Wednesday, March 05, 2008

Help me understand the morals of capitalism

So, Mormanity wrote about walking into a shop in New York and finding some people openly sewing Dolce & Gabbana labels onto cheap bags and selling them for $30. (If you have to ask how much a real one costs, you can't afford it anyway.) They were counterfeiting the bags, and not trying to hide it.

Mormanity found this to be an example of "our shameless society," where wrong is right and right is wrong. And I was sort of right there with him, except for one thing: he called what they were doing a "sin."

And that got me thinking. Why exactly would that be a sin? So I asked in the comments. Partly, of course, I was just playing "mess with the conservatives," but I really did want to know. I didn't find the answers very satisfactory.

"Because it's breaking the law." Well, man's law and God's law aren't the same thing, obviously. In fact, sometimes the law itself is sinful. "Because they're lying." That's probably true in many cases, but in this case the point of the post was that they were openly selling fakes. They weren't trying to pass them off as authentic. "Because they're stealing." That's a little more complicated, but as far as I can tell, "stealing" in the scriptures means taking something away from someone so they don't have it anymore. Since neither the bags nor the labels were stolen in that sense, I'm very unsure that the sin of theft applies.

At about that point, Mormanity himself joined in. He wanted to talk about intellectual property rights. After a little give and take, he came up with this example:
I... start a business selling "Mormanity" hot dogs and they become very popular, thanks to all the work I put into building the brand, including tons of advertising, expensive art work for my packaging, buying celebrity endorsements.... People get in line to buy Mormanity Dogs.
(Then I start making cheap, crappy knockoffs using his brand name.)
...You are stealing my intellectual assets: the brand name I have developed at great expense, the trademark I have paid for and registered to show that I don't want people using my stuff without my permission, the unique style of packaging that took a lot of work and expense to develop.

That got me thinking about hot dogs. A hot dog has an intrinsic value of, say, 35 cents. Add the convenience of eating out (I'm thinking hot dog stands here, not packages you buy in a store, but the basic idea's the same either way), and let's say an ordinary is-that-really-safe-to-eat 7-11 dog is worth about $1. Make it a very tasty dog, and we'll say it's worth as much as $3. Make it an ultra-tasty, organic, kosher Mormanity dog, and we'll say it's even worth $4. But with all his advertising and branding, Mormanity can sell his dogs for $8. And he sells loads of hot dogs and makes $10 million. That makes him a big success, a pillar of his community. OK, now just hold that thought for a second; we'll come back to it.

Because one of the examples of dishonesty Mormanity used in the discussion was an art forger. And that also got me thinking. Suppose I'm an art forger. I've invested years of study in perfecting my craft. I have to be an excellent painter; I have to know art history; I have to know the market; I even have to know some chemistry so I can properly "age" my painting. Finally I'm ready for my big score: I forge a Van Gogh and sell it for $10 million. That makes me a criminal.

But what, exactly, makes me any different from Mormanity and his hot dogs? I fooled one person into paying $10 million for a painting that's really only worth maybe $1,000. But all Mormanity really did was fool 2.5 million people into each paying $8 for a hot dog that's only worth $4. All either of us did was convince people to buy something for more than it's worth. Why does that make him an honest capitalist success story and me a criminal? Why aren't we the same thing, either both honest successes or both criminals? Can anyone explain this to me?


  1. From what I've seen, Jeff/Mormanity considers himself a libertarian, not strictly a conservative. His understanding of libertarianism seems pretty lacking, however, as he supports "intellectual property" and also seemingly opposes free trade to some extent. I too consider myself a libertarian, or loosely speaking an anarcho-capitalist, but I have consistent principles (whether you agree with them or not).

    To address to your specific example(s), if you offer someone a specific product for a specific price, they pay that price, and the product you give them in return isn't what you promised, then you have defrauded them. Even if the only difference between the products is that the one they wanted passed through Jeff Lindsay's possession at some point.

    Economists demonstrated decades ago that there is no objective way to judge the "true value" of a given product. It certainly isn't determined by the effort used to produce it (that idea is the Labor Theory of Value, a gross fallacy). So someone may be willing to pay more just because a hot dog is of the Mormanity brand, or a painting is an original Van Gogh. If you sell them a fake without their knowledge, you are defrauding them. I'm with Jeff/Mormanity that far.

    But no further. If you value a purse that looks like a Gucci and has the Gucci label, but don't care if it was really made by Gucci, and you pay for a purse that meets those requirements, NO ONE HAS BEEN WRONGED. To claim otherwise is not capitalism, but a form of protectionism, and immoral. Indeed, the idea of intellectual property is increasingly being referred to by a more accurate term, intellectual monopoly.

  2. To address to your specific example(s), if you offer someone a specific product for a specific price, they pay that price, and the product you give them in return isn't what you promised, then you have defrauded them.

    But that's exactly my point. Jeff promises them that a Mormanity hot dog is "special"; I promise that my painting is a Van Gogh. We're both lying. His hot dogs aren't "special" at all, he's merely convinced people that they are. Just like I convinced one person that my painting is a Van Gogh.

  3. "Special" can mean anything. If he makes no specific claims, he can't be lying.

  4. So, deceive with vagueness = honest capitalism; deceive with specificity = crime?

  5. I wouldn't call "Our hot dogs are special" deceptive.

  6. Sure it's deceptive. Only their marketing is special. There's nothing special about the hot dog itself.

  7. That's your judgement, but it's no different than saying that one antique pocketwatch is the same as another of the same brand and year, even if only one of them was owned by my great great grandfather. Each customer can decide what's "special" to him, even if you and I find it trivial.

  8. OK, I think I'm getting it now. You can make any claim you want to sell a product, no matter how absurd, as long as it's vague, non-specific and not fact-based, and still be an honest capitalist. A lie to sell a product must be fact-based in order to make you a criminal.

  9. You can make any claim you want, as long as it's not demonstrably false. For example, a customer can conceivably check the fat content of your hot dogs through scientific means and challenge false statements you make about it. They can check whether you use slave labor. They can check where your hot dogs were manufactured, and how the animals were treated, conceivably. They cannot disprove that your hot dogs are "special." And what of it? They can choose whether to pay more for your product based on your vague claims.

    I've given you the benefit of the doubt, but if you're not willing to discuss this honestly and cut the crap, then so be it.

  10. I don't know what you're talking about. I've been having Jeff on a bit, of course, but I've been straightforward in my discussion with you.

    I think the marketing of products like $2,000 handbags is intrinsically deceitful (and the people who buy them are fools). I've been trying to understand how it is that people justify marketing products like that, how it differs from lying and theft in their minds, because it doesn't in mine. You've helped me understand their thinking a little better, for which I thank you.

  11. Following along here, Kuri, I completely agree with you. I once designed and installed an assembly line and packaging facility for a particular kind of cookie . . . it was a plate-sized cookie and the ingredients weren't unique at all - simply chocolate chip. It was sold in a package with a small tin plate and all one had to do was put it in the oven at 350 deg. for 15 minutes and you had a plate-sized cookie.

    All told, with the cost of the production line, the overhead, the packaging and the ingredients, this multinational company for whom I built this paid 17 cents per cookie. They sold them for $2.99 each.

    The cost to build the project was $1.2 million. The cost of the first 3 months of the advertising campaign was $18 million.

    And they made the outrageous claim that they had invented the concept of a plate-sized cookie and proceeded to sue hundreds of small bakers across the country for infringing on their trademarked property. These cases they won or settled in a tidal wave of legal paperwork and court summons.

    This company (which I won't name because I'd rather not have a visit from one of their attorneys) was completely within the law. The bakers who had been making plate-sized cookies but who had not applied to trademark such products were now outside the law. Where exactly is the right and wrong? Where is the morality?

    In brutal capitalism there are winners and losers . . . and I don't think that's exactly how Jesus would've have liked things to be.

    I'm not against making good money in exchange for value in products or services - and I'm not against competition. But I think things have gone a bit far when the profit centers are driven by a company's advertising and legal departments.

    One last thing, rww said that Economists demonstrated that there is no objective way to judge true value. Could I please see that study? Granted, I'm not an Economist but I concentrated on economic applications in my Mathematics Graduate work and the specifics of my study were in valuation. I'd never heard that value couldn't be objectified. I think there's a lot of economists who'd be surprised by that summary ruling.

  12. I don't have anything against reasonable profits on useful or beautiful or enjoyable products either. But that's not really what capitalism is about.

    It's strange how many American Mormons today make a fetish of individualism and capitalism. Both early Christians and early Mormons, of course, were communists. Even Brigham Young's Utah had a strong communitarian ethos. But it's a very changeable church in some ways.

  13. Kuri,

    Have you read No Logo by Naomi Klein? It's dated (by a decade, I believe) but still the bible in anti-branding. I think you'd like it.

  14. I haven't. I just read The Shock Doctrine, though, which was an eye-opener.

  15. That one's on my list - - - in 80 books or so.


What do you think?