Monday, 7 February 2011

Ryanair, Max Weber, and the social basis of capitalism

BBC news brings us a story of a Ryanair flight from the Canary Islands which saw a "student rebellion". Apparently, some students from Belgium became unruly and decided to stop following crew instructions after one of them was charged a gate fee for "oversized luggage". So what? This happens all the time, budget airlines are known to make life miserable for passengers to squeeze a few extra euros out of them, and students misbehaving is not really surprising.

The reason why I am interested in this is that it highlights, in a nutshell, what makes modern economies tick - and how companies partly undermine the social compact underlying their profitable operation. The legal situation is probably quite clear - the company wrote something in the small print of the contract you agree to when you click 'ok' (yes, we all read that, no?). This gave them the right to charge extra for all luggage larger than 1x2x3 cm, or all bags that are red, or square. You should know, and shut up. The problem is that in modern societies, strangers get on largely by agreeing to be "reasonable". The taxi driver you just paid doesn't scream bloody murder to get paid again; you don't refuse to pay after you reach your destination, even if the cabbie can't do anything to make you. In either case, there is probably no witness, no enforcement. You just do it because it is the right thing to do.

If we were left to only  follow immediate incentives, with no restraint on our actions, most transactions would become impossible, and we would need lawyers on standby 24/7 to get the shopping done. So what's my point? There are companies - and Ryanair is a chief culprit - that go way outside what is reasonable. Indeed, their business model is partly founded on pushing the limits of reason, decency, and the law. In Barcelona, a judge recently ruled that Ryanair cannot charge you €€€ extra for not turning up with a printed boarding pass. I assume that half of their fine print is equally open to legal challenges. And yet they try, and they get away with it.... because we are all collectively too lazy to do what the one heroic Spaniard did who took them to court. The result is that companies like Ryanair gradually undermine the very fabric of reason and trust that govern and allow most commercial transactions. The US in no small measure is less pleasant as a place to live because companies have gone down this route to a greater extent. Interestingly, Max Weber also thought that modern capitalism destroyed the moral basis from which it sprung. If he had suffered a single flight on Ryanair, blaring trumpets on landing included ("another Ryanair flight on time"), I am sure he would have felt vindicated.

What's the solution? We have "sin taxes" (on alcohol, tobacco, gambling). Let's have a tax on rip-off companies, too. Let's put together some general-purpose small-print that is reasonable, involving consumer associations. Companies aren't bound to use it, but if they don't, they get taxed (a lot) extra. That would protect the "commons" of trust and decency which allows modern-day capitalism to flourish...

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