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The Amazonian Theory of Moral Sentiments
November 15, 2009 | 11:04 am
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By a TeleRead Contributor
Editor’s Note: Herewith a thoughtful piece from Alex Sanchez. Contributions from our readers are always welcomed. Paul Biba
There has always existed an intense debate regarding Adam Smith’s pivotal work “The Wealth of Nations.” Those on the left have insisted that Mr. Smith advocated a form of Capitalism that was predicated on “fair play” between customer oriented companies. The counterargument on the right has been that Mr. Smith was the first person to propose a purely free market. For our purposes let’s go with the former as opposed to the latter interpretation of Smith’s ideas. There is substantial evidence in his earlier work “The Theory of Moral Sentiments” to support this usage. You may be asking yourself at this point, how does this all link to Amazon?
I thought this question over and over and have not been able to shake the following answer. Amazon is utilizing a market strategy that has some serious Sentimental overtones. In every area that Amazon has entered it has sought to control and/or manipulate factors/opponents as opposed to destroying them. In what surely must be considered an act of bravado it even sells it competitors’ e-book readers, giving the consumer a chance to not buy into the Kindle world. But let’s dig a bit deeper, take for instance its stance on used and/or hard to find books, in which it allows smaller companies a chance to sell their wares on an open market with constant consumer feedback.
This is only the proverbial tip of the iceberg; many people here have rightfully castigated Amazon for its flagrant use of DRM. However, this is a flawed argument in that Amazon sells many of its self published authors works sans DRM, and it sells almost everything else-for the exception of e-books-in the same fashion. The sort of Capitalism that Smith advanced was one in which human beings took one another’s feelings into account when selling goods. Amazon has bought this notion into the 21st century by giving its tacit -and on rare occasions explicit- approval of 9.99 e-book pricing. One could easily label this a self serving action, but such a definition would really do Amazon’s stance little justice, in that they have not only provided the “9.99 boycott movement” a voice-via user reviews, a discussion board thread and tags- but have also stated its arguments publicly. It does not mean that Amazon will take needless lost profits for granted but rather that they have pushed the consumer’s case to recalcitrant publishers as aggressively as one can hope to.
Lastly we should give its Digital Text Platform the credit it deserves for being a revolutionary idea in business on par with E-bay. In which small sellers/authors are put on equal footing with publishers, if not given an outright pricing advantage. The winner is of course the consumer and this is something that Mr. Smith would say we can all learn to love.
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Comments:
With all due respect, Adam Smith did not “propose a purely free market,” nor was he an advocate of capitalism. He was a theorist who offered propositions about why the markets that described why they worked the way they did in his time. Moreover, he was a critic of unrestrained free markets, as evidenced by his parable of the pin factory, which cautions against what he saw as an inevitable tendency toward monopoly. He felt that in order for markets to produce an optimum outcome there must be many competitors, not a a few. His Theory of Moral Sentiments tries to find in morality an innate restraint on greed, which he acknowledges in The Wealth of Nations may need to be addressed in the case of rising monopolies by government or other intervention to maintain competition and ensure optimum social outcomes.
Amazon’s losses on best-selling e-books incurred today must be understood as a down payment on a market share that it intends to exploit in the future, which would not necessarily be good for consumers. Adam Smith would not have assumed it was a good thing, DTP, which is sort of a drop-in tail on your argument, notwithstanding.
Ebay’s a great comparison.
They screw you over SO badly, at every possible step. The latest one is killing off entire catagories by mandating free shipping.
Mr. Radcliffe thanks for the feedback. Adam Smith proposed a revolutionary new form of economics at the time. A radical departure from Mercantilism in that it was actually predicated on fairness as opposed to all out exploitation. Amazon is a relatively kind company. This present day definition of kindness being of course measured against its major competitors. Take for instance Sony -or Barnes and Nobles- who doesn’t even provide a mechanism for users to address issues that they are facing with their devices, let alone afford them a chance to review books to the degree that Amazon tolerates. Amazon is a monopoly no argument on that from me, but it should be also be viewed as a market within a market. Odd concept but bear with me, this is the same type of model that we see in such new age businesses as Google, E-bay, Scribd, and Lulu to name a few. In which the main company acts as an intermediary thus lowering the cost of entry to enter business. The self published authors on its site earn substantial margins without being denied the chance to sell their works because an older monopoly-publishers-denied them the chance.Companies like Amazon may be fulfilling Smith’s vision by making anyone a possible businessman.