities (e.g., saving vs. spending)” is also a description of what any hedge fund or other financial risk-taker does.
Look, it’s not my fault that a lot of the last three paragraphs could also have been written by a hard money enthusiast. The problem is definitely not “too much money sloshing around.”
Or, I don’t know, a Marxist!
You know I agree with the broad thrust of the complaint about bad public policy, but the weird swipes at monetary policy (Bernanke is the most progressive policymaker with any power these days), hedge funds as undiluted evil, etc. are at best irrelevant to what I take to be your main point.
The key word in the bit you quote is “primarily.” I think that a Fordist-era bank is a very different kind of institution than a contemporary hedge fund, even if you can construe them as doing broadly the same thing. Any actor in financial markets is unavoidably also producing some kind of liquidity/market-making/intermediary effect — that’s just the nature of the beast. It’s kind of like how I’m boosting GDP whether I’m buying a car or paying to have someone killed (assuming there’s effective money laundering on the other end of the transaction).
Actual-existing monetary policy seems to be at the limits of what it can do. I’d be all for helicopter money or whatever, but it’s not going to happen because it’s not within the Fed’s legal mandate and no one is going to vote to allow that. Is it controversial to say that monetary policy can’t do all the work?
Sloshing around is being contrasted with actually moving through the economy. We’re still fundamentally in a crisis of accumulation. Take all the money out of the corporations’ coffers or wherever and just give it to actual people who will spend it and — voila! Fucking simple.
Lenin, writing in the wake of the October Revolution, seemed to believe that financial intermediation was valuable enough to take out of the hands of the capitalists (i.e., not to “run it like a business”).
When Jared writes “the bank that blows itself up,” I can’t help but think of the pro-gun mantra that only crazy, bad people kill others with guns. If we leave out the *really evil*, nihilistic banks, I *promise* there’s a good bank somewhere that buys out the bad banks. Or we need more of them. With lots of money.
“Banking doesn’t kill people. Bankers kill people.”
The Market is the hierarchy of being, the whole of the “natural order” of capitalism. Money is a plane of immanence. Money is not “real value”, it is the opposite, things, commodities, are money. Value is money. Without money there is no value, as there is no being without God. Money is the name of value, which names and therefore creates value. To have no price is to be nameless and non-existent in the hierarchy. Business is all life. Capitalism is human nature. To be outside business or money is to be outside nature, is to be a homo sacer. What is outside the being of money has no value and therefore can’t exist. It is life which does not deserve to live.
The virtuality of credit and the virtuality of money are not the same thing. Part of what is constantly being obscured in these debates is the fact that money is not a commodity among commodities, or a social contrivance, as Samuelson wanted us to believe. Money is not a shorthand for other commodities. It is not neutral. As a store of value, and not merely a medium of exchange, not only is there nothing that is truly run “like a business,” but there are no monetary transactions, period, that are “just business” (i.e. just arbitrage or speculation). The genesis of money is in tokens of a surplus, whether that surplus be divine presence or honor or prestige or simply power (anthropology has been screaming at us about this for 100 years, and Graeber’s _Debt: The First 5,000 Years_ is only the latest voice in the chorus). At least Adam Smith had the nerve to admit that economics was, in the last instance, the theory of moral sentiments, and perhaps he (or perhaps Deirdre McCloskey, his avatar) would call out the purely quantitative approaches to this so-called science as the covert theology it actually is. The question is not whether there are some decent bankers or traders, but —what currency actually represents— :: in this day and age, what it represents is debt. More on these themes at http://www.absoluteeconomics.com. Adam, brilliant post! We’d like to re-blog it.
Would be interested to know your take on the rather humanist appropriation of Heidegger to understand business as co-ordinated promises to hold open a world by Fernando Flores:
I’m too terrified by the premise to risk reading it.
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