Capitalism vs Socialism Through the Lens EcoConscience

by Brian on 03-28-2009

in business,civics,economics

As part of the Earth Hour discussion, today’s Globe and Mail has a comment piece on computers and energy use that generated some insights into the relations between socialist and capitalist attitudes.

The problem isn’t so much your computer, the greater concern is massive server farms that store and route the world’s information. According to the article, data centres represent about 1% of the world’s electricity consumption.

It’s easy to forget that we’re not just consuming power in our own home/office but elsewhere as well: every browser window or tab you have open is communicating with a computer somewhere that’s using electricity (I’m not preaching here as I tend to run a lot of tabs at once). [Update/correction: would tabs and windows use any measurable server power when not active?]

Before we get up-in-arms about Google etc it’s worth considering how centralized energy consumption can be more efficient.

As our use of information technology has exploded (along with the amount of electricity we use) a higher proportion of it is being done on smaller, more energy-efficient devices like netbooks and smartphones. The heavy-lifting is done by hosts and cloud servers like Google, Amazon, etc. Thanks to software-as-a-service offers like Google Apps, entire companies can operate without any of their own servers. By doing so, that doesn’t just outsource IT, it uploads some of the electricity bill as well.

Transferring energy consumption to Google doesn’t “merely” transfer energy consumption; it transfers it to an organization with immense resources to make it more efficient.

When Google talks about “going green” they aren’t fooling around. It isn’t just PR. If you’re paying what might be the largest electricity bill on the planet, you really want to figure out how to save energy:

Sustainability is good for the environment, but it makes good business sense too. Most of our work is focused on saving resources such as electricity and water and, more often than not, we find that these actions lead to reduced operating costs. Being “green” is essential to keeping our business competitive. It is this economic advantage that makes our efforts truly sustainable.

I wouldn’t be surprised if some people see this as “doing good for the wrong reasons” — as if money somehow taints everything. That attitude is just as deplorable as the opposing attitude that things are only worth doing if done for money.

Between the two extremes there are great opportunities. My hope for the 21st century is that we’ll see a kind of “creative capitalism” (as Bill Gate’s called it) or “conscious capitalism” (the term used by John Mackey of Whole Foods) through which businesses aim (or are founded in order to) address genuine needs or generative causes, so cost efficiencies and profits are simply measurements of what’s workingrather than money being the one-and-only end-in-itself.

It may be offensive to some that business organizations are the most effective way we have to accomplish things. No doubt they can run amok — as we’re witnessing with the finance crisis — but governments and politicians are no less likely to turn corrupt and they offer only a fraction of the upside potential of business.

Creative/conscious capitalism is still young, still developing into a clear set of ideas and practices. It’s an experiment — as business itself is (or should be), like science — that leaves room to compensate for and learn from our mistakes rather than institutionalizing and perpetuating our errors.

Companies doing the wrong things (or doing the right things wrongly) will lose the confidence of the market and fail. To some degree, the failures in banking and finance don’t represent the “failure of capitalism” but rather exemplify capitalism working right — eliminating things done wrong.

To the degree that capitalism did fail in the finance crisis, it is that people failed to learn enough from earlier failures of Long Term Capital Management, Enron, and the dot-com bubble — and failure in this regard had less to do with the idea of capitalism and more to do with the social and political background in which it had to operate (e.g. economic boosterism after 9/11 prevented structural and cultural problems related to dot-com and Enron from surfacing and being eliminated).

It isn’t just that governments tend to be incapable of Google’s level of innovation — e.g. their radical idea for green offshore data barges — it’s that governments are often unable to let go of ideas when they turn out less good than initially believed.

This is why money-as-a-measurement is essential: it objectively demonstrates what works and what doesn’t. Again, it may not be an especially pleasant thought to some people…

The irony is that the notion of centralizing the world’s IT has a socialist, “big brother is watching” whiff to it. It represents socialist ideals both in practice and in theory. The web makes us one collaborative unit — comparisons to ant colonies and the Borg aren’t too far out of line. In only a decade it has done more to promote equality and power-to-the-masses than political communism accomplished in a century.

The question is, what will the next decade bring? Or rather, what faith, action, and ideas will we bring into it?

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  • http://www.desart.ca/youmustbekidding/ Francois

    Hi Brian,
    Hope you don’t mind if I barge in again…

    It may be offensive to some that business organizations are the most effective way we have to accomplish things.

    Is this written in the sky somewhere? If yes please tell me where…

    And that governments become corrupt and have difficulty letting go of ideas that don’t work, cannot the same be said for big companies? IBM, GM and the other North American car manufacturers are examples, amongst so many others.

    Capitalism is still young. What about socialism? Is this an old system that has been in place since the Middle Ages? If so I’m not aware of it.

    And that markets self regulate by failing companies that do not work out, well seems to me this is a problem. The market is regulating, which means that by the time they do fail these not working companies, a lot of damage has already been done. If the people were managing through government in a well designed democratic system, failures could be acknowledged and dealt with quicker with less damage. But of course this supposes, as said, a better designed democracy.

    I agree that Google does have some interesting ideas, but Google is very young and is still managed by a few founders. What will happen when they are gone and managed by people that forget about the ideals and stick to bottom line management?

    and failure in this regard had less to do with the idea of capitalism and more to do with the social and political background in which it had to operate (e.g. economic boosterism after 9/11 prevented structural and cultural problems related to dot-com and Enron from surfacing and being eliminated).

    It seems to me too easy here blaming these failures on something outside. This could be said about any failure, including government ones.

    Again, sorry, if my comments bother you please just let me know, I’ll stay away.

  • http://www.desart.ca/youmustbekidding/ Francois

    Hi Brian,
    Hope you don’t mind if I barge in again…

    It may be offensive to some that business organizations are the most effective way we have to accomplish things.

    Is this written in the sky somewhere? If yes please tell me where…

    And that governments become corrupt and have difficulty letting go of ideas that don’t work, cannot the same be said for big companies? IBM, GM and the other North American car manufacturers are examples, amongst so many others.

    Capitalism is still young. What about socialism? Is this an old system that has been in place since the Middle Ages? If so I’m not aware of it.

    And that markets self regulate by failing companies that do not work out, well seems to me this is a problem. The market is regulating, which means that by the time they do fail these not working companies, a lot of damage has already been done. If the people were managing through government in a well designed democratic system, failures could be acknowledged and dealt with quicker with less damage. But of course this supposes, as said, a better designed democracy.

    I agree that Google does have some interesting ideas, but Google is very young and is still managed by a few founders. What will happen when they are gone and managed by people that forget about the ideals and stick to bottom line management?

    and failure in this regard had less to do with the idea of capitalism and more to do with the social and political background in which it had to operate (e.g. economic boosterism after 9/11 prevented structural and cultural problems related to dot-com and Enron from surfacing and being eliminated).

    It seems to me too easy here blaming these failures on something outside. This could be said about any failure, including government ones.

    Again, sorry, if my comments bother you please just let me know, I’ll stay away.

  • http://brianfrank.ca Brian Frank

    Don’t apologize Francois, you’re always welcome to comment. But please don’t pick over the post for sentences to take out of context in order to express ideas you already have. I’m working hard to resolve old ideological conflicts by working out new ideas.

    I don’t think this comment is at the same level as your previous comments though.

    At least one of the criticisms you make I already made myself: yes I am aware that big companies can become corrupt, that’s what I meant when I said “they can run amok,” and I specifically named LTCM and Enron.

    As for your examples, I wrote a 1000+ word post a few months ago about GM’s problems. I’m not sure what IBM did wrong though. They’re probably the best example of a company successfully reinventing itself (under CEO Louis Gerstner: towards a more service-oriented business model).

    You ask where it’s written that business organizations are the most effective way we have to accomplish things: it’s written in this post! It’s not the word of God, it’s an claim I made in order to explore it in this post (and more posts to come).

    I’m trying to get beyond the old dualism of socialism vs. capitalism. I used the word “lens” in the title because I’m trying to look at the old conflicts in new ways.
    Take careful note of the wording though, I don’t use words carelessly: I’m not saying “capitalism is the best” in absolute terms; I’m saying business organizations are the most effective way we have to accomplish things — to accomplish specific things. And then they go out of business and are replaced.

    Unfortunately the one word I really screwed up on was “vs” in the title. It should’ve been “socialism AND capitalism.” I’m doing a critique of both — not favouring one over the other. I’m trying to identify the best features from both in order to conceive something better.

    As for my alleged claim that “capitalism is young,” that’s a misreading. I clearly specified it’s a “creative” or “conscious” variety of capitalism — a new way of doing business that isn’t just about making money — that is young.

    Did you follow the two links I provided? If you want more sources on the new approach to more enlightened management you can look at Peter Drucker, Abraham Maslow On Management, MacGregor’s Theory Y management, C.K. Prahalad, Bob Sutton and Jeffrey Pfeffer, Thomas Petzinger’s New Pioneers… management theory has been steadily going in the direction of “enlightenment” — beyond the old, simplistic, greed-driven practices and ideas that are at odds with socialist values.

    As for your last criticism. the “failure” from your quote was a failure of business people to learn from past mistakes. The word “excuse” doesn’t fit. I didn’t use it and didn’t imply it. There are no excuses in business (or there ought not to be). Private investors notoriously have no time to listen to excuses.

    And I didn’t say that failure to learn was because of outside factors, I said “it had less to do with the idea of capitalism and more to do with the social and political background in which it had to operate.”

    The key word there is idea of capitalism. I’m not denying it was capitalists or business people that fucked up. I’m saying the reason they fucked up had more to do (not only to do) with what was happening in the world (in the same way that “I understand” how hungry people can be outraged about AIG bonuses), and less to do with some abstract ideology.

  • http://brianfrank.ca Brian Frank

    Don’t apologize Francois, you’re always welcome to comment. But please don’t pick over the post for sentences to take out of context in order to express ideas you already have. I’m working hard to resolve old ideological conflicts by working out new ideas.

    I don’t think this comment is at the same level as your previous comments though.

    At least one of the criticisms you make I already made myself: yes I am aware that big companies can become corrupt, that’s what I meant when I said “they can run amok,” and I specifically named LTCM and Enron.

    As for your examples, I wrote a 1000+ word post a few months ago about GM’s problems. I’m not sure what IBM did wrong though. They’re probably the best example of a company successfully reinventing itself (under CEO Louis Gerstner: towards a more service-oriented business model).

    You ask where it’s written that business organizations are the most effective way we have to accomplish things: it’s written in this post! It’s not the word of God, it’s an claim I made in order to explore it in this post (and more posts to come).

    I’m trying to get beyond the old dualism of socialism vs. capitalism. I used the word “lens” in the title because I’m trying to look at the old conflicts in new ways.
    Take careful note of the wording though, I don’t use words carelessly: I’m not saying “capitalism is the best” in absolute terms; I’m saying business organizations are the most effective way we have to accomplish things — to accomplish specific things. And then they go out of business and are replaced.

    Unfortunately the one word I really screwed up on was “vs” in the title. It should’ve been “socialism AND capitalism.” I’m doing a critique of both — not favouring one over the other. I’m trying to identify the best features from both in order to conceive something better.

    As for my alleged claim that “capitalism is young,” that’s a misreading. I clearly specified it’s a “creative” or “conscious” variety of capitalism — a new way of doing business that isn’t just about making money — that is young.

    Did you follow the two links I provided? If you want more sources on the new approach to more enlightened management you can look at Peter Drucker, Abraham Maslow On Management, MacGregor’s Theory Y management, C.K. Prahalad, Bob Sutton and Jeffrey Pfeffer, Thomas Petzinger’s New Pioneers… management theory has been steadily going in the direction of “enlightenment” — beyond the old, simplistic, greed-driven practices and ideas that are at odds with socialist values.

    As for your last criticism. the “failure” from your quote was a failure of business people to learn from past mistakes. The word “excuse” doesn’t fit. I didn’t use it and didn’t imply it. There are no excuses in business (or there ought not to be). Private investors notoriously have no time to listen to excuses.

    And I didn’t say that failure to learn was because of outside factors, I said “it had less to do with the idea of capitalism and more to do with the social and political background in which it had to operate.”

    The key word there is idea of capitalism. I’m not denying it was capitalists or business people that fucked up. I’m saying the reason they fucked up had more to do (not only to do) with what was happening in the world (in the same way that “I understand” how hungry people can be outraged about AIG bonuses), and less to do with some abstract ideology.

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