The day after Twitter Inc floated on the New York Stock Exchange, its co-founder Evan Williams was pictured in the financial pages wearing a sheepish smile. He had just made $4.3 billion in a single day. How does that make you feel? Angry? Inspired? Envious? In his ambitious and invigorating polemic about why everything’s so messed up, Douglas Rushkoff asks us to sympathise with the young billionaire.
“When you’re on the front page of the Wall Street Journal, receiving applause from all those guys in suits, it’s not usually because you’ve done something revolutionary,” he contends. “It’s because you have helped confirm financial capital’s centrality to the whole scheme of human affairs.” Rushkoff believes that, like the founders of Google, Uber, and countless other digital ventures, Williams has sacrificed the “world-changing” potential of his technology to the “growth trap” — the expectation that businesses (and countries, and the world economy) must keep expanding in a way that no healthy organism ever can.
The problem isn’t so much naïve app developers, or Wall Street sharks or even the smug Googlers in their private buses — all these people are only doing their jobs. It’s the “faulty economic code” that underwrites the whole economy. Everything from the US constitution to religion can be understood as code, he reckons.
Rushkoff is one of these Nineties idealists who is disillusioned at what the online world has become. For all its potential to link humans in peer-to-peer networks — a sort of digitally enabled version of the mediaeval bazaars that he venerates — the web has in practice created vast monopolies.
Even the supposed “sharing economy” companies are now gamed this way. Rushkoff reads Uber as aiming for total “platform monopoly”, ie, destroying all other taxi firms until it’s in a position to justify the amount of money invested in it. Like Amazon with books, or Google with advertising, Uber intends to destroy competition rather than creating it — short of creating value, it sucks it out.
But this isn’t just a feature of digital companies — they just do it fast enough to make the process clear. Drawing on Thomas Piketty’s demonstration that capital will always grow faster than the rest of the economy (ie, you have to have money to make money) he shows how “extraction” is a feature of most corporations. He cites Walmart’s consumer colonialism. What little “value” the US supermarket giant creates is leeched from the real economy (welfare dependency increases wherever it operates) and delivered unto shareholders. He contrasts this with the more holistic approach of family-owned business, co-ops and non-profits. He lauds projects that enable value to flow around the economy, such as Bitcoin and local currencies, and cites alternative value systems such as the “time banks” that proliferate in Greece and Spain, which allow ordinary people to exchange services more equitably.
Rushkoff is brilliant on start-up economics, and he pops the “big data” bubble rather deftly. For what it’s worth, Twitter’s recent history bears out his point. The company reported record revenue of $710 million last quarter. This was seen by most commentators as a disaster, since investors generally expect a 100x return. You don’t need to be a Cassandra to see that’s not sustainable.
But what’s especially funny is that by examining California tech firms in this second machine age, Rushkoff comes to strikingly similar conclusions about capitalism as Marx and Engels did by observing Manchester factories in the first machine age. Indeed, his more far-reaching solutions — reducing the working week, universal basic income, steady-state economics — are identical to those currently being shaped by radical Lefties and environmentalist.
Rushkoff shies away from political solutions — the pitch here is more to the aspiring entrepreneurs and the business leaders he meets on the TED circuit. But he is part of a growing consensus that there is another way of doing things — and I suspect these ideas will only become more current as the century progresses.