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The corruption inherent in addiction economics

I’ve been studying the economic intersection of capitalism and addiction. It is a highly profitable and always a sordid business.

A recent history of businesses based on addiction

For a recent book project, I looked into what the tobacco companies did in the 20th century. We all know today that nicotine is addictive and cigarettes cause lung cancer. But put yourself in the mindset of a consumer in the 1950s, with cigarette advertising everywhere.

Lung cancer was once extremely rare; by 1900, only 140 cases had ever been documented. But as cases grew in the 1930s and 1940s, researchers began to suspect, and then uncover, links between smoking and lung cancer. So in 1953, the CEOs of the six largest tobacco companies supported their own research institute with a mission to dispute the link. The head of that effort was Clarence Cook Little, an 80-year-old biologist who at one time had been in charge of the predecessor organization of the American Cancer Society. His new organization’s research focused only on animal models. Cook’s position was that health problems and smoking were linked only by “statistical associations, which cannot ‘prove’ a causal relationship.”

The tobacco industry’s corrupt collusion in addicting Americans to tobacco eventually resulted in a $246 billion settlement with federal government and state attorneys general, in which the tobacco companies were prohibited from marketing their product.

Consider some other recent developments with addictive products and services:

  • For fifty years, Las Vegas casinos were owned by or associated with organized crime figures.
  • During prohibition, illegal alcohol distribution was controlled by organized crime, which reaped unimaginable profits from people’s persistent addiction to alcohol.
  • The processed food companies have tapped into the addictive, dopamine-generating combination of salt, fat, and sugar. If it says “low salt” on the label, look for more sugar. If there’s no high-fructose corn syrup, expect more fat. The objective of processed food vendors isn’t to make you healthy, it’s to keep you eating until the package of Oreos or potato chips is somehow empty again.
  • Purdue Pharmaceuticals intentionally ignored evidence that its opioid drug oxycontin was not just addictive, but that the recommended dosing schedule would leave users craving more of the drug than they could legally be prescribed. Again, the manufacturer and the Sackler family that controlled it were forced into a multi-billion-dollar settlement with the government.
  • In “The Facebook Papers,” a whistleblower revealed how Meta Platforms, parent company of Facebook and Instagram, intentionally manipulated its product to maximize users’ addiction, regardless of the resulting polarization and impact on users, especially young people.

The pattern of companies corruptly exploiting addicted users is not a coincidence

Two incontrovertible principles are at work here:

  • Capitalist principles demand that companies maximize profits for the benefit of shareholders.
  • Addiction generates the ultimate loyal customer base; such customer are generally unable to choose to give up such products or services.

Imagine two managers in such a company, one who is concerned about the detrimental effects of the company’s products on addicted users, and the other who simply concentrates on maximizing profit from addicts. The second manager will generate better financial results. The first manager, surrounded by people with such attitudes, will soon give up. The profit motive ensures that these companies will be run in such a way that shareholders gain maximum benefits, which means ignoring the problems that addiction causes in users.

When addiction-generated problems generate unavoidable bad press, such companies will build toothless ethics councils, support research programs, and find any other way to offload the addiction issues to poorly-funded external organizations. There’s a reason that addiction-mongers pay high taxes — it’s actually cheaper for them to outsource the problems of dealing with addiction to the government than to worry about it themselves.

Cory Doctorow has effectively documented the “enshittification” of digital platforms, in which widely successful digital products slowly and steadily degrade the user experience to maximize their own profits. This is another consequence of addiction. When the user has little choice (and many of these digital products are effectively monopolies or oligopolies), there’s no reason to keep the user experience decent. Addicted users stay no matter what, so better to invest in new ways to squeeze profit out of the digital addicts.

What this means

First of all, if a product becomes immensely popular — it it taps into the dopamine loop in the brain and becomes addictive — pay close attention to the behavior of the company that produces it.

Don’t just look for corrupt behavior. Expect it. Capitalism demands it. It is coming.

Don’t be fooled by company investments in mitigation of these efforts. If such mitigation were ever actually effective, that would reduce profits.

We’re already dealing with the societal impact of alcoholism, opioid addiction, processed-food fueled obesity, and mobile and social-media driven obsession.

Of these, only the tobacco industry was squeezed back — until it regenerated in the form of vaping. Addiction is powerful. Individuals can break free of it, but society generally can’t.

Regrettably, I have no useful prescription to solve all these problems. Still, I urge you to be on the lookout for the next addictive industry. Whoever they are, they’re going to say it’s not a real problem. But look at the history. Vendors of addiction really want you to look the other way while they gather more addicts. And if there’s anything we really don’t need right now, it’s more addicts.

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  1. I recommend the 2005 Hollywood film “Thank You for Smoking,” starring Aaron Eckhart. From imdb: “Satirical comedy follows the machinations of Big Tobacco’s chief spokesman, Nick Naylor, who spins on behalf of cigarettes while trying to remain a role model for his 12-year old son.”

  2. Good analysis. Could have an interesting sociological discussion of whether our civilizational infrastructure built on petrol products constitutes a societal ‘addiction’ analogous to individual nicotine/alcohol addictions.

    Not directly related to this post, but as the presidential election kicks up again, I thought you might be interested in Chris Hayes’ “The Stakes” series on his podcast Why Is This Happening. It seems like a spiritual partner to your Rationalist Papers project – he finds an expert on some policy area, and then they talk through comparison of the actual policy record for Trump 2017-20 vs Biden 2021-24. They’ve done episodes on immigration, taxes, and abortion so far.