The Growth Imperative

Capitalism 1.0

Cristian Contreras
Oct 1, 2013 · 2 min read

Let’s begin by dispelling the notion that business and society are two separate worlds. Industry and government are subsections of society – frameworks created for its benefit and insofar as their interests collide, those of society must prevail.

For the past 300 years business has trumped society in its ability to dictate the terms of the game, their power has been greater but their contribution has given rise to the middle class and to accessible technological instruments that are increasingly empowering the consumer and shifting the balance of power back to its legitimate direction. It’s an almost everyday occurrence that we find ourselves appalled by the shameless tactics corporations seem to be employing to squeeze ever more profits from their customers. Recurrent cases in sectors like telecommunications, fast food, healthcare and banking, have somewhat desensitized us to this issue, and nearly convinced all that these are perennial and unavoidable consequences that come hand-in-hand with a system that is the best of two evils. Still, we cannot blame the executives at any of these corporations for their actions. These men and women are taught that their responsibility is to maximize shareholder value and that is what they get paid to do. The problem is that in effect, these executives are hired to maximize the corporate exploitation of consumers.

The reason for this madness is that since resources are scarce insofar as they are insufficient to meet our every need and want, it is in the interest of society to perpetually increase its stock of wealth. In order to maximize economic growth, profit must also be maximized. This requires an efficient allocation of resources, following an efficient utilization of resources, which due to specialization and economies of scale as well as of scope, dictates that firms are therefore the best suited entity to facilitate markets. To accomplish this scale corporations must attract capital from investors, resulting in competition between corporations to provide the most attractive return on investment.

Corporations are thus deemed necessary and socially desirable because they are best positioned to facilitate markets, but corporations are not socially speaking an end in themselves. The pursuit of growth by corporations operating within saturated markets requires them to artificially inflate markets while squeezing profits by systematically degrading the quality of their offer (think: Miracle Whip). The cause of ‘Corporate America’s moral disconnection lies with the shareholder-centric system, its over-reliance on private capital and ultimately, the systemic assumption that corporations ought to live and die by how well and how blindly they follow the growth imperative.

    Cristian Contreras

    Written by

    Product Operations @Shopify — ex Head of Growth @HeyOrca