The Cost of Poorly Performing Processes – Need for Six Sigma
Prior to the introduction of Six Sigma philosophy, there was a debate as to whether Six Sigma is a goal worth pursuing. Many experts in the area of quality believed that wastage was a way of life. Trying to eliminate wastage would cause more wastage. They believed that it was possible to eliminate waste but […]
The Use of Enterprise Resource Planning Applications in Finance and HRM
The Importance of ERP Software In previous articles on Finance and Human Resource Management, we discussed how the finance and HRM functions have evolved to become important support functions in organizations and not just appendages to the core processes of the organization. For instance, in earlier decades when manufacturing was predominant, finance and HRM were […]
Role of Customers in Total Quality Management
Total Quality management refers to a continuous effort of management along with the employees of a particular organization to improve the quality of products and services. Businesses need to emphasize on quality of their products rather than quantity to survive the fierce competition. Remember in today’s scenario, there is no dearth of competitors in the […]
Letter of Credit – Meaning and Different Types of LC
International trade between an Exporter and Importer would entail multiple transactions in terms of documentation exchange, physical cargo movement as well as settlement of payment which have to be clearly defined and setup in order to ensure smooth business transaction. Over the years international trade has established various methods and payment mechanisms that are accepted […]
Transitioning to Agile? What Project Managers Must Know About This Hot Methodology
How Agile Has Become the Talk of the Town and What it Means to Be Left Behind Walk into any business conference or eavesdrop on any discussion with managers and execs in the corporate world and the term, Agile, invariably pops up along with associated terms such as Kanban, Scrum, and DevOps. While these terms […]
Planned obsolescence is often considered to be a part of the capitalist ideology. The supposed logic behind planned obsolescence is that capitalist companies put inferior components in their products.
As a result, these products do not last as long. Since the products break down sooner, the customers are forced to buy new products.
Opponents of capitalism, often cite planned obsolescence as the sort of evil that gets propagated as a result of capitalism. According to them, not only does planned obsolescence have economic costs but also environmental costs.
This practice has been vilified as being the reason why resources are wasted on such a large scale besides also burning a hole in the pockets of most consumers.
In this article, we will look at the other side. We will try to understand why planned obsolescence doesn’t really exist in reality, but is instead the figment of the imagination of commentators who hate capitalism.
As a result, the present value of their product in the eyes of the consumer will be less.
The company risks losing sales in the short run and even running out of business in the long run. Consumers will obviously prefer to buy from manufacturers who can make better and longer lasting products.
Critics often argue that companies have formed a cartel. As a result, all of them are using inferior components. This is the reason why no one produces a better product and takes away the market share. This explanation is implausible on several grounds. This would mean that thousands of companies, big and small, spread out across different geographies are somehow adhering to a pact.
Some of these companies have had very unprofitable years in the past, some have even gone bankrupt. Breaking the pact would have been a very profitable thing for them to do.
However, none of them seem to have done so! Hence, this whole idea that a cartel is somehow controlling the quality of the products is implausible.
Now, several groundbreaking technologies are introduced into the market every day. If one were to not innovate in the mobile phone market for a period of three years, they wouldn’t have a company by the end of it!
This is the reason why companies have to launch new products and new models several times a year. It is not feasible for them to manufacture one product which would be of best quality.
This is because the quality is not stagnant. As soon as a product is launched, the design of another product starts immediately.
Product lifecycles are becoming smaller. Once again, there is no cartel which is enforcing the timely obsolescence of products. Instead, it is the market which is causing the companies to change their products within increasingly shorter periods of time.
However, now it is common for cars to have as much as 300,000 miles on them. In fact, cars are seldom sold by their first owner before reaching 100,000 miles. The cars of today are clearly lasting longer than they did earlier.
If there were a cartel enforcing planned obsolescence, this would not be the case. The modern cars would be breaking down even before 100,000 miles.
Also, it needs to be noted that some car brands like Volvo and BMW take pride in making sturdier cars. It is common for their cars to run for as long as 500,000 miles.
If there was a cartel in operation, why would it allow some companies to make longer lasting cars while restricting the others?
Volvo and BMW do receive a premium for the longevity of their cars. Wouldn’t the other cartel members object to this preferential treatment? It is not possible for the manufacturer of every major product to somehow collude with all the other major players and together create a mega cartel.
Such a cartel would not live long because of the immense infighting. Remember that all of these companies are competitors and each one gains at the expense of the others.
The reality is that the concept of planned obsolescence does not really exist in reality. It is only a bogeyman that has been created by the government and other agencies to shake down and extort money from innovative businessmen.
It is up to the person to realize that the free market system with all its flaws is also much more efficient than the centrally planned state that was created by countries like USSR.
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What the Current Wave of Protectionism and Populism mean for the Future of Globalization and Free Trade
February 12, 2025
