Capitalism: Part I

Just a short post today since it's Friday and I'm a bit busy trying to finish off this weeks work! And since its Friday why not round off the week with an amusing little story that happens to be very relevant to Capitalist society. This is the kind of thing that passes as humour amongst salesmen and marketing people!

There are two work colleagues walking out in the wilderness as part of a "team building" exercise. They reach a long narrow river valley and start walking along, enjoying the beauty of the countryside, the peace and quiet and the fresh air. After they have walked a couple of miles they see a grizzly bear a little way off in the distance. He's clearly not in the best of moods! The grizzly starts running very fast towards the two men "Jesus, look at the bear! He's huge. He's running straight for us! I think he's going to attack us! What the hell are we going to do?!" says one of the guys. The other guy takes off his rucksack, removes a pair of top quality Nike trainers and proceeds to put them on his feet. The other guy starts screaming at him "What the hell are you doing? We're never going to outrun that bear!". The guy with the trainers turns around calmly and says "I don't need to outrun the bear. I only need to outrun you."

I think you can learn all kinds of things about competition from that little anecdote! Have a good weekend. Next post should be on Monday, with a bit more on capitalism and competition.

Corporate Thinking

In my last post I promised that I would give an example of what I meant by a "Deus ex Machina" model by considering the behaviour of a large company. I work for just such a company. A large German multi-national with tens of thousands of employees. Nobody can know everything that goes on within such a company, and that includes the board of directors.

Although I am an engineer I work closely with the marketing department. The responsibility of marketing is to match the supply side (production) with the demand side (sales). As such marketing has an excellent view of how the company is operating.

The company that I work for has been struggling. It has not made a profit for ten years. In fact it has made substantial losses for much of this time. Within companies that are struggling interesting things start to happen. Ambitious people that perceive that their careers are not best served by staying with the company make their way to competitors. The people that remain are usually very focussed on retaining their jobs. In successful companies working to keep ones job is usually aligned with making sure the company is successful by complying with the directions of the board. In a struggling company this is not the case. In a struggling company the board usually wants to cut costs, and this is not likely perceived to be in the interests of the employees. As a result the employees may seek to frustrate the actions of the board.

The various component parts of the struggling company start to malfunction. Salesmen, who are usually measured by revenue targets, start to panic when confronted by a purchasing manager at a customer. Thoughts of preserving profit margin fly out the window as the salesman seeks to ensure that the business can be booked regardless of the selling price. They will co-operate with marketing and engineering while it suits them to do so, but will knife them in the back if the appear obstructive. Meanwhile marketing, normally measured in terms of profit targets, will find that the profit targets cannot easily be met and therefore they will try to excuse this by also focussing on revenue growth. Thus they will happily work with the salesmen to push the product prices to low levels, as showing management the successful winning of a new account is better than walking away empty handed.

[It should be noted that the purchasing manager at the customer smells the weakness of the salesman from a struggling supplier. He may choose to avoid a struggling supplier altogether, but if not he will certainly pressure that salesman for lowest cost. He will not be concerned that his falsehoods about the competition might be discovered - he knows the salesman from the struggling supplier is, in practice, on his side and won't challenge him.]

Having pushed prices down too low, marketing will then put pressure on production to reduce production costs. Production, which is normally measured in terms of production efficiency, knows that full efficiency can only be achieved with a factory running at capacity. Thus production will promise that the manufacturing cost can be met, to ensure that the end customer will take the product and the factory will be filled to capacity. They can afford to lie since they don't actually work for marketing. They will simply charge the cost of the product to the company and then make excuses later for not reducing manufacturing costs to a profitable level - probably knifing marketing in the back at the same time.

You can probably already see that this is a recipe for disaster. The prices of the product are too low to make a profit. But worse than this, over time the factory will become full to capacity with products which are loss making. To recover this situation the board of directors could choose to end production of these products or push up the price to end customers. Either is unlikely to be well received by the market! And cutting production of the unprofitable product is likely to leave the factory empty and thus inefficient until new products can be used to fill it again. In any case, unless the attitude of the employees is changed the same process will repeat again.

So the board of directors has a problem. They need to either increase the product profit margin or cut costs. An Anglo-Saxon company would probably adopt the latter, but this is a German company so this is not what happens. The German company takes on yet more debt to acquire smaller companies with profitable products to feed through the production, in the hope of gradually improving the profitability of the company as a whole. But there is a problem. The board of directors puts the newly acquired small company in charge of one its German middle-management teams. The middle-management team like this. They want to protect their own well-paid jobs! So they strip the newly acquired small company bare of anything of value and leave the employees of that company out in the cold. Those latest employees will be first out the door when the next round of redundancies occur of course! Meanwhile the acquisition can hardly be said to be successful. The attitude of sales and marketing is still weak, so the end customer purchasing manager finds he is able to push the prices down yet again! The board finds their plans have been frustrated!

This is what happens at my German employer. You can see that whilst the board ultimately wants the company to be successful and the employees also want to protect their jobs, the reality is that the company is propelling itself towards disaster. The company develops its own persona when taken as a whole. It is nervous, jittery, depressed and indecisive. But you can also see that the board really has a hell of a task on its hands to turn the company around. The attitudes of the employees would have to change. They would need to be made to feel safe in their jobs, and in a struggling company that is difficult.

It is my contention that government of all kinds tends to be like running a failing company. Except when fighting a major war, there is little "buy-in" from the citizens with government policy. Generally people prefer to frustrate attempts to be "governed". Perhaps that is a good thing, but wouldn't it be better if government took us in a direction we were inspired by? A direction we had faith in? In my next few blog posts I will consider the various systems of society (capitalism, communism, socialism and democracy) and why they fail to inspire the people. In the meantime I would be interested to hear from any of you of organisations that you have been a part of that seem to have developed their own kind of madness!

"Deus Ex Machina"

Before I delve into the politics and economics, I want to clarify what I mean by "Deus Ex Machina". It would be easy for readers to get the impression that I see society as some kind of robotic machine that creates a god, floating on the clouds and dispensing mystical thunderbolts. This is definitely not what I mean! I consider this machine as a biological entity with the "god" being a separate consciousness that is derived from society but has no physical embodiment. It is a function of group thinking, and I suspect that all groups with more than 100 members tend to suffer from it. Let me show you what I mean by analogy to the human body.

In the beginning there were single celled organisms. Each was a living entity in its own right, but these living entities did not relate closely to other single-celled organisms. We can imagine this as being similar to human society before language developed, before complex communication was possible.

Thanks to the process of evolution, the single-celled organisms changed their behaviour. Instead of dividing and separating into separate creatures, they clumped together to form colonies. This didn't happen as a planned, well thought out strategy. The single-celled creatures were not capable of such things. In reality it happened as an accidental response to the environment the single-celled creatures found themselves in. It seemed to work, and these multi-cellular organisms thrived. This is analogous to the period of human history where language first developed and communities formed.

The process of evolution continued. Multi-celled organisms developed into ever more sophisticated creatures where certain cells were tasked with specific functions within a much larger organism. Each single-cell continued to be a living organism in its own right, but with no understanding of its position within the creature it was a part of, and no awareness of the existence of such a creature. This is where evolution currently stands, and it is analogous to the evolution of human society, which reached its apogee perhaps around the time of the Egyptians. Complex societies formed where individuals might have very specific functions within a society that was sufficiently complex that no individual could fully grasp how the totality of society functioned.

It should be realised that evolution is not driven by the individual cells that make up the human body. These individual cells are unaware that evolution is happening, or that they are part of some larger mechanism. Are we aware that we are part of the creation of human history? The cells are not aiming towards a particular, worthwhile goal - and neither are we.

Those cells that are part of the brain may be part of the thought process of the human individual, but they are unaware of the thoughts of that individual. Similarly, those individuals in human society that have power and influence over the whole, are actually unaware that they are trapped within a larger mechanism and that their thoughts are just a small fraction of the thinking of the whole organism we call "society".

Naturally the human body is built up not merely of cells, but of separate key functions that relate to each other. Changing one of these key functions could prove fatal to the whole organism. Sometimes the importance of certain body parts is not immediately obvious. On the other hand, individual cells may die, but they act in parallel with many other cells and can readily be replaced.

In human society, political revolutions are analogous to performing multiple organ transplants. The trauma of the operation is liable to be fatal to the patient. For such radical surgery to have a chance of success, the patient must first be put on life support. But there may also be a temptation to do nothing at all to alter the running of society. Any change could prove detrimental. But by failing to grasp the reality that history is something that is being forced upon us as individuals by the thinking of "society" we fail to become truly free. We are slaves to "society" however that society is defined. The thinking of "society” as a whole may be leading us slowly towards disaster, without us even being aware of it. No single individual is actually in charge, although it may seem like there is. It may seem that there is a conspiracy to control us, especially when the outcome of government thinking seems out of tune with our own thinking - but there is no conspiracy. We, and our governments, are trapped by the thinking of "society" as a whole.

In my next post, I intend to apply this "Deus ex Machina" model to the behaviour of a large corporation, so that it should become more obvious how trapped we are within the organisational structures we create. Subsequently I will expand the concept to the societies we have created.

This is a new political blog...

Do we really need another political blog, you might be asking?

Well perhaps this one is different.

This blog aims not to examine the minutiae of daily democracy in the UK. This blog aims to examine "society". It will examine the thesis that "society" is a "machine". Not a dumb unthinking machine but a thinking, emotional machine. It will discuss the component parts of this machine and how they interact. It will consider political revolutions and why they have failed. It will consider war and poverty and how they arise. It will consider the failings of capitalism and democracy, and how they might be repaired.

The name Deus Ex Machina derives from the Greek "God from the machine". In Greek theatre it refers to the practice of lowering to the stage an actor, representing a god, who would then magically resolve the situation occurring in the drama . I intend to use the term in its most literal sense - a "god" that is derived from the biological machine we know of as "society". It is a metaphor, but nevertheless should help us to understand how complex systems like societies work. It will help us to understand why society does not work the way we would like it to, and it will do so without resorting to class-warfare theory or conspiracy theory.

I am a senior engineer that works with the marketing department of a large European multinational corporation. I have a fascination for "how things work" - including a fascination with how large corporations work and how society works. Many large corporations are the size of towns and even cities. The way they work (or indeed, fail to work) is the way a complete society works in microcosm, especially capitalist society. The psychology and sociology of corporations holds the key to the inner workings of Western society.

Why such a blog and why now? Because the indications are that the society we live in now may be about to undergo seismic change. We will investigate the reasons for this. It may be that the changes that society will undergo are of a similar magnitude to those experienced in the 1930's as a result of the Great Depression. This monumental change resulted in war, and paradigm shifts in the manner in which societies were operated. Is the same about to happen again? Some mainstream commentators such as Matthew Parris and Matthew D'Ancona are becoming uneasy. But there is no-one in a position of influence today that is able to remember the 1930's from first-hand experience.

"Those who do not read and understand history are doomed to repeat it." - Harry Truman

Reading history is the easy part. Understanding it is considerably more difficult. In this blog we will see that "society" deliberately fails to understand history and therefore must inevitably repeat it. And therefore we are very likely to repeat the mistakes of the 1930's, and then the 1940's. "Society" has a mind of its own, beyond the control of the citizens that are its component parts.... but society has a very short memory.

I do not have all the answers, or even all the right questions, but I hope those that read this blog will contribute much of their own experience and knowledge. Hopefully, together we will learn something about our society, and how it controls each and every one of us. We might even understand how it can be changed for the better.