A friend of mine sent this to me and I’m interested in hearing how you see this playing out in practice. I want to start by saying I think this is a great idea, but I don’t think it would work much better than current structures. I’m interested to know how you came to some of the statements you did, as my experience working for a for-profit company would suggest you’re incorrect in some of your assumptions.
Premise: While I agree that a business focused on providing its profit to non-profit work is admirable, good, and perhaps the best we can do in an otherwise bad situation, I don’t believe that this factor alone is a deciding business advantage over another business with similar products. It would be one factor of many at best.
I would argue that the idea of Guiding Producers is perhaps a good stepping stone to a post-profit world, but it is not on its own the solution to the problem of exploitation to the benefit of profit. To defend my premise, I want to point to a few statements you’ve made to the writings above, and I’d love to hear your thoughts in counter.
“Structurally, there is no reason that a Guiding Producer would produce goods and services at a higher cost.”
I’d be interested in hearing where you’re coming up with this statement and what justification you’ve got; in my experience, this is demonstrably false. Even if we don’t account for the “economy of scale” argument (which you dealt with by arguing that consumers would deal with higher cost for a short period of time), there are hundreds of reasons why two businesses producing the exact same product would have very different business expenses. Things like:
Vendor relationships (your ability to argue for discounts with people you are close with or have worked with before)
Payment history (many businesses give discounts to companies with good payment history/credit)
Location (depending on where your manufacturing centers are, you may see greater or fewer costs)
Distribution mechanisms (a business may be able to hire a fleet of trucks, but they might need to outsource their shipping to a third-party because of factors other than the raw cost)
These factors alone are enough to represent a major difference in the cost of producing one good, even if it is virtually identical to another. It is not safe to assume that because a business purchases, manufactures, and distributes the same or similar goods, their up-front cost is the same and therefore the cost to the consumer is virtually the same.
“In low-differentiation sectors, it may be easier to construct a ‘no-brainer’ where a consumer is genuinely ambivalent as to two products.”
I would challenge this statement by asking where you see pure ambivalence in virtually any product purchase. It’s true that commodity goods like ketchup, toilet paper, and paper towels are usually competing in a race-to-the-bottom on cost, but what you’re talking about specifically here is a unique kind of product differentiator that functions as part of a much larger structure of consumer purchase behavior. We can come up with lots of theoretical ways that people end up buying things, and the entire field of economics is determined to codify these systems of supply-and-demand to a science. But unless you are able to take the business model of one business and replicate it exactly, all you’ve done is create one additional factor that might motivate a consumer to purchase your product. It’s not a guarantee, because people don’t fundamentally function in predictable, codified, rule-based ways.
I don’t buy Newman’s Own because (1) it costs more and (2) it doesn’t taste as good as the other kinds of ranch dressing on the shelf. It is not, in and of itself, an equal product to its competitors, and so it loses to Hidden Valley or DIY ranch seasoning packets when I go to the grocery store.
“People all over the world choose the ‘lesser of two evils’ in the political contexts routinely.”
Herein lies the core of my disagreement, which is that this advantage alone is enough to level the playing field and produce the Guiding Producer as the winner. I fundamentally disagree that we are able to practically operate on an equal playing field between two businesses and see demonstrable business advantage from just one product differentiator.
In order to sell one’s products, one must be willing to create the absolutely perfect scenario to motivate a consumer to buy their product. The competitive edge relies on coercion, exploitation, subjugation, and dishonesty to accomplish its purpose, and the business can justify those actions by arguing that profit, above all else, is the sole measure of success. Governments exist to regulate this behavior by telling companies what they are and are not allowed to do to the end of profit.
They get to say that losing money is the same as failure. How does a business whose sole purpose is to do good in the world operate by the same standard? Can a business reasonably justify underpaying its staff in order to further the profits of the non-profit it supports? If it were true that simply having a good cause was the deciding factor, why do non-profit businesses not already succeed against for-profit enterprise?
Unless a Guiding Producer is willing to exploit its workforce to an identical degree as its for-profit counterparts, it can’t corner the market on virtue alone.
Hi Brad!
A friend of mine sent this to me and I’m interested in hearing how you see this playing out in practice. I want to start by saying I think this is a great idea, but I don’t think it would work much better than current structures. I’m interested to know how you came to some of the statements you did, as my experience working for a for-profit company would suggest you’re incorrect in some of your assumptions.
Premise: While I agree that a business focused on providing its profit to non-profit work is admirable, good, and perhaps the best we can do in an otherwise bad situation, I don’t believe that this factor alone is a deciding business advantage over another business with similar products. It would be one factor of many at best.
I would argue that the idea of Guiding Producers is perhaps a good stepping stone to a post-profit world, but it is not on its own the solution to the problem of exploitation to the benefit of profit. To defend my premise, I want to point to a few statements you’ve made to the writings above, and I’d love to hear your thoughts in counter.
“Structurally, there is no reason that a Guiding Producer would produce goods and services at a higher cost.”
I’d be interested in hearing where you’re coming up with this statement and what justification you’ve got; in my experience, this is demonstrably false. Even if we don’t account for the “economy of scale” argument (which you dealt with by arguing that consumers would deal with higher cost for a short period of time), there are hundreds of reasons why two businesses producing the exact same product would have very different business expenses. Things like:
Vendor relationships (your ability to argue for discounts with people you are close with or have worked with before)
Payment history (many businesses give discounts to companies with good payment history/credit)
Location (depending on where your manufacturing centers are, you may see greater or fewer costs)
Distribution mechanisms (a business may be able to hire a fleet of trucks, but they might need to outsource their shipping to a third-party because of factors other than the raw cost)
These factors alone are enough to represent a major difference in the cost of producing one good, even if it is virtually identical to another. It is not safe to assume that because a business purchases, manufactures, and distributes the same or similar goods, their up-front cost is the same and therefore the cost to the consumer is virtually the same.
“In low-differentiation sectors, it may be easier to construct a ‘no-brainer’ where a consumer is genuinely ambivalent as to two products.”
I would challenge this statement by asking where you see pure ambivalence in virtually any product purchase. It’s true that commodity goods like ketchup, toilet paper, and paper towels are usually competing in a race-to-the-bottom on cost, but what you’re talking about specifically here is a unique kind of product differentiator that functions as part of a much larger structure of consumer purchase behavior. We can come up with lots of theoretical ways that people end up buying things, and the entire field of economics is determined to codify these systems of supply-and-demand to a science. But unless you are able to take the business model of one business and replicate it exactly, all you’ve done is create one additional factor that might motivate a consumer to purchase your product. It’s not a guarantee, because people don’t fundamentally function in predictable, codified, rule-based ways.
I don’t buy Newman’s Own because (1) it costs more and (2) it doesn’t taste as good as the other kinds of ranch dressing on the shelf. It is not, in and of itself, an equal product to its competitors, and so it loses to Hidden Valley or DIY ranch seasoning packets when I go to the grocery store.
“People all over the world choose the ‘lesser of two evils’ in the political contexts routinely.”
Herein lies the core of my disagreement, which is that this advantage alone is enough to level the playing field and produce the Guiding Producer as the winner. I fundamentally disagree that we are able to practically operate on an equal playing field between two businesses and see demonstrable business advantage from just one product differentiator.
In order to sell one’s products, one must be willing to create the absolutely perfect scenario to motivate a consumer to buy their product. The competitive edge relies on coercion, exploitation, subjugation, and dishonesty to accomplish its purpose, and the business can justify those actions by arguing that profit, above all else, is the sole measure of success. Governments exist to regulate this behavior by telling companies what they are and are not allowed to do to the end of profit.
They get to say that losing money is the same as failure. How does a business whose sole purpose is to do good in the world operate by the same standard? Can a business reasonably justify underpaying its staff in order to further the profits of the non-profit it supports? If it were true that simply having a good cause was the deciding factor, why do non-profit businesses not already succeed against for-profit enterprise?
Unless a Guiding Producer is willing to exploit its workforce to an identical degree as its for-profit counterparts, it can’t corner the market on virtue alone.
Thank you for your time.
Jo