Problems of Maximising Ones Profit at All Costs
By eliminating inefficient businesses, say laissez-faire capitalists,
the 'free market' eliminates all but the most efficient enterprises.
In fact, the efficiency is only financial - meaning that the 'free market'
eliminates any that pursue goals other than maximizing their profits. Nice guys finish last.
A company's profit is the difference between the income it derives from
customers and the cost of providing them with goods or services.
The pressure to increase the difference between the two is supposed to correlate with efficiency.
However a combination of factors, especially some of the
properties of the information-based economy
is actually making financially profitable
businesses increasingly inefficient at allocating resources to promote the public good.
Intel actually paid to impair the functionality of their 486DX chips by destroying the co-processor units.
Profit maximization is very wasteful.
When Intel developed the 80486 CPU, they produced two versions: the 486DX (with a co-processor)
and the 486SX (without). This had nothing to do with the production technology - it was purely
a strategy to maximise earnings. In fact they made 486SXs by taking 486DXs and then overvolting
(by passing too much electricity through) the coprocessor chip. This process both cost money and
decreased the desirability of the chip, but it made perfect economic sense. Why?... so they could
charge high prices to customers with a great need of computing power (who bought the DX) and have
a non-competing cheap product (the SX) to sell to users without such high demands.
Compaq deliberately nobble hard drives, decreasing their effective size.
The IBM LaserPrinter series E was identical to their standard LaserPrinter series,
but had a chip to induce wait states, reducing the printing speed from 10 down to 5 pages/minute.
This apparently bizarre method of maximizing revenue, price discrimination,
is absolutely standard. It results in countless inefficiencies such as multiple
products being bought where one would do, unnecessary upgrades, deliberate damaging or even disposal
of working products, the building in of redundancy and the attaching of inconvenient
restrictions on product use. Customers and
the environment both suffer
- all in the name of 'profit maximisation' with its distorted view of efficiency.
It is instuctive to
compare community currency systems such as LETS with
the current financial system since they are widely recognised as improvements.
Although superior in some ways they are usually still zero-sum, so profit maximization
is just one source of inefficiencies that they do cannot tackle.
To overcome these inefficiencies, people will need to
think altruistically, as encouraged by
non zero-sum systems such as are suitable for a
gift economy, systems such as
altruistic economics that is not focused on what we
can get from others, but on what we can give to them.