Tuesday, April 22, 2008

Capitalism, Free Markets, and Doing Good

I think all three of those concepts: Capitalism, Free Markets, and Doing Good, are related in the sense that I think to do really well (when you start with nothing) you really need to do good. This essay got me thinking about that in particular. I think Graham makes some very good points that explain not only why startups do good but why long established mega-corporations don't.

The basic point is that when you have nothing and are just establishing yourself, you really have nothing but your reputation and what you actually provide to your customers. So if you are not on the up and up and not producing something people actually need, you will not succeed - and if you are, you will. Further, that the drive to do something people need is what creates success more than just a bare desire to make money. Or, as Graham notes, it is the attitude that you will produce it, regardless of backing, that provides the drive to complete a project that would otherwise have been abandoned.

This also explains why large institutions are often so corrupt - they don't need to be good anymore to keep on making money, so they stop being good and just get greedy. Even if this causes damage, size keeps things afloat (as the executives loot the company). Of course, they may eventually collapse as innovation elsewhere allows people to stop being abused and get their products and services elsewhere from a company "doing good" - though I'm sure this can be delayed through manipulations of the market (many of which are illegal) and through actually rewriting the laws and getting the government to do their dirty work for them. Which is why I generally distrust both government and large corporations - they are both corrputed by their power and they are also full of all of the same sort of bullshit you see infecting all large, powerful organizations.

I think this can be mitigated both by better regulation, less government power generally, but with more transparency, both in government and in corporations. It is harder to get away with certain things when the light of day shines on what you do.

Also everyone: Be Good.


Alex said...

I really enjoy Paul Graham's writings. He presents a thoughtful and honest account of things. Thanks for pointing out this specific article.

Tammy said...

In a perfect world, great innovators could proudly proclaim, "I created this product as a means to make a profit" without having stones thrown at them. The sad misconception is that money corrupts. GREED corrupts.

A lot of damage is done in the name of "doing good". A lot of good is done in the name of "making a profit". And vice versa, of course -- although that is the only perspective that many people choose to focus on.