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http://www.edge.org/3rd_culture/rushkoff09/rushkoff09_index.html
We must stop perpetuating the fiction that existence itself is dictated
by the immutable laws of economics. These so-called laws are, in
actuality, the economic mechanisms of 13th Century monarchs. Some of us
analyzing digital culture and its impact on business must reveal
economics as the artificial construction it really is. Although it may
be subjected to the scientific method and mathematical scrutiny, it is
not a natural science; it is game theory, with a set of underlying
assumptions that have little to do with anything resembling genetics,
neurology, evolution, or natural systems.
ECONOMICS IS NOT NATURAL SCIENCE
[8.11.09]
By Douglas Rushkoff
DOUGLAS
RUSHKOFF is a media analyst; documentary filmmaker, and author. His
latest book is Life Inc.: How the World Became a Corporation and How to
Take It Back.
ECONOMICS IS NOT NATURAL SCIENCE
The
marketplace in which most commerce takes place today is not a
pre-existing condition of the universe. It's not nature. It's a game,
with very particular rules, set in motion by real people with real
purposes. That's why it's so amazing to me that scientists, and people
calling themselves scientists, would propose to study the market as if
it were some natural system — like the weather, or a coral reef.
It's
not. It's a product not of nature but of engineering. And to treat the
market as nature, as some product of purely evolutionary forces, is to
deny ourselves access to its ongoing redesign. It's as if we woke up in
a world where just one operating system was running on all our
computers and, worse, we didn't realize that any other operating system
ever did or could ever exist. We would simply accept Windows as a given
circumstance, and look for ways to adjust our society to its needs
rather than the other way around.
It is up to our most
rigorous thinkers and writers not to base their work on widely accepted
but largely artificial constructs. It is their job to differentiate
between the map and the territory — to recognize when a series of false
assumptions is corrupting their observations and conclusions. As the
great interest in the arguments of Richard Dawkins, Daniel Dennett, Sam
Harris, and Christopher Hitchens shows us, there is a growing
acceptance and hunger for thinkers who dare to challenge the widespread
belief in creation mythologies. That it has become easier to challenge
the supremacy of God than to question the supremacy of the market
testifies to the way any group can fall victim to a creation myth —
especially when they are rewarded to do so.
Too many
technologists, scientists, writers and theorists accept the underlying
premise of our corporate-driven marketplace as a precondition of the
universe or, worse, as the ultimate beneficiary of their findings. If a
"free" economy of the sort depicted by Chris Anderson or Clay Shirky is
really on its way, then books themselves are soon to be little more
than loss leaders for high-priced corporate lecturing. In such a scheme
how could professional writers and theorists possibly escape biasing
their works towards the needs of the corporate lecture market? It's as
if the value of a theory or perspective rests solely in its
applicability to the business sector.
Whether it's being done in
honest ignorance, blind obedience, or cynical exploitation of the
market, the result is the same: our ability to envision new solutions
to the latest challenges is stunted by a dependence on market-driven
and market-compatible answers. Instead, we are encouraged to apply the
rules of genetics, neuroscience, or systems theory to the economy, and
to do so in a dangerously determinist fashion.
In their
ongoing effort to define and the defend the functioning of the market
through science and systems theory, some of today's brightest thinkers
have, perhaps inadvertently, promoted a mythology about commerce,
culture, and competition. And it is a mythology as false, dangerous,
and ultimately deadly as any religion.
The trend began on the
pages of the digital business magazine, Wired, which served to reframe
new tech innovations and science discoveries in terms friendly to
disoriented speculators. Wired would not fundamentally challenge the
market; it would provide bankers and investors with a map to the new
territory, including the consultants they'd need to maintain their
authority over the economy.
The first and probably most
influential among them was Peter Schwartz, who, in 1997, with Peter
Leyden, forecast a "long boom" of at least 25 years of prosperity and
environmental health fueled by digital technology and, most
importantly, the maintenance of open markets. Kevin Kelly foresaw the
way digital abundance would challenge scarce markets, and offered clear
rules through which the largest companies could still thrive on the
phenomenon.
Stewart Brand joined Schwartz and others in
cofounding GBN, a futurist consulting firm whose very name Global
Business Network , seemed to cast the emergence of a web economy in a
new light. What did it mean that everyone from William Gibson to Brian
Eno to Marvin Minsky would now be consulting to the biggest
corporations on earth? Would they even be able to control their own
messages? Brand did famously say in 1984 that "information wants to be
free." But, much less publicized and remembered, he did so only after
explaining that "information wants to be expensive, because it's so
valuable." Would his and others' work now be parsed for the tidbits
most effective at promoting a skewed vision of the new economy? Would
the counterculture be able to use its newfound access to the board
rooms of the Fortune 500 to hack the business landscape, or had they
simply surrendered to the eventual absorption of everything and
everyone to an eternal primacy of corporate capitalism? The "scenario
plans" that resulted from this work, through which corporations could
envision continued domination of their industries, appeared to indicate
the latter.
Chris Anderson has analyzed where all this is going,
and — rather than offering up a vision of a post-scarcity economy —
advised companies to simply leverage the abundant to sell whatever they
can keep scarce. Likewise, Tim O'Reilly and John Batelle's new, highly
dimensional conception of the net — Web Squared— ultimately offers
itself up as a template through which companies can make money by
controlling the indexes people use to navigate information space.
Both
science and technology are challenging long-held assumptions about
top-down control, competition, and scarcity. But our leading thinkers
are less likely to provide us with genuinely revolutionary axioms for a
more highly evolved marketplace than reactionary responses to the
networks, technologies, and discoveries that threaten to expose the
marketplace for the arbitrarily designed poker game it is. They are not
new rules for a new economy, but new rules for propping up old economic
interests in the face of massive decentralization.
While we can
find evidence of the corporate marketplace biasing the application of
any field of inquiry, it is our limited economic perspective that
prevents us from supporting work that serves values external to the
market. This is why it is particularly treacherous to limit economic
thought to the game as it is currently played, and to present these
arguments with near-scientific certainty.
The sense of
inevitability and pre-destiny shaping these narratives, as well as
their ultimate obedience to market dogma, is most dangerous, however,
for the way it trickles down to writers and theorists less directly or
consciously concerned with market forces. It fosters, both directly and
by example, a willingness to apply genetics, neuroscience, or systems
theory to the economy, and of doing so in a decidedly determinist and
often sloppy fashion. Then, the pull of the market itself does the rest
of the work, tilting the ideas of many of today's best minds toward the
agenda of the highest bidder.
So Steven Johnson ends up
leaning, perhaps more than he should, on the corporate-friendly
evidence that commercial TV and video games are actually healthy.
(Think of how many corporations would hire a speaker who argued that
everything bad — like marketing and media — is actually bad for you.)
Likewise, Malcolm Gladwell finds himself repeatedly using recent
discoveries from neuroscience to argue that higher human cognition is
more than trumped by reptilian impulse; we may as well be guided by
advertising professionals, since we're just acting mindlessly in
response to crude stimuli, anyway. Everything becomes about business —
and that's more than okay.
This widespread acceptance of the
current economic order as a fact of nature ends up compromising the
impact of new findings, and changing the public's relationship to the
science going on around them. These authors do not chronicle (or
celebrate) the full frontal assault that new technologies and
scientific discoveries pose to, say, the monopolization of value
creation or the centralization of currency. Instead, they sell
corporations a new, science-based algorithm for strategic investing on
the new landscape. Higher sales reports and lecture fees serve as
positive reinforcement for authors to incorporate the market's bias
even more enthusiastically the next time out. Write books that business
likes, and you do better business. The cycle is self-perpetuating. But
just because it pays the mortgage doesn't make it true.
In
fact, thanks to their blind acceptance of a particular theory of the
market, most of these concepts end up failing to accurately predict the
future. Instead of 25 years of prosperity and eco-health, we got the
dotcom bust and global warming. Immersion in media is not really good
for us. People are capable of responding to a more complex call to
action than the over-simplified and emotional rants of right-wing
ideologues. The decentralizing effect of new media has been met by an
overwhelming concentration of corporate conglomeration.
These
theories fail not because the math or science underlying them is false,
but rather because it is being inappropriately applied. Yet too many
theorists keep buying into them, desperate for some logical flourish
through which the premise of scarcity can somehow fit in, and business
audiences won. In the process, they ignore the genuinely relevant
question: whether the economic model, the game rules set in place half
a millennium ago by kings with armies, can continue to hold back the
genuine market activity of people enabled by computers.
People
are beginning to create and exchange value again, and they are coming
to realize the market they have taken for granted is not a condition of
nature. This is the threat — and no amount of theoretical
recontextualization is going to change that — or successfully prevent
it.
Making Markets: From Abundance To Artificial Scarcity
The
economy in which we operate is not a natural system, but a set of rules
developed in the Late Middle Ages in order to prevent the unchecked
rise of a merchant class that was creating and exchanging value with
impunity. This was what we might today call a peer-to-peer economy, and
did not depend on central employers or even central currency.
People
brought grain in from the fields, had it weighed at a grain store, and
left with a receipt — usually stamped into a thin piece of foil. The
foil could be torn into smaller pieces and used as currency in town.
Each piece represented a specific amount of grain. The money was quite
literally earned into existence — and the total amount in circulation
reflected the abundance of the crop.
Now the interesting thing
about this money is that it lost value over time. The grain store had
to be paid, some of the grain was lost to rats and spoilage. So each
year, the grain store would reissue the money for any grain that hadn't
actually been claimed. This meant that the money was biased towards
transactions — towards circulation, rather than hording. People wanted
to spend it. And the more money circulates (to a point) the better and
more bountiful the economy. Preventative maintenance on machinery,
research and development on new windmills and water wheels, was at a
high.
Many towns became so prosperous that they invested in
long-term projects, like cathedrals. The "Age of Cathedrals" of this
pre-Renaissance period was not funded by the Vatican, but by the
bottom-up activity of vibrant local economies. The work week got
shorter, people got taller, and life expectancy increased. (Were the
Late Middle Ages perfect? No — not by any means. I am not in any way
calling for a return to the Middle Ages. But an honest appraisal of the
economic mechanisms in place before our own is required if we are ever
going to contend with the biases of the system we are currently
mistaking for the way it has always and must always be.)
Feudal
lords, early kings, and the aristocracy were not participating in this
wealth creation. Their families hadn't created value in centuries, and
they needed a mechanism through which to maintain their own stature in
the face of a rising middle class. The two ideas they came up with are
still with us today in essentially the same form, and have become so
embedded in commerce that we mistake them for pre-existing laws of
economic activity.
The first innovation was to centralize
currency. What better way for the already rich to maintain their wealth
than to make money scarce? Monarchs forcibly made abundant local
currencies illegal, and required people to exchange value through
artificially scarce central currencies, instead. Not only was centrally
issued money easier to tax, but it gave central banks an easy way to
extract value through debasement (removing gold content). The bias of
scarce currency, however, was towards hording. Those with access to the
treasury could accrue wealth by lending or investing passively in value
creation by others. Prosperity on the periphery quickly diminished as
value was drawn toward the center. Within a few decades of the
establishment of central currency in France came local poverty, an end
to subsistence farming, and the plague. (The economy we now celebrate
as the happy result of these Renaissance innovations only took effect
after Europe had lost half of its population.)
As it's
currently practiced, the issuance of currency — a public utility,
really — is still controlled in much the same manner by central banks.
They issue the currency in the form of a loan to a bank, which in turn
loans it a business. Each borrower must pay back more then he has
acquired, necessitating competition — and more borrowing. An economy
with a strictly enforced central currency must expand at the rate of
debt; it is no longer ruled principally by the laws of supply and
demand, but the debt structures of its lenders and borrowers. Those who
can't grow organically must acquire businesses in order to grow
artificially. Even though nearly 80% of mergers and acquisitions fail
to create value for either party, the rules of a debt-based economy —
and the shareholders it was developed to favor — insist on growth at
the expense of long-term value.
The second great innovation
was the chartered monopoly, through which kings could grant exclusive
control over a sector or region to a favored company in return for an
investment in the enterprise. This gave rise to monopoly markets, such
as the British East India Trading Company's exclusive right to trade in
the American Colonies. Colonists who grew cotton were not permitted to
sell it to other people or, worse, fabricate clothes. These activities
would have generated value from the bottom up, in a way that could not
have been extracted by a central authority. Instead, colonists were
required to sell cotton to the Company, at fixed prices, who shipped it
back to England where it was fabricated into clothes by another
chartered monopoly, and then shipped to back to America for sale to the
colonists. It was not more efficient; it was simply more extractive.
The
resulting economy encouraged — and often forced — people to accept
employment from chartered corporations rather than create value for
themselves. When natives of the Indies began making rope to sell to the
Dutch East India Trading Company, the Company sought and won laws
making rope fabrication in the Indies illegal for anyone except the
Company itself. Former rope-makers had to close their workshops, and
work instead for lower wages as employees of the company.
We
ended up with an economy based in scarcity and competition rather than
abundance and collaboration; an economy that requires growth and
eschews sustainable business models. It may or may not better reflect
the laws of nature — and that it is a conversation we really should
have — but it is certainly not the result of entirely natural set of
principles in action. It is a system designed by certain people at a
certain moment in history, with very specific interests.
Like
artists of the Renaissance, who were required to find patrons to
support their work, most scientists, mathematicians, theorists, and
technologists today must find support from either the public or private
sectors to carry on their work. This support is not won by calling
attention to the Monopoly board most of us mistake for the real
economy. It is won by applying insights to the techniques through which
their patrons can better play the game.
This has biased their
observations and their conclusions. Like John Nash, who carried out
game theory experiments for RAND in the 1950's, these business
consultants see competition and self-interest where there is none, and
reject all evidence to the contrary. Although he later recanted his
conclusions, Nash and his colleagues couldn't believe that their
subjects would choose a collaborative course of action when presented
with the "prisoner's dilemma," and simply ignored their initial results.
Likewise,
the proponents of today's digital libertarianism exploit any evidence
they can find of evolutionary principles that reflect the fundamental
competitiveness of human beings and other life forms, while ignoring
the much more rigorously gathered evidence of cooperation as a primary
human social skill. The late archeologist Glynn Isaac, for one,
demonstrated how food sharing, labor distribution, social networking
and other collaborative activities are what gave our evolutionary
forefathers the ability to survive. Harvard biologist Ian Gilby's
research on hunting among bats and chimps demonstrates advanced forms
of cooperation, collective action, and sharing of meat disproportional
to the risks taken to kill it.
Instead, it is more popular to
focus on the self-interested battle for survival of the fittest.
Whether or not he intends his work to be used this way, Steven Pinker's
arguments about decreasing violence among humans over time are employed
by others as evidence of the free market's peaceful influence on
civilization. Ray Kurzweil relegates the entire human race to a
subordinate role in the much more significant evolution of machines — a
dehumanizing stance that dovetails all too well with an industrial
marketplace in which most human beings are now relegated to the
reactive role of consumers.
In Chris Anderson's vision of the
coming "Petabyte Age," no human scientists are even required. That's
because the structures that emerge from multi-dimensional data sets
will be self-organizing and self-apparent. The emergent properties of
natural systems and artificial markets are treated interchangeably.
Like Adam Smith's "invisible hand," or Austrian economist Friedrich
Hayek's notion of "catallaxy," markets are predestined to reach
equilibrium by their very nature. Just like any other complex, natural
system.
In short, these economic theories are selecting
examples from nature to confirm the properties of a wholly designed
marketplace: self-interested actors, inevitable equilibrium, a scarcity
of resources, competition for survival. In doing so, they confirm — or
at the very least, reinforce — the false idea that the laws of an
artificially scarce fiscal scheme are a species' inheritance rather
than a social construction enforced with gunpowder. At the very least,
the language of science confers undeserved authority on these blindly
accepted economic assumptions.
The Net Effect
Worst of
all, when a potentially destabilizing and decentralizing medium such as
the Internet comes along, this half-true and half-hearted style of
inquiry follows the story only until a means to arrest its development
is discovered and new strategies may be offered.
The open source
ethos, through which anyone who understands the code can effectively
redesign a program to his own liking, is repackaged by Jeff Howe as
"crowdsourcing" through which corporations can once again harness the
tremendous potential of real people acting in concert, for free. Viral
media is reinvented by Malcolm Gladwell as "social contagion," or Tim
Draper as "viral marketing" — techniques through which mass marketers
can once again define human choice as a series of consumer decisions.
The
decentralizing bias of new media is thus accepted and interpolated only
until the market's intellectual guard can devise a new countermeasure
for their patrons to employ on behalf of preserving business as usual.
Meanwhile,
the same corporate libertarian think tanks using Richard Dawkins'
theories of evolution to falsely justify the chaotic logic of
capitalism through their white papers also advise politicians how to
exploit the beliefs of fundamentalist Christian creationists in order
to garner public support for self-sufficiency as a state of personal
grace, and to galvanize suspicion of a welfare state. This is cynical
at best.
It doesn't take a genius or a scientist to understand
how the rules of the economic game as it is currently played reflect
neither human values nor the laws of physics. The market cannot expand
infinitely like the redshifts in Hubble's universe. How many other
species attempt to store up enough fat during their productive years so
that they can simply "retire" on their horded resources? How could a
metric like the GNP accurately reflect the health of the real economy
when toxic spills and disease epidemics alike actually count as
short-term booms?
The Internet may be very much like a
rhizome, but it is still energized by a currency that is anything but a
neutral player. Most Internet business enthusiasts applaud Google's
efforts to build open systems the same way their predecessors applauded
the World Bank's gift of open markets to developing nations around the
world — utterly unaware of (or unwilling to look at) what exactly we
are opening our world to.
The net (whether we're talking Web
2.0, Wikipedia, social networks or laptops) offers people the
opportunity to build economies based on different rules — commerce that
exists outside the economic map we have mistaken for the territory of
human interaction.
We can startup and even scale companies
with little or no money, making the banks and investment capital on
which business once depended obsolete. That's the real reason for the
so-called economic crisis: there is less of a market for the debt on
which the top-heavy game is based. We can develop local and
complementary currencies, barter networks, and other exchange systems
independently of a central bank, and carry out secure transactions with
our cell phones.
In doing so, we become capable of imagining a
marketplace based in something other than scarcity — a requirement if
we're ever going to find a way to employ an abundant energy supply.
It's not that we don't have the technological means to source renewable
energy; it's that we don't have a market concept capable of contending
with abundance. As Buckminster Fuller would remind us: these are not
problems of nature, they are problems of design.
If science can take on God, it should not fear the market. Both are, after all, creations of man.
We
must stop perpetuating the fiction that existence itself is dictated by
the immutable laws of economics. These so-called laws are, in
actuality, the economic mechanisms of 13th Century monarchs. Some of us
analyzing digital culture and its impact on business must reveal
economics as the artificial construction it really is. Although it may
be subjected to the scientific method and mathematical scrutiny, it is
not a natural science; it is game theory, with a set of underlying
assumptions that have little to do with anything resembling genetics,
neurology, evolution, or natural systems.
The scientific
tradition exposed the unpopular astronomical fact that the earth was
not at the center of the universe. This stance challenged the social
order, and its proponents were met with less than a welcoming
reception. Today, science has a similar opportunity: to expose the
fallacies underlying our economic model instead of producing short-term
strategies for mitigating the effects of inventions and discoveries
that threaten this inherited market hallucination.
The economic model has broken, for good. It's time to stop pretending it describes our world.
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