Markus Krajewski writes about the formation of a multinational industrial cartel shortly after the First World War that helped create the very concept of “planned obsolescence” for (no) fun and (their) profit:
On 23 December 1924, a group of leading international businessmen gathered in Geneva for a meeting that would alter the world for decades to come. Present were top representatives from all the major lightbulb manufacturers, including Germany’s Osram, the Netherlands’ Philips, France’s Compagnie des Lampes, and the United States’ General Electric. As revelers hung Christmas lights elsewhere in the city, the group founded the Phoebus cartel, a supervisory body that would carve up the worldwide incandescent lightbulb market, with each national and regional zone assigned its own manufacturers and production quotas. It was the first cartel in history to enjoy a truly global reach.
The cartel’s grip on the lightbulb market lasted only into the 1930s. Its far more enduring legacy was to engineer a shorter life span for the incandescent lightbulb. By early 1925, this became codified at 1,000 hours for a pear-shaped household bulb, a marked reduction from the 1,500 to 2,000 hours that had previously been common. Cartel members rationalized this approach as a trade-off: Their lightbulbs were of a higher quality, more efficient, and brighter burning than other bulbs. They also cost a lot more. Indeed, all evidence points to the cartel’s being motivated by profits and increased sales, not by what was best for the consumer. In carefully crafting a lightbulb with a relatively short life span, the cartel thus hatched the industrial strategy now known as planned obsolescence.
How exactly did the cartel pull off this engineering feat? It wasn’t just a matter of making an inferior or sloppy product; anybody could have done that. But to create one that reliably failed after an agreed-upon 1,000 hours took some doing over a number of years. The household lightbulb in 1924 was already technologically sophisticated: The light yield was considerable; the burning time was easily 2,500 hours or more. By striving for something less, the cartel would systematically reverse decades of progress.
The details of this effort have been very slow to emerge. Some facts came to light in the 1940s, when the U.S. government investigated GE and a number of its business partners for anticompetitive practices. Others were uncovered more recently, when I and the German journalist Helmut Höge delved into the corporate archives of Osram in Berlin. Jointly founded in 1920 by three German companies, Osram remains one of the world’s leading makers of all kinds of lighting, including state-of-the-art LEDs. In the archives, we found meticulous correspondence between the cartel’s factories and laboratories, which were researching how to modify the filament and other measures to shorten the life span of their bulbs.
The cartel took its business of shortening the lifetime of bulbs every bit as seriously as earlier researchers had approached their job of lengthening it. Each factory bound by the cartel agreement—and there were hundreds, including GE’s numerous licensees throughout the world—had to regularly send samples of its bulbs to a central testing laboratory in Switzerland. There, the bulbs were thoroughly vetted against cartel standards. If any factory submitted bulbs lasting longer or shorter than the regulated life span for its type, the factory was obliged to pay a fine.
Companies were also fined for exceeding their sales quotas, which were constantly being adjusted. In 1927, for example, Tokyo Electric noted in a memo to the cartel that after shortening the lives of its vacuum and gas-filled lightbulbs, sales had jumped fivefold. “But if the increase in our business resulting from such endeavors directly mean[s] a heavy penalty, it must be a thing out of reason and shall quite discourage us,” the memo stated.
The great Adam Smith, of course, saw this coming in 1776: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Some things never change.