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Fishing with dynamite: the big competition myth

Is it time to relinquish fantasies of winning in exchange for the greater prize of shared progress?

Illustration by Sonia Roy/Colagene.com

The cure for banks? Ed Miliband advocates more competition. Need to improve education? Nick Clegg urges more competition between students, between teachers, between schools. The solution to fuel poverty? David Cameron places his faith in competition between the energy companies. From TV talent contests and school rankings to the Olympics and rich lists, our religious faith in competition has promised fabulous efficiencies, miraculous economies and dazzling innovation. Instead we find ourselves gasping for air in a sea of corruption, dysfunction, environmental degradation, waste and inequality. Might there be a connection?

When I interviewed bankers for my 2011 book Wilful Blindness, the brutal pragmatism of a competitive industry was spelled out. “Sub-prime was about ripping off poor people,” one told me. “But we have to employ a sales force. And there was no way we could hire, let alone retain a single good salesperson without letting them sell these high-commission products.

“What were we supposed to do? Sit on our principles and watch as every salesperson walked out the door?”

The financial crisis proved so catastrophic because so many were selling the same toxic products. Classic economic theory may argue that competition is productive because it generates a diverse range of goods and services that benefit consumers and, by extension, society – but in this instance (and many others) it signally failed to do so. Belief in the theory underpins Cameron’s and Miliband’s touching faith that competition, and being more easily able to switch between banks or energy providers, will somehow liberate consumers from price-gouging. In fact, it seems more likely that it will just encourage companies to copy each other’s dodgy innovations at a faster rate. Competition frequently fails to deliver its theoretical promises. Intense competition inside and between institutions generates dysfunction, corruption, waste and the unwinding of the social fabric.

In organisations, competition for permanent jobs, bonuses and promotions can erode trust. Many companies formalise this through forced ranking, a system in which employees are assessed and rewarded for their position within a standard distribution. The top 10 per cent are winners, the bottom 10 are losers and are encouraged to move out, and those in the middle are (at least temporarily) safe. At Enron, this was known as “rank and yank”, at Intel “Focal” and at Microsoft “stack ranking”. The system is a crude form of social Darwinism, inspired by the hope that a need to survive will promote great work. In fact, it has just the opposite effect: people sabotage each other, appearing to be courteous while keeping back just enough information so that colleague-competitors can’t excel. Pleasers and politicians thrive, gaming a system that no one takes responsibility for; if you’re a winner, the system works for you – and if you’re a loser, it’s not your problem. Microsoft recently announced that it was abandoning the system but most large corporations still use it, and then wonder at their inability to innovate.

Competition can’t deliver the creativity these managers need because it specifically disables collaboration. If I’m being judged in comparison with my peers, why would I help them? That these executives are the products of competitive education systems only exacerbates the problem: they bring with them a lifetime of being trained to compete for class rankings, prizes and places. In the United States, where class rankings are still common, parents advise their children not to help one another, on the grounds that doing so may jeopardise their winning the top spot. Here in the UK, primary school teachers observe “competitive friending”: parents’ attempts to ensure that their kids make the right friends to enable acceptance in the right social networks.

In both the UK and the US, the emphasis on competition and ranking encapsulates the same message: everyone is a rival. This does little to teach the subtle habits of collaboration but much to focus any child’s mind on results. If grades are all that matters at school does it matter how you get them? The past decade has brought an explosion in cheating, plagiarism and the use of drugs to enhance exam performance. At the Institute for Global Ethics, the late Rushworth Kidder estimated that, by the time they reached college, 75 per cent of students had cheated – which is why many universities now run students’ essays through Turnitin software to check that they haven’t been copied or stolen.

In the world of science, a well-honed competitive mindset has produced what many leading researchers are calling a crisis: a culture in which the open exchange of ideas, data and theories has all but stopped. Crick and Watson may have considered themselves to be in a race – but their success hinged on the shared insights, data and debates of colleagues. They would find today’s labs very different: in 1966, 50 per cent of scientists said they felt safe talking about their research, but by 1998 that number had fallen to just 14. Science is a necessarily accretive process but from Harvard and Washington to London and Berlin, ambitious scientists wanting to be superstars share with no one. Rivalry and the fear of being scooped stop them from pitching in.

Progress for a scientist is measured in publications, citations and research awards – and as the competition for both has increased, so have fraud, plagiarism and what scientists call “normal misbehaviour”: secrecy, sabotage, data slicing and culling. At the University of Washington, Ferric Fang has grown particularly concerned about the increasing numbers of scientific papers that have to be retracted because they are rushed into print too fast, with inaccurate, incomplete or fabricated data. The number of articles published in the past decade has increased just 44 per cent but retractions of scientific papers have increased tenfold – and most scientists believe this represents the tip of the iceberg.

The cost of this is inestimable; flawed papers lead researchers down dead ends and deflect others from promising avenues. The fraud of the prize-winning physicist Jan Hendrik Schön (who falsely claimed spectacular advances in the field of nanotechnology between 2000 and 2002) cost numerous scientists years of fruitless work and wasted resources.

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The tournament that is modern science has produced what scientists call “the Matthew effect”, according to which the well-funded scientists (winners) get more funding and those with little (losers) get less. This might be a great way to run a game show but it is an especially poor way of promoting discoveries because picking winners is so difficult. The history of science is replete with cases of stunning breakthroughs made by the least likely of people, from the Augustinian monk Gregor Mendel to the “surfer pothead” Kary Mullis, whose invention of the polymerase chain reaction (PCR) transformed the science of genetics.

The costs of competition in business are sometimes obvious – fraud, corruption, sabotage – but many are more oblique. The measure of a company’s success (or the status of its CEO) is size, and the pursuit of growth is routinely pursued with high-risk strategies whose true cost may be apparent only years later. This is what the legal scholar Lynn Stout calls “fishing with dynamite”.

The quickest way to grow a company is through mergers and acquisitions, an old headline-grabbing favourite of high-profile CEOs even though research shows a failure rate of anywhere between 40 and 80 per cent. Under John Browne, BP grew fast by buying Amoco in 1998, Atlantic Richfield in 1999 and Burmah Castrol in 2000. Theoretically this should have generated economies of scale but it created debt, which ushered in an era of cost-cutting.

Similarly, the quest to make RBS the world’s biggest bank left it with the biggest loss in British corporate history and, in 2012, with a balance sheet the size of the UK’s economic output. Many working at RBS sensed that the acquisition of the Dutch bank ABN Amro in 2007 was driven by Fred Goodwin’s desire to pull off the biggest deal in banking. The quest for scale delivers not just huge risk, but also vast complexity. Supersizing companies always comes at a cost because competitive instincts don’t stop until they fail. To this day, RBS is in a tangle that people working there don’t believe they can fix.

Competition for market share is typically pursued by lowering prices. This race to the bottom might look great to consumers – dresses for £5, cashmere jumpers for £40 – but the costs have to go somewhere and usually they are pushed down to the most vulnerable. We may imagine this is a relatively new phenomenon but it isn’t. The Triangle Shirtwaist Factory fire in New York in 1911 (146 deaths) was echoed a century later by the collapse in 2013 of the Rana Plaza factory in Bangladesh (which made clothing for brands such as Matalan, Primark and Walmart), in which 1,129 died.

Globalisation didn’t invent the race to the bottom but firms such as Li & Fung accelerate it. Acting as a broker between low-wage factories and the companies that use them, Li & Fung’s “Little John Waynes” scour the world from Vietnam to Bangladesh to sub-Saharan Africa in search of ever cheaper labour. This is no small business – in 2012 Li & Fung earned $20bn – and, in theory, the brokers monitor working conditions. But its suppliers have had several disasters, including a factory fire that killed over a hundred workers.

Whether you’re making clothes, fast food or cheap books, competing purely on price drives down labour costs, producing a casualised workforce whose greater needs are either ignored or met by the state: a form of corporate subsidy that companies rarely acknowledge but happily accept.

The true costs exacted by a harshly competitive culture can be seen in the flood plains of North Carolina, the epicentre of the global meat industry. It isn’t just the ten million hogs (concentrating in just one state waste equivalent to that produced by the entire human population of Canada) which make this region remarkable. Rapid consolidation of family farms threw people off the land with nowhere to go. Industrialisation didn’t bring in money or create jobs but left the predominantly African-American families living off food stamps, stranded in a wasteland dotted with lagoons of animal excrement, afraid to protest the high levels of ammonia, hydrogen sulfide, acetic and butyric acids emanating from the facilities.

As large meat conglomerates moved into eastern Europe, a tradition of silence made consolidation easy: within ten years, 600,000 hog farms in Poland and 90 per cent of Romania’s independent farms had vanished. Horse meat is a sideshow, compared to the damage done to the social fabric of such places.

Economists may call these “perverse outcomes” but they are the predictable outcomes of competition. If we place our faith in it, we shouldn’t be surprised by such antisocial effects. After all, if my win is secured at the cost of your failure, what connects us? In a society that believes in winner-takes-all, how can competition fail to generate increasing levels of inequality?

Competition enlivens routine with drama, but when the stakes are high, so are the costs. The ubiquitous metaphor of our age – sport – demonstrates how destructive competition is, when it comes to playing for the big prizes and huge rewards that professional athletes now pursue. Travis Tygart, the head of the US Anti-Doping Agency, and the man famed for bringing down Lance Armstrong, has long agonised over the increasing rates of doping and corruption that characterise elite sport. His research showed him that although people still valued sport for the lessons of fair play, collaboration, integrity and discipline it could teach, in reality they believed that all that really mattered was winning. “In a climate in which corporate executives fabricate financial records, citizens evade taxes, professional athletes commit felonies . . . cheating and unethical behaviour appear to pay off,” Tygart’s research concluded. “Is our nation well served by a citizenry that learns to prize winning and extrinsic rewards at any cost as the values held most dear?”

It’s a recurring question. How can we create schools, companies and communities characterised less by competition and driven instead by an intrinsic passion for innovation, problem-solving and collaboration? Crowdsourcing companies – Kickstarter, Airbnb, SnapGoods, RelayRides, TechShop and many more – start from the premise that it is pooling, not hoarding resources, that creates opportunity. These businesses are typically celebrated for their technology, but their true daring resides in their reliance on the human desire to work together.

More conventional businesses such as W L Gore and Arup have proved successful and resilient because they focus intently on building social capital – trust, reciprocity and shared values – both within the company and with all the other businesses they work with. This isn’t marginal; it is central to everything they do. W L Gore is known for producing Gore-tex but should be more famous for the way it runs its business; you succeed at Gore because people want to work with you, not because you’ve bested them in a contest.

The structural engineers at Arup have been able to build some of the most challenging structures in the world – the Bird’s Nest stadium in Beijing and the ArcelorMittal Orbit – because the firm nurtures a work environment in which people eagerly share expertise and where hierarchy and status contests are of negligible importance. That these companies are also owned by their employees isn’t the single driver of collaboration but consistent with a mindset that sees shared respect and commitment as the necessary conditions for progress.

The Business Secretary, Vince Cable, and others have been keen to champion employee ownership structures as making a difference to the way companies behave. They are right to do so but wrong to think ownership alone will immunise companies against the ills that competitiveness spreads. We have seen the Co-op mired in scandal and fiasco because its ownership structure proved insufficient to ward off the conventional allure of mergers and acquisitions, the quest for scale for its own sake.

There is a lesson here for nations also. While presidents and prime ministers posture on the world stage, comparing their standing in GDP league tables, it is the smaller countries, such as Finland and Singapore, that prove most agile. They have to be great partners because they don’t have the size or market heft to protect them. They export more, plan further ahead and learn quickly. Knowing they can’t win through dominance, smaller countries have had to develop the capacity internally to be excellent collaborators externally. Not surprisingly, their high-achieving school systems seek success for every child, because they don’t believe they can afford to waste anyone.

Larger nations find it increasingly difficult to adjust to a world in which partnerships, alliances and trust represent the best social and political capital. Britain’s agonised relationship with the European Union demonstrates just how poorly we have developed the ability to contribute the best of our talents to the best of our partners.

If we are to find new ways to live and work together, we need to develop and prize high levels of trust and give-and-take: elements that competition so subtly corrodes. We need to celebrate the individuals and institutions that produce the greatest opportunities for the largest number of contributors. Many companies around the world continue to prove the human capacity for this way of working and measuring collective success.

Yet many politicians, wedded to gladiatorial combat and the rankings mania of opinion polls, have signally lost the capacity to think beyond the narrow confines of a very short race. Our politics are stalled because our problems are complex and our means of addressing them are often crude and rigid.

In the looming face-off between business, governments and society, a competitive mindset can frame the contest, but accepting this could destroy the mental maps that might show the way towards a solution. The problem is a failure not of the imagination, but of courage: the willingness to relinquish fantasies of winning in exchange for the bigger prize of joint achievement and shared progress. l

Margaret Heffernan is the author of “A Bigger Prize: Why Competition Isn’t Everything and How We Do Better” (Simon & Schuster, £14.99)

This article first appeared in the 18 June 2014 issue of the New Statesman, Islam tears itself apart

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When heritage becomes hate: why my home town of Charlottesville needs to address its complex past

After an invasion of white supremacists, we need to see what our history means today.

Watching a tragedy happening in slow motion, without any way to stop it - that’s how it has felt to be from Charlottesville, Virginia in the summer of 2017. A city that used to always get voted “happiest town in the USA” when I was growing up was the target this weekend of an ugly white supremacist movement whose roots spread far from the city.

It was a huge surprise when we won the lottery of Nazi flags, with our stupid old statues that have become icons of international fascism, with a park named after a distantly forgotten old man becoming a site of struggle for an attempted racist coup of the United States. Our first reaction is: they aren´t from here. Our second: make them go away. Our third: a realisation we need to examine the way that our own ways of life, which we thought so harmless, have inspired such horrible feelings in strangers.

Maybe for my African-American classmates at high school the statue of Confederate general Robert E Lee, and the park when it was still named after him rather than Emancipation Park, always meant violence. Pulling the statue down says no more about the historical Lee than tearing down Lenin in '89 says about socialism. We've been invaded by people pretending to protect us from invasion, and the symbols of our past will never matter as much as living people do.

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The invaders picked our town, probably, because Virginia was a confederate state, and was in fact where the southern gentry used to live. Lee exemplified this tradition. He was son of Lighthorse Harry Lee, a hero of the revolutionary war and governor of Virginia, and is a descendant of one of “Virginia’s first families,” the aristocratic Englishmen who emigrated to Virginia when it was a British colony. He is part of Charlottesville's heritage, and perhaps not even all that shameful a part. He opposed the secession of the confederacy, supported the reconstruction after the war, including giving rights to recently freed slaves. Not exactly woke, but for a confederate general, not as bad as some.

We were taught at Venable Elementary School that he fought only reluctantly, to defend his land, not slavery. In the version we learned, one would imagine Lee being very opposed to people from the Midwest coming to Virginia in cars with Ohio license plates to murder Virginians. Many non-racist Virginians, including quite a few friends, respect Lee deeply - the same is true in towns like New Orleans where other Lee statues are being taken down. Yet if once we could fool ourselves into thinking that the statue didn't represent hatred and racial hierarchies, we can't anymore. The discussion of local history has turned into one of national identity. The statue should be gone by Christmas. 

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The real hero of Charlottesville is the town’s founder, Thomas Jefferson, who was among the most enigmatic of the founding fathers, idealistic and hypocritical - a real American, in other words. His idea of the gentleman farmer is also part of our heritage. It was an alternative to Hamiltonian industrial capitalism, but lost out in the tustle to shape American history. Much like English contemporaries such as William Cobbett, Jefferson believed in a rural ideal, reading poetry by morning, farming by afternoon, playing the harpsichord by night. His thought is also present in our beautiful "academical village" of the University of Virginia which he also founded. It is one of UNESCO’s few world heritage sites in the United States, so I guess it is part fo the globe's heritage as well, and it is also where the white supremacists stomped around with their tiki torches.

It’s time for us to stop being romantic about Jefferson, too. The statue in our minds needs to come down. We can recognize the great parts of his work, of his thought, in Charlottesville today, but we can also recognise that he allowed himself to use violence to dominate others, that he owned slaves and raped them. And we can recognise that equivalent scenarios continue to play out today, and will continue to play out until we are willing to face the truth.

There can be no more excuses. It’s not about Jefferson, or Lee, after all. We use monuments, statues, heroes, to inspire ourselves. In the end, the “truth” about Jefferson or Lee is a matter of trivia and history. Today, for every white male in America, we need to deconstruct the parts of our identity built on the graves of others. It’s not easy.

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Jefferson's gentleman farmer was the forerunner of the people who populate the gentrified Charlottesville that exists today of expensive coffee-shops and celebrity-filled suburbs. This romantic idea, much like the lifestyles of the American and English elite today, seems to engender a lot of resentment from those who can only watch helplessly, and are often gentrified out. It’s not only immigrants or, in the United States, African-Americans, who are denied access to America's Williamsburgs and Charlottesvilles, London's Shoreditches and Oxfords. In Charlottesville, descendants of white sharecroppers and black slaves alike are unable to afford $15 glasses of local Virginia wine.

The paradox implicit in Jefferson’s beautiful idea is that in the end, it’s impossible to sustain this chilled-out and happy lifestyle without the labor being done by others, be they slaves, sharecroppers, or factory workers in China. If America is in trouble now, the conflict comes precisely from the fact that our universalist ideas of freedom, equality, and liberty correspond to an economy that is anything but universal. We actually did it, keep doing it, and unless we can use these ridiculous men dancing through our streets iin Halloween costumes as a funhouse mirror to make us see ourselves as we are, we’ll probably keep doing it.

I resent Jefferson for his hypocrisy, because in truth, I would love it if America looked more like Charlottesville than the industrialized and nasty-looking Interstate 95 highway that leads up the East Coast, the aftermath of Hamiltonian industrial-revolution factory America. The New Jersey towns, the gas stations, what we contemptuously call “McMansions,” suburban Northern Virginia... none of it is really authentic enough. Parallel to the rich and ugly suburbs, are poor and ugly towns, the sort of places with unemployment and discounts on cereal that tastes like sugary trash in the supermarket.

The residents of these towns don’t hate the residents of more gentrified towns for our organic granola, they hate the world for the structures of oppression that they can’t escape, even as an international class, an educated class, a well-meaning class, escapes without even needing to. We coexisted in the same place but not the same set of opportunities, and we glided on to new and bigger worlds of possibility, ones denied to those of different class backgrounds, regardless of their ethnicity.

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Some of my African-American classmates at Charlottesville High School were likely descendants of Jefferson’s slaves, coming from poorer neighbourhoods and housing projects and taking "standard" level classes, with honors and AP classes for students whose parents worked in the University (very liberal, of course), a genteel place where every year, some kid wears blackface or a Nazi outfit to a party - as a joke, of course. While my classmates in AP and Honors classes got help from our teachers in applying to Ivy League schools, the general level classes saw black and white students who shared poorer backgrounds acting out to get attention from harried teachers. This was public school, but Charlottesville’s many excellent private schools, of course, didn’t even have the general level students at all.

Despite some southerners such as Lee supporting the post-war “reconstruction,” white resistance to racial equality led to a Jim Crow system that wasn’t much better than slavery, and an American South which dozed in sweaty decline while the rest of the country industrialised and modernized. From 1865 to 1965, not much happened in the South. True, there were intellectual movements like the Agrarians, whose 1920s manifesto “I’ll Take My Stand” I found one high school afternoon in the local bookstore, we had our Faulkners, our occasional geniuses. But as a society, it was stagnant. 

It was only when the civil rights movement began that the south began to actually rise again. UVa went from being a minor regional school to being a world-class one. Charlottesville went from being a mediocre gentleman’s club to a place that people of all backgrounds could make lives for themselves in the public service. And we, the public, gained so much - that’s why my family chose to live there.

I remember as a child strolling the beautiful downtown mall to go to dinner al fresco with my parents, my father pointed out a man in a turban; it was Satyendra Huja, a Sikh professor at the university who had planned the downtown mall, and made a useless street into one of the nicest places to congregate in town. In 2012, Huja became the mayor. I guess the former mayor of Charlottesville who single-handedly made Charlottesville one of the most charming towns in the country often gets told to “go home,” as if that's somewhere else.

Martin Luther King Jr.’s birthday is a national holiday in the United States, but in Virginia it used to be “Lee/King/Jackson” day, with two confederate officers added in just as a reminder. That’s not really our heritage, and as students, we were grateful for the day but always laughed at how immature it was that the powers that be needed to block out Dr. King’s achievements so much.

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Charlottesville is a southern town true to and even obsessed with our heritage - a place filled with museums, historians, bookstores - which wants to dissect that heritage to remove the parts of our forefathers (and mothers) lives that we can’t accept, like a sandwich that you open up, take the pickles out of, and then keep on eating. We love our heritage in Virginia. We read about it, celebrate it, live it every day. But heritage isn’t a static thing, fixed in time, and the walls between myth and history are thin. In fact, perhaps knowing about your heritage is the ultimate form of privilege. I doubt that either the descendants of slaves I went to high school  with, or the “redneck” (so-called because they got sunburned by working in the fields - “redneck” is a class slur) descendants of the illiterate sharecroppers of rural Maryland, do. 

What happened this weekend to Charlottesville could happen to any town as long as we those who are deprived of their history and who don’t feel at home in their hometown. But the Charlottesville I remember, and the one it is now, proves that you can go from war and conflict and institutionalised racism to one where people of all races and identities can coexist, for the most part, peacefully and happily. We can, if we try, honor Jefferson for his achievements without forgetting the slaves his beautiful buildings were built by. A “Memorial to Enslaved Laborers” is being built on the campus he founded.

For the first time, every one of my old friends is thinking about racism, white privilege, the origins of violence, and what we can do about it. We can honor Jefferson and General Lee’s memory best by trying to learn from their mistakes. Maybe, if it seems like we are able to solve these problems, I’ll have a child myself. I hope she goes to Venable Elementary School, and I’ll take her to Emancipation Park afterwards.

This article first appeared in the 18 June 2014 issue of the New Statesman, Islam tears itself apart