The myth that big business knows what is in its best interest.

wax

I just received an email from 38degrees about their campaign to stop the NHS being sold off to US companies.

It seems like a myth which is perpetuated that big business knows what's in its best interest.

Why should they necessarily know this?

A lot of big business is based upon the motivation of increasing profits, and increasing shareholder income from its business.

Why should this necessarily mean that the business knows what is in its best long-term interest?

To have a better idea of what is in its best long-term interest it might need to develop more sophisticated philosophies about how the world works, and how to function in it.

The conclusions that might come about by doing this might lead to possible future decisions going counter to the idea of making short term profits.

It seems like the myth that big business really knows what it is doing come about because its present activities go against the best interests of society at large...

By promoting the idea that big-business is damaging to society means they know what they are doing, may just re-enforce the idea that they do know what they are doing, and so people like 38degrees might just be undermining their own attempts to make the world a better palace.

I think it might be better to promote the idea that big business can benefit itself and make the world a better place at the same time and making society happier and more functional in the process..and I have read studies that say even rich people are happier if they live in happier societies, so I think some people are thinking along these lines, already.

Terrapin Station

They might make decisions that they'll come to regret, but big companies do have people whose jobs it is to analyze mountains of data--about their own business, about other businesses in their industry, about consumers, about other industries, about stock markets, about governments and economics in general, about other political, scientific, cultural trends, etc. They also involve other companies, organizations, etc. in this.

It's not like Coca-Cola, say, has just one guy who making off-the-cuff decisions where he's really spending most of his time playing Fortnite.

Paul

Big business is just a lot of people. Often a business is dysfunctional throughout, but even when it's running perfectly it's expressing the decisions of human beings. Those human beings are typically taking the actions they think will get them more money, not what they think is best for the company.

What's best for the individual is sometimes good for the business, but often not. If you're retiring in 6 months, or you're a CEO who plans to jump ship in 6 months, you may not care about 10 years from now. If you own stock and you want to sell it, you may want to recklessly inflate short term profits even it means corporate bankruptcy down the road. Or if you're a lower level employee, you may just jump through the hoops to tick the performance review boxes when you know what the company really needs is someone to risk their position in order to fix problems in the corporate structure or direction.

wax

They might make decisions that they'll come to regret, but big companies do have people whose jobs it is to analyze mountains of data--about their own business, about other businesses in their industry, about consumers, about other industries, about stock markets, about governments and economics in general, about other political, scientific, cultural trends, etc. They also involve other companies, organizations, etc. in this. — Terrapin Station

yes, they usually will have a lot of people who are highly trained in things like statistics, and probabilities etc, but what is the overarching philosophy as to how they use this information?

I know that a lot of people who work at say the Financial Times will have read widely about economic philosophies etc reading books like The Communist Manifesto etc, ..but do big companies actually have a wider philosophy as to how they fit into the rest of the world, and how best to proceed regarding the future?

If it is just about making profits in the short or long term, then maybe that wouldn't really even qualify as a philosophy...it would be more akin to an animal going around the countryside looking for food, as compared to a human learning how to grow crops and make food, which would be like a philosophy of food production, compared to the animal's more instinctual behaviour of opportunism.

Brett

↪wax

This is no myth, they do know what’s in their best interest; to survive in a competitive market.

There are many ways they might achieve this:

They might plan to buy out the competition.

They might plan to break the competition.

They might plan to build the company up and sell it at a profit

They might sell their assets to build up cash for a recession

They might plan to create a new market

They might plan to increase shareholders

They might diversify

They might plan on a five year tax deal with the government

They might plan to restructure

They might plan to hold down wages

You might not like it,but they know exactly what they’re doing and why.

wax

↪Brett

I didn't say the had no idea what they were doing, but take the options you mentioned; they seem a bit like they might be limited, and I don't really see them as much of a broader philosophy.

for example, non of the strategies you mentioned deal with the effect that the business might have on the environment. Non of them deal with the effect they might have on the society they operate in.

Brett

↪wax

These people are pragmatists. They’re not interested in your philosophy. If there was huge money in it they might be. If there was huge money in your happiness then believe me your happiness would be their priority.

No, none of those strategies deal with the environment, unless it’s in their interests.

wax

No, none of those strategies deal with the environment, unless it’s in their interests. — Brett

so are you saying what happens to the environment and the society around them has no bearing on the long-term interests of a business?

Brett

↪wax

Well I think you’ve already answered that question yourself. Though it’s not in their interests to destroy the market. They’ll keep you alive just enough to hand over your last dollar.

wax

↪Brett

so they kind of optimise their behaviour to make as much profit they can that isn't based upon a more nuanced philosophy?

Surely it would be in a business's best interest to want to exist beyond the people alive today...?

Brett

↪wax

Surely it would be in a business's best interest to want to exist beyond the people alive today...? — wax

Yes, I’m being a bit flippant there. Their profit is the difference between what they make and how much they can gouge out of you. After all how much us a bottle of sugar and water worth? They know you need reasonable wages to buy their product and they know that they need you to think well of them.

It’s true that some companies go too far and they pay for it.

They’re very alert to the public’s feelings, though, and you’ll notice an advertising campaign suddenly appear when they realise they’ve crossed a line.

wax

↪Brett

I'm a big fan of Coke, I drink quite a lot of it(the diet kind)..........they have really hit on a winner in terms of dollar of profit per dollar used in manufacture....all they have to do is not blow their good luck away somehow.

Most companies don't exist on such an easy profit margin..

The Cola Coca company might indeed come to and end or have to diversify if people are one day able to make any chemical cocktail they like in their own homes, with eg nanotechnology.

Brett

↪wax

I’m not sure if diet coke was a response to people’s concerns about weight. But the public education about sugar could end up changing what exactly Coke will be in the future.

ralfy

It's not just a motivation but in their by-laws which they submit to register their business.

wax

It's not just a motivation but in their by-laws which they submit to register their business. — ralfy

do you mean, to make a profit for their shareholders?

ChatteringMonkey

↪wax

Another possibility it seems to me is that, even if they wanted to make the world a better place, they wouldn't know how. Figuring out how to maximize profit for your business typically is an easier question to solve, than how to make the world a better place longterm. Or at least it's hard to show with facts and figures that a certain course of action will result in the world being a better place… and so it's probably hard to justify.

Also, there are collective action problems. One business deciding to forgo short term profit for a long term better world might get out-competed by businesses that only have their short to medium-term profit in mind. Some things only really work when everybody, or most at least, get on board.

ralfy

↪wax

Yes, and maximize profits.

The myth that big business knows what is in its best interest.

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