Saturday, January 3, 2009

if every business was a nonprofit, what would our society look like?

Three examples I came across recently, for your enjoyment:

There was big public campaign to convince Mattel not to make a brand of dolls aimed at 3-6 year-olds called Pussycat Dolls based on scantily clad females (even worse than Bratz).

Board which meets to provide funding for proposed business venture to manufacture and distribute Pusscat Dolls:

Advocate for Pussycat Dolls: I made a few for the neighborhood girls, and they really liked them. The parents didn't of course.

Review board: Why create a product that psychologists suggest is harmful AND parents don't like? Next!

Decade-long campaign to pass legislation to remove phlates (a potent teratogen) from nail polish. Manufacturing organizations are under crushing constraints to increase profits or be out-competed. They are thus obligated to direct their energy into fighting health-oriented regulation, hence the reason it took more than a decade for health activists to win their fight to remove phlates from nail polish. But if the goal of manufacturing is to meet human needs, then governing bodies will weigh different contingencies: the needs of humans to have lower cost nail polish vs. the needs of the children of factory workers and nail polish users to be free of phlate-caused birth defects.

Last year, Consumer Reports discussed a tree sapling which is sold via mail with the boast that it grows faster than any other tree, and if you plant it, you'll have a lovely shade-providing tree in your front yard in 6 months. The boast is true. But what isn't said is that the tree is considered an invasive species that threatens native trees and it is even illegal to plant it in some, but not all states.

Imagine that to obtain financial backing to produce a product, you present your business plan to a board of experts who will debate how well your product will serve its intended community.

Note that this is the process I and other academics go through in order to get funding to conduct scientific research. U.S. publicly-financed scientific research has a track record that is unparraeled for innovation and quality, which shows that profit motive is not required for innovation and excellence.

Under a planned economy with review boards:

Board member: Hm, should we approve the business plan to market this lovely weed tree? No, its a dangerous weed. The desire of some home owners to have a quickly-grown tree is not as necessary as the need to protect against invasive species. Not approved. Next!

Under capitalism:

Note: In the U.S., currently no board of experts who evaluate the public good of a produce or service is required to approve a business plan. All that's required is that some capitalists believe they can make money off of it and avoid criminal prosecution for any violated laws or regulations.

Venture capitalists: Hm, the tree is actually illegal in some states, so be careful not to mention this in ads. It does grow faster than any other tree, and we should be able to make a good profit in those states that haven't passed laws against it. People may even buy it even in the places where it is illegal, but that's their fault, not ours, so there won't be any legal liability. Approved!

More info, see this video...

Leave a comment if you'd like to contribute to the blog, "if every business was a nonprofit." Thanks!


Dan said...

Two questions I see right away:

1) How do you deal with businesses that fail? Does the state provide for startup funds and then eat the cost? Say you have a brilliant idea, and you want to make a pocket music player. You get money somehow to build a factory (how, since there's no capital?), get all the permits (make sure it's not harmful, and adds to society's well-being), and start making it. Now, perhaps you just made the iPod, everyone wants one, especially since you're only charging $20 pre-profit. But what if you ended up making the Zune and lose money? What am I missing here?

2) Are you willing to also remove charity from the system? Because without profit, everyone making just what they need to live a comfortable life, there's no extra for charity (see historical Communist states, no sign of individual-level charitable activity). I guess that means the state provides for all charitable needs. But certainly no more Amnesty International, Planned Parenthood, Doctors Without Borders, Red Cross, Salvation Army. Hopefully you're planning for a world-wide setup where all states are supporting their people equally, and you feel there are no injustices left that the state is not addressing. What am I missing?

Scott said...

1) Businesses that fail should be controlled by the public. That way, if something useless is being made the factory can be retooled to make something else, rather than just laying everybody off and shutting the place down.

2) Some of the groups you mention do good work, but there is a "non-profit racket" that begs the state (and corporations) for money and then has their agenda beholden to these funders. Charity as well should be public rather than controlled by private (non-profit) charities, which often hire people with exorbitant salaries. Instead, public wealth should be used not just for charity but to democratically empower people to have more power over their lives. Instead what we have are non-profits which, while some of them do good work, some become accustomed to the inequalities and competition of our society rather than challenging it.

Dan said...

1) I don't understand -- who eats the cost of the business failure? If, as in the capitalist system, it's the shareholders, then that's a risk they take when they invest, and it's balanced by the opportunity to make a profit. If there's no chance of making a profit, then you would have no shareholders. And thus no business. In a non-profit world, it seems to me there would be no "businesses," there would only be the state.

Interestingly enough, the state would need a source of capital to start a factory, for example. Where does it get the capital if there is no profit? A resource-rich country, for example, could sell its resources. But if it sells them at the cost of extraction, non-profit, that doesn't help to raise money for a factory. So it can borrow the money, as the communist East European countries did, from the capitalist countries. But who do you borrow from if no one else is capitalist, and thus no one has any capital to lend?

I'm sure someone has written up the utopian manual on how the world would produce iPods, etc., without capitalism, is there a reference?

2) Of course there are good charities and bad charities. What I was asking is whether it's OK to get rid of ALL charities, good and bad, because a nonprofit system has no excess funds for charity. The problem with the state doing the charity work is that it's no longer charity, it's social security (or whatever label you prefer). If the state decides that midnight basketball is a poor use of resources, then it's cut off and no one else has the money to step in. If the state decides stem-cell research is bad, then there's no other source for grants. If the state decides that it's better for everyone if the gypsies are all incarcerated, there's no one to raise awareness. The state controlling who gets help leads, in the best case, to the tyranny of the majority. And when the psychopaths take over, watch out. It's never worked in real life, and, again, I'd be happy for a reference.

Anonymous said...

the chemical is "pthallate" not as spelled in the blog

HumanProject said...

Anonymous, thank you. I knew that I did not know the spelling, googled (nail polish phlate) and found plenty of articles, see "Debate over phlates" but your spelling appears to be the definitive, correct spelling (wikipedia). Its a reminder that the google spelling method, which I've come to rely on, does not always work...

HumanProject said...

Dear Dan,

A big debate of the 19th and early 20th centuries concerned how to envision (how to approach) the goal of an egalitarian society. The marxist approach was to say that the details of the future egalitarian society needed to be decided by the members of that society. Marx felt it would be anti-egalitarian to specify in advance a blue-print; that needed to arise through discussion and debate in democratic councils and neighborhood groups.

Another approach is to look at past attempts at egalitarian societies, such as the brief Paris Commune (in 1871).

Of course other thinkers, particularly scholars in the field called "political economy" have tried to answer the questions of how economics would work in non-capitalist systems. There are sometimes articles in the journal Monthly Review on these topics:

I'll try to find some good sources and will post them.

Its a massive problem that everyone should think about: how do we as a society want to organize ourselves? How should we allocate resources and efforts to produce group goals?