Jul 10, 2016

Capitalism’s Downfall: Growth for the sake of growth is cancer’s ideology...

In the age of Silicon Valley-Capitalism, growth for the sake of growth is the name of the game. Small start-ups are by definition required to grow and grow quickly to survive, raise funds and become profitable. Similarly, human cells (stems cells) grow and proliferate exponentially in the early stages of life. However, in an adult human body, cell growth for the sake of growth is called cancer. 
In a normal cell, powerful genetic circuits regulate cell division and cell death. In a cancer cell, these circuits have been broken, unleashing a cell that cannot stop growing. –Siddhartha Mukherjee 
Just like a healthy body requires regulated and limited cell growth and proliferation, a healthy capitalist economy also requires regulated and limited business growth. This may sound counterintuitive from a ‘Wall Street’ capitalist perspective where future growth and market expansion is a way of survival, however, corporate capitalism much like cancer is a threat to our very economic system. Monopolies that are too big to fail with their armies of lobbyists, lawyers and innovation suffocating patent vaults are a threat to free-market capitalism as well as democracy. Much like a healthy cell becomes cancerous if it keeps growing beyond a certain threshold, when companies grow and proliferate exponentially with no limits, their economic and innovation benefits to society begins to plateau as they are forced to rely on marketing, advertising and lobbying to continue growing. What was once an exciting startup or small business with economic and innovation benefits to society, becomes a big, slow and inefficient monopoly hindering competition and innovation. What was once a great idea, is now a big army of lobbyist and marketing agents influencing and manipulating their way into survival and relevance. This was especially evident with banks in the last decades when they not only became too big to fail but they “invented” new unethical schemes to sustain and prolong their growth. The 2008 financial crisis was a symptom of a sick economy full of cancerous banks that not only had grown beyond their means but had infiltrated the economy in such a way that simply letting them fail and die was not an option.

Healthy cells are programmed per the code in our DNA to limit their growth but how should companies know when they’ve reached the growth threshold beyond which they become an existential threat to the very system that sustains them?
Growth is a core tenet of success. But we often destroy our greatest innovations by the constant pursuit of growth. An idea emerges, takes hold, crosses the chasm, hits a tipping point, and then starts a meteoric rise with seemingly limitless potential. But more often than not, it implodes, destroying itself in the process. Ideas are consumed just like lichen. Rather than endless growth, the goal should be to grow as quickly as possible—what technologists call hypergrowth—until the breakpoint is reached. Then stop and reap the benefits of scale alongside stability. What is missing—what everyone is missing—is that the unit of measure for progress isn’t size, it’s time. – Jeff Stibel
One other example of systems where growth is limited/regulated is ant colonies. Jeff Stibel, in his latest book Breakingpoint, highlights a study done by Deborah Gordon that concluded that ant colonies don’t grow in size past their fifth year of founding. Stibel calls this the “breakingpoint” beyond which the colony will collapse if it continued to grow.
The queen lives—and continues to lay eggs—for 15 to 20 years, but the colony doesn’t grow in size past the fifth year. The queen keeps having babies but they either replace older ants (a worker ant only lives for about a year), or they’re sent off into the world to mate and start their own colonies. Ant colonies have a breakpoint. They hit equilibrium during the fifth year and shed off all but about 10,000 ants. Remember, when the colony stops growing, it begins to reproduce—the fertile females and the male ants get sent off to mate and create new colonies. That prevents the original colony from growing too large. At this point, things change for the colony. Much like the neural network of the human brain, the ant colony grows smaller and paradoxically gets wiser. Their reactions to various incidents become quicker, more precise, and more consistent. After completing its explosive growth phase, the colony seems to change its focus from quantity to quality.
According to Stibel as the size of ant colonies reaches equilibrium and stops growing, the community/network of ants evolves from “quantity to quality” and becomes more intelligent, effective and efficient. This means that in the corporate world there needs to be a limit on the size of each corporation. The goal should be more, smaller corporations as opposed to very large monopolies. But the question still remains: What is the threshold/breakingpoint for corporations? It will obviously be different depending on the type of business and market. But I envision a graph where advertising and marketing begin to be the focus of the company as opposed to R&D and product/service quality. A graph showing the R&D budgets vs. the advertising/marketing budget over time should help us realize whether the particular company has reached its peak in terms of innovation and is now relying heavily on marketing and advertising to sell more products/services. Obviously a certain level of advertising and marketing is necessary for businesses to gain exposure but a company that is relying solely on advertising to sell products is no longer an innovative company but rather a consumption enabler.     

2 comments:

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