Douglas Rushkoff's Blog, page 24

City Lights Booksellers – Douglas Rushkoff Live (Audio)

Listen to the audio podcast at City Lights Booksellers

Douglas Rushkoff appeared again at City Lights to speak about his new book Throwing Rocks at the Google Bus and to answer questions on all things pertaining to the effect of technology on culture.

When protesters shattered the windows of a bus carrying Google employees to work, their anger may have been justifiable, but it was misdirected. The true conflict of our age isn’t between the unem­ployed and the digital elite, or even the 99 percent and the 1 percent. Rather, a tornado of technological improvements has spun our economic program out of control, and humanity as a whole—the pro-testers and the Google employees as well as the shareholders and the executives—are all trapped by the consequences. It’s time to optimize our economy for the human beings it’s supposed to be serving.

In this groundbreaking book, acclaimed media scholar and authorDouglas Rushkoff tells us how to combine the best of human nature with the best of modern technology. Tying together disparate threads—big data, the rise of robots and AI, the increasing participation of algorithms in stock market trading, the gig economy, the collapse of the eurozone—Rushkoff provides a critical vocabulary for our economic moment and a nuanced portrait of humans and commerce at a critical crossroads.

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Tech Emergence – Advocating a More Sustainable Business Culture in an Automated World

Listen to the podcast at Tech Emergence

How does automation influence society today? This is an open-ended question with likely endless answers that can be observed in many different areas of society. As a Writer, Speaker, and Professor in Media Theory and Economics, Douglas Rushkoff has made it his livelihood to examine the impacts of automation in our evolving digital society. In this episode, we speak about his ‘disappointment’ in how automation has been used by many industries without regard for employees’ long-term well being, and how a cultural shift in business’ priorities may be what’s needed to make automation beneficial for the majority.

There are many directions that one could take in answering how automation has impacted society in the last decade, but it’s undeniable that automation in business, especially in a largely capital-driven economy, has far and wide-reaching ramifications. “I have to look at automation within the context of the business landscape itself, and most of the automation you’re going to see funded is by companies and people looking to save money, extract more value out of the world and convert it into their share price.”

When looking at automation in industry, Rushkoff identifies robots and computers that automate human tasks and labor and suggests that the use of these tools, for the most part, is shaped by our market priorities; those companies that have enough money and time to automate processes are usually working for those (owners and shareholders) who are looking to extract more value in less time. “I’ve been a little disappointed…there’s a kind of a reversal  going on where I’m seeing people doing more automated tasks and machines getting to do more interesting ones,” says Douglas.

Opportunities for profit weave into the automated behaviors that spill over into our daily and routinized actions. Especially in more urban and suburban areas, it’s a rare occurrence to not see people constantly swiping through their mobile phones, with instant access to emails, Facebook and other social media platforms, and any number of apps. “Kids went to Stanford and figured out what’s the most Pavlovian effect, what’s the best behavior modification that we can put into an interface to induce people to check it again and again…what can we do to make these devices more and more compelling in order to get more and ore more predictable, repeatable behavior out of people,” says Rushkoff.

The constant search queries and engagement with Facebook and similar interfaces feed back into marketing. Our Facebook news feeds, for example, are filled withalgorithmically-created ads based on a person’s statistical profile, with the goal of getting individuals to behave more consistently with their target demographic group. If a company knows that 80% of a targeted demographic group might go on a diet next week, they might want to leverage this statistic by filling your newsfeed with messages or ads promote products or services for eating the ‘right’ foods.

Rushkoff again makes the argument that in many areas, people are the ones becoming more automated. “Look at,say, Amazon Turks; who do the most repetitive, boring tasks? It’s the people for 2 cents a pop finding the number in the frame; the ones (tasks) too boring for computers to do, they give it to people to do.” In general, he doesn’t see companies trying to make life better for people; rather, they’re goal is to reduce short-term expenditure, often at the expense of long-term innovation in order to convert real-time value into share price.

While there are strong incentives to eliminate wasted time, there does appear to be a potential contention working against well being and creative experiences. Douglas believes it really becomes a question about the reasons behind our programming. Goldman Sachs, Morgan Stanley or any of these stock market investing companies are turning to algorithms that can do high-speed training and predict market trends, with up to 80 percent to 90 percent of transactions now automated.

That’s fine, says Douglas, but what are these bots really programmed to do? In reality, he says, it seems to exploit infinitesimal errors in arbitrage opportunities in the market. “They’re not there to promote the distribution of capital to businesses that need it; the original function of the stock market, which was to allocate capital, is now being changed because the majority of transactions are automated,” says Rushkoff.

He emphasizes that, like any other technology, it’s not automation in and of itself that is the problem. “The priorities of the particular automation that you’re using, the way in which your automation has been optimize, can end up having extreme effects on the underlying system that you’re automating,” says Douglas.

Can Automation Change an Hourly-Wage-Driven Culture?

Can we get businesses thinking more about the common good than maximum profit without legislation? Are there examples of businesses that are doing so today?

“It’s hardest for public companies because of the fiduciary responsibility and shareholders,” admits Douglas. In a digital age, it’s a shift from the industrial age era to think about optimizing not for the growth of capital, but for the velocity of money, getting it circulating in better ways. One way to better control long-term interests is for companies to go private or change their corporate structure, focusing on long-term benefits beyond short-term share price. “It’s also a matter of realizing that a lot of things we’re doing don’t need to be scaled up, a lot of things do tend to work better at a local level,” says Rushkoff.

The local food movement may be one of the best examples of this phenomenon. If you want to eat healthier food and have less of a negative impact on the environment, then joining a local community supported agriculture (CSA) is a better option than eating mass-produced food that is shipped from across the country or the other side of the world.

For other large and emerging business platforms, Douglas articulates an interesting idea that doesn’t seem to be often discussed. He notes that companies like Uber and Airbnb, which are making significant disruptions to their respective marketplaces, could set an example for dynamic change if they were to let workers or participants share in the long-term company profit.

Drivers are (more or less) doing research and development (R&D) for a company that has already made its plans clear to one day use automated cars. “Rather than simply do R&D for free essentially, driving themselves out of business, if Uber had set aside even 10 percent of the company for its drivers, they could get a share based on how many rides they gave or how many miles they drove, it’s really simple,” explains Rushkoff.

The grand idea is that drivers have a lasting stake in the bigger picture, an investment in both their and the company’s future. If drivers are participating in future profits in a company that they helped build, then they’re much less likely to be upset when their job gets automated, says Rushkoff. “If you’re going to use people to help teach the machines that are going to one day replace them, all you have to do is let them participate; otherwise, how will we get to a place where we can just sit and drink ice tea where the robots till the fields? We can’t.”

A large part of this shift is conceptual, and requires evolving an idea that has become a culturally-engrained norm. “We need to stop thinking of them as ‘employees’ earning wages over time,” says Douglas. The hourly wage culture began with the industrial age; before that, the majority of people were farmers or craftspeople, they owned what they did. It’s really been only in the past 200 years or so that we’ve started to pay people for their time, explains Rushkoff.

The concept of paying people for time poses a problem as we continue to create machines and increase computing power, shrinking the amount of time that it takes to complete many tasks in various industries, and as a result inevitably eliminating certain segments of the workforce. If we can change the structure of earning wages, suggests Douglas, and workers are made stakeholders in large companies with guaranteed long-term incomes, then the eventual onset of automation is much more likely to be welcomed instead of feared.

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Can two new books save the internet from its own success?

Read this piece at New Scientist

When, and why, did it all go wrong for the digital idealists? Throwing Rocks at the Google Bus, Douglas Rushkoff’s significant and empowering book, pinpoints one fulcrum moment: the end of 2013 in San Francisco, capital of 1960s counter-culture

For a while, protesters had been rallying against the distorting effects Silicon Valley companies were having on the life of the city – raising rents and costs for those who live outside the gated communities of the technorati. But in Oakland, as frustrations built, some started throwing rocks at Google’s employee-exclusive buses.

As Rushkoff ruefully acknowledges, this isn’t how the internet was supposed to end up. Since the early 1990s Rushkoff has been an ardent evangelist for this technology, seeing in the net a means of distributing power, voice and resources away from established elites. But it has become as readily associated with oligarchs like Amazon’s Jeff Bezos and Facebook’s Mark Zuckerberg – a “1 per cent” making fortunes from our blithe clicking and sharing – as it is with the Arab Spring, or distance-learning in the developing world.

Rushkoff – and Arun Sundararajan, with his more focused essay The Sharing Economy – come with plans to redeem the promise of the networked society. Their appeal is directly to the business class, rather than to the rock-hurlers. After the last financial crash, and before the next one, can those who want their enterprises to serve society, rather than indifferent and turbo-charged capital markets, see their way to a new model?

13th century origins

Rushkoff’s fascinating, big-picture move is to locate the wrong turning way, way back – not in the deregulations of Margaret Thatcher or Bill Clinton, or the accelerations of financial software, but in the 13th century, the era when corporations were first invented.

His reading of medieval history identifies a golden moment, after the Crusades, when returning soldiers brought the bazaar, and new trading routes, back to Europe. This was “a peer-to-peer economy, something along the lines of eBay or Etsy”, quips Rushkoff, where “attention to human relationships promoted better business”. The bustling, burgeoning merchants that arose from these trades threatened the feudal power of the aristocracy.

The kingly response was to tax and break up the bazaars, and bestow monopolistic rights on land and trade routes to favoured merchants. Thus began what Rushkoff sees as the long march to the incorporated company – from workers “selling their wares to selling their hours”.

The idiosyncratic currencies that enabled these dense, face-to-face marketplaces were also extirpated by the nobles, who introduced “coins of the realm”. The core function of these national currencies, Rushkoff notes – with an eye on our current turmoils – “was to make wealthy people more wealthy”.

Rushkoff believes we are reacquiring an appetite for more human-scale, human-bounded economies – ones that keep cash circulating among immediate users as much as possible, rather than salting it away into corporate reserves. A “digital distributism” is his proposal.

Rise of the techno-bazaar

Bitcoin and its successors show that viable currencies can be launched without state bodies behind them, supported by the technical commitment of their users. Crowdfunding sites like Kickstarter and Indie Go-Go, and platforms that help people utilise their physical assets like Airbnb and Lyft, establish direct, personal relations between services and their users.

Before we get too carried away, however, we should also consider the ride service Uber (and both authors do, at some length). Combining the underused cars in our driveways, our love for apps, and the need for that extra “gig” in the age of austerity, Uber is indeed a techno-bazaar, making value out of complex, self-employed, stuff-cluttered lives. The stated ambition of Uber’s CEO, Travis Kalanick, is to hire a million more drivers. Great.

But once they’ve achieved enough scale, the explicit plan is to automate all those cabbies out of business, as self-driving cars become the norm. A strange “human-scale” economy, this, that so airily imagines millions of humans as wetware, pulling fares while awaiting its upgrade.

Should we really brand all of this the sharing economy, as Arun Sundararajan proposes? His own analysis suggests that the term perhaps lends a rosy glow to a range of business models, some of which can be pretty hard-edged.

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Digital Trends – Dial 1 for Euphoria

Read this piece at Digital Trends

One algorithm makes you smaller, and one makes you tall. But the ones the FDA gives you won’t do anything at all – not without a prescription, anyway.

Welcome to the brave new world of electrotherapy stimulation. What may have once been limited to experimental research labs is about to become as common as Prozac – and that should have Big Pharma scared.  Mood alteration is becoming as simple and inexpensive as a battery-powered handheld device with two little electrodes you strap on your head. Sit there for 20 minutes receiving gentle, barely perceptible pulses, and cure your anxiety, insomnia, PTSD, depression, bipolar disorder, and more.

This much isn’t speculation, but FDA-verified, double-blind, peer-reviewed fact. Doctors at Mt. Sinai Beth Israel in New York used neurostimulation not only to successfully treat bipolar depression, but to do so with zero side effects. Compared with the documented long-term impact of selective serotonin re-uptake inhibitors (SSRIs) and other psychopharm solutions, this is astonishing.

It’s also super cheap. The leading device in the sector, the Fisher Wallace Stimulator, retails for around $600 – although some insurance companies and Medicaid will pick up the tab. That’s less money than a single monthly dose of many mood drugs. And it won’t keep you from being able to have sex or get to sleep without another compensating drug.

Shock yourself clean

Exactly how the device works is still something of a mystery. (So is the exact function of aspirin – so that’s nothing to be too worried about.) It appears that tiny amounts of electrical current don’t actually cause resting brain neurons to fire. But they can enhance or reduce what brain cells are already doing, by changing the voltage of the nerve-cell membranes. The positive electrode makes cells more excited, while the negative one calms them down.

While the current stimulators follow a standard protocol, new research by companies like Fisher Wallace, hospitals like Mt. Sinai, and, arguably, anybody with an Arduino kit, should extend these abilities really soon.

The latest version of the brain stimulator from Fisher Wallace, designed by streetwear fashion phenom Mishka, looks like something out of The Residents’ first CD Rom, Freak Show. And the associations are clear: Here’s a new way to play with your brain.

The FDA-approved devices sold by Fisher Wallace are only available with a prescription, and are relatively tamper-proof. I tried one for a few weeks, and while it did seem to generate a sense of calm, I don’t have one of the particular conditions treated by the machine in its single, default setting.

But consciousness explorers should soon be having a field day with this technology, mapping various areas of the brain and then observing the effects of different kinds of current. An iPhone, a pulse amplifier, and a couple of electrodes should yield an almost infinite number of potential brain programs. Without worrying about how to fabricate chemicals or how to get them past the blood-brain barrier, they’ll be gaining access to what amounts to a dashboard of human brain states.

Recreational brain use

Assuming the brain is really as cooperative and externally configurable as it now appears, what would it be like to live in a world where one’s mood of choice is just a few swipes away?

On the one hand, it’s a dream come true. An app like this would be more dependable than the local pot dispensary – and offer even more varieties. Just set it for “high with low paranoia” or “melty psychedelic haze” or “peaceful ideation.” That’s likely why the FDA is extremely cautious about how these technologies reach the public. I’ve always suspected the war on hallucinogenic drugs had more to do with preventing the states of consciousness they offer than preventing any damage to the users.

Or what about optimizing the brain for effectiveness? Maybe electrotherapy stimulation can provide the ultimate smart drug — Adderall without the comedown, or the same inspiration provided by that microdose of LSD young Bay Area developers are said to be using these days to enhance their programming chops.

Then again, how are those who refuse such stimulation supposed to compete with those who are busy optimizing their brains for higher productivity, less sleep, or more ruthlessness? Even without any sci-fi projection of future capabilities, the already proven ability to mitigate depression and other symptoms of mental illness may make life better in the short run, but at what cost to society?

Don’t worry, be … whatever you want

Living in a world where symptoms can be eliminated with the tweak of a dial means literally turning off part of our collective nervous system. Depressed and anxious individuals are not always born that way. Sometimes, they are responding to social and environmental stress about which the rest of us may still be unaware, or unmoved to remedy.

It’s a debate initially waged between early psychoanalysts Willem Reich and Anna Freud. Reich believed neuroses were caused by greater sexual and socioeconomic stressors. Worrying that mental health patients might be canaries in the coal mine, capable of warning the rest of society of greater, systemic ills, he argued that we should “attack the neurosis by its prevention rather than its treatment.” Freud, on the other hand, believed the unhappy should be adjusted to society, not the other way around. That’s how she justified everything from blaming depressives for their symptoms to the therapeutic correction of homosexuality.

As we gain the ability to realize Freud’s vision of a treatment protocol to neutralize any symptom, we have to ask ourselves whether we really want to feel better, no matter what. As the oceans rise to cover our cities, new climate-liberated diseases spread the globe, and wealth disparity disenfranchises a majority of humans, should we just dial -in a better mental state in order not to despair? What does it matter if we feel OK?

From an ethical standpoint, using mind-altering technologies to alleviate symptoms may be more questionable than playing with our brains for the fun of it.

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Nonprofit Quarterly – The Sustainability Prerogative: Nonprofits in the Future of our Economy

Read this interview at Nonprofit Quarterly

Douglas Rushkoff’s best-selling books on media and popular culture, including  Present Shock , have been translated to over thirty languages. He is Professor of Media Theory and Digital Economics at CUNY/Queens, technology and media commentator for CNN, digital literacy advocate for Codecademy.com and a lecturer on media, technology, culture, and economics around the world.

In Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity , Douglas Rushkoff argues we have failed to build the distributed economy that digital networks are capable of fostering and have instead doubled down on the industrial age mandate of growth above all. Central to his argument is the rise of a new dominant business form—and it is, ideally, nonprofit.

Ruth McCambridge [RM]: Douglas, your ideas are so aligned with a lot of what we’ve been thinking about at NPQ in terms of where the general economy is going and what part nonprofits should have in its future. We have been talking with our readers about thinking bigger, understanding that there’s a major shift going on, and that they have to understand the hugeness of it and the capacities of it before it’s too late. But the tendency in the nonprofit sector is to deal with one social issue at a time and not with the larger construct of the economy or with the way individual enterprises reflect one economic priority over another. That leads to some pretty muddy thinking where valuing ourselves as economic engines goes.

I was hoping that you could describe just where you see the economy as regards the character of for-profit style growth and what it is doing to the planet, and then describe to some extent the whole distributed alternative and what we have to pay attention to in terms of a platform. I could just set you to it with a really simple question: What is your book’s basic proposition? Can you describe your hypothesis about why an emphasis on growth would lead us down the wrong path at this point?

Douglas Rushkoff [DR]: I think that the nonprofit sector in particular is perfectly situated to help us transition to a different economic landscape. You know, most nonprofits think of themselves as doing something good, but what I want to try to make them more aware of is that the nonprofit structure itself, the way the business is actually structured, may be doing more good than whatever their particular business is.

And that’s sort of my basic premise—while the public looks at nonprofits as do-gooders, I’m looking at the structure of nonprofits and not-for-profit corporations as business entities. Because they’re not for sale, because they’re not shareholder- or share value–maximizing companies, what they end up doing is promoting revenue and the exchange of value and the circulation of money, which revives a whole economy rather than enriching the few.

The major businesses that are around today, particularly digital businesses, don’t understand those business basics. The way that digital companies make money is simply by returning share value to their investors. So, some young person or developer might have a great idea for an application or for a platform that makes revenue and helps people accomplish a purpose, maybe helps other people do business, even makes users rich on one level or another. But they take money from a venture capitalist, who then has a very different goal for the company. His goal for the company is that it gets acquired or that it reaches an IPO, meaning it gets listed on the stock exchange, within 18 to 24 months. That’s what he wants. And, it’s a win-or-lose landscape. That company has to hit a “home run,” which means it makes it all the way to IPO and becomes a multibillion-dollar company, or nothing. The venture capitalist who is now in charge of the company would rather see the company die than be a “single” or a “double.” In other words, it can’t just be a successful company, because that doesn’t serve him.

What he needs is for this company to be 100x return, meaning 100 times his initial investment has to be paid back in a sale. And, the reason why he would rather the company die is because until the very last minute, the very last second, there’s some possibility that even the dying company will be acquired, so he will position the company for that. This doesn’t mean having a successful sustainable business enterprise or making revenue; it means establishing a defensible monopoly over a particular industry. You don’t have to even think of that industry—or that vertical, as they call it—as something that you want to thrive, that you want to even survive. It’s just something that you can so totally own that you have the ability to then leverage that monopoly to go get another one.

Look at Amazon with books. Amazon doesn’t care about authors and publishers. They don’t care if HarperCollins is making more money or less, or if authors reach more readers or fewer readers. They chose the book industry as their initial beachhead in the American economy because the book industry was weak. Oh, it was fine, hobbling along, but dying in the sense that it wasn’t a growth industry. It couldn’t compete against all the other growth businesses out there, from the Internet to oil or something. We are a sustainable little industry. There’s only so many people alive, so many people reading, so much time they can spend reading.

Now, in real business, you can open one store, make pizza, sell pizza, make a profit, feed your family, and go on like that until you die. But in the stock market business, in traditional corporate capital, that’s not fine. That doesn’t work. You need to grow. You need to show your shareholders that your quarter-over-quarter business prospects are doing better and better so that you can get a higher and higher share price and your shareholders are happy.

So, Amazon goes and looks at the book industry; they don’t care if they kill it. All they need to do is to be able to dominate it completely so then they can leverage that monopoly into another industry and another industry, whether it’s drone planes or retail toys and clothing or cloud services or any other. The same with Uber; they don’t care if the drivers all go bankrupt. They don’t care if the taxi business they’re starting or the taxi marketplace they’re running is ultimately unsustainable because they don’t need it. They are buying the taxi industry in order to flip it into something else, in order to move into drone delivery or logistics or some other market.

Traditional corporate capitalism always worked this way, but it was a bit slower. It took Walmart 20 or 30 years to bankrupt one of the communities that it was extracting value from. So now Walmart is in trouble, because so many towns where it operates are impoverished. Once you have a Walmart, you can’t make any money doing anything else. Everyone just either works for the Walmart or buys from the Walmart, that’s it. And it’s an extractive force, so eventually the towns go belly up, and now there’s Walmarts closing because the towns they’re operating in have died.

But, what happens when you do this digitally? When you do it with a digital platform like an Amazon or an Uber, that value extraction happens a lot faster. So, what used to take 30 years now might happen in three years, but they don’t care because they’re going to move on to another and another and another. It’s the scorched earth practice.

[RM]: So, this is anti-sustainability?

[DR]: Yeah, and they don’t really care, because the object of the game is to buy a business and then sell that business for enough profit that you never have to work again. And, as the world gets worse because of that activity, it doesn’t really matter because you’ve earned enough millions of dollars to insulate your family and yourself from the reality that you’ve created. So, that’s really the whole idea: Get a business and sell that business so that you have enough money to protect yourself from the devastation and the poverty and the unrest that’s around you.

Now, the thing that I’m arguing to those people, to business people, is that the probability of being what they call a unicorn, the probability of having the 1-out-of-10,000 chance you have of having a company that ends up being a Facebook or an Uber or a Twitter or whatever, that your chances of doing that are so small that by creating a sustainable business and shooting for some millions of dollars, rather than an unsustainable business and shooting for billions of dollars, is actually smarter business. It’s better business, because, worst case, you can always fall back on the fact that you have a revenue-producing sustainable business. In other words, why not at least have a company that generates revenue, that has a market that is thriving?

What I’m arguing is that digital companies, and all companies really, should look at everyone from their supply chain through their consumption chain as people that they want to make rich. If you make your customers rich, then you’ve got wealthier customers and people who are going to come back. So, you need to start looking at money not as something that you extract from the economy and store in share price but rather as something that you circulate through the economy and that you see again and again and again and again.

A good company, in other words, understands that if it has wealthy customers and if it circulates money, it can earn the same dollar ten different times rather than just taking $10 off the table. What traditional corporations have done is they’ve extracted so much money from the marketplace that there’s not enough money for people to do the things they actually need. Most of the people are poor, and the corporations are rich—but they’re so rich that they’re suffering from a kind of a financial obesity, where they’ve accumulated all this money but they’re really bad at deploying the money, they’re bad at making money with their money.

In technical terms, corporate profit over value has been going down for 75 years. That means they’re very good at collecting money but very bad at spending it, at using it, at doing anything successful. A big, for-profit pharma company now doesn’t have the capacity to innovate. Instead, they look around for little companies that are innovating and then buy them. So, they’re not really pharmacy companies anymore; they’re holding companies. They may as well be a mutual fund or a bank. That’s even what happened to Google. Google now calls itself Alphabet. It got so big that it really couldn’t figure out how to innovate on its own anymore, so it buys drone companies and robotic companies and other software companies that do still have the ability to use their funds to innovate.

Now, the nonprofit sector…unlike the for-profit sector, the nonprofit company can’t sell itself, and it doesn’t have shares that go up in value. Everything else is the same. You could be a nonprofit store. That doesn’t mean you don’t make revenues; it doesn’t mean you can’t pay yourself. It just means that the way you make money is not by making your share price more valuable and then selling those to other people. It means that the investment that you put in the company stays in the company. You can’t extract that when you leave.

So, it’s much more like a family business, and if you look at the data, family businesses do better than shareholder-owned businesses in pretty much every single metric and they last a whole lot longer. You’re building a company not because you want to take value out of it and then use that money to bequeath an inheritance to your grandchildren, but rather you’re building a company that you hope will still be around when your grandchildren need a job, to circulate wealth when you die.

That’s why I’m trying to convince Internet startups to be benefit corporations, multipurpose corporations, or best of all, nonprofits. Once you’re a nonprofit, you don’t have to worry anymore. You could still borrow money if you want to, and issue bonds and do other things, but it makes it impossible for shareholders to come and demand that you change your business. You know, if the mob is going to take over your restaurant, they don’t care about your meals anymore. They’re using your restaurant as a front for something else. That’s what shareholders do: They use any goodwill that you’ve created with your little app, with your little company, that name that people have on their lips, and they use that as a front for an IPO, as a front for a flip. And, even if you get to IPO, like my dear little friends at Twitter who got to an IPO and have this very, very successful app that just delivers 140-character messages to other people, they make $500 million a quarter and they’re considered an abject failure by Wall Street because they peaked. You make $500 million a quarter, but what about next quarter? What if that’s as much money as a 140-character app can make? What if just $2 billion a year is all that this little tiny app can make? They’re going to drive them out of business, right? They’re going to get rid of them. They’re going to kill the company because it can’t grow anymore. And that’s tragic.

[RM]: So tragic. I think it’s exactly why we’re losing so many newspapers. It wasn’t about whether they could support themselves or not; it was about whether they were still growing.

[DR]: Yep. We live on a planet that—I mean, I hate to admit it, but we might have a fixed quantity of real estate on the planet. From space, it looks like a sphere; it doesn’t look like it’s growing to me. This looks like it’s about it, and it may be able to go on for a whole long time, way longer than people think, but it needs to start thinking about itself as a regenerative system, more like a coral reef or a forest than like a corporate marketplace that’s supposed to expand forever. And, whenever I say this, people accuse me of being Malthusian, that I’m saying things are limited and we’re all going to die, and I’m really not saying that—

[RM]: Well, hello! In fact, we are all going to die and things are limited.

[DR]: Things are limited, but you can still grow. It doesn’t mean you can’t have progress and change. You can have all sorts of innovations and shifts of stuff, but even if we may be able to grow, even grow forever, there’s a certain point at which you can only extract so much water from an aquifer before it can’t replenish itself fast enough and the aquifer is gone. Yes, in a billion years, assuming the planet is not gone, the aquifer will replenish itself, but maybe not fast enough for the human beings who want so much more water from it than it can really supply.

The rate of the artificial marketplace is much faster than the rate of the real planet. It’s not even the rate of real business. Most business—94 percent of business, something like that—is now derivative. People aren’t even buying and selling real shares; they’re buying and selling derivatives based on those shares. The derivatives exchange got so big that it bought the stock exchange. So, we’re looking at a completely synthetic form of moneymaking. Seventy-four percent of the revenues earned, the money earned by the top 1 percent was utterly passive synthetic income. It was valueless. It was just derivatives of derivatives. It was pure drag on the system, and it just doesn’t work after a while.

[RM]: Can you say a little bit about the concept of the commons? I know you’ve been talking about it all through this—nonprofits come out of that concept—but can you talk explicitly about how that needs to apply here?

[DR]: The commons has gotten maligned. People talk about the tragedy of the commons, which is the idea that if there’s no one who owns the thing, then everyone is just going to abuse it and take everything and there will be nothing left. But, in reality, a commons is a managed common resource, and a real commons has very strict rules about it. So, if there’s a pond in our town that we all fish from, we’re going to have to make rules about this commonly used resource. We’ll say, okay, if you want to use this, you can only have 10 fish a day or 20 fish a week from this, you can only use this kind of bait because this other kind is going to pollute the water. And then, as the managers of this common resource, we have the ability to penalize or exclude those who don’t follow the rules that we’ve established to maintain that commons.

I mean, it seems like simple logic, but it’s looking at a resource as something that we want to maintain over time. We want to maximize the value that everybody can create, as opposed to…well, the way a short-term company looks at something. The ideal scenario for them, I guess, is when you go to someone else’s country, you mine for things and you mine for things in such polluting ways that you make it impossible for the local community to do subsistence farming anymore. So now everybody has to work for your company if they want to have an income, and then even after you’re gone, they don’t have a way to sustain themselves, so they become utterly dependent on you and the World Bank or foreign lenders in order to buy chemicals or whatever they need to try to grow on their polluted topsoil. It’s the anti-commons view.

[RM]: One last question: One thing I found fascinating is this concept of platform monopolies. What’s the alternative to platform monopoly, and how do we get this sector focused on that and other modern concepts of the commons?

[DR]: I think the most promising new structure I’ve been looking at is called a platform cooperative, and it’s the opposite of what an Uber or an Amazon does. Uber and Amazon want to establish monopolies of their platforms. It’s the same as the old chartered monopoly that destroyed the peer-to-peer economy of the late Middle Ages but instead of it being the East India Trading Company or Walmart being defended by laws or their access to capital, now it’s digital platforms that are defended by their very programming.

Right now, on a platform like Uber, you have drivers who are doing the research and development for robotic cars that are going to replace them. So, they’re investing their time and labor into something that will soon make them even more jobless than they already are. If it were a platform cooperative, then the difference would be that the drivers would own the platform instead of shareholders. Instead of investing $5 billion or $10 billion into this platform to give it a war chest to deregulate or reregulate markets in their favor and to undercut everybody else in the industry (which is what that cash is for, it’s to have lower prices than are manageable, than are sustainable), it would be a driver-owned platform so they could pay themselves fair wages. Moreover, even if they do obsolesce their own driving, even if they obsolesce their own careers, they would be owners in the company that they built, which is a totally different relationship to it.

If your neighborhood gentrifies, if you’re just a renter in that neighborhood, you’re screwed, but if you own a building in the neighborhood that’s gentrifying, at least your property value is going up. At least you’re benefiting in some fashion. But, if you are just a disenfranchised worker, like an Amazon Turk or an Uber driver, there’s no hope.

So, what I’m looking at is models that include workers as owners. And, there are examples of them. There’ve been co-ops for a long time. For instance, there’s WinCo, which is a competitor to Walmart out west. No, it’s not a nonprofit, but it’s a worker-owned cooperative that is beating Walmart in both prices and quality, and certainly in sustainability because they pay their workers more and their workers are owners. I’ve talked to some of the biggest shareholders of Walmart, and they’re so confused: “How can these people pay their workers more money and still undercut us on price? That makes no sense.” It’s like, yeah, well, they don’t have the overhead of you. They don’t have the overhead of shareholders who want to extract all the value from this equation, and that’s the real difference here.

What nonprofits have to realize is that growth can be a happy side effect of reaching more people and doing more things. The one advantage the nonprofit sector has over its for-profit counterparts is that you don’t have the obligation to grow. You are not structurally required to grow, and if you don’t play that advantage, then you’re going to get eaten, one way or the other.

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Seeking Alpha – Review of ‘Throwing Rocks’

Read this piece at Seeking Alpha

Throwing Rocks At The Google Bus: How Growth Became The Enemy Of Prosperity by Douglas Rushkoff, Portfolio Penguin, New York, 2016.

Raw Deal: How The “Uber Economy” And Runaway Capitalism Are Screwing Workers by Steven Hill, St. Martin’s Press, New York, 2015.

Throwing Rocks at the Google Bus and Raw Deal summarize the good and bad news and the backlash brewing against Silicon Valley’s approach to IT innovation. Authors Douglas Rushkoff and Steven Hill level well-researched critiques of Uber, Airbnb, Task Rabbit, Mechanical Turk and similar electronic platforms promoting as the “sharing economy”. Such applications of IT do increase narrowly defined economic efficiency. As digitization overtakes ever more sectors of industrial societies, there are too few broad analyses of the nature of these disruptive technologies, whom they benefit, and how they are restructuring every aspect of our lives.

In the 1960s and 1970s, serious academic studies emerged, often well-funded by foundations and science policy units in government agencies such as the US Office of Technology Assessment (OTA) and the National Science Foundation. These reports covered the broader societal implications and effects of information technology, automation and artificial intelligence and their likely impacts on employment, inequality, privacy, medicine, communications, cities, trade, finance and economies. Most of these earlier reports predicted the promise and challenges of our Information Age. Not only were they largely ignored but as in the case of OTA deliberately deep-sixed as OTA was shut down in 1996.

Today, the most predictive of these OTA reports are being re-published by the Library Press @ UF, University of Florida Press, and Ethical Markets. They illustrate like “smoking guns” the long-standing denial of science and anti-intellectualism we still see within the US Congress. Thus, we now rely on independent authors like Rushkoff and Hill as well as Kevin Carey’s The End of College, to explore in-depth the second-order effects of Silicon Valley’s digitization of the US economy and society.

Steven Hill, in Raw Deal, focuses on the fallacies of the business models of such “unicorns” as Uber, Task-Rabbit, Mechanical Turk and others. These companies laud the “sharing economy” and the efficiencies created when people can monetize their cars, rooms, and spare time, and thereby increase their living standards and incomes. With in-depth chapters on many of these Silicon Valley companies, Hill describes the gritty realities of often desperate people trying to make ends meet, holding multiple part-time jobs – making up some 30% of the US labor force as the contingent self-employed. The “sharing economy” turns out to be a new kind of labor exchange where workers rush between “gigs” on their own time and expense, with no certainty, security or benefits, with low wages. All this is very different from those based on earlier barter platforms where people actually share: exchange clothes, appliances, the time banks, exchanging services and the local currencies and credit circles which run on cooperation and community service. I covered this pure information-based economy in ” Information: the World’s Currency Isn’t Scarce.” The Silicon Valley “unicorns” have coopted these cooperative models and built high-profit expectations to appeal to venture capital. Hill’s examination of how these business models are unsustainable is now validated by Fortune’s review (March 15, 2016) of these companies’ stock valuations and pre-IPO hopes which sees them as the next IT bubble.

Rushkoff’s Throwing Rocks at the Google Bus confirms the findings of Hill inRaw Deal, taking his analysis further into the need for new economic models and deeper paradigm shifts re-thinking work, efficiency, success and what is meant by “progress” beyond GDP-growth. Rushkoff’s insights reveal the centralizing effects of digitization and the “big brother” dangers of the expanding big data powered “attention economy” which I also reported inBuilding a Win-Win World (1996) as the triumph of “mediocracies”. Whatever our forms of government, today media shapes politics, culture, public discourse, finance and business in most countries. Coupled with digitization and the power laws of the internet, competition is now between platforms Google (NASDAQ:GOOG), Ali Baba (NYSE:BABA), Amazon (NASDAQ:AMZN), Etsy (NASDAQ:ETSY), Twitter (NYSE:TWTR), Facebook (NASDAQ:FB), Instagram, TenCent (OTCPK:TCEHY) and the latest Fintech 100 now taking the lunch of bankers, stockbrokers in the global financial casino lost in cyberspace. Rushkoff nails these trends and the “like economy” where human users of these platforms are the product being sold to advertisers, insurance companies, government agencies and other bidders. He documents how 25% of all video ad viewers are not human users but “bots”, which incurred losses to advertisers in 2015 of $6.3 billion. These disruptions of two irresponsible industries: finance and advertising, are in sense karmic come-uppances.

Rushkoff digs deeper and finds more socially responsible models beyond the information monopolies seeking, like Amazon, Facebook and Google, to own the market itself. He looks at the other higher ethical possibilities in Blockchain, inclusive capitalism, B Corps, and employee ownership ESOPS. He also examines Kickstarter, Indiegogo, AngelList, PandoDaily, microfinance,crowdfunding, genuine sharing and barter sites, ethical investing, and NGOs’ Jubilee movement for debt cancellation.

Rushkoff’s analysis is the most sweeping and presents all the better models for the future. Both books are must-reading for all investors and asset managers navigating these massive, disruptive shifts now accelerating in the global economy due to their unprecedented interactivity.

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Corporate Growth for the Sake of Corporate Growth

Read this piece at The Atlantic

On at least one level, Bernie Sanders remains right: Billionaires are getting richer as everyone else gets poorer. Yes, the top one-tenth of 1 percent own nearly as much wealth as the bottom 90 percent, but the problem is, Sanders stops his rhetoric right there. Such statements lead both his followers and detractors to assume he’s calling for a forced redistribution of all that money through taxes or other penalties.

A better approach would be to focus on the economic system’s inner workings and how they can be retooled. Right now, the American economy demands that businesses take a grow-or-die approach to their industries. Growth of capital ranks above everything else, such that even revenue pales in comparison: A company such as Twitter, which makes $500 million per quarter off an app that sends 140-character messages, is considered a failure on Wall Street. Investors don’t want that $2 billion a year—they want to see the share price grow 100-fold over the rate they bought in at.

The accumulation of capital trumps any effort to create sustainable revenue flows, and this is the reason why so many large companies utilize scorched-earth tactics to dominate their markets. They use their fortunes to undercut competition, and the leverage gained from that to squeeze their competition. All these companies hope to do is establish a monopoly in one industry in order to move into another.

The irony is that, in the long term, the economic landscapes that such companies dominate eventually go fallow. The towns where massive retailers operate, for example, lose the ability to provide sustainable revenue to themselves or the corporations hoping to profit off them. In the relentless pursuit of growth, these companies extract the money that the people and businesses in their markets use to transact—or even buy stuff from the extractive company itself. And while these companies are great at growing by extracting value from their marketplaces and labor forces, they are really bad at putting their money to work, so that it can continue growing over the long term. They can store capital, but don’t deploy it.

In fact, in the past 75 years, corporate profits have gotten smaller as businesses’ total value has increased. Many corporations simply keep cash in the frozen storage of share prices, and as the emphasis has been put on fiscal tinkering, companies have become less interested in innovating. They have started to depend on acquisitions for growth, which is one reason why big pharmaceutical companies simply buy smaller ones that develop new drugs.

I’ve consulted to multiple Fortune 100 CEOs who have actually broken down in tears as they’ve recounted selling their companies’ few productive assets in order to show growth to shareholders. They are tired of cannibalizing their own businesses, laying off loyal employees, and making their companies less enduring just to satisfy the demands of short-term growth imposed by the market.

This is where economic policy comes in. The current economic operating system is programmed to encourage growth and discourage distributed prosperity. One major reason shareholders are incentivized to destroy a business en route to increasing its share price, rather than just accepting a dividend, is that capital gains are taxed at less than half of what earnings are taxed at. That encourages extraction over transaction. More than two-thirds of the income of the top 0.1 percent comes from passive gains, not value creation.

So, if the economy is to be tilted less toward accumulation and the storage of capital, and more toward increasing the velocity of money as it travels between people and businesses, the tax code is a good place to start making revisions. This would mean rewarding revenue, earnings, and even payroll with lower tax rates, while discouraging capital gains with higher ones. Imagine if companies were busy trying to figure out how to avoid taxes by doing business, instead of by selling assets, laying off employees, or hiding earnings overseas.

That is just one example—there are plenty of other ways that the American economy currently prioritizes growth. Banking policy offers few rewards for banks that facilitate local reinvestment rather than lending and then extracting working capital, and it leaves little room for local and complementary currencies. At the moment, the largest companies are the ones that are rewarded with better interest rates, access to lawmakers, and other advantages of scale, but instead rules could be put in place to encourage businesses to learn to succeed in the lowest possible weight class, instead of striving to monopolize a single market. These are the sorts of things that could be changed so that prosperity could be more evenly distributed—and so that big business could be rescued from the cross of growth.

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Big Think – Nothing Grows Forever. Digital Industrialism and What Comes Next.

Read this piece at The Big Think

Last week I posted a plea on Facebook for an open discussion among friends about Hillary v. Bernie, “One in which nobody is called an idiot or a sheep-erson, or a Commie.” The refreshingly civil discourse that followed made plain that many people I know are treating this election as a kind of referendum on the future of the American Left: New Deal Progressivism that tackles income inequality and political corruption head-on vs. Clintonian Neo-Liberalism-as-usual. Things are further complicated for me by the fact that I don’t fully trust either of them: Hillary because of her political savvy and Bernie because of his lack of it.

In the midst of all this I read Douglas Rushkoff’s new book “Throwing Rocks at the Google Bus”. It’s a crystalline lens through which to make sense of our present-day economic predicament, how we got here and the various ways we might still save ourselves. The book explains precisely how the structure of our corporations and money itself are “programmed” to pursue a scorched-earth policy, extracting value from employees, customers, and markets until they dry up and new markets must be conquered or created. “Digital industrialism” as he calls it has only accelerated this process, with massive platforms like Uber “disrupting” entire industries, supplanting skilled humans first with expendable amateurs (licensed cabdrivers for anyone with a car, hoteliers for AirBnB hosts) and ultimately, wherever possible, shoving humans aside altogether.

But let me back up a bit. Rushkoff starts with a historical overview of commerce, beginning with the pre-industrial marketplace. It’s a framework reminiscent of Marx’s Capital, without the emphasis on revolution and class warfare. Instead Rushkoff gives us a digitally-fueled vision of companies as apps or programs and money as the operating system. We programmed them in the first place, he continually reminds us, and we can rewrite the code.

In the pre-industrial Middle Ages, as Rushkoff tells it, skilled medieval traders took their wares to market, established personal relationships with their customers, and developed systems of exchange and early forms of money to keep goods flowing. The medieval marketplace definitely wasn’t perfect, but it was built upon what tech folks call “peer to peer networks” in which skills and labor were valued and directly tied to their products, and community and business were organically intertwined.

But as the merchant class grew in power and wealth, the increasingly cash-poor nobility wanted a piece of the action. They established charter companies––business monopolies that enabled them to control the flow of capital and extract value from other people’s labor. Laborers were paid for their time, not their products, and expensive, skilled artisans were passed over for non-guild workers. Quality often went down, as did merchants’ wages, but productivity and profits skyrocketed. As paper money supplanted barter, royalty cornered the market on currency, often lending it out at interest. Money making money for the people who made the money in the first place.*

From then until now, says Rushkoff, money and corporations have been programmed for unlimited growth at all costs, concentrating increasingly fantastical wealth in the hands of investors. And in the age of digital industrialism, we’ve arrived at a point where the value of many companies no longer depends on their profitability, or on whether or not they actually create anything of value. The value of Facebook, for example ($315.68 billion as of this writing), is based not upon how much fun it is to use or how much it improves our lives, but upon the vast troves of user data it sells to advertisers and industry. OUR data, which we give away for free.

Industrial growth, especially when exponentially accelerated by digital technology, has a host of negative externalities most apparent in things like the market crash of 2008 and the growing gulf between (fewer and fewer) haves and (more and more) have-nots. Politically, it gives us Bernie Sanders and Donald Trump, both of whom promise (in very, very different ways, of course) to fix a rigged and broken system.

The solutions Rushkoff offers (with plenty of real-world examples) often include decentralized currencies like Bitcoin or hybrid systems in which larger currency systems operate alongside local currencies designed to circulate rapidly and stay within their communities. Rushkoff also cites alternative corporate structures that prioritize sustainability over growth, people over profits. Finally (and this will really get the traditional capitalists’ blood boiling) he questions the idea that everybody needs an official job and offers compelling evidence that Guaranteed Minimum Income can have major benefits for society.

Like it or not, says Rushkoff, industry itself is starting to see the value proposition here––corporations are running out of earth to scorch, both literally and metaphorically speaking. Asteroid mining, anyone? The “space economy”?

Rushkoff’s prose is engaging and funny, and Throwing Rocks at the Google Bus is a refreshingly practical progressive voice amid the rhetorical excesses of this election year. It’s a timely, practical manual for building a humane future, as opposed to one in which any humans left are either exploitable or in the way.

The author seems convinced that it isn’t already too late, and I very much want to believe him.

—

*Given the scope of the book, this is a necessarily simplified overview, and doesn’t address the later Christian attitude toward interest-bearing loans as “usury”, the complicated consequences for the Jewish merchant class who were lending money to those same Christians, etc.

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PC Magazine – Throwing Rocks with Douglas Rushkoff

Here’s a great interview courtesy of PC Magazine about Throwing Rocks at the Google Bus. It’s only available via their Facebook page, which means it can’t be embedded here on the blog. Follow the links to view.

Part 1
Part 2

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Medium – Is Growth Necessary for a Thriving Economy

Read this post at Medium

Believing something you know not to be true, is one thing, believing something you believe to be true is quite another, and it’s at this end of the make-believe spectrum that Douglas Rushkoff takes up his enquiry into the dismal science, in his new book “Throwing Rocks at the Google Bus.”

Over the last few years there has been a flush of books by heterodox economists looking to make sense of a huggermugger economy where multi-billion dollar pseudo-valuations are placed on tech companies with no discernable operating profit, where other companies sit on huge piles of cash without investing it, or paying much in the way of tax, and where middle class Americans haven’t had a pay rise in real terms since 1990.

What makes this book a valuable addition to the genre is Rushkoff’s self-confidence in asking seemingly naïve questions — “how is value created”, “where does money come from”, “what is the purpose of the economy” — coupled to a hacker’s perspective and written in a tone that is humanist and relatable. After all, what is economics if it is not about people and what we decide to do with each other?

Hannah Arendt wrote of the vital importance of a durable human world designed to provide a stable setting for our common existence and shared common sense, without which we are only our individual needs and desires. This is a core theme in Rushkoff’s book and what makes it interesting is that his approach is more from the front lines, looking at how to reprogram the economy from the inside out, organized around the idea of ‘digital distributism’, which harks back to the democratic ideals of the early internet, while grounded in his thinking on the present.

He writes, “what sacred truths must we be willing to reevaluate?” If like me you left college with a conventional economics degree, you could start with these three axioms.

When individuals are left to make choices in their own interests, scarce resources are allocated efficiently, via the price mechanism, and a competitive marketplace runs smoothly. That economics might also involve imagination, creativity and human motivation — all the interesting stuff in life — can’t be plotted on a chart so it wasn’t part of the model. Put another way, simply consider whether fossil fuels are being “allocated efficiently.”

Governments should not interfere in free markets because they just drag the whole thing down with tiresome regulations and put a damper on entrepreneurial vigor. You’re reading this on the internet, perhaps on a touch screen, wireless, GPS enabled, voice activated device, all of which are core technologies initially funded by the US government, thereby creating new markets and liberating entrepreneur’s. Without which there would be no Apple, Facebook, Airbnb, Amazon or Uber. Governments step in early when it’s too risky for private capital e.g. wind, solar, battery tech. And when we, the taxpayer, make a $500m loan to Tesla why don’t we keep some shares? As for regulations, those are hard fought for protections that give you recourse if you’re in an accident while a passenger in a taxi, or a guest in a hotel, or an employee.

A thriving economy is a growing economy, it must grow because that is how we create jobs and prosperity. Growth will be calculated through GDP, the increase in the value of goods and services sold in the monetary economy, simply put the amount of money changing hands each year.

Which makes sense if we all get lifted up in an economy where your spending is someone’s wages and their spending is someone else’s wages and so on. So why then is median income falling?

We’re caught in a growth trap that serves some people very well and a lot of people poorly. This is a key part of Rushkoff’s critique, he identifies that our economy was designed to expect it, then require it, and now demand it. How did this happen?

1. Money is created by banks through debt at interest and there is no other way to pay off debt with interest other than with a growing economy. Rushkoff entertainingly traces this back to its roots in 13th century British aristocrats hiring sophisticated Moorish accountants to fix the emerging money market back in their favor.

2. Companies are routed to shareholder value, and to deliver shareholder value you’ve got to increase profits. Sure, there are some developments here from long term ‘patient capital’ to Unilever renouncing quarterly returns in favor of its ‘sustainable living plan’, but no one is seriously suggesting we disrupt the current economic system. Why not? Schumpeter said the essence of free market capitalism is ‘creative destruction’. If you believe in free markets and free enterprise but not the owners of capital being the exorbitant beneficiaries of taxpayer handouts now seems as good a time as any for a new operating system.

3. To increase profits companies look to create efficiencies through workforce productivity, more work from less hours, therefore we’ve got to grow the economy to create new jobs. Except the paradox we face is record productivity and falling jobs, which will only widen with the rise of automation. As Rushkoff writes, “if we can separate the notion of employment from that of making a valuable contribution to society, a whole lot of new possibilities open up for us.”

4. You might add other more political reasons to do with power, every country wants to rise in the GDP report card, or more aptly every politician wants to be in the group shot with the leaders of the G20. And, there are cultural reasons too, such as the meaning of work that date back to Luther’s idea of vocation and Calvin’s thinking on predestination.

Can we get out of this trap? Pessimistically, we can passively sit back as business-as-usual builds a profoundly dehumanizing model, and this is what Rushkoff sees happening, unless we take back democratic control. More optimistically, it’s up to us, we have to decide what we are programming for. How could we develop a system that rewards people for creating value rather than extracting it? What can we do better than the technology we create?

Rushkoff spends around half the book investigating money and investing. There is a fascinating story about a tech entrepreneur who deliberately set out to game the venture capitalists, who are of course also gaming the start-up market in their futile search for unicorns. As you’d expect for a tech writer his thoughts on Bitcoin and alternative forms of finance are insightful, I was left with the impression that Bitcoin is a brilliant answer in search of a the right problem to solve, I don’t think this undoes his call for being clear about what we are programming for, because the inherent values in Bitcoin are the right ones. It just remains to be seen where it will end up. In an economy that requires debt, a currency with a fixed supply is not going to replace the Fed.

One thing is clear in the book, digital technology is going to have profound effects on what we do for work, and what we will recognize as work. Which then of course has profound effects on how we design the company of the future.

There is an anecdote in the book when he remembers some years ago working in an office where an attractive receptionist took his fancy, unfortunately before Douglas had a chance to ask her out she was replaced by a machine.

The moral of this story is the surplus theory of value, something that I should point out is not taken seriously by present day orthodox economists, perhaps because its author was Karl Marx.

But, it goes a long way to explaining very basic concepts such as where does value come from, and the moral ideas that underpin the economy. If you’re currently employed, the difference between your wage and the price at which your employer sells your labor, is the surplus value. In a competitive consumer market there will always be downward pressure on prices, so the employer will always look to increase efficiencies i.e. replace you with a machine or buy cheap labor. You can experience it yourself everyday, any kind of waiting in line on a phone or using an interactive menu and you’re donating surplus value to that company.

It’s a useful mechanism to understanding the value proposition of most tech monopolies and the concealed labor within them, the lowly serfs sifting for offensive images on Instagram to keep it clean, and millions of other click workers who “invisibly help computers and Web sites create the illusion of mechanical perfection.” Through to the economy of likes and swipes, meaning your social life converted into ad dollars. This might not be different in principle to commercial TV, except if you look at the numbers, as he does, they don’t add up.

At the heart of this is the (false) promise of the full data set a.k.a. Big Data. Sweeping away sampling issues and respondent veracity to a brighter future of capturing actual consumer behavior, subsequent predictive probability, greater certainty, and therefore improved efficiencies and productivity — a familiar ‘value’ story. Knockers will say it‘s demand manipulation through data surveillance, advocates will say it’s enabling better choices, spinning the wheels of commerce, ‘empowering the consumer’ etc. etc. This is the same argument Vance Packard et al had with Ernest Dichter. However it’s worth unpacking in the modern context to see if there is anything new in the box.

Within the marketing industry Big Data, behavorial economics, nudging and persuasive technology all appear to swirl around each other as the current big thing. Finally, cry the marketers, the economists have discovered what we knew all along, people don’t make coolly considered rational choices, it’s all rather unpredictable, but hang on, we’ve codified this unpredictability to make it more predictable. This is starting to sound like the financial sectors concept of ‘riskless risk’, and we know how that ended.

A few years ago I spent a couple of days at Stanford’s Captology Lab learning the in’s and out’s of their behavior change formula, which I was told was ‘probably as important as E=MC2’, and something about how it could spell ‘the end of the brand’. I wasn’t too sure at the time so I kept my own council, but on reflection the conviction of behavioral triggers appears doubtful.

To be frank, back then, I didn’t know anything about BF Skinner, but now I find it difficult to see how current thinking is any different from his experiments rewarding pigeons and the theory of ‘operant conditioning’. Much of what passes for persuasive communication online is just treats, rewarding us to be good little consumers. There is a moral issue here though, as expressed by the philosopher Lewis Mumford, in that, a system of compulsion based on rewards is another kind of hell, of course different from a hell based on punishment, but in his opinion a worse kind of hell because we would think we are in heaven.

Economics isn’t just about technicalities and measurements, buried below the surface are deep disagreements in moral issues that often get skirted around. For instance, will health insurance companies crunch Big Data to offer cheaper premiums to healthier people, who will be most likely wealthier than relatively unhealthy people? Is that your idea of social justice?

So what to do?

There are clearly many, many alternatives to business-as-usual, none of which are a return to state socialism. Under the theme of the ‘steady state enterprise’ Rushkoff runs through a whole bunch of existing projects and company structures. From the nascent B-corp movement to direct public offerings, from hybrid corporates (although he doesn’t mention it think circular economy) to non-profits.

Some feel like a middle ground solution, the B-corps and ‘natural capitalists’ of the world and I think this is to some degree driven by your own starting point. If you’re coming from a traditional MBA background, or you’re in the corporate sector, then you’re going to work with what you’ve got. I just wonder whether in their genuine desire to be seen to be making changes they might win a battle but lose the war.

For instance the great promise of decoupling resource use from growth appears to be an illusion, if a recent paper by the National Academy of Sciences is right. Or, when Keith “Twinkletoes” Weed, from Unilever, gets up on stage to eulogize about their sanitation campaign and advertising soap on roti’s, this sounds to me like philanthro-capitalisms latest attempt to ameliorate a structural fault in the economy, while at the same time suggesting there are some things governments can’t do. True, I’m just not convinced basic sanitation is one of them.

Of the examples Rushkoff presents workers coops are something I know next to nothing about but found the most intriguing, they could be, like universal basic income, an old idea who’s time has come. And, if you’ve got an aversion to authority and hierarchical power structures what’s not to like!

Coops of course come with their own set of considerations, its been shown that in replacing the traditional pecking order a new one emerges around some set of shared cultural values, in other words cliques form. In Greece, a country with a long history of coops, they developed a reputation for corruption. I’d be very curious to know what the progressive lobby think about renowned workers coop, Mondragon, and their common ownership of gun manufacturer BPI Outdoors based in Georgia.

Coops face a host of challenges, from getting financing to competing in an economy not designed for them, and a host of regulatory and legal requirements. Bizarrely American anti-trust law is tipped against them because it focuses its ire on cartels more than monopolies, meaning even with the best of intentions cooperation amongst smaller players in the marketplace can come up against the law, as we saw when publishers took on Amazon.

I’m sure there are other hurdles but these just go some way to explaining why there are less than fifty workers coops in New York State, all pretty small. This does not include consumer organizations like food coops, utility coops, or financial coops.

Perhaps the drive for platform coops could change this; Fuse Labs, Stocksy, Fairmondo, La’ Zooz, Members Media, Resonate, Loconomics. Are all examples of coops where ‘digital distributism’ could scale them into a mainstream economy.

So if this is the direction for tomorrow’s economy how do we move people there, how do we make this outcome more desirable than where we are today? What is the strategy to change the ideological fabric of a nation?

In ‘Sapiens: A Brief History of Humankind’ Yuval Noah Harari writes, “…we might soon be able to engineer our desires too, the real question facing us is not ‘What do we want to become?’, but ‘What do we want to want?’Those who are not spooked by this question probably haven’t given it enough thought.”

Fifty years earlier, in ‘Strategy of Desire’, Ernest Dichter writes, “the basic material with which the battle of human progress must be fought is human desires.”

For this reader this is the piece that is missing, not so much from this book, that would be unreasonable, but from new economic thinking in general. It seems to me the sustainability conversation often falls back to “focusing on real needs”, whatever they might be, while sidestepping the complication of our desires. The latter being, as Adam Phillips described them, a “peculiar species of hope…the future in all its indescribable promise”.

One thing I’m sure of, a compelling emotional story beats rational argument every single time. Perhaps this is a story of liberation and the next step is to figure out how to articulate that in order to “facilitate its acceptance by those who cannot be made to listen to reason in any other way”.

Postscript: Having sat in this for a couple of days I felt I hadn’t directly answered the question in the title, ‘Is growth necessary for a thriving economy?”. I think the answer is nuanced, when is it not, in the sense that GDP as it is currently measured is part of the structural problem. So one answer is change the way it’s calculated, Diane Coyle is an expert on this. Another answer is there is a “good growth” and there is “bad growth”, e.g. investment in green energy is good growth that boosts GDP. And regardless, there is a moral question I did not think about, which is, how can we justify no-growth when hundreds of millions of people are without electricity? So it’s complicated but all the same what this book and others made clear to me is that we need a new operating system and that tinkering with the model is just pretense.

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