For authors of business how-to books, it makes perfect sense. Who wouldn’t want to brag that Google is taking their business advice? For me, it was a little different. Throwing Rocks at the Google Bus was about the inequity embedded in the digital economy: how the growth of digital startups was draining the real economy and making it harder for people to participate in creating value, make any money, or keep up with rising rents.

I took the gig. I figured it was my chance to let my audience know, in no uncertain terms, that Uber was among the worst offenders, destroying the existing taxi market not through creative destruction but via destructive destruction. They were using the power of their capital to undercut everyone, extract everything, and establish a scorched-earth monopoly. I went on quite a tirade.

To my surprise, the audience seemed to share my concerns. They’re not idiots, and the negative effects of their operations were visible everywhere they looked. Then an employee piped up with a surprising question: “What about UBI?”

Wait a minute, I thought. That’s my line.

Up until that moment, I had been an ardent supporter of universal basic income (UBI), that is, government cash payments to people whose employment would no longer be required in a digital economy. Contrary to expectations, UBI doesn’t make people lazy. Study after study shows that the added security actually enables people to take greater risks, become more entrepreneurial, or dedicate more time and energy to improving their communities.

So what’s not to like?

Shouldn’t we applaud the developers at Uber — as well as other prominent Silicon Valley titans like Facebook co-founder Chris Hughes, bond investor Bill Gross, and Y Combinator’s Sam Altman — for coming to their senses and proposing we provide money for the masses to spend? Maybe not. Because to them, UBI is really just a way for them to keep doing business as usual.

Uber’s business plan, like that of so many other digital unicorns, is based on extracting all the value from the markets it enters. This ultimately means squeezing employees, customers, and suppliers alike in the name of continued growth. When people eventually become too poor to continue working as drivers or paying for rides, UBI supplies the required cash infusion for the business to keep operating.

When it’s looked at the way a software developer would, it’s clear that UBI is really little more than a patch to a program that’s fundamentally flawed.

The real purpose of digital capitalism is to extract value from the economy and deliver it to those at the top. If consumers find a way to retain some of that value for themselves, the thinking goes, you’re doing something wrong or “leaving money on the table.”

Back in the 1500s, residents of various colonized islands developed a good business making rope and selling it to visiting ships owned by the Dutch East India Company. Sensing an opportunity, the executives of what was then the most powerful corporation the world had ever seen obtained a charter from the king to be the exclusive manufacturer of rope on the islands. Then they hired the displaced workers to do the job they’d done before. The company still spent money on rope — paying wages now instead of purchasing the rope outright — but it also controlled the trade, the means of production, and the market itself.

Walmart perfected the softer version of this model in the 20th century. Move into a town, undercut the local merchants by selling items below cost, and put everyone else out of business. Then, as sole retailer and sole employer, set the prices and wages you want. So what if your workers have to go on welfare and food stamps.

Now, digital companies are accomplishing the same thing, only faster and more completely. Instead of merely rewriting the law like colonial corporations did or utilizing the power of capital like retail conglomerates do, digital companies are using code. Amazon’s control over the retail market and increasingly the production of the goods it sells, has created an automated wealth-extraction platform that the slave drivers who ran the Dutch East India Company couldn’t have even imagined.

Of course, it all comes at a price: Digital monopolists drain all their markets at once and more completely than their analog predecessors. Soon, consumers simply can’t consume enough to keep the revenues flowing in. Even the prospect of stockpiling everyone’s data, like Facebook or Google do, begins to lose its allure if none of the people behind the data have any money to spend.

To the rescue comes UBI. The policy was once thought of as a way of taking extreme poverty off the table. In this new incarnation, however, it merely serves as a way to keep the wealthiest people (and their loyal vassals, the software developers) entrenched at the very top of the economic operating system. Because of course, the cash doled out to citizens by the government will inevitably flow to them.

Think of it: The government prints more money or perhaps — god forbid — it taxes some corporate profits, then it showers the cash down on the people so they can continue to spend. As a result, more and more capital accumulates at the top. And with that capital comes more power to dictate the terms governing human existence.

Meanwhile, UBI also obviates the need for people to consider true alternatives to living lives as passive consumers. Solutions like platform cooperatives, alternative currencies, favor banks, or employee-owned businesses, which actually threaten the status quo under which extractive monopolies have thrived, will seem unnecessary. Why bother signing up for the revolution if our bellies are full? Or just full enough?

Under the guise of compassion, UBI really just turns us from stakeholders or even citizens to mere consumers. Once the ability to create or exchange value is stripped from us, all we can do with every consumptive act is deliver more power to people who can finally, without any exaggeration, be called our corporate overlords.

No, income is nothing but a booby prize. If we’re going to get a handout, we should demand not an allowance but assets. That’s right: an ownership stake.

The wealth gap in the United States has less to do with the difference between people’s salaries than their assets. For instance, African-American families earn a little more than half the salary, on average, that white American families do. But that doesn’t account for the massive wealth gap between whites and blacks. More important to this disparity is the fact that the median wealth of white households in America is 20 times that of African-American households. Even African-Americans with decent income tend to lack the assets required to participate in savings accounts, business investments, or the stock market.

So even if an African-American child who has grown up poor gets free admission to college, they will still likely lag behind due to a lack of assets. After all, those assets are what make it possible for a white classmate to take a “gap” year to gain experience before hitting the job market or take an unpaid internship or have access to a nice apartment in Williamsburg to live in while knocking out that first young adult novel on spec, touring with a band, opening a fair trade coffee bar, or running around to hackathons. No amount of short-term entitlements substitute for real assets because once the money is spent, it’s gone — straight to the very people who already enjoy an excessive asset advantage.

Had Andrew Johnson not overturned the original reconstruction proposal for freed slaves to be given 40 acres and a mule as reparation, instead of simply allowing them to earn wage labor on former slaveowners’ lands, we might be looking at a vastly less divided America today.

Likewise, if Silicon Valley’s UBI fans really wanted to repair the economic operating system, they should be looking not to universal basic income but universal basic assets, first proposed by Institute for the Future’s Marina Gorbis. As she points out, in Denmark — where people have public access to a great portion of the nation’s resources — a person born into a poor family is just as likely to end up as wealthy as peers born into a wealthier household.

To venture capitalists seeking to guarantee their fortunes for generations, such economic equality sounds like a nightmare and unending, unnerving disruption. Why create a monopoly just to give others the opportunity to break it or, worse, turn all these painstakingly privatized assets back into a public commons?

The answer, perhaps counterintuitively, is because all those assets are actually of diminishing value to the few ultra-wealthy capitalists who have accumulated them. Return on assets for American corporations has been steadily declining for the last 75 years. It’s like a form of corporate obesity.The rich have been great at taking all the assets off the table but really bad at deploying them. They’re so bad at investing or building or doing anything that puts money back into the system that they are asking governments to do this for them — even though the corporations are the ones holding all the real assets.

Like any programmer, the people running our digital companies embrace any hack or kluge capable of keeping the program running. They don’t see the economic operating system beneath their programs, and so they are not in a position to challenge its embedded biases much less rewrite that code.

As appealing as it may sound, UBI is nothing more than a way for corporations to increase their power over us, all under the pretense of putting us on the payroll. It’s the candy that a creep offers a kid to get into the car or the raise a sleazy employer gives a staff member who they’ve sexually harassed. It’s hush money.

If the good folks of Uber or any other extractive digital enterprise really want to reprogram the economy to everyone’s advantage and guarantee a sustainable supply of wealthy customers for themselves, they should start by tweaking their own operating systems. Instead of asking the government to make up the difference for unlivable wages, what about making one’s workers the owners of the company? Instead of kicking over additional, say, 10% in tax for a government UBI fund, how about offering a 10% stake in the company to the people who supply the labor? Or another 10% to the towns and cities who supply the roads and traffic signals? Not just a kickback or tax but a stake.

Whether its proponents are cynical or simply naive, UBI is not the patch we need. A weekly handout doesn’t promote economic equality — much less empowerment. The only meaningful change we can make to the economic operating system is to distribute ownership, control, and governance of the real world to the people who live in it.

Photo by tokyoform

The post I Used to Argue for UBI. Then I gave a talk at Uber. appeared first on P2P Foundation.

So I’ve been ending my talks with specific, actionable suggestions for how companies of all sizes and stages can become more sustainably profitable in the current environment. It amounts to a 12-step program for getting off the addiction to growth. If you need to grow in order to survive, then you’re not a real business – you’re just a brand name on debt.

Here’s the quintessence of the recommendations to be gleaned from hearing my talks, reading my book Throwing Rocks at the Google Bus, or listening to my TeamHuman podcast. Of course, if you read the book you’ll see the arguments for why these strategies will work, and how they expose the false assumptions we’ve been working under for a few centuries, now. But here are the basic principles.

1. In all decisions, optimize for the velocity of money over the accumulation of capital. How do we keep money moving instead of piling up? If you are sitting on money that can’t be deployed, you are taking too much out of the system.

2. Make them rich. Make your customers, suppliers, partners, and even your competitors rich. If you drain the value from your marketplace, your customers won’t have money to spend with you. If you squeeze your suppliers on margins, they will be looking to do business with anyone else at the first opportunity. If you make everyone who comes into contact with you wealthy, they will want to keep working with you.

3. Employ bounded investment strategies. Think of the US Steelworkers, who invested their retirement money in construction projects that also put steelworkers to work. Or their subsequent decision to invest in projects that hired them to build nursing homes for their own parents. This triple and quadruple dipping is not a conflict of interests, but the leverage that comes with bounded investing. With boundaries, you can generate the cyclone effect required to enhance the velocity of money. Don’t earn ten dollars once; earn one dollar ten times.

4. Push for a tax policy that promotes revenues instead capital gains. Shareholders are addicted to growth of share price because dividends are taxed higher. Reverse the tax code to promote flow over growth. Dividends and payroll should be tax incentivized; passive capital gains, discouraged.

5. Organize as Platform Cooperatives.  Think Uber, where the drivers own the company. Even if they’re getting replaced by autonomous vehicles, they are going to own the company for which their labor served as the R&D and machine learning.  Labor must participate in ownership of the means of production, instead of simply getting a redistribution of spoils after the fact through taxes. Coops like Winco beat shareholder companies like Walmart wherever they compete.

6. Local crowdfunding. If you run a bank or credit union, instead of giving 100k loan to a small business, give 50k contingent on their ability to raise the other 50k from the community, through advance-sale discount coupons. Customers pay $100 for $120 of pizza at the restaurant when it finishes expansion. Locals invest in their community and Main St, instead of outsourcing investment to the S&P, and draining local coffers.

7. Develop favor banks and local currencies. An economy is people with needs and people with skills. They shouldn’t be hampered for lack of a means of exchange. Local currencies and favor banks allow for the exchange of value without borrowing at interest from a central treasury. This also means local businesses in the chain can transcend the artificial growth requirement.

8. Cooperative businesses cooperate. Do everything open source, open API, and without “trade secrets.” Maintaining secrets shows you believe your company’s best innovations are in the past. Sharing secrets means you know your best innovations lie ahead, and that you benefit from everyone being smarter. It positions you as the center of competence in your field, dedicated to promoting a culture of learning and innovation.

9. Larger companies can enact economic experiments as local, limited trials. No need to turn the whole ship. Sell the ideas to the CEO or Board  as public relations stunts, then use their success to promote them throughout company. Walmart can introduce an aisle of locally produced goods; supermarkets can open parking lot to farmers market on Sundays; banks can offer local crowdfunding apps. Promote disruptive ideas as if they are just one-offs, not the radical game-changing innovations they really are.

10. Run your company like a family business. Family businesses do better in every metric than shareholder owned businesses. They make more money in the long run, have better-paid employees, more stability, less damage externalized to the community or environment, and so on. They are concerned with legacy, the family name, the relationship of their own families to communities in which they live, and the company itself as the inheritance they are bequeathing subsequent generations.

11. Develop new metrics for success other than growth. Put them down on paper. How prosperous is the community in which we are operating? How many unsolicited resumes from qualified candidates are coming in? How well are our suppliers doing? Do our frontline employees feel they are being supported by the company?

12. Your goods and services are your product – not your stock. Don’t build a company to sell it to someone else; build it to run it, yourself. Companies are not disposable. An “exit strategy” is for Ponzi schemes. The world is connected. The environment is limited. The economy is circular. There is nowhere to run.

Before emailing me for references for all this, please know that you can find everything in my book Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity. You can even just get it at the library, and use the index to find the answers you want.

Photo by naturalflow

The post 12 Steps to Post-Growth Sustainable Business appeared first on P2P Foundation.

They’re missing the point. The rise of nationalist sentiments are not the cause of the economic shift underway, but a result of it. The real force energizing these changes is digital. While the digital economy has accelerated and amplified many of the mechanisms investors and corporations use to grow their capital, it has left most people with less money and less opportunity. This latest burst of fear stemming from that lack of opportunity is coming in the form of nationalism, and even protectionism, but it also could offer us a fleeting but real chance to turn our digital economy toward the needs of people instead of finance itself.

Don’t get me wrong. I’m all for prosperous businesses, digital and otherwise. But I’ve also witnessed with horror over the past 20 years as the potential for widespread, bottom-up prosperity unleashed by digital technology have been surrendered to the priorities of extractive global capitalism. This is not the way it was supposed to go, at least not according to me and my cyberpunk friends of the late ’80s.

Back then, the emergence of low-cost computers and networking appeared to augur a peer-to-peer, fluid, and more open economic landscape, one where we all step off the industrial-age, punch-the-clock treadmill and work in our own time, collaboratively, on creative pursuits, from home, in our underwear. Instead, we’re getting an exacerbation of some of extractive corporatism’s worst effects: joblessness, disenfranchisement, wealth disparity, corporate lethargy, artificial growth, and financialization.

Why aren’t we getting new, digitally enabled forms of community currency, worker-owned businesses, networked cooperatives, and peer-to-peer marketplaces? It turns out it is not because they don’t work; it’s simply because there are entrenched powers and limited visions preventing their rise. They find it hard to see digital technology as anything other than an investment opportunity. A company is not a provider of goods or services, but a “disruptor” capable of overturning an existing marketplace and generating 100x returns to the early shareholders. It doesn’t matter what the company does, if anything, after that.

So young developers in their dorm rooms may come up with a great idea for a revenue-generating and largely beneficial application. But then, almost automatically, they rush to find angel investors or venture capitalists to back their ideas. Along with the infusion of capital come unrealistically high valuations and unrefusable demands to “pivot” away from whatever the company may have once sought to accomplish. Instead, the company must focus on how to hit a 100x “home run,” usually by disrupting an existing marketplace and establishing the sort of temporary monopoly that convinces a new round of investors to buy the shares of the last ones.

Silicon Valley may trumpet its innovation bona fides, but this is a very old way of doing business, which digital technology should have rendered obsolete instead of amplifying. But most business leaders, bankers, and even economists tend to accept venture capitalism as a pre-existing condition of nature. It is not. The rules of capitalism were invented by human beings, at particular moments in history, with particular goals and agendas. It’s like a computer program, with accumulated lines of code written by developers throughout history with specific functions in mind. By refusing to acknowledge this, we end up incapable of getting beneath the surface. We end up transacting, and living, at the mercy of a system—of a medium, really.

In fact, there are precedents to the digitally distributed economy so many of still imagine. And they are often characterized by a retreat from international ambitions and restored focus on the power of local, circulatory economics.

The last example of this happening on a grand scale was back in the late Middle Ages, just after the expansionism of the Crusades. As European soldiers returned home, they brought with them many innovations from the Arab world. One of them was the bazaar, or what became known as the market. It was a local economic innovation that turned market activity into a bottom-up, generative, and local affair. Former peasants began to trade the goods they made with one another, instead of simply paying up to the lords. They also imported the idea for market moneys that were good just for one day—like poker chips, except representing a loaf of bread or pound of grain—and optimized for priming transactions. And they began to get wealthy.

Threatened by the rise of a middle class, the aristocracy and monarchs “innovated” against the former peasants. They made market moneys illegal, and forced merchants to borrow from the central treasury, at interest. That allowed the wealthy to make money simply by controlling currency, while also setting in motion the growth trap we’re caught in today. The monarchs also restricted entrance to particular industries by issuing “monopoly charters” to their favorite businesses, in return for a stake in the profits.

So, as I’ve tried to show in my book Throwing Rocks at the Google Bus, from which the chart above is taken, the hands-on economy of the artisanal market was overtaken by the more extractive rules of early industrialism. Workers were disconnected from the value they created and paid by the hour instead. In this light, industrialism and mechanization were just ways to remove human beings from the value chain.

That’s the economy we’ve been living in for the past 600-or-so years. The growth mandate was great for colonial powers looking to expand into new territories. As long as there were new people to enslave and resources to extract, capital could grow. But by the end of World War II, those people and places started to push back. Could we finally give up the global expansionist agenda of late medieval capitalism, and revisit an economic model that didn’t require the sort of growth that was proving impossible to maintain?

Now, digital technology should have been able to retrieve the values of pre-industrialism, and realize them in new ways. The human-to-human contact of the local marketplace is retrieved by the personalization of our digital networks. Market currencies can be retrieved by blockchains or even simpler authentication methods. Web-enabled cottage industries should thrive with their newfound equal footing and distributive power. Meanwhile, the commons and crowdfunding—enclosed and regulated out of existence during the corporate industrial era—find new life in an age whose foundational technologies are based in sharing processing cycles.

But by the early 90s, the cyberpunks’ human-centered vision of a networked marketplace was replaced by another vision of digital business, the one espoused by the libertarian early editors of Wired magazine and the corporate-sponsored futurists of Cambridge, Massachusetts. They looked at digital technology and saw the salvation of the securities markets and the infinitely expanding global economy. The stock market had crashed in 1987, along with the bursting of the biotech bubble. But now digital technology was to restore the NASDAQ to its former glory, and beyond. Indeed, just when it looked like we had reached the limits of the physical world to supply us with more opportunities for growth, it seemed we had discovered a virtual world from which to extract still more value. This new digital economy would augur a “long boom” of economic growth: a digitally amplified, speculative economy that could literally expand forever.

To do that, however, technologies with the potential to distribute value throughout their marketplaces and generate long-term sustainable revenue streams are instead converted into powerfully extractive versions of themselves. Amazon, for one ready example, could have developed itself into a value-creating marketplace like eBay. Instead, it adopted a scorched earth approach to its markets. Amazon chose the book industry as its initial beachhead not because of Jeff Bezos love of reading, but because it was a no-growth, highly inefficient market, ripe for domination. Amazon’s purpose is not to make authors and publishers wealthier, but to use its capital to undercut existing players, establish a monopoly, and then used that monopoly to “pivot” into other “verticals.” It’s the same extractive model utilized by 20th-century behemoths like Walmart, except the total domination of a market occurs even more quickly.

Uber, likewise, could have developed a thriving taxi marketplace by letting local companies and drivers maintain their autonomy on the platform or, alternatively, allowing drivers to earn shares proportionate to the miles they’ve driven. At least that way, once robots replace the human drivers, they would still get some revenue from the platform they helped build with their labor. But that’s not Uber’s goal. The company is still on the chartered monopolist’s script. Only in this case, instead of using the King’s law to maintain their status, they use code. They can’t see that having wealthy customers and employees is actually good for the long-term health of their businesses because they’re trapped in an early colonial mindset that sees markets as territories to conquer, resources to extract, and people to enslave.

Reinforcing all this is a shareholder mentality obsessed with growth and a tax code that favors capital gains over real earnings. No wonder companies focus on stock price, IPOs, and acquisition over real, taxable revenues. Most digital companies’ shares are their only true product.

So instead of moving to the last column of the chart—digital distributism—we have ended up stuck in the third: a digitally amplified version of the same old global industrialism. Digital industrialism is characterized more by the destruction of value and its conversion into share price than the creation of value and its distribution to the stakeholders who made it possible. Digital industrialism exacerbates the imbalance between the traditional factors of production – land, labor, and capital, giving voice only to the needs of the venture capitalists and their mindless pursuit of growth.

But it’s working too well for its own good. These corporations are great at extracting capital from the markets they enter but really bad at deploying it. Corporate profit over size has been declining steadily for decades, now. They grow obese and lose the ability to innovate. So, Google becomes Alphabet, a “holding company” that buys and sells technology companies because it can no longer innovate, itself. Facebook’s biggest moves are not technology developments but acquisitions. Digital industrialism turns its biggest players into vacuum cleaners that suck out the value, and maybe park it in share price or, worse, overseas—but don’t know how to distribute it or even put it to work.

That’s because they’re trapped trying to run 21st-century digital businesses on a 13th-century printing-press-era operating system. The real problem with the digital economy as it is currently constituted is not the digital, but the economics.

The nationalism and protectionism of today’s anti-globalists may be based in jingoism and xenophobia, but it could also—at least temporarily—create the boundary conditions necessary for something more like local, circulatory economic activity to take root. Such boundaries, like closing borders or enacting harsh import tariffs, don’t just prevent the leak of jobs overseas. They discourage businesses from thinking of their markets as global, much less infinite. The markets in which they operate are decidedly finite.

This forces them to stop thinking of themselves as simply sucking up all the cash in a particular territory and then moving on to the next. They must develop local economies that are capable of renewing themselves and delivering ongoing revenue. Instead of earning 10 dollars once, businesses must figure out how to earn the same dollar 10 times. That means promoting not the extraction of capital from a market, but the velocity of money through a market. What goes around comes around.

With any luck, businesses will take a cue from those who already operate this way, such as the US Steelworkers Union. Faced with the declining stock market of 2007, the steelworkers were looking for alternative investments for their pension fund. Instead of outsourcing their funds to S&P index funds, they got the fantastically circular idea to invest in construction projects that hired steelworkers. They invested in a project that not only earned them equity but paid them back their investment as wages.

Such strategies are actually more consonant with digital networks, which circulate information in a distributed fashion and share resources more easily than they hoard them. They are not infinitely expanding; they are bounded and self-sustaining. But they are really difficult to execute in an economic environment characterized by rapid growth startups and infinitely scaling corporate growth. The real world doesn’t scale.

A momentary withdrawal from that game forced by anti-globalist protectionist policies may actually allow for some digital distributism to gain traction. It will force us to remember that an economy doesn’t require global scale or growth to function; it simply needs people with skills, people with needs, and a means of exchange. The finance ministers and corporate chiefs attending Davos—as well as the decisions they make—are inconsequential to this activity. Their effort to salvage the global economy is really just an effort to keep us back in the third column of the chart, the digital industrialism that extracts value from people by evermore technologically creative means.

In contrast, a genuinely distributed economy requires those on the ground to develop strategies for economic and social viability from the bottom up. Don’t be surprised to see labor cooperatives, commons-based approaches to resource management, and even local currencies emerge to fill in where federal action falls short. While these mechanisms may not have worked convincingly before, digital technologies may just lend us the decentralized methods of accounting and authentication we lacked in the Middle Ages.

Whether we like it or not, it’s again time to return from the Crusades, and try a second time to build a new economy here at home.

Cross-posted from Fast Company

Photo by kalieye

The post The silver lining of anti-globalism might be the creation of a true digital economy appeared first on P2P Foundation.

In Extraenvironmentalist #94 we first speak with Douglas Rushkoff about his new book, Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity. Douglas discusses drivers of recent tech businesses and how relentless financial incentives are undermining their possible value to society. Then we speak with Jennifer Hinton about the possibility of a not-for-profit model for business and technology described in her forthcoming book How On Earth: Flourishing in a Not-For-Profit World by 2050.

Segments on Soundcloud

Books

Throwing Rocks at the Google Bus by Douglas Rushkoff
How On Earth: Flourishing in a Not-For-Profit World by 2050 by Jennifer Hinton and Donnie Maclurcan

Clips (in order of appearance)

How private tech industry buses became a symbol of the economic divide in San Francisco
Exponential Technology

Music (in order of appearance)

Overjoy – Another via Soundcloud
Rufus Du Sol – Innerbloom (Lane 8 Remix) via We Got This Covered

Production Credits and Notes

Our editor Kevin via Sustainable Guidance Youtube Channel

Episode #94 was supported by donations from the following generous listeners:

Ian in Australia
Kyle in Colorado
Ben in Colorado

The post Rocking the Google Bus appeared first on P2P Foundation.

Q. Your title is provocative. Are you saying we should throw rocks at the Google Bus?

A. No – but the real protests by San Francisco residents struggling to afford to remain in their city do epitomize the way the tech economy has failed on its promise. Instead of making the world easier and more livable, it ended up doing the same old extraction. Google was the ultimate success story of the people’s revolution against corporate capitalism: two kids in a Stanford dorm room, writing an algorithm that took down Yahoo, and used the links between people to organize information from the bottom up. Now, it was using public bus stops for its private buses, transporting alien employees to the mothership in Mountainview.

The promise was a p2p economy, as distributed as the networks themselves. The reality has been a doubling down on the same old extractive, growth-based capitalism.

Q. What’s wrong with growth? Isn’t that what every company wants?

A. Growth is fine if it’s organic to your marketplace. But not if it’s simply a way of satisfying your debt structure. Twitter is considered a failure with $2 billion of revenue a year, because it can’t find more growth. Great, sustainable companies must pivot away from revenue in order grow. I was at an executive retreat of a Fortune 100 company where the CEO had his minions chanting “5.2!”, the percent growth target for the coming year. When I got up to do my keynote, I couldn’t help but ask if one of the world’s twenty biggest corporations must still grow in order to be okay, then isn’t there a problem, here? Eventually, you run up against the limits of physical reality.

That’s why GE sold off is washing machine business in the 90s. Jack Welch realized the company could only have a sustainable business by selling people washing machines, but that it could grow by lending people the money they needed to buy washing machines. So they sold off their productive assets and became a bank. Jeff Imelt, the current CEO, is working hard to reverse all that today and to become a value-creating enterprise.

Q. So companies shouldn’t financialize. Is that what you’re saying?

A. Yes. But most startups are really just that: ideas that can be sold at a higher price to a new round of investors. It’s “flip this startup.” Get to IPO or acquisition.

Young developers aren’t aware of the financial operating system on which their companies are running. They think that’s just “business,” when it’s a very particular model of VC: one that recognizes the importance capital but ignores the other two factors of production, land and labor.

And that makes them act in irrational and extractive ways. Amazon destroys the book market; Uber destroys the cab industry – not to create a marketplace but to establish a “platform monopoly” they can leverage into another vertical.

The real product of these companies is their stock. The original idea – the platform or app or device – is really just a marketing tool for the stock. So many great young developers have surrendered their ideas and their missions to their investors. The investors don’t want a sustainable company – or at least they don’t care about that. They just want to sell their stock and get the capital gains.

Q. Is this unique to Startups? Digital companies?

A. No – but digital companies, and the speed at which this is all taking place, has laid this bare. Made it apparent.

The Deloitte Shift Index of 2011 showed corporate profit over growth has been declining for 75 years. That means companies are great at taking all the chips off the table but terrible at deploying assets. It’s a form of corporate obesity. They bankrupt their marketplaces, and end up holding n the money. That’s not good for business. They have to become holding companies, themselves. That’s what Google did when it became Alphabet: they went from being a technology company to becoming a holding company that buys and sells technology companies.

When you look at Amazon, Uber, Facebook, and the other digital behemoths out there, you come to realize that these are not companies in the traditional sense of the word. Digital companies are essentially pieces of software that convert circulating currency into static capital – into share price.

Q. Okay, then. What should they do differently?

A. I’ve got six main suggestions.

• Take less money. Sounds ridiculous, I know, but if you want to have a company that answers to no one, and is allowed to make money for a whole long time by selling goods and services, then take less capital to begin with. Go for the lowest valuation possible, because then it will be easier to fulfill your investors expectations. If you get a high valuation – say 50 million dollars – and your investors are expecting a 100x return, that means your company has to become worth $5 billion for investors to be happy. If you don’t reach that size, they would rather the company die. A single or a double is not sufficient. It’s a home run or nothing.

• Make “them” rich. This means to make your customers, employees, and suppliers wealthy. Don’t take the traditional Walmart approach of squeezing everyone else until they’re bankrupt. When your customers have no money, they can’t spend it with you. When your cab drivers can’t pay their rent, they can’t drive for you. When your suppliers can’t make a profit selling to you – even if you are the monopoly player – they go out of business. Then you can’t make money off your marketplace, because it is gone. So instead, create platforms that let others profit by engaging with you. Whether that’s giving your uploaders a better share of the ad revenue from their videos, or giving your drivers a livable wage.

• Promote flow over growth. We have to get off growth and start looking at how to optimize for the velocity of currency. More transactions. Instead of taking ten dollars off the table, think of how to make the same dollar ten times. If you’re focused on revenue instead of growth, consider delivering dividends to your shareholders instead of capital gains. Also look at bounded investing, like the US Steelworkers did with their retirement accounts: they invested in construction projects that hired steelworkers. They invested, and made the same money back.

• Experiment with new models. Banks can offer half their business loans in cash contingent on a borrower’s ability to raise the other half with a crowdfunding app supplied by the bank. Then the bank is becoming something more than the monopoly lender; it’s also the facilitator of local economic development. Or Walmart could experiment by setting aside one aisle for locally produced goods.

• Platform cooperatives. Imagine if Uber’s drivers owned 50% of the company. Then they wouldn’t be doing the R&D for a robot driving company that they don’t own. They’d be investing their work for their own futures. Or consider giving employees real participation in your enterprise – not just silly options that only work if you’re a unicorn. Real, ongoing, ownership in the company that isn’t dependent on a freak sale.

• Finally, consider cutting the employees in on their increased productivity. If you can cut the work week down to four days, why reduce their salary as well? Why deliver all the gains to the shareholders, and put the employees at risk? Our relationship to work is backwards; we use “employment” as a way to justify letting people partake of what we already have in abundance. We are tearing down houses in California because we can’t find enough people with “jobs” to justify letting them live in them.

Q. Is there a role for government or policy?

A. Mainly, reverse tax punishment for dividends vs. capital gains. Charge low tax on dividends and revenue; charge high tax on capital gains. This will lead shareholders to stop pushing for growth and start looking for sustainable revenues.

Q. Finally, you see this as a pivotal historical moment? Explain.

A. Yes. As I see it, it’s a new renaissance – but much different from the last one. The original renaissance was great in many ways, but it quashed a thriving p2p marketplace, and replaced it with the chartered monopoly and central currency. It set in motion the monopolistic, growth-based, extractive, colonial corporate economy in which we live. Think Conquistadors, British East India Trading Company, and Walmart. These days, that has translated into Google/NSA, Amazon, and Uber.

But we may just be in a new renaissance. Think of the parallels:

Printing press / Internet

Circumnavigate globe / orbit the planet

Perspective painting / hologram, fractal

The list goes on.

A renaissance is an opportunity to retrieve – literally re-naissance or “re-birth” – the mechanisms and ideals suppressed in the last renaissance. In the case of the last Renaissance, the things that got rebirthed were the centrality and empire of ancient Greece and Rome. Meanwhile, it wiped out the commons, p2p trade, and distributed prosperity. The medieval marketplace and its local currencies were legally and forcibly shut down.

So in a digital renaissance, we see some of those mechanisms retrieved. We don’t go back to the Middle Ages, but we bring forward some of their long-repressed innovations, such as the commons, p2p trade, alternative currencies, and distributed prosperity.

After all, digital really means the digits – the fingers. It’s a restoration of our productive capability as well as our ability to transact directly. Networks make the old marketplace finally scalable. Land and labor are brought back into the equation, along with capital rather than just “externalized.”

We finally have the choice whether to use technology to optimize humanity for the marketplace or use to technology to optimize the market for humanity.

The post The next digital economy: Why refusing to grow is better business appeared first on P2P Foundation.

Douglas Rushkoff: I thought long and hard about how best to respond to the thousands of emails I’ve received since publishing Throwing Rocks at the Google Bus. People, companies, mayors, cooperatives, towns and big corporations, all looking for ways to distribute prosperity more widely, start local currencies, build platform cooperatives, convert to employee ownership, offer dividends instead of capital gains, or crowdfund a bookstore. I’ve answered more than half – or about 20,000 of them – individually. But I realized that it’s really not me who has the answers; it’s you.

I’m not a one-stop shop for new social and economic strategies. But I know a heck of a lot of the people who have the answers – people who understand we have to stop optimizing human lives for economic growth, and start optimizing the economy for human prosperity. People who want to stop programming people for technology, and start programming technology for people. The people I’ve come to call Team Human.

So I’m going back on the air with a new audio show – my first since doing The Media Squat on WFMU a decade ago. It’s a weekly podcast called Team Human, looking to challenge the operating systems driving our society, reveal its embedded codes, and share strategies for sustainable living, economic justice, and preservation of the quirky nooks and crannies that make people so much more than mere programs.

Team Human is where the conscious beats the automatic. An intervention by people, on behalf of people. All in delightful audio – perhaps the most intimate, enveloping medium yet developed.

My books may have been good for addressing the symptoms of social and economic injustice, and doing forensic analysis of the root causes for our problems – sometimes dating back to things like the invention of central currency and chartered monopolies in the late Middle Ages. But social change requires more than knowledge of where we are and how we got here. It requires a shift in values, in perception, and in the way we understand what it means to be a human being. It’s more fundamental than policy, because it is what animates us in the first place.

If we understand human beings the way the market does – in terms of our ‘utility value’ – then all is surely lost before we’ve even begun. Machines will always have greater utility value than humans. And people are certainly an impediment to a marketplace where assets are abstractions of derivatives, not the stuff that sustains life. To the market, the derivatives on water are worth a whole lot more than water, itself.

Meanwhile, if we look at human beings the way some of the scientists and CEO of our leading technology companies do, then we’re just some temporary stage on information’s journey toward higher states of complexity. The minute humans are outpaced by artificial intelligence – the moment of the ‘singularity’ – we will be officially and effectively obsolete. In their perverted understanding of evolution, human beings should pass the torch. Any effort to stick around as something more than a memory card may as well be hubris.

Well, I don’t buy that. And I know a lot of you don’t, either. It’s time we forge the solidarity we need to press for the human agenda – without shame or embarrassment.

People are cool, in our own weird, clumsy, and ambiguous way. The markets and technologies we’ve created are not new gods. They are not our replacements, but mechanisms we’ve constructed to make our lives better, more just, and more meaningful.

That’s why I’ll be engaging in real-time, no-holds-barred discussions with people who are hacking the machine to make it more compatible with human life, and helping redefine what it means to stay human in a digital age. Members of Team Human such as debt activists Astra Taylor and Tom Gokey, Occupy Wall Street founder Micah White, YesMan Andy Bichlbaum, Institute for the Future chief Marina Gorbis, co-op organizer Esteban Kelly, DNA artist Heather Dewey-Hagborg, tech environmentalist Richard Maxwell, and so many more, including, hopefully, you too.

Please join Team Human – both as a listener and as a human teammate. It’s not too late to reclaim planet earth for its people, to give land and labor a voice along with capital, and to share our best strategies for mutual aid, environmental sustainability, and economic justice. In the real world, we humans have the home field advantage. Let’s use it.

Lead image by David Shankbone

The post Douglas Rushkoff’s TEAM HUMAN appeared first on P2P Foundation.

“The moment we stop optimizing the digital economy for the growth of capital, and optimize it for the circulation of value between people, everything will start to get better really fast.”

Another eye-opening interview with our friend Douglas Rushkoff. This one was conducted by Jesse Hicks and originally published at The Kernell.

For more than two decades, Douglas Rushkoff has provided incisive commentary on our increasingly connected, digitized, and corporatized world. From Cyberia: Life in the Trenches of Cyberspace to Life Inc.: How the World Became a Corporation and How to Take It Back to his newest, Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity, he’s chronicled both the promise and the peril of of a global society being remade by the Internet and high-tech corporations.

In his new work he argues that, appearances to the contrary, today’s online colossi—think Facebook, Google, Apple, and the like—haven’t truly revolutionized our economy. Instead, they’ve reproduced the Industrial Age corporation at a global scale, with all the benefits of digital innovation. At heart, though, they’re still designed to extract value and to pursue growth above all else. That mission, he argues, is becoming increasingly untenable, and for perhaps the first time there’s an alternative: companies that leverage technology to spread abundance rather than hoard wealth to themselves. But making that happen first requires rethinking some of our most basic assumptions about what corporations do—and why they exist.

Via email just prior to his book launch at SXSW, we discussed why our global economy is stuck in an Industrial Age mindset, why Wall Street considers Twitter a failure, and why Silicon Valley needs to start building companies that aren’t just meant to be sold for a healthy return on investment.

What made you write a book about the failings of the digital economy?

I got the idea the day that Twitter went public, when I saw my friend, one of the co-founders, on the cover of the Wall Street Journal with the number of billions he made that day. I wasn’t sure whether to be happy or sorry for him. Yes, he was rich, and he had disrupted the communications industry—but he was surrendering all that disruption to the biggest, baddest industry on the block: finance.

Worse, Twitter would have to somehow deliver impossible returns to its new investors. They were demanding growth. So even today, Twitter—which earns half a billion dollars a quarter—is considered an abject failure by Wall Street.

Worst of all, this obligation to grow has turned otherwise promising companies into extractive monopolies. In order to grow, they use scorched-earth practices that take value from people and places and turn it into capital for their shareholders. This growth mandate is cause for the increasing disparity of wealth, and it has been energized and accelerated by digital technology. Digital technology was supposed to distribute this wealth to more people, not impoverish the many for the wealth of a few.

The main target of your critique is what you call “the growth trap.” Since at least the birth of the corporation, you argue, our economic thinking has been dominated by an unrelenting drive for growth: Companies have to continue to extract more and more value in order to be seen as successful. You suggest that we’ve reached a point where this is no longer tenable—and that digital technology in particular can enable a new way of thinking. Can you explain the growth trap and how it undergirds our current thinking?

Well, it takes a whole book to explain this properly, because the requirement for companies to grow really traces all the way back to the institution of interest-bearing currency, which requires that the economy grow in order for that interest to be paid back.

Today, the equivalent of those bankers are shareholders. They expect not just interest, but tremendous returns on their initial investments. They witnessed the success of Facebook and Google and want those sorts of returns, too. So they put money into a company like Twitter, and then expect to earn back 100 or 1,000 times on their original investment. The fact that Twitter makes 500 million dollars a quarter is considered an abject failure by the investors. And so Twitter must look for some way to “pivot”—that is, change from a super successful company that lets people send 140-character messages, into something else.

Regular companies are in the same position. Pepsi, McDonald’s, Exxon all have shareholders who demand that the share price go up—that the company grow. And the bigger these companies get, the harder it is for them to grow. They are already worth billions of dollars. In fact, corporate profits over total value have been declining for over 75 years.

The CEOs of these companies read my articles about getting out of the growth trap, and they call me begging for the way out. They all know they can’t keep growing at the rate demanded by their shareholders. They can fake it a while, but in the end, these scorched-earth policies just kill the markets and consumers on which they’re depending. Well, in the real end, they end up extracting all the value out of people and places until there’s nothing left.

Growth depends on expansion. Not just that, but on accelerating expansion. You have to grow faster and faster. And it’s just not possible for companies of this size to do that. They must instead learn to pay shareholders with dividends. Run themselves like family businesses, for the long term.

You noted that at the beginning of the Net, there were serious and deeply felt expectations that it might not become, as you’ve characterized it, a strip mall. Today we have “social media” that basically recruits people to become marketers to their friends, and a “sharing economy” driven by the idea that if you’re not monetizing every bit of your time, you’re wasting it. Does it feel different this time—that this time there might be a role for the Net to play in genuinely reimagining our economic world?

Well, the thing that feels different to me is that pretty much everyone sees that it’s not sustainable. How can everyone get paid to advertise? What’s left to advertise? Marketing has never ever accounted for more than 3 or 4 percent of GDP. And now it’s supposed to be our main industry? That, and finance? They’re both abstractions. When we see a company as successful as Twitter failing, we come to understand that the model itself is broken.

As for “sharing,” Uber drivers taught us that this is a crock. The unemployed gig drivers of Uber are now as smart about labor politics as the cabbies from London. Uber’s monopoly and policies have been rendered so transparent.

And yes, while I’m not a techno-solutionist, I do believe that networking technologies could enable much more distributed prosperity. The digital economy, so far, is just corporate industrialism on steroids: extract value from people and places. Digital companies are like software programmed to take currency out of circulation, and deliver it up to shareholders. They could just as easily—more easily, in fact—be optimized to promote the circulation of currency. Most simply stated, less like Amazon, more like eBay. It’s as simple as letting Uber drivers have shares in the company, proportionate to the amount of work they’ve done. And that would be pretty easy to calculate and authenticate with something like a blockchain. Networking technologies are biased toward more distributed solutions. That’s what they were originally built for.

But the real problem here is that our technology development is driven solely by the needs of capital.

The book’s title comes from an incident in which protesters in Oakland, frustrated by the way Silicon Valley companies are remaking the social fabric of San Francisco, threw rocks at the private buses that ferry Google employees to work. What did that event clarify for you, and why do you think those rocks were aimed in the wrong direction?

I don’t know that rocks needed to be thrown in any direction. Not just yet. The original protests did not involve rocks, and were entirely well-founded. Still are. Google and other Silicon Valley companies are behaving like foreign corporations. Workers move into SF, impacting rents, driving local businesses out of the neighborhood. Then they use public bus stops to take private buses to workplaces outside the city.

“The whole ‘startup’ process is really just the old wine of venture capital in a new digital bottle. These companies are built to be sold.”

And this crisis of poor wealth distribution is both real and symbolic of a bigger disappointment we all have with the poorly distributed gains of the digital economic boom. I try not to blame individuals for this—as if there are some mean people making this happen. They’re not mean so much as clueless. They have built very disruptive—positively disruptive— businesses, but haven’t disrupted the economic operating system on which they are operating. They are not truly digital companies so much as industrial companies running on digital steroids.

You point to the popularity of books such as The Second Machine Age as evidence that despite being in an entirely new economic environment, we’re still saddled with thinking from the Industrial Age. Why is that the case, and what’s the new kind of thinking that we ought to be embracing?

It’s only natural for our first response to be reactionary. Most books on how to thrive in a new economy are really about how to maintain a traditional industrial corporation. The whole “startup” process is really just the old wine of venture capital in a new digital bottle. These companies are built to be sold. And their revenue, when they even have it, is based on the company’s ability to extract value—not their ability to create it.

Where do we look for hope that we can shake off dead ideas and adapt to the new environment we’re in the process of creating?

We look for hope right there in the despair. Every person who can’t get a job at a big corporation is another person who gets to figure out how to create and exchange value in the real world. Every person who can’t get a loan is another person willing to consider how alternative currencies, favor banks, and the commons work. Every town whose economy has been trashed by a corporation is another community about to learn that the only things you need for a thriving economy are people with skills and people with needs.

The moment we stop optimizing the digital economy for the growth of capital, and optimize it for the circulation of value between people, everything will start to get better really fast.

Illustration via Max Fleishman

– See more at: http://kernelmag.dailydot.com/issue-sections/features-issue-sections/15982/douglas-rushkoff-throwing-rocks-at-the-google-bus-interview/?curator=MediaREDEF#sthash.fn9gVnLQ.dpuf

Photo by designbyfront

The post Douglas Rushkoff’s vision for a new, better world appeared first on P2P Foundation.

“I’m less frustrated by people’s blindness to the problem than I am to their blindness to the solutions – by how easy it is to develop local currencies, to use alternative websites, to do simple investments in their communities rather than in far-flung mining companies. People don’t realise how much power they have. And that’s partly because the real world has been dwarfed by this digital simulacra which seems much more important than our reality but it’s not – it needs to be in service of our reality.”

Our frequent collaborator Douglas Rushkoff was recently interviewed in the Guardian by Ian Tucker. Rushkoff says: “This is a pretty good new interview about the upcoming book, and a good excuse for me to say the time has come: please support Throwing Rocks at the Google Bus by pre-ordering through your favorite bookseller or Amazon.” The full interview is reproduced below.

Douglas Rushkoff emerged as a media commentator in 1994 with his first book, Cyberia. His debut examined “the early psychedelic, rave roots of digital technology. I was trying to infer what a digital society might be like given the beliefs of these people,” he tells me during a phone interview from his home in Hastings on Hudson, New York.

He has published 10 books detailing an increasingly fierce critique of digital society. Along the way Rushkoff has coined terms that have slipped into the lexicon such as “digital natives”, “social currency” and “viral media”. He has also made several documentaries and written novels both graphic and regular; consulted for organisations from the UN to the US government and composed music with Genesis P-Orridge. In 2013 MIT named him the sixth most influential thinker in the world, sandwiched between Steven Pinker and Niall Ferguson.

His latest book, Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity, is published by Portfolio Penguin on 3 March.

Was this a topic for this book something you’d been pondering for a while or was this book inspired by the Google bus protests in San Francisco?

Actually the germ of the idea was when in 2000 AOL announced they were buying Time Warner, which was a huge deal. It was the moment where I realised that digital businesses were not disrupting the underlying operating system of traditional corporate capitalism. The question I had been asking myself before that point was: will digital media ‘networkise’ capitalism or will capitalism commodify and destroy the internet? Initially, with people like Howard Rheingold and Stewart Brand the internet promised a retrieval of a 60s hippy communal approach to the world.

What do you find most objectionable about the kind of economy that technology appears to create?

What’s most pernicious about it is that we are developing companies that are designed to do little more than take money out of the system – they are all extractive. There’s this universal assumption that we have to turn working currency into share price.

You call this the “growth trap”?

The growth trap is the assumption of business that growth and health are the same thing – and I understand how they got back that way – that when you have a debt-based monetary system it has to pay back to the central banks more than was borrowed and that requires growth. So if you have a currency that requires growth in order to have value you’re going to have all these businesses biased towards growth rather than everything else.

For example?

Uber has nothing to do with helping people get rides in towns. Uber is a business plan. It’s a platform monopoly getting ready to leverage that monopoly into another vertical whether it be delivery, drones or logistics. The prosperity of all the people who used to be in the cabbie industry ends up sacrificed to the growth of this company. Corporations are like these obese people, they suck money out of our economy and store it in the fat of share price. That’s not business, that’s value extraction. They take all the chips off the board.

You’re an advocate of local currencies and bartering. Do you see “sharing economy” platforms such as Airbnb as their internet manifestation?

Yes and no. Initially they seemed to be leaning in the right direction, they appeared to be encouraging peer-to-peer exchange. Which is what we need the ability to do – I want to buy from you, you want to sell to me but without some big corporation being involved. The real problem is they end up taking too much venture capital and then the money people say you’ve got to extract more from that transaction – you can’t just take 5% for your little app, you should be taking half. So the young developer is forced to pivot from whatever the original idea was to become a monopoly that allows the company to reach a sellable event – an IPO or an acquisition – in order for the original investors to get 100 times their initial investment. Anything less than that is a loss for them, they need a home run.

Douglas Rushkoff speaks at Occupy Wall Street in Zuccotti Park. Photograph: Alamy

You left Facebook in 2013. How is that working out for you? 

Professionally, I’m thinking it may be good for one’s career and business to be off social media altogether. Chris Anderson was wrong. “Free” doesn’t lead to anything but more free. Working for free isn’t leverage to do a talk for loads of money; now they even want you to talk for free. What am I supposed to do? Join YouTube and get three cents for every 100,000 views of my video? That is crap; that is insane!

So business-wise I’m thinking that every time I post an article summarising what my book is about I’m hurting the sales and I end up delivering my ideas in a piecemeal, context-less fashion which ends up communicating less. And it makes my ideas much more easily applied for evil by corporations. That’s the lesson I should have learned in 1994 when I published Media Virus and my concept got turned into “viral marketing”, which took a slither of an idea and used it for pernicious applications.

I hope you don’t regard this interview as part of that process.

Not at all, but if I write a piece for someone, they ask: “Are you gonna tweet it? Facebook it? Are you going put it on your blog? Are you RSSing that blog? Do you have a newsletter?” Oh my God, I became an author to sit alone and write ideas. It used to be when you finished a book it would be a celebration. Now it’s when the work starts. It’s torture.

You’re an established writer, but social media can be useful to someone just starting out.

Maybe I’m unfair. I’m sure there is a way of using Facebook as a ladder to get to somewhere else. But also knowing what Facebook does behind the scenes, I thought it was bad digital hygiene to encourage people to “like” me and make them more vulnerable to nasty things.

What kind of nasty things?

They’ll get marketed to. Facebook will market you your future before you’ve even gotten there, they’ll use predictive algorithms to figure out what’s your likely future and then try to make that even more likely. They’ll get better at programming you – they’ll reduce your spontaneity. And they can use your face and name to advertise through you, that’s what you’ve agreed to. I didn’t want Facebook to advertise something through me as an influencer where my every act becomes grist to marketing.

Do you ever feel like you’re shouting into the abyss? Most people are relaxed about the levels of surveillance and tracking that happen on the internet. They enjoy and use the services too much to care …

I’m less frustrated by people’s blindness to the problem than I am to their blindness to the solutions – by how easy it is to develop local currencies, to use alternative websites, to do simple investments in their communities rather than in far-flung mining companies. People don’t realise how much power they have. And that’s partly because the real world has been dwarfed by this digital simulacra which seems much more important than our reality but it’s not – it needs to be in service of our reality.

Is it true that in the early 90s your publishers cancelled your first book Cyberia because they thought the internet wouldn’t last?

I finished it in 1992 but the publisher believed the net would be over by 1993 so they cancelled it. So I sold it to HarperCollins – a Rupert Murdoch imprint, so I took a whole load of grief from my leftie friends.

You’ve been credited with coining the term “digital natives” – saying they are better equipped to navigate the current landscape. Is it not harder for them since they don’t have an experience of anything pre-Google, pre-smartphone etc?

Originally I thought they could navigate it better and my generation were the immigrants. I think they have more facility with these networks and platforms as they are designed but they have less insight that they are designed environments. They don’t see how they are tilted towards extracting value from them. They could benefit from engaging with those of us that saw how those networks were put together. That’s why I wrote the book Program or Be Programmed – if you don’t know what a piece of software is for, the chances are you are being used by it.

Do you still advocate taking a digital sabbath?

I came up with this thing which I now don’t like: the digital sabbath. It feels a little forced and arbitrary, and it frames digital detox as a deprivation. I would much rather help people learn to value looking into other people’s eyes. To sit in a room talking to people – I want people to value that, not because they aren’t being interrupted by digital media but because it’s valuable in its own right.

Lead image by Seth Kushner, from his e-comic with Douglas Rushkoff Taking Back the World

The post Douglas Rushkoff on the Malfunctioning Tech Economy appeared first on P2P Foundation.

As we move forward year-by-year, we are introduced to new futuristic terms and concepts like IoT, VR, and autonomous vehicles. These new industries are set to refine our perception of daily life, while revolutionizing the industries they touch. As we move further into connected space, our economy is also slowly on the move. Many have talked about the benefits of a true “digital economy” and the what that could bring. But are we there yet?

The advancement of the tech sector and the switch to the digital space is of great concern as we peer into a future that many of us just struggle to keep up with each day. Douglas Rushkoff, however, is not one of those individuals. He has made a career of peering into that unknown future and helping the rest of us come to grips with the burgeoning digital space. His books have tackled a wide variety of topics dealing with this period of change, its effects, and warning signs that things might not be progressing as smoothly as they could be. We convinced Douglas to take a few minutes to answer some of the questions we have about the economy, a new renaissance, and where things are going right and wrong.

Each transformative period is a moment to remember that we are programming our reality to favor the best things about humanity.

Douglas Rushkoff

Much has been said about the “digital economy” and its role on the consumer’s life. How would you describe the current state of that economy? Are we there yet?

Honestly, I don’t think we’re in a digital economy, yet. We’re really just in an amped-up version of the old industrial economy: traditional, extractive, mass-scale corporate capitalism, where the object of the game is to monopolize value creation and promote the growth of capital. In other words, it’s the same old economy on digital steroids.

The true digital economy is in the most fledgling state, a great majority of business – digital and otherwise – is geared more toward thwarting these early efforts. The true digital economy is emerging in the form of platform cooperatives (digital companies actually owned by the participants), crowd-funding, and peer-to-peer transactions directly between people. The way to distinguish truly digital spirited economic activity is to see whether it is distributing value, or just extracting it.

Your new book, Throwing Rocks at the Google Bus, examines your thoughts around the digital economy and how you believe it’s currently on the wrong track. What, in your opinion, have been the biggest mis-steps in the development of this digital transaction space?

I guess the biggest mis-step is for innovators to focus on “disrupting” one small sector, without ever questioning the underlying business processes. So they may develop a technology that disrupts music or journalism, but then they run to a venture fund or Goldman Sachs to get on the track to be acquired or having an IPO. So the problem is that everyone is keen on creating new operating systems for one thing or another, but no one is questioning the bigger operating system on which all of this is occurring: capitalism.

Now capitalism itself isn’t so bad – as long as investors realize that there are factors of production that must be valued other than the capital. Traditionally, as long as there has been economics, we’ve recognized the factors of production to be land, labor and capital. All three are required to make business work. But capital – money – is the only one of those factors that can be digitized and scale up. And so it’s the only contribution that gets valued. The people putting in the money end up the only ones who own a piece of the pie.

As a follow up to that question, of those mis-steps, which do you think are the easiest to change in order to right the ship? And even more to the point, can it be righted?

The easiest path to a fix is to recognize that there are more stakeholders than the investors. You could start with the workers. Let the people using a platform be its owners. Distribute just 10% of Uber’s shares to the drivers. That would be the first step toward adopting a business model that seeks to create wealth rather than simply extract it.

There has been a lot of talk about industry 4.0, hyper-local manufacturing, and bringing the means of production back to the individual. What do you see as the largest benefits from putting these types of manufacturing processes back in the hands of individuals, rather than large corporations?

Well, most simply, it retrieves a concept first articulated by the Catholic church when it was trying to state its position on Marx and runaway industrialism. The popes argued for a principle they called subsidiarity, in which no business grows larger than it needs to be in order to serve its purpose. Growth for growth’s sake was seen as the problem. They also believed in what was later called “distributism” – the idea that workers should own the tools through which they create value.

So at the time, that meant the land on which they worked, or the machines they used to make stuff. If they were co-owners, then they couldn’t really be exploited. It was their company, their land they were contributing to. In digital terms, this means the net being able to foster value creation by people on the periphery – not just by workers who travel to the city to work in somebody else’s factory.

A new industrial age could bring around great transformative change. Do you think we are on the threshold of, or are we in the midst of a period of growth–a new renaissance?

My whole point is that the new renaissance is not a period of growth. We transcend the whole idea of growth (grow what? the economy? at whose expense? the planet’s?). And instead, we learn how to prosper in a more circulatory, “steady state” economy. The objective is not to grow businesses by lending money and then extracting it from the economy. We don’t optimize for growth, but for circulation. We get money moving throughout the economy. We encourage lots of translation and value exchange. We keep recycling the same money.

Instead of “capturing” value and turning it into dead shares of stock, we keep all that value circulating through the economy. Growth is really a trap.

Are there practices from the tech industry that economists can utilize to develop more equity in the business world? Something akin to “Open Source Economics” versus the winner take all model?

I don’t know if the economists can do it, but the entrepreneurs and investors and technologists can. All the economists can do is make the suggestions and show the proofs. But yeah, I suppose the principles to understand are, first, the distributed nature of networks. Everything is accessible everywhere. They need to think of money that way – not as something programmed to accumulate, but something programmed to move in a frictionless way throughout the network.

Second, on the level of legal reform, they can stop taxing dividends more then capital gains. That means they have to stop punishing real earnings, and rewarding the passive accumulation of income by not taxing it as much. They should think of the economy less like a hard drive, and more like the cloud.

Finally, they can look at the open web – the peer-to-peer alternatives to fat platforms that seek to monopolize our interactions. People can actually interact in a peer-to-peer fashion online, without the need for a central authority or arbiter. They can transact this way, as well.

What do you see as the main value(s) that should/could come from a transformative period of great change?

The main value should always be the value of humans. Each transformative period is a moment to remember that we are programming our reality to favor the best things about humanity. Too often, we use these transformative periods to deny our humanity or, worse, surrender it to some other ideal – whether it’s the pyramids, the factories, or – today – economic growth. Whenever we are in transition, as we are now, we have the ability to see those faulty programs and rewrite them to express our deeper purpose. But to do that, we have to get back in touch with our humanity. And that’s hard when our behaviors are so driven by software.

In one of your recent lectures at The New School you talked about the initial purposes of the industrial age, one of which was to remove peer-to-peer transaction. Do you see that reversing and what would be the overall benefits of it?

I see almost everything about the industrial age being reversed by the things being “retrieved” by the digital age. A renaissance means old, repressed ideas being reborn (re-naissance) in a new context. So industrialism really came out of the last renaissance, which was largely about rebirthing the ideas of ancient Greece and Rome: centralization of authority, empire, and expansion.

Today’s renaissance would retrieve the medieval values (not the lifestyle!) that were stamped out by the renaissance: crafts, peer-to-peer trading at the market, local value creation…even craft beers! Really, it’s no coincidence that the cultural expressions of the digital age – like Burning Man and etsy – share so many medieval qualities.

The benefits of reversing the dehumanizing bias of the industrial age – the drive to reduce human involvement and intervention in production and expansion – is to put the economy and technology back in the service of human beings, instead of letting them continue to devalue us. Because today’s technologies are so much more powerful than they were in the era of the steam engine. If we program them to remove human interference, this time they may be able to do it.

Dr. Douglas Rushkoff is an author, teacher, and documentarian who focuses on the ways people, cultures, and institutions create, share, and influence each other’s values. Douglas will be speaking at WebVisions New York and Portland on the subjects of media, society, and change in his talk, Throwing Rocks at the Google Bus – How Growth Became the Enemy of Prosperity.

Originally published in WebVisions.

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