I monopoli in rete e soprattutto la crescita infinita, trimestre dopo trimestre, richiesta a tutte le aziende, incluse quelle online, rischiano di rompere il giocattolo dello sviluppo economico. Esagerato?
Ho letto Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity e ho estratto molti insegnamenti, per riflettere sul perché Google, Amazon, Facebook e Apple (e Microsoft) sono sempre più grandi e perché non è detto che questo sia un bene.
Seguono 104 note che mi piacerebbe molto discutere prima o poi in qualche sede, perché ne varrebbe veramente la pena. Ti invito a leggere il libro, prossimamente spero tradotto in italiano. Per stimolare la tua curiosità.
To use the metaphor of our era, we are running an extractive, growth-driven economic operating system that has reached the limits of its ability to serve anyone, rich or poor, human or corporate. Moreover, we’re running it on supercomputers and digital networks that accelerate and amplify all its effects. Growth is the single, uncontested, core command of the digital economy.
We optimized our platforms not for people or even value but for growth. So instead of getting more free time, we ended up getting less. Instead of getting more varieties of human expression and interaction, we pushed for more market-friendly predictability and automation.
That’s the game most of us now call the digital economy. It is accepted unquestioningly, because it stokes the flames of growth—however artificially. Companies with new technologies are free to disrupt almost any industry they choose—journalism, television, music, manufacturing—so long as they don’t disrupt the financial operating system churning beneath it all.
Winning the digital growth game is less a new sort of prosperity than it is a new way to execute business as usual: old wine in a new bottle.
Evan had disrupted journalism with the blog, and newsgathering with the tweet, but now he was surrendering all that disruption to the biggest, baddest industry of them all. When you’re on the front page of the Wall Street Journal, receiving applause from all those guys in suits, it’s not usually because you’ve done something revolutionary; it’s because you have helped confirm financial capital’s centrality to the whole scheme of human affairs. As the dealer at the casino shouts loudly enough for everyone to hear, “We have a winner!” The growth game is still working, so place your bets.
It’s not that Twitter isn’t successful; it’s just not successful enough to justify all the money investors have pumped into it. There was already enough revenue for the employees to be happy, the users to be served, and even the original investors to be well compensated in an ongoing way. But there may never be enough to satisfy shareholders who expect to win back one hundred times their initial $20 billion bet. To do that, Twitter must grow into a corporation bigger than the economy of many entire nations. Isn’t that a bit much to ask of an app that sends out messages of 140 characters or less?
Once money has been “captured” in a stock price, it tends to just sit there as if in a bank vault. This, in turn, puts pressure on the company to make more money, faster, in order to justify the new total value of all the stock.
In fact, for the past seventy years or more, according to economists at the Deloitte Center for the Edge,5 corporate profits over net worth have been steadily decreasing. Companies are accumulating money and assets faster than they can utilize them. This doesn’t mean that corporations aren’t still rich. It just means they don’t know how to apply the assets they already have. They have grown too much for their own—or anybody else’s—good.
Most people are not cultural creatives capable of launching a business on Etsy, programming a new iPhone app, or growing artisanal organic yams. We work in cubicles managing spreadsheets, calculating sales targets, and budgeting ad spends—or in retail stores, on factory floors, and in warehouses—doing jobs that may have no application or value outside that single corporate setting. We are simply fighting to stay employed, pay our mortgages, save for our kids’ college, and make sure we have something left for retirement. And in spite of the digital boom—or maybe because of it—it’s getting harder to do any of those things.
Neither individuals, small businesses, corporations, nor even whole governments need to live and die by their rate of growth. This is not bad news but good news. And the sooner we accept this, the sooner we’ll all be off the hook.
Somehow, growth has become an end in itself—the engine of the economy—and human beings have come to be understood as impediments to its functioning. If only people and our idiosyncratic demands could be eliminated, business would be free to reduce costs, increase consumption, extract more value, and grow bigger. This is one of the primary legacies of the industrial age, when the miraculous efficiency of machines appeared to offer us a path to infinite growth—at least to the extent that human interference could be minimized. Applying this same ethos in a digital age means replacing the receptionist with a computer, the factory worker with a robot, and the manager with an algorithm. It’s all just a new, digital way of running the same old program.
Industry was really just the development of manufacturing processes that required less skill from human laborers. Instead of having to learn how to make shoes, each worker could be trained in minutes to do one tiny part of the job. In the long run, many industrial processes have ended up more efficient than production by individual craftspeople, but that’s most often because their total costs are hidden or externalized to others.
Today’s technology fairs, from the Consumer Electronics Show to South by Southwest, offer audiences the latest in digital gadgetry with nary a mention of the labor going into their assembly, the death of slaves mining for the “conflict minerals” they require, or the agricultural regions destroyed by the pollutants released in their production.
While mass production disconnects workers from skills and the creation of value, mass marketing now disconnects workers from the people they’re serving.
Manufacturers had to substitute something for the lost human bond between consumer and producer, or supersede it where it still existed. This is where branding came in. Putting, say, a Quaker on the box of oats gave consumers a new face to look at—and one more consistently friendly than that human miller’s. Unlike the real craftsperson, the brand icon could be embedded with whatever mythology the marketer chose and forge an even deeper connection with the consumer. Of course, brand mythology had little or nothing to do with the product or its manufacture.
But this last stage of industrialism came with a human price as well. Just as mass production devalued human labor, and mass marketing separated consumers from producers, mass media isolated human consumers from one another.
Those fashion and perfume spots promising friends and lovers are not intended for those who already have friends and lovers. Advertisements work best on lonely individuals.
it’s no coincidence that mass media tend to atomize us, creating millions of markets of one person each. That’s how the television evolved from a hearth in the living room watched by the whole family to a television in each bedroom and a cable channel or YouTube stream for each person. They don’t call the stuff on television “programming” for nothing—only in this case, it’s humans being programmed, not machines.
Remember, industrialism’s primary intent was to subvert a rising middle class and their peer-to-peer market system. Merchants and craftspeople were creating value from the bottom up and threatening the passively earned income of the aristocracy. The object of the game was to get people out of the way, because they create value independently, demand compensation, and value their relationships over their purchases. And the game remains the same to this day.
Our measures of economic success, from corporate profits to gross national product (GNP), specifically ignore the human component of the economy. That’s how an environmental disaster and its resulting cancer rates can still be considered a net positive to the economy. They require more spending on cleanup and chemo, so it’s good for business as we currently define it.
We tend to use new media in old ways, at least until we discover their innate possibilities. The first television shows were simply stage plays with a camera in the audience. The first graphical computer interfaces imitated the real-world office desktops they replaced. Likewise, our digital economy is still more in its “horseless carriage” phase than in that of the automobile—more “moving pictures” than full-fledged cinema. That is, we conceive of the digital in terms of the limits of the previous landscape rather than the potentials of the new one.
However we slice it, digital selling platforms exacerbate the extremes between superstars and those who sell nothing. This is because of a phenomenon called power-law dynamics.
These monopolistic commerce platforms are not true peer-to-peer systems, and they are anything but freeing. They are growth machines—digital department stores, where the many purchase items from the few. We are all buying from the same few places and people. Continuing to do so only reinforces their position at the top, leading to more of that same centralized growth invented by the aristocracy to disempower everyone else.
We optimize for more directed consumer choice, less human intervention, volume sales, and monopoly control of a given marketplace. Moreover, we devalue the contributions of people, going so far as to ask them to spend their time and energy providing reviews, comments, and content—real value—to the corporations who own these platforms, for nothing in return.
if social media companies are going to maintain their growth, they must continue to generate more and more likes out of us humans. Since they can’t take any more of our money, all these social media platforms must by their very nature harvest an increasingly large share of our attention, our time, and our data.
This stuff—these likes—are not an entirely phantom metric used to fool shareholders. They are worth real money, either to brands that want to become “friends” with the fans of a particular celebrity or, better, to market researchers who want to gather data about a particular demographic.
In a landscape dominated by social media, everything begins to matter less for what it is than for how many likes it can generate—because more likes means more data to sell.
Nursing one’s Twitter or Instagram following is compulsory. Instead of taking acting lessons, the aspiring star must stir up social media attention and keep feeding users more content in order to draw out more likes from them.
Pop stars like Jay Z take it to a new level, distributing free music apps that log users’ contacts, geolocation, and even phone records, all to scrape more user data,26 which is in turn sold to advertisers and market researchers. It’s as if no matter what business you’re in, profit ultimately rests on your ability to glean and sell the data associated with your transactions.
As an author, my books will be less valuable as objects for sale (people won’t be paying for things like books anymore, anyway) than as the publishing tool through which I accumulate followers on social networks, whom I then sell to brands. So my books had better be brand-friendly and my audiences preselected for their data-richness. And even then I’ll have to make it to the very head of the long tail to be of interest.
In 2015, advertisers are projected to lose $6.3 billion in pay-per-click fees to these imaginary viewers.28 Consider the irony: malware robots watch ads, monitored by automated tracking software that tailors each advertising message to suit the malbots’ automated habits, in a human-free feedback loop of ever-narrowing “personalization.” Nothing of value is created, but billions of dollars are made.
they soon realized that their data offered more possibilities than this: it could predict our future choices. Using more sophisticated computers and methodology, researchers began connecting seemingly unrelated data points and became capable of determining who among us was about to go to college, who was probably trying to get pregnant, and who was likely to have a particular health problem. More than merely knowing our likely receptiveness to a pitch, they became capable of calculating, with alarming accuracy, what we human beings were going to do next. They had no idea why such a prediction might be true, and didn’t really care. This was the beginning of what we now call big data.
As anyone working with big data knows, the content of our phone calls and e-mails means nothing in comparison with the metadata around it. What time you make a phone call, its duration, the location from which you initiated it, the places you went while you talked, and so on, all mean much more to the computers attempting to understand who you are and what you are about to do next.
Big data has been shown capable of predicting when a person is about to get the flu based on their changes in messaging frequency, spelling autocorrections, and movement as tracked by GPS.
The algorithms use trial and error to see what works, iterating again and again until that 80 percent probability goes up to 90 percent. Fewer people find alternative paths as they are corralled toward the limited outcomes of their statistical profiles. Companies depending on big data must necessarily reduce the spontaneity of their customers, so that they are satisfied with what amounts to fewer available choices.
The big rub is that invention of genuinely new products, of game changers, never comes from refining our analysis of existing consumer trends but from stoking the human ingenuity of our innovators.
Paranoia just feeds the system. Becoming more suspicious of the data miners—as we do with each new leak about government spying or social media manipulation—only increases the value of data already being sold. The more restrictive we are with what we share, the more valuable it becomes and the bigger the market that can be made. We might just as easily go the other way—give away so much data that the data brokers have nothing left to sell. At least that would put them all in the same boat as the rest of us.
Those who market or analyze our data make money, while most everyone else is shut out. All the value we create—either directly, through our writing, music, and other online contributions, or indirectly, through the passive data trail we leave behind us—is basically “off the books.”
Though ingenious, Lanier’s solution could actually dehumanize things even further. If we are paid chiefly for our data, then we are all performing for the machines instead of one another. We are earning money not for the ways we create value for people but for all the passive activities that happen to be data intensive. Our only value to this digital economy comes from those aspects of ourselves that can be quantified.
Although it currently has a valuation of over $41 billion,38 Uber is no more a taxi service than Airbnb is a hotel chain. These are apps—beautiful ones but ultimately very simple ones—that make their money by encouraging people to engage in freelance versions of previously regulated industries. That’s the real arbitrage opportunity here, and that’s why local cabbies and hoteliers are up in arms.
How can a cabbie make mandatory loan and insurance payments and compete on price against an out-of-work actor with a car, a smartphone, and a few hours to kill? Uber, for one, well knows this. One of the company’s e-mail campaigns proclaims that Uber prices are “now cheaper than a New York City taxi”—for a limited time only. It’s as if the company is giving fair warning that its predatory pricing strategy is just a temporary measure designed to put regular yellow cabs out of business, the same way Walmart undercuts local retailers.
The app will orchestrate the movements of robot vehicles even more seamlessly than those driven by humans, and Uber’s shareholders should do just as well—even better—in this more automated future. To them, the sharing economy is less a cultural ethos than part of a strategic transition toward more fully automated solutions. Peer-to-peer is not a means of including more people as value creators but a prelude to getting rid of them—first the skilled, fairly paid ones, and then the unskilled ones who took their places.
It’s as if whenever we start down the path of trying to find an employment solution for people in a digital landscape, we end up in the same defenseless, jobless place. We can’t get paid for our cultural product unless we’re one of the Top 10 artists of the year. We can’t get good at any job skill without its being automated by someone with a free smartphone app.
Most of the technologies we are currently developing replace or obsolesce far more employment opportunities than they create. Those that don’t—technologies that require ongoing human maintenance or participation to work—are not supported by venture capital for precisely this reason. They are considered unscalable because they require more paid human employees as the business grows.
Already in China, the implementation of 3-D printing and other automated solutions is threatening hundreds of thousands of high-tech manufacturing jobs, many of which have existed for less than a decade.43 American factories would be winning back this business but for a shortage of workers with the training necessary to run an automated factory. Still, this wealth of opportunity will likely be only temporary. Once the robots are in place, their continued upkeep and a large part of their improvement will be automated as well. Humans may have to learn to live with it.
“It’s the great paradox of our era,” Brynjolfsson explains. “Productivity is at record levels, innovation has never been faster, and yet at the same time, we have a falling median income and we have fewer jobs. People are falling behind because technology is advancing so fast and our skills and organizations aren’t keeping up.”
Digital technology merely accelerates this process to the point where we can all see it occurring. As Thomas Piketty’s historical evidence reveals, the ever-widening concentration of wealth is not self-correcting. Capital grows faster than the rest of the economy. Or, in even plainer language, those with money get richer simply because they have money. Everyone else—those who create value—gets relatively poorer. In spite of working more efficiently—or really because of it—workers get a smaller piece of the economic pie.
the beauty of living in a digital age is that the codes by which we are living—not just the computer codes but all of our laws and operating systems—become more apparent and fungible. Like time-elapsed film of a flower opening or the sun moving through the sky, the speed of digital processes helps us see cycles that may have been hidden to us before. The fact that these processes are themselves comprised of code—of rules written by people—prepares us to intervene on our own behalf.
How do we get people back to work? How do we bring jobs back from overseas? How does the price of oil affect jobs? How do we raise the minimum income without its costing any jobs? How can we retrain our workforce for the jobs of tomorrow? It’s as if the highest moral good and core human need is jobs. I’m not so sure it should be. People want stuff. They want food, shelter, entertainment, medical care, a connection to others, and even a sense of purpose. But employment—a job one goes to, clocks in, does some work, clocks out, and returns home—isn’t really high on the hierarchy of needs for most of us. Dare we even admit it, but who really wants a job?
The time-is-money ethic became so embedded in our culture that putting in one’s hours now feels like an essential part of life. What do you do? Yet jobs were not invented to give us stable identities. They were simply a part of the growth scheme: a way to monopolize the creative innovation and hard labor of the earlier free marketplace.
Our industrial capabilities have surpassed our requirements. We make more stuff than we can use, at least here in the developed world. Even middle-class Americans rent storage units for their extra stuff. Our banks are tearing down foreclosed homes in multiple U.S. states in order to prevent market values from declining.49 Our Department of Agriculture is storing, even burning, surplus crops to stabilize prices for industrial agriculture.* There is more than enough to go around.50 Why don’t we give those houses to the homeless, or that food to the hungry?
It’s time we accept the truth: we have gotten so efficient at production that we don’t really need everyone employed 40 hours a week anymore.
In California, Amador County workers initially protested when their worktime was reduced 20 percent, from five days to four, in order to justify a 10 percent reduction in their pay. Two years later, when they were offered the option of going back to a 40-hour workweek, 79 percent voted to stay at the reduced hours and pay.
Plants grow, people grow, even whole forests, jungles, and coral reefs grow—but eventually, they stop. This doesn’t mean they’re dead. They’ve simply reached a level of maturity where health is no longer about getting bigger but about sustaining vitality. There may be a turnover of cells, organisms, and even entire species, but the whole system learns to maintain itself over time, without the obligation to grow. Companies deserve to work this way as well.
Marshall McLuhan, the godfather of media theory, liked to evaluate any medium or technology by asking four related questions about it.1 The “tetrad,” as he called it—really an updated version of Aristotle’s four “causes”—went like this: What does the medium enhance or amplify? What does the medium make obsolete? What does the medium retrieve that had been obsolesced earlier? What does the medium “flip into” when pushed to the extreme?
What did corporations render obsolete? They killed the local bazaar and all the peer-to-peer value creation and exchange that took place there.2 They also worked against the marketplace’s values of innovation and competition. If a company won the exclusive right to make clothing or to exploit the riches of the East Indies, then its only job was to extract value. It had no competition and no reason to innovate. We have to remember this part of the program because it’s so counterintuitive: the core code of the corporate charter is to repress exchange, competition, and innovation. It was intended to extinguish the free market.
The function of the corporate “medium” today begins to make sense if we understand it as an expression of this original programming. This forgotten code still drives corporate behavior, angering critics and frustrating corporate boards alike. But the corporation has no choice other than to exercise the four sides of its original tetrad: extract value, squash local peer-to-peer markets, expand the empire, and seek personhood—all in order to grow pots of money, or capital.
Walmart obsolesces local trade. When it moves into a new region, it undercuts the prices of local merchants—often taking a loss on sales of locally available goods simply to put smaller merchants out of business. Even when it is not practicing predatory pricing, it can survive on lower margins by underpaying its workers and leveraging its size for discounts from its suppliers. In the long run, the store costs its consumers more in lost earnings, unemployment, a decreased local tax base, and externalized costs such as roads and pollution than it saves them in low prices.
The company sometimes opens two stores, ten or twenty miles apart in a new region, and keeps them both open until local merchants go out of business and new consumer patterns are established. Then it closes the less popular store, forcing those consumers to travel to the other one. In the fashion of a Roman territorial war, the advancing armies leave behind only what is necessary to maintain the region.
Local wealth creation and exchange diminishes wherever the company’s model is successfully operating.10 It has to. The job of the company is to extract value from local communities and pay it up to investors. Its customer base, as well as its employee population, ultimately grows poorer.
Still, like Walmart, the majority of big corporations are playing a game with diminishing returns. You can extract value from a region or market segment for only so long before it has nothing left to pay with. Extractive economics is a bit like draining an aquifer faster than it can replenish itself. Yes, you end up with all the water—but after a while there’s no more left to take.
The study, which has been updated each year, researches detailed financial, productivity, and economic data on twenty thousand U.S. firms from 1965 to the present. In 2013, it found that while new technologies are giving companies the ability to do things better and more efficiently, the vast majority have been incapable of capturing the value from these new potentials. In other words, while per capita labor productivity is steadily improving, the core performance of the corporations themselves has been deteriorating for decades.
As John Hagel, one of the authors of the study, explained in his book Shift Happens, “The return on assets for U.S. companies has steadily fallen to almost one quarter of 1965 levels.”14 This means that for the past fifty years, corporate return on assets has been declining. Corporations may still be delivering more income to shareholders, but they are not doing so by making more profits.
Corporations were programmed not to be part of the local community fabric but to replace those bonds with allegiance to distant, abstract brands. They were built to extract value from employees and consumers alike. Without conscious reengineering by a strong CEO, they can’t bring long-term prosperity to the people and places where they operate. At best, they will create a false, temporary economy and total dependency—leaving no viable economic infrastructure once they shut down.
The corporate program has reached its limits. Its function is to grow companies by turning active economic activity into static bags of capital. And in doing so, it has taken a liquid medium necessary for our economy’s circulation and frozen it in corporate accounts. Farmers know to leave fields fallow or plant restorative crops so that they can repair and remineralize. Aggressive extraction leaves nothing.
The researchers broke down income into four main categories: labor, capital gains, capital income, and business income. In a healthy economy, there’s a balance among these forms of income, with most people making money through labor or small-business income while a wealthy minority makes money off stock as either dividends or capital gains. If corporations convert too many assets from the working and business economies into pure capital, then the whole system seizes up for lack of fuel.
Apple, Google, Facebook, Amazon, Microsoft, and many other corporations have created new opportunities and new millionaires. But as a result of their extractive, monopolistic practices, the landscape is left with less total activity and potential for growth. The pie is smaller, or at best staying the same, but these digital businesses have managed to get bigger pieces of it—making it harder for every other corporation around, including themselves in the long term.
Union Square Ventures founder Fred Wilson worries aloud on his company blog that digital entrepreneurs are more focused on creating monopolies and extracting value than they are on realizing the Internet’s potential to promote value creation by many players. Wilson is excited about the possibility of new platforms that allow new sorts of exchange, “but,” he says, “there is another aspect to the Internet that is not so comforting. And that is that the Internet is a network and the dominant platforms enjoy network effects that, over time, lead to dominant monopolies.”
we now see that Amazon is less a bookseller than a business plan. As Forbes put it, only half admiringly, “Unlike the other big companies that symbolize our times—Google, Apple, Facebook, Microsoft—Amazon did not rise to power by inventing a new product or service. It came to power by systematically taking down an entire existing industry.”29 In all of the company’s moves, in each of the ways it leverages its platform monopoly, we see the digital activation of the earliest tenets of corporatism.
Amazon amplifies the power of central authorities. It first appeared that it would empower the independent publisher by giving everyone a place on its infinite shelf space. But it eventually grew into the center of the publishing universe. Everyone is the same size—tiny—compared to the platform on which they sell and interact. Amazon sets the prices, the terms, the technologies, the copy protection, the privacy of readers . . . everything.
In the fashion of the Dutch East India Company making its own rope, Amazon sees any service provided by an outsider as a profit opportunity to absorb: printing, publishing, e-books, readers, tablets, and even smartphones, streaming media, and movie studios.
Amazon retrieves the spirit of empire by colonizing not just verticals within its own category but horizontals in everyone else’s. It first established a platform monopoly in books by selling books at a loss, in the manner of Walmart using its ample war chest of capital to undercut local stores. A simple loyalty perk like free shipping was eventually revealed to be the ever-expanding, increasingly sticky Amazon Prime. Amazon then leveraged its monopoly in books and free shipping to develop monopolies in other verticals,
Amazon isn’t really a new sort of company so much as a very old sort of company. It is leveraging digital platforms the way colonial powers once leveraged their exclusive shipping routes to the New World. (Both even have pirates to watch out for!) That’s why none of this is ever about bringing more value to people or—heaven forbid—helping people create and exchange value on their own. Digitizing the corporation simply affords it ever more efficient and compelling ways to extract what remaining value people and places have to offer.
highest priority. Although computers may never become conscious, they will certainly be smart, and their ability to iterate rapidly will prove challenging for human beings on both sides of the corporate equation. At that point, who is left to exercise any human intervention in business? The people running corporations can no longer credibly claim that they are merely responding to consumer demand, since consumer demand will be largely determined by smart machines. And those machines will simply be running the original and unchallenged corporate program as best they can, carrying out a thirteenth-century template for converting value into capital, replacing human agency with the corporate agenda, and usurping organic growth by creators in favor of monopolized extraction by established players.
On a digital landscape running only corporate code, corporations themselves end up in the same predicament as musicians and everyone else: a couple of winners take it all while everyone else gets nothing. Making matters worse, remember, in a successful corporate environment total economic activity decreases as money is sucked up into share value. It’s as if the business world is morphing into a video game. We can only wonder who the eventual winner of the growth game will be as the Gini number creeps upward toward one. Sergey Brin, Mark Zuckerberg, Jeff Bezos . . . ? They’re playing in a winner-takes-all competition.
In some sense, these apps are each configured to their respective visions of the world. Uber’s is a corporate-driven world where speed and convenience trump socializing and planning. It exploits a platform monopoly to extract value from its users, while Sidecar attempts to help its users create and exchange value in a new way. Uber’s reviews and other capabilities are worth more to us in an anonymous landscape, where we are depending on this information to judge one another. Sidecar depends more on its users’ finding favorite drivers, engaging in repeat business, and setting up regular schedules.
The truly successful scalable company in the digital economy may not be the one that can grow infinitely but the one that can prosper on any scale, large or small.
Some of these examples will be elucidated in the coming chapters, but what should already be clear is that the financial and marketing innovations we associate with the digital age are less disruptions than extensions of established business practices—new ways of exercising the same old corporatism.
Great family businesses have understood this for centuries: hire your friends and family, invest in people as if their personal fates matter to you, and think of your business less as a means of extraction than as a sustainable legacy.
Six large California farms account for the vast majority of officially organic produce.50 In spite of large posters throughout the stores featuring wholesome local farmers, locally grown food is still hard to find on the Whole Foods sales floor. That’s because it doesn’t make sense for a company of its size to sacrifice the efficiencies of scale to the minutiae of local sourcing and distribution. Whole Foods isn’t a hybrid strategy at all but an industrial response to a new consumer trend.
Other companies have opted to become what are known as “flexible purpose” corporations, which allows them to emphasize pretty much any priority over profits—it doesn’t even have to be explicitly beneficial to society at large.74 Flexible purpose corporations also enjoy looser reporting standards than do benefit corporations.75 Vicarious, a tech startup based in the Bay Area, is the sort of business for which the flex corp structure works well.
Finally, the “low-profit limited liability company,” or L3C, is a hybrid corporate structure first used in Vermont in 2008, tailor-made for the digital era’s socially conscious entrepreneurs.
Any of these structural adjustments, and many others currently emerging, give corporations a way to transcend, or at least sidestep, the growth mandate that threatens their sustainability and longevity. Instead of removing money from the economy, they end up distributing their prosperity laterally—as if through a network. The money stays in circulation, providing currency to more people and enterprises. The piles of cash no longer accumulate, and the corporate obesity conundrum improves. Profit over net worth increases, even if only because net worth is shrinking. It’s like getting a better body-fat percentage simply by losing weight.
In the absence of new continents in which to expand growth, industry strived to speed up rates of production or to make existing processes more capital intensive. Industrial farming, for example, generates more crops in the short term than do traditional, less-intensive methods. It also requires more machinery, fertilizer, and chemicals. By abandoning the practice of rotating crops, industrial farming also depletes topsoil faster, which in turn generates even more dependency on chemicals and pesticides. More money is required—and that’s the object of the game. If Big Agra processes lead to a less-healthy population or higher cancer rates, Big Pharma is ready with costly fixes, fueling another source of economic expansion.
Economic philosopher John Stuart Mill identified this problem as far back as the 1800s. “The increase of wealth is not boundless,” he wrote.20 He believed that growth wasn’t a permanent feature of the economy because nothing can grow forever. No matter what the balance sheet may be asking for, economic growth is limited by the finiteness of the real world. We can generate only so much activity and extract only so many resources.
Student debt is estimated at about $1.2 trillion as of this writing, while medical debt currently burdens over fifty million adults in the United States45 and is the nation’s largest single cause of personal bankruptcy.
There are more than a hundred time banks in Barcelona alone, with membership sizes varying from less than fifty into the thousands. Some of them are managed day-to-day by human staff (who are themselves compensated in time dollars), while others are entirely digital and automatic. Many of the bigger time banks even offer checking, auditing, and online banking.
Local currencies, time dollars, and LETS are programmed to be nonextractive, highly transactional, and free of borrowing costs.
We might not know exactly when these extreme events are coming, but we know they will, because that’s the way nonlinear systems express themselves. We are not witnessing momentary crises in the capitalization of business; we are watching a high-stakes video game among the nonhuman players of the wealthiest investment houses. At best, we humans are carried along for the ride.
Ruby did exhaustive research on emerging interests and keywords in the technology and business press, as well as conference topics and TED subjects. What were venture capitalists getting interested in? Moreover, what sorts of technical skills would be valuable to those industries? For instance, if she concluded that big data was in ascendance, then she would not only launch a startup related to big data but also make sure she created competencies that big data firms required, such as data visualization or factor analysis. This way, even if her company’s primary offering failed, it would still be valuable as an acquisition—for either its skills or its talent, which would be in high demand if her bet on the growing sector proved correct.
Startups are not trying to earn revenue (which is a liability); they are setting themselves up to win more capital. They are not part of the real economy or even the real world but part of the process through which working assets are converted into new stockpiles of dead ones.
We have gone from buying music on records or CDs to downloading MP3 files to simply subscribing to Pandora or Spotify. Owning music—or a car, for that matter—is becoming less important than having access to it. This is certainly a step on the path from hoarding to sharing. Except the many sharing platforms and services are not sharing at all but renting.
Our investments of time, place, and materials are exploited by those who have invested money and actually own the platforms. Now that we can see it, however, we can also envision the alternative: we join and form businesses that value our real investments of effort, stuff, and community resources. Imagine an Amazon owned by the sellers, an Uber owned by the drivers, or a Facebook owned by the people whose data and attention is being bought and sold. Distributed digital technology makes this not only possible but preferable to the locked-down, overprogrammed, and extractive platform monopolies of today.
For example, in stark contrast to the business bankruptcies and unemployment plaguing Italy as of this writing, in the Emilia Romagna region a full 30 percent of GDP is created by a bounded network of independent, employee-owned firms constituting just 10 percent of the population.
Fairmondo, an open-source, user- and worker-owned e-commerce platform, has operated in Germany since late 2012. On the consumer end, Fairmondo’s interface is similar to that of any major e-commerce site, offering new and used books, apparel, and electronics. However, unlike Amazon, eBay, or even Etsy, Fairmondo allows users to offer items for trade or exchange or to lend them free of charge. It also allows shoppers to filter searches for ecological and fair trade practices.
That’s how a digital economy should work. Instead of removing humans further from the equation of commerce, distributed digital technologies can reinvest living human beings into the fabric of a more sustainable and prosperous economic landscape. There is no exit.
Instead of simply digitizing industrial extraction in the name of growing more capital, our new media technologies can distribute value creation in the name of a sustainable economy.
Digital industrialism sought to extract value from the system using new, digital means; digital distributism seeks to use those same technologies to distribute new capabilities to small businesses and real communities. Digital industrialism accepts growth as a condition of nature; digital distributism strives toward a dynamic steady state.
According to the principle of subsidiarity, no business should be bigger than it needs to be to serve its purpose—whether that’s feeding pizza to the town or making roads for the state. Growth for growth’s sake is discouraged.
The ideal business, according to the popes, is the family business because of its limited size, its focus on long-term sustainability, and the likelihood that people will treat one another as something more dignified than replaceable employees. (And, as we’ve seen from the data, such businesses are also more resilient and long-lived.)
A form of networked distributism may just be our last best hope for peace in the digital economy today. The conscious application of more distributist principles into the digital economic program could yield an entirely more prosperous and sustainable operating system. Instead of simply amplifying the most dehumanizing and extractive qualities of industrialism, it pushes ahead to something different—while also retrieving the truly free-market principles long obsolesced by corporatism.
Recall the tetrad we developed for the industrial corporation: it amplifies extraction, it obsolesces the peer-to-peer marketplace, it retrieves empire, and, when pushed to the extreme, it flips into personhood. What might the tetrad for a genuinely digital, distributist business look like?
It would amplify value creation from everywhere as much as from the center—distributed creativity. It would obsolesce centralized monopolies, working to break them up and share the means of production with customers. It would retrieve the values of the medieval marketplace, recovering inexpensive means of exchange between peers. Pushed to the extreme, well, a digitally distributed company would probably seek some sort of collective or spiritual awareness—another retrieval of a more familial or even tribal sensibility.
If we are measuring our health in terms of growth, then we are on the wrong track. If we are depending more on our competence, getting closer to value creation, allowing others to participate, investing in bounded communities where we actually live, and operating businesses we want to sustain instead of sell, then chances are we are moving in the right direction: grounded, collaborative, person-to-person exchange and support. It’s an economy we want to own.