Remembering to think!

[Alexander Parkinson]

I'm part way through typing up my notes on The Human Economy and so have been rethinking through notions of the formal profit framework and the need for a more socially embedded economy - building on what is already there. I often find that it is useful to think through my past experiences to bring such ideas down to a familiar lived reality. This post was intended for my own private blog where I organize my ideas but I thought maybe someone would find it useful here too or that it may spark debate with a recently quiet group. 

So, in search for a concrete understanding, I was led to reflect on my first ever job, when I joined one of the leading UK supermarket chains as a bakery counter assistant in 1999. One of my daily tasks was to reduce the price of unsold items as the trading day drew to a close in the hope that the lower price would entice buyers, which it usually did. The company was happy to take the lower price and cut its losses than chance receiving no money in return. I will always remember a Tunisian man, Jamal, who would often arrive later in the day with a family member and buy up whatever bread sticks we had left at the end of the day. On a couple of occasions he was kind enough to give me a lift home. This all changed some time after I had begun working there when the company changed the way in which it defined "loss" at the bakery on items what were fully produced in store; such as, breads, donuts, rolls and some cakes. Previously, if a bread stick that retailed at 30p was reduced to 10p then the recorded loss was 20p. Under the new practice, no reduction in price was allowed. Instead, any items approaching their sell-by date were to be discarded at the end of the day. The argument was that managers would only record the loss at the cost of the raw materials which was closer to 1p. Clearly, this stripped out the labour and energy costs (sorry Marx), as well as the missed opportunities to sell at the reduced prices. Still, a recorded loss of 1p was perceived as better than a recorded loss of 20p. The level of waste was shameful and none of the food was gifted; it was dumped. I regretfully remember throwing away bag loads of perfectly edible items every shift. Jamal soon stopped coming to the store.

I can only deduce that the deeply flawed logic that was employed by managers in this brief case was a result of a form of creative accounting that de-emphasized the actual losses that were being made, painting a prettier picture for shareholders. This raises several issues. The separation of ownership from control fostered the misrepresentation of unproductive economic action. Would the owners of the firm really have allowed this to happen if they knew of the true losses and lost sales? It is even more intriguing that the losses represented in terms of price were deemed more significant than the loss of perfectly marketable products. An abstract calculation of loss is more important than one of our basic human needs: food. Moreover, the act of buying up the raw materials itself creates a false demand that helps ramp up the price for those who may actually want to buy flour, say, for baking and then eating. This example not only reiterates the necessity for a more socially-minded economic system, rather than one couched chiefly in a detached mathematical profit framework. It also highlights the lack of incentive or pressure to re-distribute the goods away from the bins and to mouths. Certainly, there are currently plenty of charities that would happily assume this role (whether the supermarket operates under this system still I do not know - it may have returned to the less wasteful ways of my early employment days). For me, a central point is that the price system actually worked fine most days to avoid waste and maximize the money taken by the bakery. It was only when attitudes towards these practices changed that this all broke down. Capitalist control and ownership coupled with a financialized approach to economics caused a failing of this micro-market exchange system. An old English proverb says you can't have your cake and eat it. Likewise, you can't throw away your cake and sell it.

This is only a short case and analysis that has allowed me to recall and record a useful experience in light of new ideas. I urge others to do the same and maybe post experiences here that relate to other ideas (central or not) about the Human Economy.

[Keith Hart]

I experienced your post as a remarkable coincidence, Alexander, since I am travelling in Brazil at present and yesterday visited a street market in Sao Paulo. My companion was the famous economist and public intellectual, Eduardo Gianetti. We talked about the market period. These food sellers set up their market in a different place every day and they have to remove everything by 4pm. The fish sellers have to get rid of whatever they have left and prices fall dramatically in the last hour.

Eduardo and I have an ongoing conversation about time and money, the two most important things we can count. He likes to talk of intertemporal choice or sacrifice now and have more later vs spend now and have less later. It's the question of interest, the subject of a wonderful book by the American economist Irving Fisher (1930, he lost everything in the Wall St crash!).

I am in Brazil for a conference on economic ethnography at the Museu Nacional. As usual, my great friend Jane Guyer is here and of course before long we were talking about time and money, in other words, credit. It is not accidental that the economists construct their supply and demand curves as spot contracts. This means that time can be built in afterwards or not at all. It is the basic contrast with the gift conceived of as a delayed return. But this is a false contrast since most contracts have time built into them, not just credit/debt, but wages, rent and so on. This is our great potential as ethnographers, to take time as the main focus of our investigations into economic relations. This is the fast track to human economy.

I have recently read Michael Lewis's The Big Short about a small band of men who anticipated the collapse of the subprime mortgage market. If you read that, you would find boundless confirmation of your thesis that the switch to dumping food at a fixed price was a way of beautifying the accounts. How else could worthless lending on houses for losers end up being sold as triple A rated bonds with almost zero risk of failure?

Your example reminds me of a great article by Paul and Jane Alexander What's a fair price? about Javanese markets. They focus on the contrast between fixed and sliding prices. Negotiation of price over time was once universal. So where did fixed posted prices come from? The answer lies in the bureaucratization of selling in the late 19th century and the arrival of department stores in particular. For the first time, the owners/managers were removed from direct interaction with customers and their problem was how to control the actual sellers. It all follows from that.

If we ask what is new about neoliberalism, I would say that private manipulation of the public interest has been normal for centuries, but it was usually hidden. Now it is all becoming a lot more blatant, even defended as being in the highest public interest. I am reminded of a joke, but it is no longer all that funny. A businessman interviews candidates for a job as accountant and asks each of them what is 2 + 2? Most of them answer 4, but the guy who gets the job asks What number were you thinking of?

[paulrchalmers]

An interesting aspect of the dynamics of price reduction and wastage policies is exactly what you mention – that many charities would be willing to take the perfectly good out of date food. In fact this is becoming fairly commonplace, and well-organised groups are finding themselves overwhelmed with gifted food from the big retailers as the CSR departments play catchup with each other.

What is interesting is that the retailers would prefer to give food away to the worthy consumers represented by the charities than sell the food at a somewhat smaller loss to their normal consumers – who are assumed to buy at full price if the reduction wasn’t available. Whereas in the case you mention, your personal knowledge of the consumers allows you to make a distinction between a regular consumers and those such as Jamal who only come for the discounts, Jamal only shows up to them as a normal consumer who would otherwise buy full price. It is at this point that the de-socialised logic the shareholders adopt loses information. I used to work in an independent coffee shop where we gave two or three particular homeless customers free or discount tea and food – similarly, this was based on the manager having a personal relationship with them.

This was shown by the fact that ‘free tea’ wasn’t a deal which you could qualify for or enter into. In the case of supermarkets, they give away out of date food through charities because the charities regulate a distinction between regular consumers and those who couldn’t buy anyway – they officiate the distinction between potential customers. Through calibration with corporate interests, the charities are perhaps coming to regulate buying capacity rather than desert – destitution becomes the qualifying condition. At the same time, they are regulating people’s understanding of desert, so they don’t self identify, or identify certain others (e.g. middle-class skip raiders) as people who deserve free waste. The companies have to create consumption based distinction - even as they assert that they aren’t being so disrespectful as to make homeless people eat complete rubbish (e,g, ‘our sandwiches are so fresh we give them away every day...’).

The association of buying capacity with desert may not be a relevant problem in all contexts, as destitution is it is clearly a worst-case and one to address first. But it certainly will become a question as the trend catches on, and already has in some areas, as homeless shelters are satiated with donated waste food. As non-consumers and clearly the ‘deserving poor’, homeless people offer a handy solution for the waste food quandary of supermarkets, but there is a tension that will resurface.     

[paulrchalmers]

Consider that even as it is, 'reduced to clear' are normally in a specific shelf - they are there for those who look for them, not placed to maximise purchase by people who would buy at full price.

And an aside; I wonder, beyond choice available and so on, whether the lack of customer refrigeration capacity also makes a difference as to how willing they are to wait until the end of the day to buy their fish (in Keith Hart's Sao Paulo example). There must be some disincentive to wait to buy during the heavy discount period - which, conversely, wouldn't be a discount period if everyone waited till then to buy. I bet there are interesting comparisons to be made in both informal and super- market discounting policy between how able particular foods are to be preserved at home in particular contexts. . . a lot of people freeze discount bread, less so salad.