Chapter 7- Potential Economic Innovations

Summary

Chapter 7 looks into how to better motivate executives to benefit our economic system holistically, rather than a few people. The change needs to come from the higher-ups that are currently getting most of the benefit. The author's main argument was the specific types of problems that occur and where the solution lies, rather than what exactly the solutions were. For example, cheap products that break over and over result in more repairs and replacements for customers, as well as more employee time. While the original product is cheap, these costs end up eliminating any profit the company would have made, as well as causing burdens for the consumer and decreasing their likelihood of purchasing from the company again. Cheaper products also come with more environmental and societal costs, like pollution and cruelly low wages, due to executives not wanting to make the investment that would cost them personally. Woodhouse argues the solution lies in the hands of executives and the creation of a double-check system, where a network of groups would govern major changes and approve ones that executives made. This way the changes could be viewed holistically and assured to be generally beneficial.

Analysis & Synthesis

Throughout this chapter I was caught by all the vagueness and confusing missing links in the world's current innovation infrastructure. Woodhouse wants to eliminate things like the number of repairs and replacements and employee time spent on such things. He argues that no move has currently been made because "no one knows just how well businesses eventually could perform" (82), but "a process of improvement could be launched without knowing the eventual level of achievement" (83). The problem is that executives and economists aren't going to make those moves unless they have proof or clear promise of improvement. The system operates on profit incentives, and if that isn't laid out for them, of course they won't take it. He lists off general changes he wishes to see:

• Induce executives to combine drive for profit w/service to customers
• Better employee service
• Better service to general public
• Reduced toxins
• "toxics could not have become an environmental horror story without the initiatives taken using corporate executives' discretionary authority" (85)
• Better safety in product
• Reduced pollution
• Business executives that make a system that provides good prices, durable products, safety, fair employment, job opportunities, fair treatment, opportunities for employee advancement

All of these are fine and well and wonderful, and his solution of a consulting/accounting system makes a lot of political and logistical sense. However, I believe the problem is in our natural tendencies and behaviors as humans. Is there anything really wrong or unnatural about hierarchical, dominant or selfishly motivated behavior? Are these behaviors what needs to be changed to effectively better our economic system? Those behaviors are what allowed us to live in the wild as well as successfully survive and build society. The problems come in when the behaviors are used at the expense of others or in a corrupt or harmful way. Behaviors that are profitable need to be consistent with socially positive norms. In other words, the system needs to be reorganized so that maybe not the cheapest, but cheap manufacturing "induces farmers, factory managers, retailers, and others to adapt their behaviors" (89) so as to bring about those changes. In the chapter, Woodhouse used the example of making textile substitutions for cotton, a highly environmentally damaging crop in production and the amount of water and electricity needed to care for it. If the clothing was stylish, or comfortable, if celebrities endorsed it, if it was advertised well, or if it was cheaper than cotton clothing, consumers would buy it. It wouldn't matter that cotton was the tradition. Then, more companies would use the cotton substitutes as sales increased and cotton would slowly be weeded out or at least thinned out within the system. This could be done with anything if it follows the same profit incentives to slowly add in the changes Woodhouse sees as benefiting the system.