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Why the Tech Elite Is Getting Behind Universal Basic Income

photo of Nathan Schneider

Nathan Schneider
24th February 2015


raining-gold

As if Silicon Valley hasn’t given us enough already, it may have to start giving us all money. The first indication I got of this came one evening last summer, when I sat in on a meet-up of virtual-currency enthusiasts at a hackerspace a few miles from the Googleplex, in Mountain View, California. After one speaker enumerated the security problems of a promising successor to Bitcoin, the economics blogger Steve Randy Waldman got up to speak about “engineering economic security.” Somewhere in his prefatory remarks he noted that he is an advocate of universal basic income—the idea that everyone should get a regular and substantial paycheck, no matter what. The currency hackers arrayed before him glanced up from their laptops at the thought of it, and afterward they didn’t look back down. Though Waldman’s talk was on an entirely different subject, basic income kept coming up during a Q&A period—the difficulties of implementing it and whether anyone would work ever again.

Around that time I had been hearing calls for basic income from more predictable sources on the East Coast—followers of the anarchist anthropologist David Graeber and the editors of the socialist magazine Jacobin, among others. The idea certainly has a leftist ring to it: an expansion of the social-welfare system to cover everyone. A hard-cash thank-you just for being alive. A way to quit the job you despise and—to take the haters’ favorite example—surf.

Basic income, it turns out, is in the peculiar class of political notions that can warm Leninist and libertarian hearts alike. Though it’s an essentially low-tech proposal, it appeals to Silicon Valley’s longing for simple, elegant algorithms to solve everything. Supporters list the possible results: It can end poverty and inequality with hardly any bureaucracy. With more money and less work to do, we might even spew less climate-disrupting carbon.

The idea of basic income has been appearing among the tech-bro elite a lot lately. Mega-investor and Netscape creator Marc Andreessen recently told New York magazine that he considers it “a very interesting idea,” and Sam Altman of the boutique incubator Y Combinator calls its implementation an “obvious conclusion.” Albert Wenger, a New York–based venture capitalist at Union Square Ventures, has been blogging about basic income since 2013. He’s worried about the clever apps his company is funding, which do things like teach languages and hail cars, displacing jobs with every download.

“We are at the beginning of the time where machines will do a lot of the things humans have traditionally done,” Wenger told me in October. “How do you avoid a massive bifurcation of society into those who have wealth and those who don’t?” He has proposed holding a basic-income experiment in the dystopian fantasyland of Detroit.

Singularity University is a kind of seminary in Silicon Valley where the metaphysical conviction that machines are, or soon will be, essentially superior to human beings is nourished among those involved in profiting from that eventuality. Last June, the institution’s co-founder and chairman, Peter Diamandis, a space-tourism executive, convened a gathering of fellow industry luminaries to discuss the conundrum of technology-driven unemployment.

“Tell me something that you think robots cannot do, and I will tell you a time frame in which they can actually do it,” a young Italian entrepreneur named Federico Pistono challenged me. Among other accomplishments, Pistono has written a book called Robots Will Steal Your Job, but That’s OK. At the Singularity meeting he was the chief proponent of basic income. He cited recent experiments in India that showed promise for combating poverty among people the tech economy has left behind. Diamandis later reported having been “amazed” by the potential.

One might not expect such enthusiasm for no-strings-attached money in a room full of libertarian-leaning investors. But for entrepreneurial sorts like these, welfare doesn’t necessarily require a welfare state. One of the attendees at the Singularity meeting was HowStuffWorks.com founder Marshall Brain, who had outlined his vision for basic income in a novella published on his website called Manna. The book tells the story of a man who loses his fast-food job to software, only to find salvation in a basic-income utopia carved out of the Australian Outback by a visionary startup CEO. There, basic income means people have the free time to tinker with the kinds of projects that might be worthy of venture capital, creating the society of rogue entrepreneurs that tech culture has in mind. Waldman refers to basic income as “VC for the people.”

Chris Hawkins, a 30-year-old investor who made his money building software that automates office work, credits Manna as an influence. On his company’s website he has taken to blogging about basic income, which he looks to as a bureaucracy killer. “Shut down government programs as you fund redistribution,” he told me. Mothball public housing, food assistance, Medicaid, and the rest, and replace them with a single check. It turns out that the tech investors promoting basic income, by and large, aren’t proposing to fund the payouts themselves; they’d prefer that the needy foot the bill for everyone else.

“The cost has to come from somewhere,” Hawkins explained, “and I think the most logical place to take it from is government-provided services.”

This kind of reasoning has started to find a constituency in Washington. The Cato Institute, Charles Koch’s think tank for corporate-friendly libertarianism, published a series of essays last August debating the pros and cons of basic income. That same week, an article appeared in the Atlantic making a “conservative case for a guaranteed basic income.” It suggested that basic income is actually a logical extension of Paul Ryan’s scheme to replace federal welfare programs with cash grants to states—the Republican Party’s latest bid to crown itself “the party of ideas.” Basic income is still not quite yet speakable in the halls of power, but Republicans may be bringing it closer than they realize.

Karl Widerquist, a professor of political philosophy at Georgetown University’s School of Foreign Service in Qatar, has been preaching basic income since he was in high school in the early 1980s. He says that we are now in the third wave of American basic-income activism. The first was during the economic crises between the world wars. The second was in the 1960s and 70s, when libertarian heroes like Milton Friedman were advocating for a negative income tax and when ensuring a minimum income for the poor was just about the only thing Martin Luther King Jr. and Richard Nixon could agree about. (Nixon’s Family Assistance Plan, which bears some resemblance to basic income, passed the House but died in the Senate.) The present wave seems to have picked up in late 2013, as the news went viral about a mounting campaign in Switzerland to put basic income to a vote. Widerquist is glad to see the renewed interest, but he’s cautious about what the libertarians and techies have in mind.

“I don’t think we want to wait for technological unemployment before having basic income,” he says. For him the plan is not about averting the next disaster—it’s about curbing the exploitation of the property system.

Riding way on the left side of the current wave of enthusiasm is Kathi Weeks. She’s a good old-fashioned-in-certain-ways feminist Marxist who made basic income a central proposal in her recent book The Problem with Work. She advocates it cautiously, however: If a basic income were too low, people wouldn’t be able to quit their jobs, but employers would still lower their wages. It could incline more businesses to act like Walmart, letting their workers scrape by on government programs while they pay a pittance. Workers might get money for nothing, but they’d also find themselves with dwindling leverage in their workplaces.

If we were to fund basic income only by gutting existing welfare, and not by taxing the rich, it would do the opposite of fixing inequality; money once reserved for the poor would end up going to those who need it less. Instead of being a formidable bulwark against poverty, a poorly funded basic-income program could produce a vast underclass more dependent on whoever cuts the checks. And as out-there as the idea can seem, Weeks’s leftist critics complain that it’s still a tweak, a reform. “It’s not going to signal the end of capitalism,” she recognizes.

Like pretty much all the shortcut solutions Silicon Valley offers, basic income would have its perks, but it isn’t enough to solve our real problems on its own. There’s still no substitute for organizing more power in more communities—the power to shape society, not just to fiddle with someone else’s app. Social Security, for instance, came to be thanks to the popular struggles of the 1930s, and it carried huge swaths of old people out of poverty. Obamacare, a set of reforms mostly written by the industry it was meant to regulate, has turned out to be a far more mixed bag.

A basic income designed by venture capitalists in Silicon Valley is more likely to reinforce their power than to strengthen the poor. But a basic income arrived at through the vision and the struggle of those who need it most would help ensure that it meets their needs first. If we’re looking for a way through the robot apocalypse, we can do better than turn to the people who are causing it.

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Posted in Anti-P2P, Cognitive Capitalism, Collective Intelligence, Culture & Ideas, Economy and Business, Open Innovation, Original Content, Politics | No Comments »

A world of ‘sharing and caring’ won’t begin in Davos

photo of Adam Parsons

Adam Parsons
13th February 2015


Davos

At this year’s gathering of the world’s richest and most powerful at Davos, the World Economic Forum founder has urged delegates that the motto for their 2015 meeting should besharing and caring’.


Inequality is again on the agenda (if not considered the top threat to world stability, as last year), which has prompted many critics to point out – as usual – that the solutions to inequality are unlikely to come from the global elites that are largely responsible for creating it.

Despite all the media debates and high-profile discussions there is mainly talk and no action when it comes to creating a more equal society. And the only kind of sharing that is championed by the corporate executives and world leaders at Davos is within the context of charity and big business, rather than discussing any real solutions that would require government interventions and wealth redistribution.

A new report and series of interactive infographics from Global Justice Now, formerly the World Development Movement, exposes the core myths that define the worldview of this tiny group of elites. In a refreshingly straightforward and incisive way, it demonstrates the fallacies behind their ideology that is now deeply ingrained in society and a serious obstacle to building a fairer, more sustainable world for the majority.

For example, it is not true that the ‘poor are getting richer’ in the face of soaring inequality, which is starkly illustrated in sub-Saharan Africa where there has been almost no improvement in poverty rates since 1981 (indeed, the number of people living on less than $2 has doubled over this period). As often repeated, the vast majority of the fall in global poverty since the 1990s is the result of China’s effectiveness at tackling poverty, which it famously achieved without following the prescriptions of the so-called Washington Consensus.

The reality is that while the rich have certainly got richer as a result of economic globalisation, most of the poor have remained in poverty. Believing otherwise is to conveniently overlook the devastating impacts of free market, neoliberal economic policies in many developing countries, as well as the inequalities of power that keeps poor people poor. But this is, of course, unlikely to be the chief concern at Davos where discussions revolve around a common theme: that their business practices, overseas investments, entrepreneurial talent and philanthropy are the only answer to world problems.

Another myth is that economic growth is the panacea for social ills and poverty, despite all evidence to the contrary. As the Global Justice Now report argues, growth – while important – is never enough, unless a nation’s economy is geared to sharing the benefits of growth fairly. As long as the benefits are increasingly captured by a small global elite, it is inevitable that the lives of those at the bottom of society will continue to get worse. A neat graphic illustrates a stark fact from the New Economics Foundation’s report Growth isn’t working, asking the reader to guess how much of each $100 of global economic growth has actually contributed to reducing poverty – which is an astonishing $0.60. (Equally shockingly, 95% of the proceeds of growth in the US went to the top 1% during the three years of economic recovery that followed the 2008 financial crash.)

Several of the report’s myths also simply describe how the global economic system is fundamentally skewed in favour of rich countries, which is the real reason why billions of people in poorer countries are lacking the essentials for life, such as adequate food, water and energy. So the image of Africa as poor and helpless is wrong, because the continent is one of the richest in terms of natural resources – and far more money is extracted from the region (such as through profit repatriation, debt repayments and tax evasion) than is given in aid.

The report also argues that international aid could make the world a fairer place, but only if it undergoes major reform so that it is genuinely redistributive and no longer a tool of free market policy. At present, aid is increasingly being used to support multinational corporations in their quest for profits, such as by forcing poor countries to privatise their public services. But this does not mean that overseas development assistance should be entirely scrapped as a system, as “redistributing wealth from the richest to the poorest is a necessary element of creating a fairer world – as it is in creating a fairer society.”

More ambitiously, the report suggests, we should see aid more as a system of global taxation in which it is used to help build what we might call ‘sharing societies’ in all countries. It concludes: “The funds would have to be much bigger than they currently are to create such a change, and the mentality would have to change completely. Creating a better world is not generous, especially if you have created the unfairness in the first place. What’s more aid can never be seen in isolation. Fairer trade, cancelling unjust debt, stopping climate change, tackling tax havens and securing democratic freedoms are all more important in achieving global justice.”

Such common sense is sadly not the preserve of orthodox thinking among the majority of attendees at the luxurious ski resort of Davos, where there is no hint of the poverty and hardship suffered by billions of people elsewhere in the world. As ever, it is up to campaigners and concerned citizens to challenge the myopic outlook of those elites who are concerned about growing inequality, but unwilling to embrace the necessary measures to reverse it.

Photo credit: World Economic Forum, flickr creative commons

 

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Posted in Anti-P2P, Cognitive Capitalism, Economy and Business, Empire, Ethical Economy, Events, Original Content, P2P Collaboration, Politics, Sharing | No Comments »

Oxfam’s latest bombshell on how unequally the world’s wealth is shared

photo of Rajesh Makwana

Rajesh Makwana
10th February 2015


davos-oxfams-shareable-graphic2-island

Twitter feeds and newspaper headlines were again dominated this morning by new statistics on growing wealth inequality, as released by Oxfam ahead of this week’s annual meeting of the World Economic Forum.

It is now customary for Oxfam to publish new research on how severe the gap between the 1% and the 99% is growing, prior to the gathering of billionaires and politicians at the Swiss ski resort of Davos. The latest research has heralded another media coup for the anti-poverty charity, demonstrating how extreme is the lack of sharing in our societies when just 80 rich people have the same wealth as the bottom half of the planet.

This is in contrast to the 85 billionaires that held the same amount of wealth last year, according to wealth data drawn from Credit Suisse that also grabbed news headlines in January 2014. (Interestingly, Forbes magazine – who publish the annual billionaires list – later contended that it was actually 67 people who own as much wealth as the poorest 3.5 billion).

Oxfam estimate that in 2014, the richest 1% of people in the world owned 48% of global wealth, leaving just 52% to be shared between the other 99% of adults on the planet. However, almost all of that 52% is owned by those in the richest 20% of the global population, leaving just 5.5% for the poorer 80% of people. If current trends continue of an increasing wealth share to the richest, the top 1% will have more wealth than the remaining 99% of people by 2017.

Oxfam’s short research brief, Wealth: Having It All and Wanting More, illustrates this staggering inequality with a series of graphs that show how the wealth share of the top 1% has continued to increase since 2010, while the bottom 99% have experienced a decline in their share of total global wealth that is set to fall significantly further over the next 5 years. The wealth of the very richest continues to expand at an inconceivable rate, typically increasing by over a billion dollars per individual between March 2013 and March 2014 – or $4 billion in the case of the Italian pharmaceuticals magnate, Stefano Pessina.

In the words of the paper’s author, senior researcher Deborah Hardoon: “The extreme wealth at the top of the distribution… is not only mind-blowing, but quite obscene when compared with how wealth is distributed to the rest of us in the world.” The main reason for this upward redistribution, according to the brief, is the entrenched cycle of wealth, power and influence that enables the super-rich to create an environment that protects and enhances their interests, particularly through government lobbying activities and campaign contributions.

The most prolific lobbying activities in the US are on budget and tax issues, which Oxfam states can directly undermine public interests where a reduction in the tax burden to companies results in less money for delivering essential public services. In other words, the billions that are spent on lobbying is increasingly moving society away from the direction of economic sharing and redistribution on behalf of the common good, a pernicious trend that is set to accelerate without a dramatic change in government policy and business practices.

The reality of extreme global inequality and the case against it has now been well made in any number of books, reports and conferences, from Thomas Piketty’s tome of analysis to the annual meeting of the IMF and World Bank last year, where the chosen theme was ‘shared prosperity’. But the need for real action from policymakers to share wealth and resources more equitably is ever urgent, especially in the midst of ongoing austerity measures, wage cuts and high unemployment in many high-income as well as low-income countries.

As STWR has often remarked, this will inevitably require government intervention, regulations and laws that guarantee fairness and equity in society, however anathema this may remain to the neoliberal rulebook still held by most of today’s politicians. Although the richest 1% had an average wealth of $2.7 million per adult in 2014, we cannot expect the members of this global elite to voluntarily share their wealth as a response to world poverty, one that is based on charity instead of justice and structural reform. Indeed as Oxfam acknowledge through their many sensible recommendations, the policy solutions for reducing inequality are plentiful and widely known. So if 2014 was the year when the need to tackle inequality went mainstream, perhaps 2015 will be the year when a call for economic justice and sharing becomes the presiding theme of political conversation.

 

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Posted in Anti-P2P, Cognitive Capitalism, Economy and Business, Food and Agriculture, Original Content, Politics, Sharing | No Comments »

As Neoliberal Forces Lash Out, Solidarity with Syriza is Needed

photo of David Bollier

David Bollier
6th February 2015


Syrizavictory

Now that Syriza has prevailed in the Greek elections, a new field of battle has emerged:  the political maneuvering before debt-relief negotiations.  Syriza’s decisive victory is sending some richly deserved shock waves through the citadels of finance capital and their partners in government, especially in Europe.

Not since the 2008 financial crisis have neoliberal policies and politicians suffered such a stinging public rebuke – through democratic elections, no less.  The financial establishment and leading politicians around the world want nothing more than to staunch the damage. They clearly wish to isolate the new prime minister and undermine his party’s leadership.  They would also love to kill in the cradle many socially minded initiatives that Syriza plans (protections against home foreclosures, restoration of pensions, basic healthcare, etc.).

Hence the fierce media propaganda war now underway to defame Syriza and lock in a negative set of images and ideas about it. I keep hearing the term “radical left” a lot (funny, the press never called austerity politics a program of the “radical right”).  British Prime Minister David Cameron recently warned, “The Greek election will increase economic uncertainty across Europe” – as if that hasn’t been the case for years.

There are also many attacks on the coalition government as unprincipled and expedient, particularly after Syriza made a coalition government with ANEL (a conservative party whose acronym translates as “independent Greeks”).  ANEL is socially conservative but it is also extremely hostile to big capital and the current banking system.  It is more radical than Syriza in that it wants to nationalize banks and throw out the Greek oligarchy.

I thought it was telling, in its account of the elections, that the New York Times gave the last word to the neoliberal Peterson Institute for International Economics.  A fellow there counseled Greece to move to the political center because “it would show that these protest movements ultimately recognize reality – which is that they are in the euro, and they have to play by the rules.”  Otherwise, he warned, “things could get a lot worse.  Very, very quickly.”

“Play by the rules,” “face reality” – or things will get “a lot worse.” Worse than the slow-motion social disintegration that austerity is already imposing on the Greeks?  Such advice is darkly humorous in light of the rule-breaking, reality-defying audacity of banks, financial institutions and investors.

Still, such fear campaigns have to be taken seriously.  We remember what happened when the democratically elected president of Chile, Salvatore Allende, did not conform to the expectations of international capital in 1973. This is serious stuff. Nowadays governments have learned to handle such perils in a more decorous fashion – through draconian, secretly negotiated international treaties, non-democratic central bank actions and sweetheart legislation enacted by compliant or corrupt members of parliament.  Much cleaner politically.

The lesson today is the same one that the 2008 meltdown taught:  in the end, citizens and democracy are the junior partners in this enterprise known as “democratic capitalism.”  Investors and creditors have their privileges, their trump cards and reliable political proxies.  That’s what is being mobilized now against the Greeks.

We saw this sort of mobilization of political clout a few days ago before the Greek election. The European Central Bank used “quantitative easing” lending in an attempt to sway Greek voters, according to Corporate Europe Observatory:

“The EU bureaucratic elite is very much part of the game in Greece. Already at the first hint of an upcoming general election, the EU Commission President Juncker lashed out at Syriza, saying he thought ‘the Greeks ­– who have a very difficult life – know very well what a wrong election result would mean for Greece and the eurozone,’ warning against “extreme forces.”  And the power of the ECB has been unashamedly applied in a way that doesn’t quite square with its mandate. A case in point is its quantitative easing, the massive injection of capital to the tune of 1.1 trillion euro decided yesterday [January 22] by the ECB, in that its timing and design could be seen as in part an attempt to influence the outcome of the Greek elections.”

The website went to note that Syriza wants to cancel at least half of the Greek debt, especially debt to the Eurozone and the ECB:  “These are promises that are hard to go back on… as they strike to the core of the humanitarian crisis in Greece. This crisis moreover, will not be relieved in the slightest by the new program of quantitative easing, but only via some sort of rollback or outright deletion of the Troika austerity programs.  Clearly the ECB has chosen its design and timing for its quantitative easing program in a manner that is intended to be helpful to the party currently in power in Greece, the conservative New Democracy, as it fights an election this weekend.”

So if the pre-election manipulations were bad, the coming collision between European creditors and the Syriza government will likely be even more intense. The Greek government has some serious chips of its own to play, however, most notably its commanding election victory and the legitimacy that it confers.  Greece could conceivably leave or threaten to leave the Eurozone, too, a move that would be very bad news for investors. In a bit of bravado, Syriza has even called attention to the fact that Germany has never repaid the money that it “borrowed” from Greece during the Nazi occupation during WWII.

Needless to say, the guardians of the “Washington consensus” are not eager for Greece to prevail and set a “bad example” that others might emulate. A successful Syriza might inspire oppressed taxpayers and jobless citizens in Spain, Italy, Ireland, the US and elsewhere to fight the crushing anti-social costs and unfairness of austerity politics. Occupy could happen again, but with a new determination not to be fooled again.

It is hard for most of us to imagine the hardships that the Greeks have endured – the massive unemployment, extensive privatization of public assets, loss of public services, corrupt policymaking and dire everyday need. Over 400 new laws were rushed through the Greek parliament over the past four years, including many drawn up by the Troika — the European Commission, the International Monetary Fund and the European Central Bank.  It has now become virtually illegal for public sector workers to go on strike because it would threaten growth and risk state mobilization of citizens. Such a threat was made against teachers who threatened to go on strike.

So the attacks on Syriza are really about much more than Syriza – they are about preserving the international policies and neoliberal political system for the benefit of investors and lenders. They are about nipping in the bud any sustained or contagious populist insurgencies.

That’s why it is critical, in the coming media wars, that there be strong international solidarity with Syriza and the difficult challenges that it faces in inventing a new, more socially constructive successor to neoliberalism. Governments in the US, UK, Germany and elsewhere need to realize that their hardball tactics toward Greece will have domestic political costs — because, after all, Greece was simply in the vanguard of what the rest of us could well face.

Greek commentator Akis Gavriilidis writes that the real reason that Syriza is so feared and reviled by international capital and neoliberal governments is that the party is engineering an “epistemological break” with the history of the Greek Left:

“It breaks a long tradition – perhaps the only tradition – of the Greek left: the conception of separateness, the concept of the ‘fortress party,’ as the only possible form of leftist politics. Up to now, this politics had almost exclusively organized itself on the founding principles of unity and purity, and considered ‘pluralism’ as an insidious weapon used by bourgeois ideology in order to undermine and bring discord in our ‘camp.’  Now it is the first time when somebody tries to abandon uniqueness (or duality, which is practically its synonym) and work with multiplicity as a means to increase their strength and bring about a transformative and emancipatory effect.

Gavriililis suggests that the Greek left may be following “the essential lesson of Asian martial arts: the good strategist is not the one who crushes the enemy’s forces, but the one who uses them in his/her own favor.”

 

Updates:  Here is a well-produced independent video documentary, directed by Theopi Skarlatos, about the last 23 days of the Greece election campaign, with an emphasis on Syriza.

For English-language news about the Greek situation for global readers, check out the Press Project.

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Posted in Activism, Anti-P2P, Campaigns, Collective Intelligence, Culture & Ideas, Economy and Business, Empire, Original Content, Politics | No Comments »

John Michael Greer on intermediation and the end of the market economy

photo of Stacco Troncoso

Stacco Troncoso
16th December 2014


France, Château de Beynac Window

Extracted from his blog, John Michael Greer talks about the historical role of intermediation in both thriving and declining economies. This extract forms part of larger series of posts entitled “Dark Age America”


One of the factors that makes it difficult to think through the economic consequences of the end of the industrial age is that we’ve all grown up in a world where every form of economic activity has been channeled through certain familiar forms for so long that very few people remember that things could be any other way. Another of the factors that make the same effort of thinking difficult is that the conventional economic thought of our time has invested immense effort and oceans of verbiage into obscuring the fact that things could be any other way.

Those are formidable obstacles. We’re going to have to confront them, though, because one of the core features of the decline and fall of civilizations is that most of the habits of everyday life that are standard practice when civilizations are at zenith get chucked promptly into the recycle bin as decline picks up speed. That’s true across the whole spectrum of cultural phenomena, and it’s especially true of economics, for a reason discussed in last week’s post: the economic institutions and habits of a civilization in full flower are too complex for the same civilization to support once it’s gone to seed.

The institutions and habits that contemporary industrial civilization uses to structure its economic life comprise that tangled realm of supposedly voluntary exchanges we call “the market.” Back when the United States was still contending with the Soviet Union for global hegemony, that almost always got rephrased as “the free market;” the adjective still gets some use among ideologues, but by and large it’s dropped out of use elsewhere. This is a good thing, at least from the perspective of honest speaking, because the “free” market is of course nothing of the kind. It’s unfree in at least two crucial senses: first, in that it’s compulsory; second, in that it’s expensive.

“The law in its majestic equality,” Anatole France once noted drolly, “forbids rich and poor alike to urinate in public, sleep under bridges, or beg for bread.” In much the same sense, no one is actually forced to participate in the market economy in the modern industrial world. Those who want to abstain are perfectly free to go looking for some other way to keep themselves fed, clothed, housed, and supplied with the other necessities of life, and the fact that every option outside of the market has been hedged around with impenetrable legal prohibitions if it hasn’t simply been annihilated by legal fiat or brute force is just one of those minor details that make life so interesting.

Historically speaking, there are a vast number of ways to handle exchanges of goods and services between people. In modern industrial societies, on the other hand, outside of the occasional vestige of an older tradition here and there, there’s only one. Exchanging some form of labor for money, on whatever terms an employer chooses to offer, and then exchanging money for goods and services, on whatever terms the seller chooses to offer, is the only game in town. There’s nothing free about either exchange, other than the aforesaid freedom to starve in the gutter. The further up you go in the social hierarchy, to be sure, the less burdensome the conditions on the exchanges generally turn out to be—here as elsewhere, privilege has its advantages—but unless you happen to have inherited wealth or can find some other way to parasitize the market economy without having to sell your own labor, you’re going to participate if you like to eat.

Your participation in the market, furthermore, doesn’t come cheap. Every exchange you make, whether it’s selling your labor or buying goods and services with the proceeds, takes place within a system that has been subjected to the process of intermediation discussed in last week’s post. Thus, in most cases, you can’t simply sell your labor directly to individuals who want to buy it or its products; instead, you are expected to sell your labor to an employer, who then sells it or its product to others, gives you part of the proceeds, and pockets the rest. Plenty of other people are lined up for their share of the value of your labor: bankers, landlords, government officials, and the list goes on. When you go to exchange money for goods and services, the same principle applies; how much of the value of your labor you get to keep for your own purposes varies from case to case, but it’s always less than the whole sum, and sometimes a great deal less.

Karl Marx performed a valuable service to political economy by pointing out these facts and giving them the stress they deserve, in the teeth of savage opposition from the cheerleaders of the status quo who, then as now, dominated economic thought. His proposed solution to the pervasive problems of the (un)free market was another matter. Like most of his generation of European intellectuals, Marx was dazzled by the swamp-gas luminescence of Hegelian philosophy, and followed Hegel’s verbose and vaporous trail into a morass of circular reasoning and false prophecy from which few of his remaining followers have yet managed to extract themselves.

It’s from Hegel that Marx got the enticing but mistaken notion that history consists of a sequence of stages that move in a predetermined direction toward some as-perfect-as-possible state: the same idea, please note, that Francis Fukuyama used to justify his risible vision of the first Bush administration as the glorious fulfillment of human history. (To borrow a bit of old-fashioned European political jargon, there are right-Hegelians and left-Hegelians; Fukuyama was an example of the former, Marx of the latter.) I’ll leave such claims and the theories founded on them to the true believers, alongside such equally plausible claims as the Singularity, the Rapture, and the lemonade oceans of Charles Fourier; what history itself shows is something rather different.

What history shows, as already noted, is that the complex systems that emerge during the heyday of a civilization are inevitably scrapped on the way back down. Market economies are among those complex systems. Not all civilizations have market economies—some develop other ways to handle the complicated process of allocating goods and services in a society with many different social classes and occupational specialties—but those that do set up market economies inevitably load them with as many intermediaries as the overall complexity of their economies can support.

It’s when decline sets in and maintaining the existing level of complexity becomes a problem that the trouble begins. Under some conditions, intermediation can benefit the productive economy, but in a complex economy, more and more of the intermediation over time amounts to finding ways to game the system, profiting off economic activity without actually providing any benefit to anyone else.  A complex society at or after its zenith thus typically ends up with a huge burden of unproductive economic activity supported by an increasingly fragile foundation of productive activity.

All the intermediaries, the parasitic as well as the productive, expect to be maintained in the style to which they’re accustomed, and since they typically have more wealth and influence than the producers and consumers who support them, they can usually stop moves to block their access to the feed trough. Economic contraction, however, makes it hard to support business as usual on the shrinking supply of real wealth. The intermediaries thus end up competing with the actual producers and consumers of goods and services, and since the intermediaries typically have the support of governments and institutional forms, more often than not it’s the intermediaries who win that competition.

It’s not at all hard to see that process at work; all it takes is a stroll down the main street of the old red brick mill town where I live, or any of thousands of other towns and cities in today’s America. Here in Cumberland, there are empty storefronts all through downtown, and empty buildings well suited to any other kind of economic activity you care to name there and elsewhere in town. There are plenty of people who want to work, wage and benefit expectations are modest, and there are plenty of goods and services that people would buy if they had the chance. Yet the storefronts stay empty, the workers stay unemployed, the goods and services remain unavailable. Why?

The reason is intermediation. Start a business in this town, or anywhere else in America, and the intermediaries all come running to line up in front of you with their hands out. Local, state, and federal bureaucrats all want their cut; so do the bankers, the landlords, the construction firms, and so on down the long list of businesses that feed on other businesses, and can’t be dispensed with because this or that law or regulation requires them to be paid their share. The resulting burden is far too large for most businesses to meet. Thus businesses don’t get started, and those that do start up generally go under in short order. It’s the same problem faced by every parasite that becomes too successful: it kills the host on which its own survival depends.

That’s the usual outcome when a heavily intermediated market economy slams face first into the hard realities of decline. Theoretically, it would be possible to respond to the resulting crisis by forcing  disintermediation, and thus salvaging the market economy. Practically, that’s usually not an option, because the disintermediation requires dragging a great many influential economic and political sectors away from their accustomed feeding trough. Far more often than not, declining societies with heavily intermediated market economies respond to the crisis just described by trying to force the buyers and sellers of goods and services to participate in the market even at the cost of their own economic survival, so that some semblance of business as usual can proceed.

Read the full text here.

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The Techno-Leviathan as the Technocratic Politics of the Bitcoin Ledger

photo of Michel Bauwens

Michel Bauwens
4th December 2014


You do not escape the world of big corporates and big government by wishing for a trustless set of technologies that collectively resemble a technocratic crypto-sovereign. Rather, you use technology as a tool within ongoing political battles, and you maintain an ongoing critical outlook towards it. The concept of the decentralised blockchain is powerful. The cold, distrustful edge of cypherpunk, though, is only empowering when it is firmly in the service of creative warm-blooded human communities situated in the physical world of dirt and grime. Perhaps this means de-emphasising the focus on how blockchains can be used to store digital assets or property, and focusing rather on those without assets.

This article (excerpt) by Brett Scott which appeared in Furtherfield may well be the most important article written this year about p2p trends and more specifically about the huge potential implications of the bitcoin cryptoledger. Today, technological design and protocals are a vital area of social and political struggle.

I’ve said it before: ‘what fascism is to the state, propertarian anarcho-capitalism is to the market’. It’s a dangerous political vision that aims for a trustless techno-cratic society and institutions centered around those who have property. This is NOT the vision of the mutualist p2p commons vision, which aims to create trustfull human communities based on liberty, sustainability and equity.

Read Brett Scott’s key analysis of the underlying political vision that lay behind much of the enthusiasm around decentralized autonomous organisations:

Brett Scott:

“When asked about why Bitcoin is superior to other currencies, proponents often point to its ‘trustless’ nature. No trust needs be placed in fallible ‘governments and corporations’. Rather, a self-sustaining system can be created by individuals following a set of rules that are set apart from human frailties or intervention. Such a system is assumed to be fairer by allowing people to win out against those powers who can abuse rules.

The vision thus is not one of bands of people getting together into mutualistic self-help groups. Rather, it is one of individuals acting as autonomous agents, operating via the hardcoded rules with other autonomous agents, thereby avoiding those who seek to harm their interests.

Note the underlying dim view of human nature. While anarchist philosophers often imagine alternative governance systems based on mutualistic community foundations, the ‘empowerment’ here does not stem from building community ties. Rather it is imagined to come from retreating from trust and taking refuge in a defensive individualism mediated via mathematical contractual law.

It carries a certain disdain for human imperfection, particularly the imperfection of those in power, but by implication the imperfection of everyone in society. We need to be protected from ourselves by vesting power in lines of code that execute automatically. If only we can lift currency away from manipulation from the Federal Reserve. If only we can lift Wikipedia away from the corruptible Wikimedia Foundation.

Activists traditionally revel in hot-blooded asymmetric battles of interest (such as that between StrikeDebt! and the banks), implicitly holding an underlying faith in the redeemability of human-run institutions. The Bitcoin community, on the other hand, often seems attracted to a detached anti-politics, one in which action is reduced to the binary options of Buy In or Buy Out of the coded alternative. It echoes consumer notions of the world, where one ‘expresses’ oneself not via debate or negotiation, but by choosing one product over another. We’re leaving Earth for Mars. Join if you want.
It all forms an odd, tense amalgam between visions of exuberant risk-taking freedom and visions of risk-averse anti-social paranoia. This ambiguity is not unique to cryptocurrency (see, for example, this excellent parody of the trustless society), but in the case of Bitcoin, it is perhaps best exemplified by the narrative offered by Cody Wilson in Dark Wallet’s crowdfunding video. “Bitcoin is what they fear it is, a way to leave… to make a choice. There’s a system approaching perfection, just in time for our disappearance, so, let there be dark”.

But where exactly is this perfect system Wilson is disappearing to?

Back in the days of roving bands of nomadic people, the political option of ‘exit’ was a reality. If a ruler was oppressive, you could actually pack up and take to the desert in a caravan. The bizarre thing about the concept of ‘exit to the internet’ is that the internet is a technology premised on massive state and corporate investment in physical infrastructure, fibre optic cables laid under seabeds, mass production of computers from low-wage workers in the East, and mass affluence in Western nations. If you are in the position to be having dreams of technological escape, you are probably not in a position to be exiting mainstream society. You are mainstream society.

Don’t get me wrong. Wilson is a subtle and interesting thinker, and it is undoubtedly unfair to suggest that he really believes that one can escape the power dynamics of the messy real world by finding salvation in a kind of internet Matrix. What he is really trying to do is to invoke one side of the crypto-anarchist mantra of ‘privacy for the weak, but transparency for the powerful’.

That is a healthy radical impulse, but the conservative element kicks in when the assumption is made that somehow privacy alone is what enables social empowerment. That is when it turns into an individualistic ‘just leave me alone’ impulse fixated with negative liberty. Despite the rugged frontier appeal of the concept, the presumption that empowerment simply means being left alone to pursue your individual interests is essentially an ideology of the already-empowered, not the vulnerable.

This is the same tension you find in the closely related cypherpunk movement. It is often pitched as a radical empowerment movement, but as Richard Boase notes, it is “a world full of acronyms and codes, impenetrable to all but the most cynical, distrustful, and political of minds.” Indeed, crypto-geekery offers nothing like an escape from power dynamics. One merely escapes to a different set of rules, not one controlled by ‘politicians’, but one in the hands of programmers and those in control of computing power.

It is only when we think in these terms that we start to see Bitcoin not as a realm ‘lacking the rules imposed by the state’, but as a realm imposing its own rules. It offers a form of protection, but guarantees nothing like ‘empowerment’ or ‘escape’.

Technology often seems silent and inert, a world of ‘apolitical’ objects. We are thus prone to being blind to the power dynamics built into our use of it. For example, isn’t email just a useful tool? Actually, it is highly questionable whether one can ‘choose’ whether to use email or not. Sure, I can choose between Gmail or Hotmail, but email’s widespread uptake creates network effects that mean opting out becomes less of an option over time. This is where the concept of becoming ‘enslaved to technology’ emerges from. If you do not buy into it, you will be marginalised, and thatis political.

This is important. While individual instances of blockchain technology can clearly be useful, as a class of technologies designed to mediate human affairs, they contain a latent potential for encouraging technocracy. When disassociated from the programmers who design them, trustless blockchains floating above human affairs contains the specter of rule by algorithms. It is a vision (probably accidently) captured by Ethereum’s Joseph Lubin when he says “There will be ways to manipulate people to make bad decisions, but there won’t be ways to manipulate the system itself”.

Interestingly, it is a similar abstraction to that made by Hobbes. In his Leviathan, self-regarding people realise that it is in their interests to exchange part of their freedom for security of self and property, and thereby enter into a contract with aSovereign, a deified personage that sets out societal rules of engagement. The definition of this Sovereign has been softened over time – along with the fiction that you actually contract to it – but it underpins modern expectations that the government should guarantee property rights.

Conservative libertarians hold tight to the belief that, if only hard property rights and clear contracting rules are put in place, optimal systems spontaneously emerge. They are not actually that far from Hobbes in this regard, but their irritation with Hobbes’ vision is that it relies on politicians who, being actual people, do not act like a detached contractual Sovereign should, but rather attempt to meddle, make things better, or steal. Don’t decentralised blockchains offer the ultimate prospect of protected property rights with clear rules, but without the political interference?
This is essentially the vision of the internet techno-leviathan, a deified crypto-sovereign whose rules we can contract to. The rules being contracted to are a series of algorithms, step by step procedures for calculations which can only be overridden with great difficulty. Perhaps, at the outset, this represents, à la Rousseau, the general will of those who take part in the contractual network, but the key point is that if you get locked into a contract on that system, there is no breaking out of it.

This, of course, appeals to those who believe that powerful institutions operate primarily by breaching property rights and contracts. Who really believes that though? For much of modern history, the key issue with powerful institutions has not been their willingness to break contracts. It has been their willingness to use seemingly unbreakable contracts to exert power. Contracts, in essence, resemble algorithms, coded expressions of what outcomes should happen under different circumstances. On average, they are written by technocrats and, on average, they reflect the interests of elite classes.
That is why liberation movements always seek to break contracts set in place by old regimes, whether it be peasant movements refusing to honour debt contracts to landlords, or the DRC challenging legacy mining concessions held by multinational companies, or SMEs contesting the terms of swap contracts written by Barclays lawyers. Political liberation is as much about contesting contracts as it is about enforcing them.”

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Ukraine Opens To Monsanto And Large-Scale Land-Grabs

photo of Øyvind Holmstad

Øyvind Holmstad
10th November 2014


By Pål Steigan. Original article here.

Ukraine’s black earth belt may probably have the most fertile soil on our planet. Ukraine has been called the» bread basket of Europe», and international agribusiness is drooling over the chance to get hold of it. The combination of an economic catastrophe and the corrupt regime in Kiev provides a golden opportunity for Monsanto, GMO to carry out large-scale land-grabs.

(Translated from the Norwegian by Tanja Barth)

EU Porosjenko

The scramble for natural resources – Among other things, the conflict in Ukraine concerns natural resources. These include uranium and other minerals, and especially Ukraine’s fertile soil. The country has been the world’s third largest exporter of corn and the fifth largest exporter of wheat. The Ukrainian «black soil» forms a thick layer and is rich in nutrients. It is difficult to find land that can be more easily farmed. Global cooperations are looking to control it. This struggle is nothing new. More than 1.6 million hectares (nearly as much as the area of the state of New Jersey) have already been sold to foreign agro-business. The largest contracts have been handed to companies based in Luxemburg, Cyprus (perhaps as a cover for Russian or Ukrainian oligarchs) and in France. China signed an agreement to buy more than 3 million hectares (30 000 square kilometers) in 2013 (equivalent to the size of Belgium, comprising 5 % of all of the fertile soil in Ukraine), but at present there are doubts whether this deal will be finalized. (Please read Land concentration, land grabbing and people’s struggles in Europe.)

The oligarchs see the agricultural sector as yet another source of profits, and they are the people that have taken control of most of the resources. The richest man in Ukraine, Rinat Achmetov, owns a large section of land. The same goes for Oleg Bachmatjuk, one of the world’s largest producers of eggs. His company is registered in Cyprus. Some of the largest foreign land owners are US NCH Capital (400,000 ha) and Russian Ukrainian Agrarian Investments (260,000 ha). (Please read Land concentration, land grabbing and people’s struggles in Europe.)

Drastic reforms facilitating foreign agro-business taking control – With the US’s preferred crew installed in Kiev, the road now is open for international agro-business. So far, laws and regulations have been an obstacle for companies like Monsanto, but under heavy pressure from the World Bank, the International Monetary Fund and Washington’s «advisers», the extreme right-wing regime in Kiev will soon have changed all this. A case in point is the Ukrainian law that didn’t allow the use of genetically modified organisms (GMOs), but in the association agreement with the EU there now is a section stating that both parties should «cooperate in extending the application of biotechnology». This section will be used to implement GMOs.

According to Michael Cox, research director at the investment bank Piper Jaffray: «Ukraine, and in the wider perspective Eastern Europe, are among the most promising growing markets for producers of agricultural machinery like John Deere and seed producers like Monsanto and DuPont

For several years now, the World Bank has insisted that Ukraine must facilitate international investment in the agricultural sector. In 2013, Ukraine was selected to be one of ten countries to be especially closely followed in their Benchmarking the Business of Agriculture project. The deregulation of the seed and fertilizer markets are central for this agenda. New loans from the World Bank and the IMF are linked to requirements that Ukraine implement reforms to facilitate the acquisition of land by foreign owners, and that they reduce taxes on such investments and reduce the frequency of inspections. (!) In May of 2014, the World Bank granted a loan of 1.5 billion dollars which is partly intended for the implementation of wide-ranging reforms in the agricultural sector. Regarding these reforms, the bank itself states that

«…some of the social effects will be difficult to quantify. In the short term, the adjustments…can have negative social consequences for income and employment and create a shock that can affect the poor».

In Kiev, the international agro-business and financial capitalists now are dealing with a government that is not overly concerned with the negative social impact resulting from its policies. In May 2014, Jim Yong Kim from the World Bank praised Yatsenyuk’s government as

«…dedicated to conducting wide-ranging reforms in cooperation with the World Bank».

On May 27th 2014, the New York Times revealed the truth about the IMF credit:

“Western interests insist on changes and big multi-national companies have expressed their interest in the Ukrainian agricultural sector.”

The newspaper revealed that reforms in the agricultural sector is a prerequisite for the 17 billion dollar credit, and that the IMF aimed at

«…increasing the investor confidence in Ukraine by removing bureaucracy and inefficiency».

J.P. Sottile, in his article Corporate Interests Behind Ukraine Putsch has described how the American multi-national corporations, in particular, have participated in the support for and encouragement of the coup in Kiev in February 2014. The article specifically mentions the U.S.-Ukraine Business Council. The executive council of this body looks like a list of Who’s Who in American agro-business, oil- and weapons industry: John Deere, Monsanto, Chevron, Westinghouse, Chevron, DuPont and Cargill.

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Book of the Day: The Black Box Society

photo of hartsellml

hartsellml
5th November 2014


* Book: Frank Pascuale. The Black Box Society: The Secret Algorithms That Control Money and Information.

URL = http://www.hup.harvard.edu/catalog.php?isbn=9780674368279

 

Description

‘Every day, corporations are connecting the dots about our personal behavior—silently scrutinizing clues left behind by our work habits and Internet use. The data compiled and portraits created are incredibly detailed, to the point of being invasive. But who connects the dots about what firms are doing with this information? The Black Box Society argues that we all need to be able to do so—and to set limits on how big data affects our lives.

Hidden algorithms can make (or ruin) reputations, decide the destiny of entrepreneurs, or even devastate an entire economy. Shrouded in secrecy and complexity, decisions at major Silicon Valley and Wall Street firms were long assumed to be neutral and technical. But leaks, whistleblowers, and legal disputes have shed new light on automated judgment. Self-serving and reckless behavior is surprisingly common, and easy to hide in code protected by legal and real secrecy. Even after billions of dollars of fines have been levied, underfunded regulators may have only scratched the surface of this troubling behavior.

Frank Pasquale exposes how powerful interests abuse secrecy for profit and explains ways to rein them in. Demanding transparency is only the first step. An intelligible society would assure that key decisions of its most important firms are fair, nondiscriminatory, and open to criticism. Silicon Valley and Wall Street need to accept as much accountability as they impose on others.”

 

More Information

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Can we turn Netarchical Platforms into worker-owned businesses?

photo of Stacco Troncoso

Stacco Troncoso
18th October 2014


facebook
In answer to the question posed in the title, I don’t think we can do much to reclaim our rights as producers of content and use value in netarchical platforms. However, we can work to raise awareness on the subject and help the shift toward real P2P platforms. This is already happening right now, with Diaspora enjoying a revival in the wake of Ello’s failed promise to deliver a true alternative to Facebook. The following article was written by John Robb and originally published in Home Free America.


“We don’t get ownership because we don’t expect ownership… We’ve been conditioned to give away our work and our patronage for free while the schmucks on Wall Street walk away with buckets of money.”

Do you contribute to Facebook, Yelp, Reddit, or sites like that?

Most of us do contribute to some sites like this and our contributions, more or less depending on our contribution, are the reason these companies are valuable.

Our contributions are the reason people come to these sites day after day, so why don’t we get a bit of ownership for our contributions?

Lots of ownership goes to the employees.  But, nobody goes to these sites for the high quality software, elegant design, or robust hosting.  Further, all of the tech they are using is the result of innovation by other people.

Most of the ownership goes to the financing.  Yet, these sites don’t cost much to run.  A pittance actually.  The cloud makes them very cheap to operate.  In fact, the amount is so small, nearly all of the money needed to launch these sites could be raised by the customers using these sites.

We don’t get ownership because we don’t expect ownership.

We’ve been conditioned to give away our work and our patronage for free while the schmucks on Wall Street walk away with buckets of money.

There is a small glimmer of hope things might finally be changing (it’s something I tried to do back in 2010-12 and got my ass handed to me for trying to do it).

My hope is due to three things:

  1. Desire to do the right thing.  We don’t see enough of this in Silicon Valley anymore, despite the fact that all great innovations start with getting the “why” right.  Reddit’s CEO, Yishan Wong (formerly of Facebook) is doing the right thing.  He’s planning to make Reddit’s users into owners, depending on their contribution to the site.
  2. There’s a way to create a form of liquid ownership that doesn’t require Wall Street.  This new method is based on the bitcoin blockchain.  That technology makes it possible to issue ownership to contributors in a decentralized and trusted way.
  3. The combination of blockchain stock, Yishan’s example, and the experience of participants will set in motion a wave of change in Silicon Valley.  The message is:  if you want to build an online company, you better find a way to make your customers/contributors owners.

PS:  This is potentially a sea change in financing/ownership.  There’s much more to this.  Wall Street’s banksters should be worried.

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Posted in Anti-P2P, Cognitive Capitalism, Collective Intelligence, Copyright/IP, Culture & Ideas, Economy and Business, Empire, Networks, Politics | No Comments »

Spanish lawmakers to kill CC licensing

photo of Guy James

Guy James
17th October 2014


image by argazkiak.org

image by argazkiak.org

As usual, Spanish politicians react with fear and repression when confronted with the effects of new ways of sharing information: they are preparing a new law (to go with the ones restricting crowdfunding and services like AirBnB and Uber) to tax those who wish to share information freely. The pattern appears to be: existing industry feels threatened, lobbies government, government passes legislation to hamper innovations. The individual merits of each new service can be argued but anyone who knows the way the conservative government in Madrid generally thinks and reacts, we can be pretty sure they do not understand the milieu in which they are attempting to act.



“…all Spanish newspapers are haemorrhaging readers, consistently report revenue losses to the tune of millions of euros a year and many are already technically bankrupt.”
“…The idea that law will compensate for these losses is laughable. What isn’t so funny is the chilling effect on the free dissemination of information it will have.”

Read more…

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Posted in Anti-P2P, Copyright/IP | 2 Comments »