15 July 2021
Profit and Prejudice:
The Luddites of the Fourth Industrial Revolution
2020, Routledge, 274 pages,
Reviewer: Vicky Pryce
I didn’t know what to expect of this dense volume written by Paul Donovan, a bank economist, but loved the simple – but so correct – overall message of the book: prejudice is bad for business and the economy. Prejudice wastes talent, leads to bad decisions, weakens profits and economic strength . As the author asserts: ‘prejudice puts the wrong people, with the wrong skills, in the wrong jobs, at the wrong time.” Indeed!
We can see it in business, in politics, in the unwillingness to change. And Paul Donovan argues that we as economists have failed to convince others of the cost of that prejudice. A bit like climate change, it has not been properly priced into the system and people carry on with their prejudices unhindered, thereby causing damage.
Even when we know that prejudice is bad, changing attitudes and weeding out conscious and unconscious biases from organisations takes time and is costly. We therefore let it persist even if change could be a win-win There is ‘rationality failure’. Even though we know it makes sense to eliminate those prejudices we won’t do it because it is easier to carry on as we are. And we tend to go for the lazy option. For example, when it comes to hiring decisions we end up choosing people who are more like us. There is also ‘coordination failure’. We could all improve all-round performance in a sector, for example, if we worked more closely to stamp out prejudice across businesses or an economy. But we don’t and end up not doing as well as we could otherwise have done.
I had a particular interest in the book’s coverage of prejudices against women as I have written about this myself . Unlike me, Donovan does not believe much in quotas as a way to cut through the prejudice and ensure progress . But he does retell the by now well-known story of how the only way more women started being hired by orchestras a few decades ago was by ensuring that candidates playing various organs were hidden behind screens for auditions so their sex could not be seen and, therefore, not influence the selection process.
Other examples abound in the book. Marie Curie, despite winning two Nobel prizes was not able to be a member of the French Academy as women were not allowed. Vera Stephanie (now Dame) Shirley had to resort to using the name Steve before she was taken seriously by prospective clients and backers for what ended up being a very successful and pioneering IT software business, called F.I , staffed initially mostly by women working from home. And she had to get her husband’s signature to open a bank account.
Admittedly that was in 1962, though it doesn’t seem that long ago to some of us! But is it better now? The truth is that prejudices, in the form of covert and overt biases, still abound. The book quotes a study done in Boston and Seattle where customers booking shared rides had to wait considerably longer if they had an Afro-American sounding name. But if one tries to eradicate prejudices the wrong way they may, in fact, have worse consequences. Donovan highlights how French Muslim school girls left education as soon as they legally could, at sixteen, after France introduced a hijab ban in schools in 2004 . They apparently felt that the ban created more rather than less prejudice against them in schools and higher education establishments. And biases are still to this day apparent in the funding of female-owned businesses –not only in the UK where this has been well documented but in many advanced nations as this book demonstrates. And they still exist in the perceptions that one has of educational capabilities of ethnic minority students who are then inevitably held back.
Donovan rightly argues that ‘stopping people from reaching their potential is destructive to the economy’. And his opening statement about prejudice being bad for business and the economy appears again as the powerful closing sentence of the book.