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Lex maniac

Investigating changes in American English vocabulary over the last 50 years

Tag Archives: capitalism

business model

(1980’s | businese | “business plan,” “grand strategy,” “big idea”)

Putting a business model into practice requires a lot of attention to detail, but the business model itself doesn’t. It can usually be summed up in a few sentences, a statement of general means to achieve broad goals, or a couple of concepts connected loosely with a method of bringing them about. These are not the fiendishly complex models of the hobbyist; they’re like economic models that set up a highly simplified map of how money moves around intended to make reasonably accurate predictions about real life. Business models look to the future, and they are subject to change; executives must recognize when they need a new one, lest the firm fail or fall behind. A start-up might boast of future profit infallibly brought to pass by their business model, while an established concern is more likely to tout a business model that is serving them well in the present and doesn’t need changing, thank you very much.

In everyday use, the expression is pretty casual, but there is a bit more to it. A 1990 definition in Computerworld magazine broke it down thus: “[Business] models, generally developed by a data administration unit, describe current and planned business activities and the related information requirements. A model is typically a four-level hierarchy that identifies business functions, the processes within each function, the activities within each process and the information needed to accomplish each activity.” At some level there must be attention to detail, even in the most devil-may-care industries.

Before 1990, “business model” also meant something else and was more likely to be paired with institutions of higher learning, or perhaps government agencies and even individuals. The idea was “act like a business,” that is, subscribe to the reigning corporate nostrums and show no regard for employees. If you did that, the financial poobahs would congratulate you on following a business model. That use remained in play into the nineties, which is when today’s understanding of the term took over. The tech companies dragged it into prominence; the computer industry seems to be the first that was generally expected to produce “business models.” That’s probably because new firms can’t attract funding without one, and computer start-ups were a dime a dozen in those days. Also because with a few off-the-charts exceptions, most computer companies have never quite figured out how to be profitable, even with an enthusiastic customer base and lots of love from investors. (In that respect the tech industry resembles American society in general, where a tiny minority is staggeringly prosperous while the vast majority does its best many levels below.) But even an unsuccessful venture may pull the wool over the eyes of investors long enough to free them of their money and give the principal shareholders time to grab the capital and run.

For the business model is the blueprint for making money. It helps if it has been proven by others; if it’s untried, you’d better have a good line of patter to back it up. A common way to disparage an enterprise is to say that its business model is the same as that of another company that failed or is in the process of failing. But how much success can be traced back to the business model? If the product’s no good, the business model won’t save it; if your employees don’t do their jobs, your big idea won’t go far. If the theory isn’t put into practice effectively, it doesn’t matter how good it is.

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leverage

(businese (finance) | “take advantage of,” “turn to one’s advantage,” “exploit”)

A word that has always baffled me slightly. Most words are pretty easy to define with a little thought; I can usually come up with two or three synonyms for an ordinary word, and at least one for the less ordinary. “Leverage” has many definitions, and it has an unusual quality: Just when you think you understand what you’ve got pretty well, some other usage comes along. The word seems too simple to encompass such a large field. I learned it first in the ancient Archimedean sense of having a solid enough base to exert force or pressure in a certain direction. (As a boy, I heard the word pronounced “leeverage,” but in my family we said “levverage.”) I wasn’t aware of it at the time, but it was already available as a verb in businese, whence it has sprawled in ungainly growth. In the financial world, leverage has mainly to do with debt. I’m not a good guide to financial jargon, but the basic idea of leverage, as I understand it, is that you borrow money to put yourself in a position to borrow more money from someone else. So you might borrow money to purchase another company, and you use those funds as collateral for the loans you have to take out to complete the larger transaction. That’s a simplified description of the leveraged buyout, which caused a lot of trouble in the eighties. In this sense, “leverage” seems clearly descended from the Archimedean; the borrowed assets provide means to liberate larger sums, as a place to stand provides means to move the earth. An older way to define leverage is as an institution’s ratio of debt to equity — the higher the ratio, the more debt the company carries. In fact, sometimes “leverage” is a straightforward substitute for “debt” in the financial press.

And that’s the puzzling thing about “leverage.” The thread of debt runs through it — debt, which should be a source of weakness rather than strength — but the word “leverage” itself lends it power. While loans with a reasonable probability of being repaid are the lifeblood of capitalism, when too many people lend too much money at too much risk, things can go south in a hurry, as history has shown time after time. That proves true within single corporations as in entire economies. Money that you can spend now and don’t have to repay until later continues to exert a fascination for any capitalist, and debt carefully managed may lead to substantial gains. Maybe I just have puritan ideas about how money ought to be handled, but I wonder if the notion of gaining strength from debt rather than sapping it is what gives me trouble with this word.

Well, it’s not just for bankers any more, leverage. (Like “monetize,” it is a technical term in economics that has seeped into the greater discourse.) Now it commonly serves as a transitive verb meaning roughly, “make the most of what you have to work with.” So you leverage data gleaned from your web analytics to increase your customer base, or you leverage your skills or talent to create a side hustle. These examples still reek of the financial, but the word is used casually by people far from the industry. It means roughly the same thing as it did in the financial sector in the seventies, when banks leveraged assets all the time — using whatever they could scare up to produce larger gains. Which is still a recognizable echo of our old friend Archimedes. The idea of surprising gain from relatively little effort persists down through the ages. But now the idea seems to be let’s use whatever we have lying around or can generate, whether it provides more bang for the buck or not. Leveraging is successful if it produces any benefit at all, even if everybody has to do extra work. Leverage has lost its ease. (Wait, wouldn’t that be “lvrag”?)

In politics, leverage means brute exercise of power over others for any sort of gain, political or personal. The distinction matters little; leverage can be used on or against anyone for any purpose. Finding the lever that gives you the ability to put your opponent into an untenable position, with very few holds barred. An idea as old as politics, clothed in a new word.

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24/7

(1990’s | teenagese (African-American)? | “around the clock,” “always on or up,” “constantly,” “non-stop”)

I had assumed that this expression came out of stodgy corporatese, shortly after (perhaps even before) the ubiquity of ATM’s and all-night shopping or possibly the tech support call center, but now I think it’s more likely that it arose in African-American youth culture, especially rap. The earliest instance I found in LexisNexis, from 1993, came up in a glossary of rap terms printed in the Straits Times of Singapore. I didn’t do an exhaustive search, and it may have appeared earlier, but African-Americans do seem to have been early adopters. Actually, the first allusion may date from 1986: an all-black band named 24-7 Spyz. They were “known for mixing soul, funk, reggae, and R&B with heavy metal and hardcore punk” (Wikipedia), so they weren’t rappers. It’s not clear to me that “24-7” meant the same thing in the band name as it does now, but if it did it was ahead of its time. Hardly anyone uses the hyphen any more; the virgule has become standard, as if it were a fraction, but it isn’t. (I was bedeviled as a child by this brain-teaser: Where do you commonly see the fraction 24/31? The answer? On a calendar.) Fact is, the hyphen makes more sense, but history will not be denied.

Before our use of the expression crept into the language in the early nineties, you found numerous examples of this sequence of numbers, particularly in football scores and stock quotes, representing America’s favorite spectator sports. That made it more difficult than usual to figure out when this term really began to appear. By 2000, “24/7” was widely understood in hipper circles, and it didn’t generally require a gloss by then. Whether out of African-American culture or not, this is a phrase that bubbled up from below, definitely not forced down our throats by corporate headquarters or celebrity central. Early uses of the expression were typically ordinary people talking about their lives, not executives bragging about all-night grocery stores. Now the expression may be used metaphorically to indicate something closer to “full-time,” rather than “available at any moment, day or night, including holidays (as in “24/7/365”). Like many new terms, it has become less rigorous over time. Exclusively an adverb at first, its part of speech has drifted so that now it can serve almost as easily as an adjective.

There’s no doubt that commercial forces have latched onto “24/7,” which sounds like a descendant of 7-Eleven (the name dates back to 1946). America’s favorite convenience store was named for its sixteen-hour day, and the first 7-Eleven stayed open all night in 1963. Before then, the only places open all night were hospitals, cheap restaurants, and a few factories that employed multiple shifts. The idea that you should be able to order a hamburger or buy milk at any hour barely existed outside of major cities. You closed the store at a decent hour and went home to your family. Nobody worked on national holidays. And hardly anyone was expected to be reachable at any time. The pager and the cell phone made us subject to summonses from the office at all hours; the funny thing was, hardly anyone seemed to mind.

It’s tempting for everyone on the political spectrum to see such changes as due to declines in some moral value or another, but I’m more inclined to blame this one on the curse of capitalism. In its purest form, the curse of capitalism says, “If one guy works harder, everyone has to work harder. If one guy stays open late, everyone has to stay open late.” Etc. We always look at competition from the point of view of the consumer — and to be sure, competition benefits customers, at least up to a point (having too many choices becomes confusing and onerous). But from the other point of view, competition places every producer at the mercy of every other. Thousands of eyes on the main chance, endlessly scheming, out to make a buck and the rest of ‘em be damned. Every time one person or firm comes up with a profitable innovation — of any kind — everyone else has to match it, if not surpass it (this is particularly true if stockholders are involved). The exception would be an innovation that reduces the expenditure of time or capital, but even a true labor-saving device just opens up more time for work of other kinds. It doesn’t matter who first had the idea to staff a 24-hour hotline to help you fix your computer. If you want to start or stay in business, you have to offer it now.

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fair trade

(2000’s | activese | “ethical”)

This phrase bears watching, for it has already gone through three distinct meanings in the last 75 years, not to mention two changes in part of speech. An expression like that can always sneak off and pick up something new — just promiscuous, that’s all.

“Fair trade laws,” which seem to have become established during the Depression and persisted until the 1960’s, were a form of government price fixing. Not that the government actually set prices, but it did explicitly permit manufacturers to set minimum resale prices for their products, so retailers were forbidden to offer discounts. These were federal laws, mind you, enforced across state lines. They started to disappear in the fifties, as courts started throwing them out. By my childhood, they were almost extinct.

By my childhood, of course, “fair trade” had taken on a new life in international commerce. We didn’t have NAFTA back then, kids, but we did have GATT and other international trade conventions, which limited tariffs and other protectionist practices in the interest of promoting free — that is, unregulated — trade. If you were a politician with national aspirations back then, sooner or later you would be caught saying, “Free trade must be fair trade” (that precise formulation is taken from Jimmy Carter’s 1978 State of the Union address). The same sentiment dripped often from official lips from the 1970’s until 1990 or so. By then, our solons had stopped talking in any terms other than those of free trade, which was understood to be not only fair by definition but best for everyone by acclamation. That tacit understanding saved politicians the bother of making a case that there was anything fair about free trade.

But the phrase even then was not permitted to leave the stage, for it rose again to be applied to products — produce, usually — that meet certain labor and environmental standards. (Now it changes back to an adjective after a sojourn as a noun.) Purchasers of fair-trade goods deliberately pay a premium for products that help make the world a better place, which has the effect of turning fair-trade goods into luxury goods. Histories of fair-trade practices generally date the concept to the aftermath of World War II, but the term as we use it does not seem to have appeared until the 1980’s. I found a few instances from the U.K. in LexisNexis before 1990, but it did not become common in the U.S. until at least a decade later. Most of us first heard the term applied to coffee, and it still refers most often to comestibles, although handicrafts, cut flowers, skin care products, even soccer balls may also qualify. Recently, fair-trade principles have been used to condemn clothing made in sweatshops.

So there you have it. The three meanings do have some common features. Fair-trade practices today have the effect of giving the producer a price floor higher than an unregulated market would permit, for example, just as fair-trade laws did. But the underlying axiom that really binds all of them together is simply this: Fair trade is the opposite of free trade. Unregulated commerce will not produce equitable results; therefore, fair trade must involve some outside regulation and principles beyond brute profit motive. Legendary labor leader George Meany put it starkly in 1977: “The answer is fair trade — do unto others as they do to us, barrier for barrier, closed door for closed door.” What do you expect from a union boss? But the fact is, politicians of nearly every stripe will say something similar if cornered. The fundamental purpose of most economic regulation is to give someone besides the one percent a chance, and we need that because free markets concentrate wealth, and past a certain point, that makes our system of government untenable. That’s why no one really believes in free trade, any more than anyone really believes in a free market. If the economy gets bad enough, any politician who wants to keep his job must admit as much.

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