Recently, while volunteering as a union organizer for freelance journalists, I spoke with a skeptical member. “Really, what is my ROI?” he asked. I tried to explain that the union is not a business. There are no customers or investors. His dues would uplift the group, but that process may benefit some more than others. I couldn’t quantify, or calculate, any profit for him as an individual. We tend to forget that the word “investment” has a specific technical usage—money spent in pursuit of profit—and that “return on investment” is more technical still, a ratio of profit to invested capital.
This person was using “ROI” in the looser, colloquial sense, so disturbingly widespread in the American lexicon that we hardly notice it. Without batting an eye, a man in New Jersey can sing the praises of a local retiring pastor by noting that his “product was people’s lives” and “his return on investment was off the charts.” Scientists, trying to classify which species need to be saved from extinction, can recommend the use of a “return on investment” approach to taxonomic research. ROI can be and has been applied to early childhood education, physical activity, and the activities of the US military.
ROI injects the logic of investment banking into all life. It is why a recent New York Times personal finance column can pitch caring for others like a smart financial outlay: a “prosocial investment in others” that will “pay off” down the line. It is love as an ennobling finance scheme. Investment thinking—that we should always derive some lonely benefit from our actions—rules our world, occluding all other forms of social relations.
The term “return on investment” first emerged in the early 20th century, after financiers lassoed and crammed thousands of businesses into a few nation-throttling monopolies. Accounting became central to American business, and the moneymen needed a financial metric to gauge success. Corporate managers, as Jonathan Levy outlines in his new book, Ages of American Capitalism, found ROI an easy unit. It was deployed famously by the DuPont corporation and championed by Frank Donaldson Brown, later a top executive at General Motors. For industrialists like the du Ponts (“sharp critics of organized labor,” Levy notes) ROI was complicated enough that only “highly trained corporate accountants” could calculate it, but arbitrary enough to be manipulated. Accountants and managers alone determined which numbers would be plugged into the formula, and at what value. Someone must decide what a factory or an hour of labor is worth. Then, as now, the numbers were fungible enough to mainly express the prerogatives of whoever ran the business. As industrial capitalism calcified, ROI and accounting made the new order seem like the result of rational science, not politics. It was a fundamental part, Levy notes, of proving socialism wrong: Everyone is paid their fair share when it comes to ROI, see? Why are the workers asking for more?
High on the post–World War II boom, enthusiastic conservative economists like the University of Chicago’s Gary Becker began to think that the logic of corporate accounting could be applied to all facets of human life. In Becker’s influential 1962 study, “Investment in Human Capital: A Theoretical Analysis,” he theorized that the cost of training and educating workers could be measured as the return in profits and wages to employees. He called it a “unified and powerful theory.” Becker was saying that everything in the service of human betterment—everything we do in life—could be considered an investment and calculated with ROI, gauged by whether it raised or lowered our income.
This logic “legitimizes inequality and feeds into the story of the meritocracy,” explains Eli Cook, a professor at the University of Haifa and author of The Pricing of Progress. “If someone is wealthy it is just their return on investment.” Conversely, if you’re poor, you clearly didn’t invest in yourself.
While “investing in yourself” was an idea as far back as the 1920s, Cook thinks that a major contributing factor to the spread of investment thinking was the rise of the 401(k) in the 1980s, which turned everyone into an investor. Ironically, as finance grew more powerful in this period, big business ejected ROI as its preferred valuation for the more shareholder friendly “return on equity.” But to a new generation of investors ROI surely struck a rational, self-serious cord.
The problem with using ROI, Cook says, is that you get into a mindset that says, “If you can’t price it, it doesn’t count.” Something less quantifiable, like happiness or solidarity, cannot be plugged into the equation. We’ve ejected complicated, ethical negotiations for the narrow certainty of finance. But many of our relations are not transactional in a clear-cut way, like donations to church, helping a friend move, or paying dues to a union. They’re moments of mutual obligation. They’re relations that finance simply can’t describe.