It’s An IKEA World

It’s a tiny squeak in the roar of global capitalism, but IKEA has altered its ubiquitous Billy bookcase ever so slightly.
The fasteners which fix the top, middle, and bottom shelves in place are now plastic, not metal.
And the studs on which the adjustable shelves rest are no longer simple cylinders but hollow little cups with a lip which rests against the side of the bookcase. The new studs are vastly more complex pieces of industrial design; thinned at the end, but ridged to “grip” the walls of the holes they are stuck in.
The old studs weighed three grams a piece. The new studs weigh just one gram.
The changes to studs and fasteners are nearly imperceptible. But there are sixteen studs per bookcase. The bookcases are shipped all over the world – flat-packed into cardboard boxes, stuffed into the omnipresent containers of global capitalism, and sent to one of IKEA’s 267 stores.
If you multiply the weight saving over the 3.1 million Billy bookcases produced every year… well, you can bet IKEA’s management knows exactly how tiny changes add up.
The retail price of the Billy has declined over the last 30 years in every country it is sold. A few years ago, the basic Billy sold in Australia for $99. In the 2011 catalogue, it was listed as $79.
No company epitomises global capitalism more than IKEA.
After all, at first glance, it’s an unusual space for an innovative company to occupy. Furniture is hardly cutting edge, retailing furniture made largely of wood even less so. There’s no fashionable Moore’s Law (the theory the processing power of computers doubles every two years) for cheap couches and brightly painted wood side tables. IKEA is far from the realm of biotechnology or the information technology.
Yet few companies play the capitalism game harder.
For example: IKEA pays next-to-no tax. It isn’t even a Swedish company: the umbrella body for most of the stores is registered in the Netherlands, and it’s registered as a charitable foundation. The company fled Sweden in the 1970s because of the Scandinavian country’s inheritance tax (now abolished) and its high income tax (definitely not abolished).
Observing IKEA’s low tax burden is not to criticise it. Any company is within its right to minimise its tax profile while observing the law. Just as individuals hoard receipts for their personal tax deductions, companies are entitled to do the same.
But it is to point out that IKEA’s success at avoiding its tax liability is in our interest – we reap the benefits of an aggressively capitalistic company pushing hard against its competition.
The furniture isn’t always good quality. (Is it ever good quality? I don’t imagine there will be many IKEA heirlooms.) But it’s damn cheap.
And the company offers aesthetics and design affordably to those who can’t afford an Eames lounge chair or a Regency writing desk. In previous generations, the young and the poor scrounged for furniture at op shops and garage sales. In the 21st century the young and the poor buy Grevback, Husa and Rykene. It’s often cheaper, and they get to pick the colour.
That should be reason enough to celebrate capitalism and the dynamics of the marketplace.
But by and large we don’t. We dismiss or ignore the micro-innovations we see around us – the ever so slight increases in our standard of living.
Think of the tiny changes to products at supermarkets which may be little, but are genuine help.
You can buy grated parmesan cheese in single serve packets. Honey now comes in squeezable, plastic containers, which is pretty convenient, but also designed to be upside down, to harness gravity, and with suction lids, to keep the container clean.
These sorts of innovations may seem trivial. They aren’t. Some of them – like the changes to the Billy bookcase – keep prices down and profits high. Others reduce waste. Others just ease petty frustration.
Critics of the market economy claim we’re getting unhappier, fatter, less virtuous, dirtier, and more iniquitous.
I think for the most part the data suggests the critics are wrong. But put aside those debates for a moment. And celebrate the joy of capitalism: the trickle of innovation, invention, efficiency and entrepreneurship which steadily, gradually, but inexorably increases our living standards.
That means celebrating better hairdryers, cheaper linen, sturdier toothbrushes, more cup-holders in cars, flexible silicon bake ware, safer razors, a wider variety of cheaper clothes, and stronger dishwashing gloves with longer sleeves. (Matt Preston might also point out paper towels are more robust these days.)
None of these products are exposed to the argument they’re just indicators of conspicuous consumption: nobody ever impressed with a Billy bookcase or toothbrush.
They’re just the things we quietly enjoy. And they’re result of millions of people competing in a global economy to make our lives just a fraction better.