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Modern Business And Sustainability

I was disappointed by Jason Hickel’s Less Is More. I had a number of concerns that fit under three headings, lack of economic/business understanding, lack of historical understanding, and divorce from political reality. Today I’ll discuss the technical business elements of my complaint about Hickel’s book. Let us discuss modern business and sustainability

Modern Business And Sustainability

To appreciate my criticism let me set the scene by saying that there is a lot I agree with Hickel on. (Although I’m not sure he’d accept that characterization). We need to make business much more sustainable. It is with this in mind that I was hoping that where Hickel was (to my mind) correct he would effectively communicate his ideas. But I don’t feel he does. When a writer is saying something it needs to make sense or else they undermine the entire argument. What is more, basic errors of thinking give the impression that nothing that is being said is valid. They are obvious flaws in many of Hickel’s arguments. He often exaggerates, or plays far too loose with, the ideas he critiques. Thus, he isn’t at all persuasive to my mind.

Business And Growth

For example, I agree that business does often have a bit of an obsession with the idea of growth. There is often less of a focus on making sure whatever is growing is something you want to grow. Investors get fixated on growth stocks. Marketers chase unit sales. CEOs swallow incompatible companies to grow revenue (and bonuses). Still, it is important not to overstate the point in an incorrect fashion. Hickel’s misstatements detract from his valid point that business should examine what it is doing.

So if Facebook keeps churning out the same profits year after year (i.e., 0% growth), it will be able to repay your initial investment but it won’t be able to pay any interest on it. The only way to generate enough surplus for investor returns is to generate more profit each year than the year before.

Hickel, 2022, page 86

Hickel’s statement is so obviously wrong that it is hard to believe anyone could write such rubbish. His apparent confusion between interest (paid to creditors) and surplus (what is available to pay to owners/investors) is just the start.

Profits Don’t Matter?

It gets much more bizarre as he goes on to say:

From the perspective of capital profit alone doesn’t count. It is meaningless. All that counts is growth.

Hickel, 2022, page 86

Where did he get this from? People, rightly to my mind, criticize businesses for a relentless focus on profits. This is a problem if the business ignores how the firm treats stakeholders other than the owners. So I’m all for criticizing business people for only focusing on profits at the expense of everything else.

Which makes it rare to hear a critic of business say profits don’t matter to business people. By rare I mean completely at odds with everything that people criticize businesses (and the business schools that train managers) for doing. Hickel is literally saying that profits are meaningless to for-profit companies. It’s just plain weird. What is he on about?

Making Money Without Growth

Let us return to the idea that an individual firm can only make money from growth as stated in Hickel’s original quote. This is self-evidently wrong. (Remember he is talking about a single firm, Facebook. He is not making a wider argument about entire financial systems).

If you want to see how a firm can make money without growth think of a number, any number. Now double it. Let the first number be the initial investment you need to make. Let the second number be the return each period. Note this return each period is completely stable, it never grows. Voila, assuming you can find an investment that uses these numbers you will make a lot of money. This is something Hickel said was impossible. Yet, it can easily be demonstrated by anyone with the mathematical skill to think of a number. Such a doubling of the initial investment as a stable return each period is something that any sensible investors would be ecstatic with. (Caveat, unless you are in some sort of completely atypical hyper-inflationary territory. Then you can simply triple, or quadruple, or whatever, the number you originally thought of as necessary to show that Hickel is wrong).

Firms Can Be Profitable Without Profits Growing

Why Errors Matter When Discussing Modern Business And Sustainability

The challenge is that lots of people read these popular books. Imagine you are an under-informed but intellectually curious business person who picked up Hickel’s book. You did so in order to decide if there was anything to the idea of sustainability. After reading Hickel you couldn’t be blamed for assuming the sustainability stuff was all nonsense and not bothering with it at all. After all, a well-known professor, who is a strong voice in the field, is astonishingly ignorant about the topic he is discussing.

To re-emphasize, I agree that business can sometimes obsess too much about (sometimes mythical) future growth. Still, to argue that without growth a single firm can’t make profits is just plain wrong. What’s more, it is so obviously wrong it is unbelievable that this is happening in a book written by an academic. And don’t get me started on profits not mattering to for-profit companies.

Commodities And Modern Business

Hickel also seems obsessed with the idea of everything being a commodity. It is almost as though he has taken the most basic Econ course where they talk of apples and bananas, maybe the course was designed 100 years ago, and hasn’t thought about business beyond that. For example, he says:

[capitalism] pulls ever-rising quantities of nature and human labor into circuits of commodity production.

Hickel, 2022, page 40

Yet, surely one of the key objectives of modern business is to get away from merely selling commodities? To be clear, I’m not arguing this is because firms are environmentally conscious. It is just, for most firms, it is generally better for the bottom line to do more than sell commodities.

Commodities Are The Opposite Of Brands, And Brands Matter

Commodities are the raw materials. They aren’t branded. Commodities are interchangeable. You can easily switch between suppliers when buying commodities. Some who have access to large supplies of certain commodities can make good money. (Hence why Quatar hosted the 2022 World Cup). You can make money from commodities if they are in demand and scarce. Still, commodity businesses are mostly a mug’s game because profits are competed away given commodities are interchangeable so customers can just buy from someone else if you try to charge a high price.

In many ways, the better (more sustainable in every sense) way to make money is to create unique products. Firms do this through combinations of limited amounts of commodities, unique knowledge, excellent customer insights, and specialized production processes. Apple makes lots of money through creating products in ways that only it can do. It does not make its money by selling the individual metals (commodities) in its phones. Coke makes money because people value Coke more than other similar drinks. It isn’t because Coke has extra ingredients (at least not anymore). What’s more Alphabet/Google makes tons of money. Search engines wouldn’t know a commodity if it bit them. These examples aren’t obscure exceptional companies that I had to search (google) to find. These companies are the standard bearers of modern business.

The point is that a focus on commodities is, at best, a weirdly dated way to look at business. Business value often now comes from the firm’s intangible assets.

A 19th-Century View Of Business

Hickel has a strangely dated view of business. On the other hand, he also seems to have bought the hype about a world of perfect knowledge. He seems to think advertising isn’t needed to inform people of anything anymore. What is more fun is that he describes advertisers as “fracking … for our minds” (Hickel, 2022, page 212). (I do worry that the next book by a retired ad executive will be ‘mind-fracking’).

Hickel believes advertising merely tricks people into making irrational decisions. So if you enjoy Coke you are irrational. Whenever I hear the term irrational I cringe. It is never well thought through when people launch the term irrational at others. Hickel seems to think any brand value is evidence of irrationality. This matters because it implies he doesn’t really believe in key intangible assets. Such intangibles are becoming an increasingly important part of the modern economy but he seems to have missed that.

Intangible Assets And Sustainability

The good news is that whenever businesses rely on immaterial (intangible) factors it could potentially break the link between growth and material use. Movies don’t (have to) generate a large environmental footprint. Books can be written with very limited resource use. Software puts limited stress on materials.

Strong brands are valuable because of consumer perceptions not because of their commodity inputs. There is no (practical) limit to the amount of intellectual/relational value that can be created. Thus, the link between business success and material use could, theoretically, be broken. Whether it has been broken becomes an empirical question. Are we using more materials when we grow businesses?

To be fair to Hickel, he does share some data. But he largely cites a small number of other works rather than explaining them or what he means exactly. His is the start, not the end, of a discussion. As such, I would have loved much more on why he thinks business can’t improve its sustainability. Instead, he just largely makes grand pronouncements that ignore many major features of modern business. Arguing from the data is a much better idea than what I saw as his overstated, and technically incorrect argument, that business must by its nature always rely on increasing commodity use. This just isn’t true.

Defending Intangible Knowledge

One of the ways Hickel hopes to get away from having to discuss knowledge and other intangibles/immaterial goods is by saying you can’t defend knowledge/relationships and so you can’t make money from it.

But the thing about immaterial goods is that they tend already to be abundant and freely available, or are otherwise very easy to share.

Hickel, 2022, page 161

This is an odd statement. The Coke brand is a major intangible/immaterial good. Is the Coke brand easy to share? Try putting a Coke label on a drink you plan to sell and see how that goes for you. (Hint, line up a good lawyer first).

Publishing Creates Intangible Assets

If I understand his argument it is that growth can’t come from immaterial items as they are mostly free or their intellectual property can’t be defended. This is despite copyright and other laws that are vigorously enforced in the modern (‘capitalist’) economies he criticizes. He thinks firms can’t make money from immaterial goods. Yet, firms do this all the time.

It is funny that he is published by Penguin. This is a company that is trying to make money from ideas. Even before e-books were a thing, Penguin sold the immaterial ideas in books, not really the paper in books per se. Penguin has established a business based on selling immaterial goods for many years with reasonable success.

Better still is the text of the end material of his book.

The moral right of the author has been asserted.

Hickel, 2022, page 318

Hickel seems to feel he has the moral right to defend the copyright on his ideas. This seems to be creating the artificial scarcity — restriction of the distribution of ideas — that he loudly deplores throughout the book. Why can he defend the copyright on his ideas and others cannot? Maybe capitalists aren’t as ruthless in asserting their moral rights as Hickel is. Big business can’t defend the value of their intellectual property but don’t mess with Hickel’s private property rights. It left me quite puzzled.


Hickel makes some great points about GDP. As far as measures of national economic (never mind any other type of) success go GDP needs a lot of improvement. He is right that GDP is a challenge when we see it as a goal. He rightly notes that things that are bad can look like they are good in GDP. If citizens are buying a lot more security apparatus because they are terrified of crime this looks good in GDP terms. Still, it doesn’t seem to be what anyone would really want. Trashing the planet can look pretty good in short-term GDP terms. It is an excellent point that we could poison the entire human race with the economy booming up to the point where we all died.

Hickel’s important point, to my mind, is that we should not see GDP growth as the main aim of society. This is absolutely correct. Why did Hickel not focus on that and cut out the basic errors?

Hickel’s views of economics and sustainability seem to derive from an ideological starting point. This comes from 19th-century economics. I don’t see it as well thought through. Neither do I see any noticeable understanding of the connection between modern business and sustainability. Hickel does say some things that make sense. Yet, he says some complete nonsense too. He says other things that make sense but shares them in ways that are technically incorrect. This really isn’t the way to convince anyone that he has properly considered what he is saying. While Hickel has built a base of followers I worry his work might lose credibility for the entire field of sustainability.

For more on sustainable marketing strategy see here.

Read: Jason Hickel (2022, Kindle Edition) Less Is More: How Degrowth Will Save the World, Penguin

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