Amazon as a Planned Economy

By LavaBaron - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=38520180

All corporations are creepy, but Amazon is uniquely so. Perhaps its the Borg-like inevitability with which it converts your friends and family into excessively loyal Prime subscribers, or the Brave New World implications of its new mother-bot, Alexa, which promises to send a drone rushing to your door the moment you call out to it with an unsatisfied urge. Alexa…I’m bored. Bring me a toy. Alexa, I’m hungry. Feed me. Alexa, I’m horny…

Writing for Medium, Malcolm Harris makes the case that “More than a profit-seeking corporation, Amazon is behaving like a planned economy,” and that it’s pursuing a Matrix-like endgame that concludes with “workers swaddled in a pod of perfect convenience and perfect exploitation:”

From a financial point of view, Amazon doesn’t behave much like a successful 21st-century company. Amazon has not bought back its own stock since 2012. Amazon has never offered its shareholders a dividend. Unlike its peers Google, Apple, and Facebook, Amazon does not hoard cash. It has only recently started to record small, predictable profits. Instead, whenever it has resources, Amazon invests in capacity, which results in growth at a ridiculous clip. When the company found itself with $13.8 billion lying around, it bought a grocery chain for $13.7 billion. As the Recode story referenced above summarizes in one of the graphs: “It took Amazon 18 years as a public company to catch Walmart in market cap, but only two more years to double it.” More than a profit-seeking corporation, Amazon is behaving like a planned economy.

If there is one story on Americans who grew up after the fall of the Berlin Wall know about planned economies, I’d wager it’s the one about Boris Yeltsin in a Texas supermarket.

In 1989, recently elected to the Supreme Soviet, Yeltsin came to America, in part to see Johnson Space Center in Houston. On an unscheduled jaunt, the Soviet delegation visited a local supermarket. Photos from the Houston Chronicle capture the day: Yeltsin, overcome by a display of Jell-O Pudding Pops; Yeltsin inspecting the onions; Yeltsin staring down a full display of shiny produce like a line of enemy soldiers. Planning could never master the countless variables that capitalism calculated using the tireless machine of self-interest. According to the story, the overflowing shelves filled Yeltsin with despair for the Soviet system, turned him into an economic reformer, and spelled the end for state socialism as a global force. We’re taught this lesson in public schools, along with Animal Farm: Planned economies do not work.

It’s almost 30 years later, but if Comrade Yeltsin had visited today’s most-advanced American grocery stores, he might not have felt so bad. Journalist Hayley Peterson summarized her findings in the title of her investigative piece, “‘Seeing Someone Cry at Work Is Becoming Normal’: Employees Say Whole Foods Is Using ‘Scorecards’ to Punish Them.” The scorecard in question measures compliance with the (Amazon subsidiary) Whole Foods OTS, or “on-the-shelf” inventory management. OTS is exhaustive, replacing a previously decentralized system with inch-by-inch centralized standards. Those standards include delivering food from trucks straight to the shelves, skipping the expense of stockrooms. This has resulted in produce displays that couldn’t bring down North Korea. Has Bezos stumbled into the problems with planning?

Although OTS was in play before Amazon purchased Whole Foods last August, stories about enforcement to tears fit with the Bezos ethos and reputation. Amazon is famous for pursuing growth and large-scale efficiencies, even when workers find the experiments torturous and when they don’t make a lot of sense to customers, either. If you receive a tiny item in a giant Amazon box, don’t worry. Your order is just one small piece in an efficiency jigsaw that’s too big and fast for any individual human to comprehend. If we view Amazon as a planned economy rather than just another market player, it all starts to make more sense: We’ll thank Jeff later, when the plan works. And indeed, with our dollars, we have.

In fact, to think of Amazon as a “market player” is a mischaracterization. The world’s biggest store doesn’t use suggested retail pricing; it sets its own. Book authors (to use a personal example) receive a distinctly lower royalty for Amazon sales because the site has the power to demand lower prices from publishers, who in turn pass on the tighter margins to writers. But for consumers, it works! Not only are books significantly cheaper on Amazon, the site also features a giant stock that can be shipped to you within two days, for free with Amazon Prime citizensh…er, membership. All 10 or so bookstores I frequented as a high school and college student have closed, yet our access to books has improved — at least as far as we seem to be able to measure. It’s hard to expect consumers to feel bad enough about that to change our behavior.

[Read on at Medium]