The digital economy isn’t working out quite like it was supposed to.
The promise was that we were all going to get to work fewer hours, from home, in our pajamas, on creative pursuits, while our computers and networks did the heavy lifting. Instead, however, we find ourselves automated out of gainful employment, less secure in our futures, and glued 24/7 to screens that are extracting value from us — whether or not we’re even on the job.
This is not the Internet’s fault. Technology is not breaking the economy. The real problem is that instead of building a truly digital economy, we’re using digital technology to amplify the values and mechanisms of the growth-based industrial economy we should be leaving behind. Instead of building a peer-to-peer marketplace where prosperity is as distributed as the networks on which it runs, we are jacking up traditional venture capitalism on digital steroids.
That’s why we’re getting such extremes. We are not developing our new technologies for the betterment of humanity or even our businesses, but to maximize the growth of the speculative marketplace. And it turns out that these are not the same thing.
Grow or die
In order to become one of those rare winners that are acquired or go public, digital startups must abandon their original missions and instead demonstrate their ability to achieve an absolute monopoly of one or more sectors. Success is not enough.
Twitter’s earnings of over half a billion dollars a quarter are punished by Wall Street as an abject failure. Half a billion dollars of earnings by an app that broadcasts messages of 140 characters is pretty darn good. It’s just not enough to satisfy investors who want 100 times return on their initial multi-billion-dollar stakes.
We are jacking up traditional venture capitalism on digital steroids.
So now Twitter, like so many other digital companies, must somehow contort itself into something other than it is. It must compromise its functionality in order to play news outlet, advertiser, video-streaming utility, or something else capable of extracting more value from the activities of people and businesses.
This is why Facebook is less about connecting people than mining data, smart phones are programmed less for utility than interruption, and Uber would rather use its massive capital investment to fight regulation instead of appropriately compensating its drivers.
It’s not fair to burden digital companies with perpetuating the dominance of a growth-based, venture-driven economy. Not to the companies themselves, nor to those of us living in the wake of their economic destruction.
Resistance is almost futile. Those businesses that remain in productive enterprises and attempt to resist disruption end up warring against digital adversaries with vastly inflated assets. It’s not that these upstarts are necessarily better or more efficient; they simply have much bigger war chests.
Reprogramming the economy for people
In short, we are trying to run a 21st Century digital economy on an obsolete, printing-press era economic operating system. It worked well enough for a few centuries of industrialism – slavery and environmental devastation notwithstanding – but now it’s time to upgrade.
We must look to the distributive qualities of digital technologies for their ability to promote economic activity rather than usurp it. The beauty of networks – unlike industrial machines – is that they are biased toward distribution and circulation. Everything is moving. Things don’t travel from the top down or even the bottom up, but to and from everywhere at once.
Likewise, instead of optimizing digital companies for simple extraction, we should be optimizing them for transaction over accumulation – for flow over growth, or what economists would call the velocity of money rather than capital appreciation. This is what digital platforms do best.
In the simplest sense, this would mean building more companies like eBay, which let people exchange value with one another, or even YouTube, which cuts in creators on the proceeds their videos create. It means coming up with capital-busting platforms like Kickstarter, which let people pre-order and pre-fund the products they want – sidestepping the need for speculative investment by those outside the value chain, as well as preserving the money they would have eventually extracted.
It means experimenting with new, frictionless forms of exchange such as the interest-free local currencies currently in use from recession-vanquished Lansing, Michigan to Euro-challenged Greece. Thanks to what is known as the “multiplier effect,” local currencies end up circulating among businesses ten times more than interest-bearing central currency. The same money ends up essentially recycled. Instead of earning one dollar and trapping it in static capital, we get to earn the same dollar ten times. Revenue and prosperity go up the more those same dollars are exchanged.
The tools and approaches of a digital age can rebuild our economy from the inside out.
It also means exploring technologies such as bitcoin, not for their value as speculative investments, but as new systems for the authentication of peer-to-peer transactions and contracts. When we don’t need a central platform, bank, or clearinghouse to verify who has done what for whom, people gain the ability to transact directly. When we can do that, neither the banking industry, nor centralized platforms such as Airbnb or Uber, can maintain their monopolies over commerce or continue taking their disproportionate share of every exchange.
We can replace those monopoly platforms with worker-owned applications, or what are called “platform cooperatives.” Imagine an Uber where the drivers owned the platform itself, proportionate to their contribution of labor. This way, instead of merely doing the research and development for the driverless cars that will one day replace them, they would participate in the profits their work and vehicles made possible. Juno, a cab-hailing app launching in New York this spring, is doing just that.
This is the digital economy we deserve. Instead of merely amplifying the worst of a dying, growth-based, industrial paradigm, the tools and approaches of a digital age can rebuild our economy from the inside out.
After all, if we don’t like the digital economy we’re in, it’s up to us to go program a better one.
|Douglas Rushkoff is the author of Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity, as well as a dozen other bestselling books on media, technology, and culture, including Present Shock, Program or Be Programmed, Media Virus, Life Inc and the novel Ecstasy Club. He is Professor of Media Theory and Digital Economics at CUNY/Queens. He wrote the graphic novels Testament and A.D.D., and made the television documentaries Generation Like, Merchants of Cool, The Persuaders, and Digital Nation. He lives in New York, and lectures about media, society, and economics around the world.
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