- The Shirky Principle postulates that institutions frequently aim to sustain problems they are ostensibly supposed to fix.
- This principle comes into play in capitalism, impacting how companies manufacture products and establish consumer trust.
- Understanding it can empower consumers to make informed decisions and avoid falling for artificially created problems.
Deep in the Amazon rainforest, hidden amid the huge trees and the webs of vines, there is a wasp laying her eggs. It wouldn’t be remarkable if not for the fact that this particular wasp is laying her eggs inside the flesh of a caterpillar. As these Glyptapanteles larvae are born, they burst from their eggs inside the host. But they do not kill the caterpillar. They will eat the caterpillar’s body, bit by bit, but never enough to kill. In fact, if these wasp larvae were to kill their host, they, too, would die from a lack of fresh meat.
A good parasite does not kill its host. It knows that, even when locked in a biological war with its host, it must never destroy its rival entirely. It’s a phenomenon that mirrors one in the world of business and management and it’s called the Shirky Principle. The Shirky Principle is named after the writer Clay Shirky, and it states that “institutions will try to preserve the problem to which they are the solution.” In other words, organizations, like parasites, must be careful not to destroy the very problems they were designed to solve, lest they find themselves without purpose or resources.
It can be easy to point out the Shirky Principle in action. For example, you don’t have to be Noam Chomsky to notice that defense contractors quite enjoy it when there’s a war going on. Police officers need crime. Personal trainers need you to stay unfit. In short, it’s bad business to make yourself redundant.
But, as we’ll see, things might be more complicated.
The lightbulb mafia
In the first half of the 20th century, the “Phoebus Cartel” was a group of the world’s largest lightbulb manufacturers. The cartel’s main business was to lower the life expectancy of all lightbulbs sold, from 2,500 hours to 1,000. They cynically and deliberately engineered products to fail so that you’d have to buy more of them. In 2017, a French lawsuit was brought against the printer companies Epson, HP, Canon, and Brother, alleging that the companies had designed their printers to display false signals telling customers that the products’ components were nearing expiration.
But often this is not what’s happening with tech. Apple does not design their iPhones to fail prematurely. With the rapid pace of technological progress, it’s inevitable that older models will struggle to keep up with newer software and applications. The original iPhones work perfectly well on basic iOS and if you only want to look at HTML websites. But when apps are bigger, websites are bloated, and everything becomes more advanced, your 16 GB smartphone ain’t gonna cut it.
The workings of capitalism
What’s interesting about the Shirky Principle is that it highlights the nuances of how capitalism actually works.
Yes, on the one hand the Shirky Principle is all about the principle of supply and demand. If you have lots of people wanting your products, you can charge more for them. So, if you’re an Apple executive, it’s good business to have your phones to slow down. After all, if you have a broken phone then you have to re-join the great demand pool. If the iPhone was a “one-off purchase,” Apple would not be the largest company in the world.
But this is a simplistic view of how markets work. If a company produces shoddy and easily broken products then, at best, they get a reputation for mediocrity. At worst, their customers go elsewhere, and the company goes bust. With Apple, the opposite is actually true. People buy Apple products, and Apple can charge higher than all their competitors because people trust them. Their products are slick, well-made, and well-thought-out. People trust companies like Apple. And, according to research from Deloitte, that matters a lot. Trusted companies will “outperform their peers by up to 400%.” Customers are three times more likely to choose a trusted product over rivals, and twice as likely to promote it to others.
So, the Shirky Principle is all about walking a fine line. Companies want to make as much profit as possible, and to do that they need consumers. A good way to achieve this is to create products that people need to buy over and over again. But, if companies offer only sub-standard items, or if that company is massively distrusted, then they’ll lose their customer base entirely.
Avoid the Shirky
Knowing about the Shirky Principle can help us as consumers. Thinking about things from the supply-side of things can give us an edge. Here are three practical tips we can take away:
- Invented problems: When you’re shopping or clicking on a targeted ad, ask yourself a question: “Is this a problem I actually have and, if so, is this product the way to solve it?” For example, is it really a problem you have to turn on a light switch and do you need to spend $50 on a smart bulb to “fix” it?
- Have a target in mind: For when there are legitimate or perceived problems — for example, “I need to lose weight” — have a goal. Let’s say you pay $30 a session for a personal trainer and you reach your target weight. What reason is there to carry on? I’m sure your PT will have a few reasons, but are they yours? If you need a phone to only use social media or message your friends, do you really need a new one?
- Educate yourself: The internet can be busy at times, and when it comes to buying things it’s hard to wade through the marketing and noise to find out what’s good. But there are still good consumer websites that can review a product and point you in the right direction. Generally, it’s best to read things written by other people — as with TripAdvisor, TrustPilot, or even Amazon reviews. Alternatively, consider going to websites where they have nothing to sell. Non-profit organizations (like charities) or government-run websites will often not have a product they to hawk. They are, usually, simply in the business of helping you out.