Is Amazon’s plan to increase our efficiency a good thing?
It was explicitly and deliberately a ratchet, designed to effect a one-way passage from scarcity to plenty by way of stepping up output each year, every year, year after year. Nothing else mattered: not profit, not the rate of industrial accidents, not the effect of the factories on the land or the air. The planned economy measured its success in terms of the amount of physical things it produced.— Francis Spufford, Red PlentyBut isn’t a business’s goal to turn a profit? Not at Amazon, at least in the traditional sense. Jeff Bezos knows that operating cash flow gives the company the money it needs to invest in all the things that keep it ahead of its competitors, and recover from flops like the Fire Phone. Up and to the right.— Recode, “Amazon’s Epic 20-Year Run as a Public Company, Explained in Five Charts”
If there is one story on Americans who grew up after the fall of the Berlin Wall know about planned economies, I’d wager it’s the one about Boris Yeltsin in a Texas supermarket.
It’s almost 30 years later, but if Comrade Yeltsin had visited today’s most-advanced American grocery stores, he might not have felt so bad. Journalist Hayley Peterson summarized her findings in the title of her investigative piece, “‘Seeing Someone Cry at Work Is Becoming Normal’: Employees Say Whole Foods Is Using ‘Scorecards’ to Punish Them.” The scorecard in question measures compliance with the (Amazon subsidiary) Whole Foods OTS, or “on-the-shelf” inventory management. OTS is exhaustive, replacing a previously decentralized system with inch-by-inch centralized standards. Those standards include delivering food from trucks straight to the shelves, skipping the expense of stockrooms. This has resulted in produce displays that couldn’t bring down North Korea. Has Bezos stumbled into the problems with planning?
In fact, to think of Amazon as a “market player” is a mischaracterization. The world’s biggest store doesn’t use suggested retail pricing; it sets its own. Book authors (to use a personal example) receive a distinctly lower royalty for Amazon sales because the site has the power to demand lower prices from publishers, who in turn pass on the tighter margins to writers. But for consumers, it works! Not only are books significantly cheaper on Amazon, the site also features a giant stock that can be shipped to you within two days, for free with Amazon Prime citizensh…er, membership. All 10 or so bookstores I frequented as a high school and college student have closed, yet our access to books has improved — at least as far as we seem to be able to measure. It’s hard to expect consumers to feel bad enough about that to change our behavior.
Although they attempt to grow in a single direction, planned economies always destroy as well as build. In the 1930s, the Soviet Union compelled the collectivization of kulaks, or prosperous peasants. Small farms were incorporated into a larger collective agricultural system. Depending on who you ask, dekulakization was literal genocide, comparable to the Holocaust, and/or it catapulted what had been a continent-sized expanse of peasants into a modern superpower. Amazon’s decimation of small businesses (bookstores in particular) is a similar sort of collectivization, purging small proprietors or driving them onto Amazon platforms. The process is decentralized and executed by the market rather than the state, but don’t get confused: Whether or not Bezos is banging on his desk, demanding the extermination of independent booksellers — though he probably is — these are top-down decisions to eliminate particular ways of life....MUCH MORE
