Monday, September 5, 2011

Gain the World, Lose Your Soul

For how is a person benefited if he gains the whole world, but suffers the loss of his real self? Or what will a person give in exchange for his real self?

Gospel of Matthew 16:26

Wisdom traditions across time and geography are filled with admonitions against the supplanting of lasting value for the seduction of short-term gain – or so we are taught to construe the maxim above. In the Mediterranean cultures from which this famous quote arose, the idea of transacting was inextricably part of the tapestry of social systems. Two thousand years ago, traders of knowledge, military power, goods and services plied the seas and organized caravans overland to trade what was locally controlled for what could be remotely obtained. Built on the understanding derived from a legacy of Babylon, Persia, and Egypt and inspired by influences from the Indus to China, the literal answer to this rhetorical question could very well have been a new question: Having gained the world, who would ever trade it for the smallness of a singular, individuated identity?

In the traditional King James translation, the question is asked: “For what is a man profited, if he shall gain the whole world, and lose his own soul?” My attention was drawn back to this phrase when I was reading a few Shareholders’ Agreements establishing the roles and responsibilities of the parties to gold mines in the Pacific. Specifically, I was intrigued by the aspirations I heard with respect to a much promoted, yet mythical benefit in what was described as a “profit-sharing” agreement. Now to be clear, most junior (and for that matter, senior) miners in the Pacific, South America, Asia and Africa know that many of the endeavors they fund will not materialize. Without exception, their rewards and those they share with their funding partners are initially and principally derived from financing activities (sale of speculative equity; trading in equity; debt-financing of local ‘participation’; treasury management and investment income; and tax losses or jurisdiction efficiencies which offset unrelated income). In the countless agreements I’ve studied, I have yet to see a single country benefit from the place where the majority of early value is created or exchanged. And, ironically, communities and governments around the world are seduced into trading their environment, their land and their water in exchange for future ‘profit’ never knowing that profit may never be the intention.

Bear with me as I ask that you, for the moment, ignore this most egregious injustice long enough to see the next level of madness in ‘profit-sharing’ arrangements. There are two costs in speculative mining ventures which erode profitability (in the majority of instances, the actual operating costs are handsomely contracted to related-owned entities and assessed against the actual producing mine). The two variable costs are: 1) royalty payments; and, 2) local employment. In other words, if a ‘profit’ is going to be declared in which a ‘sharing’ can happen, in most instances this comes on the back of an EXPLICIT REDUCTION in the benefit coming to, you guessed it, the very people with whom ‘profit-sharing’ is promoted.

Gain the world and lose your soul? Worse than that, using the carefully constructed shell corporations under Rio Tinto, Newcrest and Nautilus you can lose both!

But this inquiry leads down a pathway that felt to be a predictable, tired moralistic trap. And while, in no way do I wish to lessen the focus on this pathetic behavior of unscrupulous actors, I began asking a question that is going to be the subject of considerable future inquiry here in Inverted Alchemy and in conversations to come. I wonder how often ‘profit’ is a foil for a rather elaborate purveyance of ignorance. Is an enterprise ‘profitable’ if it is paid higher value than its contribution warrants or is it the case that it is over rewarded for something that has perceived, yet not substantiated value? Alternatively, is it possible that ‘profit’ is actually a surrogate for the amount of value that is explicitly NOT being measured in the cost of production? If I manufacture a garment that I sell at $50 profit, is it really profit or have I underpaid the laborer and, in so doing, established an unsustainable, volatility-predisposed ecosystem? If I lumber a forest, have I profited if I allocate no funds or resources to reforest the land? Does a ‘for-profit’ company exist or is it the case that in most, or all, instances, profit is a surrogate metric for the degree to which all-in-costs have NOT been factored?

These are questions. They are an inquiry inspired from a new look at an old problem. But what did surface in this inquiry was yet another look at the ancient (and possibly, future) models of commerce. The principle of ‘provisioning’ is a very different reality that seems to evoke a more viable enterprise. When I seek to provision the present, I seek all resources and utilities to achieve my objective. Throughout the course of my endeavor, I seek adequate provisioning to see it through AND, when applicable, be prepared for the next. Unlike a linear metric of temporal profit, the concept of provisioning says that the utility and productivity of the present must prepare me for both the certain present and the confidently uncertain next.

Emerging in this image is an ideal of an enterprise that achieves its effectiveness through the perfect optimization of resource utilization where appropriate inputs are aligned to produce optimal productivity without waste. By now, my frequently quoted Bloomberg interview in which I stated that Google had acquired “crap” from Motorola is one manifestation of the malignancy of ‘for-profit’. By falling for the siren song of the patent cold war strategy, Google paid $12.5 billion to buy protection that, had it used any disciplined inquiry whatsoever, would have been seen for its inadequacy. For a fraction of its Motorola acquisition – made possible from unconsidered ‘profit’ – it could have seen that EVERY patent it acquired has an equivalent that is in the public domain. Both Google AND its customers could have benefited. But in a world of unconsidered profit, they sold their soul. There is another path and, one day, I hope more of us find it.

1 comment:

  1. One interesting twist on "profit-sharing" has been the approach of the Prospectors & Developers Association of Canada, which has allowed that it could support "Government resource revenue sharing", which translates to a slice of the royalties. So again, anything to keep from any reduction in the total take from the investors or mining company.


Thank you for your comment. I look forward to considering this in the expanding dialogue. Dave