July 2023
Imagine that you’re the type of person who really cares about where your food comes from. You seek out locally raised grass-fed meats, you make sure all your eggs are pasture raised, and you buy only organic produce from the farmers market every Sunday. You put all this effort and thought into curating only the highest quality ingredients for the sake of health, longevity, and the taste of your food. And yet, when you finally turn all these ingredients into a delicious meal, you top it off with a generous grind of black pepper that contains actual rat hair, amongst other contaminants. Wait… what?
The thing is, you don’t have to imagine this. According to FDA research, it happens every day.
The black pepper you put on your food, especially if it’s the lower cost variety, might contain rat hair, or insect parts, or just plain old salmonella. So why would our grass-fed farmers market friend buy the cheapest pepper on the shelf without giving these facts much thought? Aren’t they the type to care about the source of their food? Why wouldn’t they spend a little extra to get something that’s of better quality?
The answer is information asymmetry – if a buyer is unaware of a problem, they’re not going to pay extra money for a seller to solve it.
This is a truth of capitalism. It’s why every culture has their own phrase for “buyer beware.” For most of economic history, sellers have been trying to get as much value as they can from buyers for as little effort as possible. This is the default paradigm, and rationally so.
And it’s for this reason that in order to avoid a race to the most efficient outcome irrespective of quality, capitalism needs storytelling. Storytelling is the anecdote to information asymmetry.
Most people pay for pepper with rat hair in it simply because they don’t know any better. They aren’t aware of the problem. The story has yet to enlighten them. And when people don’t know any better, decision sets tend to come down to just two criteria - price and social signaling. And in this rubric, the lowest price usually wins.
This is capitalism’s Achilles heel - when consumers don’t know what to look for, they get taken advantage of. And everyone is worse off for it, with the lone exception of the person capturing the bulk of the value. But everyone else is left hanging - from the producer whose product is facing downward price pressure, to the consumer who is ingesting something that’s objectively inferior to a higher quality product. All in the name of squeezing out a few extra points of margin for the seller.
That’s not the capitalist society I want to live in. Instead, I want to live in a world where storytelling and information parity is prioritized and valued.
Storytelling is the only barrier between productive and unproductive behavior in capitalism. The only stop gap between acceptable levels of quality and no holds barred efficiency.
Without storytelling, we only get the worst parts of capitalism, and none of the incredible incentive aligning benefits. The lack of awareness caused by a storytelling vacuum creates negative incentives for capitalists. An environment where corner cutting is in their best interest.
But with storytelling, buyers are made aware of the often overlooked problems that exist in their lives presently. This state of information parity allows them to make a more educated buying decision, which then sends positive incentives reverberating throughout the entirety of the supply chain. Because people now know and care about the quality of their goods, sellers will be incentivized to follow suit.
So if you’re looking to start a new business, look to the shadows to try to uncover the overlooked truths that exist all around us. If you can find these truths and amplify them through storytelling, you’ll have the chance to upend entire industries of entrenched corner cutters.
And if you’re not looking to start a business, perhaps you should go out and buy yourself a beautiful grass-fed ribeye from a local rancher instead. If you find yourself thinking about the black pepper you’re about to put on it when dinner time comes, then I suppose the storytelling has done its job.