The new economy will also need to balance quantity and quality (as we will see below, this is not a trivial issue – it matters for some fundamental aspects of social life). The old way of thinking maintains that, generally speaking, quality reduces quantity and vice versa, but this does not need to be the case. However, to achieve the balance between them, we need to address two formidable challenges that are rarely acknowledged in economics: quality has the potential to reduce the demand for products as well as for services.
The challenge of quality reducing product demand
A common response to asking for good quality products is that it is unrealistic. We have an ever-increasing population, so we need quantities delivered by mass production. Quality is a luxury reserved for the well-off. This is, again, thinking from a previous era. Quality and luxury are not the same. Luxury items are not always high quality, and high quality does not need to be luxurious. We need to redefine what is generally meant by high quality, so that it refers to products that do more good than harm (i.e. to individuals, society and the environment). For example, high quality would apply to food that has real nutritional value rather than to lavish confections of little nutritional goodness. Similarly, products such as clothes or phones that last a long time (as they maximise the use of resources) would be considered high quality. If we start thinking in that way, there doesn’t need to be a trade-off between quality and quantity, but some steps need to be taken in order to get there in practice:
Levelling up the making of lasting products: the major reason why quality is eroded is not the need for mass production, but the perception that products that last reduce demand. The private sector relies on ‘built-in obsolescence’ and cheap, short-lived products to stimulate production and profit. If a fridge or a jumper is going to last decades, demand may not be replenished quickly enough to keep the company’s shares rising. The capitalist system operates on the principle of recycling the customers who keep coming back to buy, and the more often they return the better. However, this is not only bad for consumers, but for the environment too, as it is enormously wasteful. So, the issue here is how to ensure that businesses can make lasting, high-quality products and keep going. Let’s first state that this problem would be greatly reduced if the main driver was not to make ever-increasing value for the parasitic aspect of the private sector. Many companies could thrive by producing good-quality products if they were not driven by shareholders’ expectations and by debt. Reducing that pressure would not in itself be enough though, as competition would still drive many companies to cut corners in terms of quality if they could get away with it. Of course, an ultimate solution would be to make replacements or new versions less profitable than producing good-quality, lasting products. The diminution of resources will force many companies to spontaneously go in this direction, but we should not rely on it if we do not want to end up in a state of perpetual scarcity. Instead, producing cheap, short-lived products could be made harder. For example, companies should be expected to fully compensate for the real cost of their production – in other words, they should not be allowed to externalise some costs. That would mean in practice that companies would have to recompense affected communities as well as cover the cost of:
- replenishing (e.g. the cost of full reforestation after deforestation)
- restoring (e.g. the cost of returning the land or waters to the same condition they were in before extracting or mining or any other activities carried out)
- maintaining (e.g. the cost of maintaining air quality to ensure it’s not affected by transportation or industrial pollution)
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Producers should also be responsible for recycling the same, or nearly the same, amount of material they are using in their products. This would stimulate investment into research in recycling and renewing, as well as innovation in general, and would also contribute to diversification – which, in turn, could help companies keep afloat even if the demand for one of their products decreases.
Improving functionality by competition: we are all familiar with software companies who, for example, deliberately leave or create imperfections in their programs or remove some functions to motivate consumers to buy new versions. Such unproductive manipulations can be reduced if more products are open to competition. This would mean that, in principle, anybody could be allowed to improve a product. For example, company X may clear bugs from or add some functionalities to existing software and charge extra for that (they would, of course, have to pass some of their profits to the developer of the original product). This is already possible with many items. For example, you can buy a car or motorbike, improve it, and sell it for a higher price. There is no reason why the same should not be allowed with software and other items. To minimise any disadvantage for the original companies, they should be able to incorporate the improvements in their products and/or offer employment or compensation to the inventor(s) of the improvements. They sometimes do that already, but often sit on such improvements rather than making them available to consumers. Such a practice should be made illegal, as it really doesn’t benefit anybody (except, again, a few shareholders).
Levelling up the short-term and long-term effects of products: one of the major reasons why the invisible hand fails, is the time delay or discrepancy between immediate gains and long-term negative consequences (mass produced, processed bread is cheaper, but it is not good for one’s health in the long run). Consumers feel the benefits immediately, but not the long-term, negative consequences. This is why it is easy to sell what is effectively rubbish. A claim that this is necessary with an ever-growing population (‘better to have rubbish than to have nothing’) is a straw man argument. It is perfectly possible to achieve reasonable quality for everybody that is not harmful in the long term. For example, not adding sugar to bread would not make the production more expensive – quite the opposite. To make this shift, we need not just better information and education, but also better accountability and regulations, as it is simply unrealistic to expect every individual to have enough time, energy or willingness to read (usually very) small print and weigh the costs and benefits for every item they put in their shopping basket.
Deconditioning consumers’ choice: an argument is sometimes put forward that it is consumers who drive the production of cheap, low-quality products – ‘This is what they want!’ Low-quality products indeed have some advantages: they appear to be cheaper and we get less attached to them; you will not get very upset if you lose your cheap mobile that you were planning to replace soon anyway, but you may be upset if you lose a good-quality mobile that you planned to keep for several years. However, the advantages of good quality are generally greater. Such products are better and therefore more satisfying and less annoying; long-lasting products also create a sense of familiarity and you don’t need to keep learning how to use new versions and adapting to them. We also tend to take better care of higher-quality items as they are intrinsically more satisfying. Last but not least, high-quality products are, in fact, usually cheaper. If your laptop is meant to last ten years, it is ultimately cheaper than one that costs a third of the price but only lasts for three years. Most people would be expected to recognise these advantages and gravitate towards better quality if given a chance. To enable true customer choice in this respect, much greater transparency would need to be enforced (e.g. regarding how long various products, from kitchen appliances and printers to socks and jumpers, are expected to last). Low-interest loan schemes for this purpose could mitigate the initial cost of lasting, good quality products being too high for some people. Such schemes are already common practice for certain items in many countries.
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The challenge of quality reducing the demand for services
The focus above was mostly on the private sector, as there are important differences in the public sector: usually, the state is a hugely diverse provider making it easier to absorb a drop in the demand of something specific, and also there is no disincentive for long-lasting, good-quality products such as roads or bridges. However, the state sector faces a comparable challenge of quality reducing demand for services. Let’s take the police: the better a police force is, the more criminals they catch and therefore the demand for police officers is reduced. The state, under constant pressure to shift resources, decrease taxes or reduce the deficit, is then tempted to cut the number of police officers. So, the police’s ‘reward’ for doing their job well is an increased risk of losing their jobs! This is demotivating, unfair, and in the long term damaging as the police are likely to cut corners and be less efficient in order to retain a high demand for their services. This is particularly common when the state subcontracts / outsources services to private companies. The US prison population has been steadily increasing since the privatisation of prisons, as those private companies have no incentive to invest in rehabilitation – the fewer prisoners they have, the less work and profit there is for them. The key for meeting this challenge is diversification. Two broad categories of initiatives are suggested: diversification of work and diversification of incentives. Let’s again use the police as an example:
Diversification of work: the police could be integrated with other, related services, so they would not only be responsible for dealing with crime, but also be involved in crime prevention, the rehabilitation of offenders, and community initiatives (such as the already existing Neighbourhood Watch and community liaison officers). Some police officers could be allocated to these tasks when they are not involved in chasing criminals. Initially, some resistance among seasoned police officers might be encountered, but new recruits are likely to favour this diversity.
Diversification of incentives: in order to maintain good quality of services, service providers need to feel adequately rewarded. Incentives could include public recognition, bonuses or extended paid leave for good work. There is no good reason why bonuses are considered normal practice in the private sector but not in the state sector (providing that other conditions, such as the length of holidays, are also similar). It is often taken for granted that those in the state sector should be above all that, and be purely motivated by their desire to serve the public. But this means taking advantage of people’s idealism. If somebody less deserving is rewarded more just because they work in a different sector, it is not surprising that the public sector often loses its best talents to the private one. What may matter even more in this respect is an ability to exercise autonomy. To return to our example of the police, at times of decreasing demand for the police force, good cops should be able to choose if they should climb the career ladder, take advisory or supervisory roles, do the same job in less-successful districts, or work in rehabilitation or prevention. As the choice is linked to performance, those who are not so good would have less choice when a relocation of staff is taking place. If this is coupled with voluntary redundancies and the offer of reduced hours (such as part-time work), a reduction in services could be achieved without demoralising effects on the staff and the quality of their work.
~ What we can do now ~
- Choose better quality products (those that are lasting, functional, and healthy).
- Lobby private companies and retailers for better displays of relevant information. Using traffic lights colours for this purpose can be very effective and is already standard practice in some cases.
- Support our public services (even if it is just saying ‘thank you’ to them).
- If you are in the public sector, you can be proactive in implementing some of the above initiatives in your workplace. If enough of us do this, we won’t need to reduce the quality or efficiency of our performance in order to keep our jobs.
In conclusion
The last few chapters were an attempt to argue that there could be an alternative to the dominant existing economic system; that such an alternative is viable not only on a small scale but globally too; that the best way to get there is through evolution of the pivotal elements of the existing system; and finally, that we can all make some contributions to this process. However, as already mentioned, these changes and the economy as a whole cannot be seen or addressed in isolation. There are other facets of social life that are inextricably connected with the economy. Politics, of course, comes first to mind, so we will turn to that topic now.
