Of course industrialism wasn’t sold to us as the disempowerment of workers, but as the triumph of technology. As far back as Prince Albert’s Great Exhibition in 1851—the original World’s Fair, really—the public was dazzled by exhibits featuring wondrous new technologies that seemed to run without any human workers at all. Attendees marveled at the mechanical looms used to make rugs in India but were never exposed to the laborers who operated them, lost fingers to them, or were displaced by them. Instead, manufacturers proudly demonstrated how their machine-produced rugs showed no evidence of human craftsmanship. Today’s technology fairs, from the Consumer Electronics Show to South by Southwest, offer audiences the latest in digital gadgetry with nary a mention of the labor going into their assembly, the death of slaves mining for the “conflict minerals” they require, or the agricultural regions destroyed by the pollutants released in their production.
Let’s call it the dumbwaiter effect. Remember the ingenious little hand-operated elevator Thomas Jefferson invented for his servants to deliver meals up from the basement kitchen to the dining room? Today we think of it as a time- and energy-saving technology. But for Jefferson, it had less to do with saving his kitchen staff needless walks up staircases than with distancing himself and his guests from the harsh realities of slave labor—at least while they were eating. With the dumbwaiter, food simply arrived as if from a Star Trek replicator. No human effort, or discomfort, needed to be recognized. This became an important strategy as the rest of human society became increasingly dependent on unseen labor.
While mass production disconnects workers from skills and the creation of value, mass marketing now disconnects workers from the people they’re serving. Mass-produced products may have lost their handcrafted quality, but they made up for it with consistency. The real obstacle to their adoption was the lack of a human connection between producer and consumer. Instead of buying oats out of a barrel from Joe the local oat miller, we were supposed to buy oats in a box, shipped from hundreds of miles away. At best, the relationship with the craftsman was replaced by one with the human salesperson—who was really just a surrogate consumer at the wholesale level. Manufacturers had to substitute something for the lost human bond between consumer and producer, or supersede it where it still existed.
This is where branding came in. Putting, say, a Quaker on the box of oats gave consumers a new face to look at—and one more consistently friendly than that human miller’s. Unlike the real craftsperson, the brand icon could be embedded with whatever mythology the marketer chose and forge an even deeper connection with the consumer. Of course, brand mythology had little or nothing to do with the product or its manufacture. If anything, it was a way of distracting consumers from the reality of the factory, its conditions, and its great distance away. Meanwhile, expositions and world’s fairs have always celebrated the machines of industry over the humans who operated them. The Victorian exhibition displayed mechanical looms with no laborers, and the 1964 World’s Fair conveyed people on moving sidewalks while showing them peopleless, automated factories. In today’s computer-animated TV commercials, shiny parts fly together into a completed appliance or vehicle as if by magic. Consumers may as well be buying their cookies, cars, and computers from the machines themselves.
Finally, mass media—itself the product of industrial-age technologies, from the printing press to the satellite—gave manufacturers a way of spreading their brand mythologies across the country or around the world. Thanks to this advertising, consumers could forge relationships with brands before they had even arrived on the store shelves. That Quaker may as well have been an old friend smiling from the package. Or better.
But this last stage of industrialism came with a human price as well. Just as mass production devalued human labor, and mass marketing separated consumers from producers, mass media isolated human consumers from one another. Those fashion and perfume spots promising friends and lovers are not intended for those who already have friends and lovers. Advertisements work best on lonely individuals. So it’s no coincidence that mass media tend to atomize us, creating millions of markets of one person each. That’s how the television evolved from a hearth in the living room watched by the whole family to a television in each bedroom and a cable channel or YouTube stream for each person. They don’t call the stuff on television “programming” for nothing—only in this case, it’s humans being programmed, not machines.
In a snapshot, the transition from peer-to-peer, artisanal economic values and mechanisms to those of the industrial age looks something like this:
ARTISANAL
1000–1300
INDUSTRIAL
1300–1990
Direction
Purpose
Subsistence
Growth
Company
Family business
Chartered monopoly/corporation
Currency
Market money
(support trade)
Central currency
(support banks)
Investment
Direct investment
Stock markets
Production
Handmade (manuscript)
Mass-produced
(printed book)
Marketing
Human face
Brand icon
Communications
Personal contact
Mass media
Land & resources
Church commons
Colonization
Wages
Paid for value (craftsperson)
Paid for time
(employee)
Scale
Local
National
Optimized for
Creation of value
Extraction of value
We’ll trace each of these developments more fully, but for now what’s important to notice is that each industrial innovation diminished the value of one human element after another. Identifiably crafted products, such as the manuscript, gave way to mechanically reproducible ones, such as the printed book. Instead of relating to products through the human who made them, people relate to the brand on the package, and so on. People are disconnected from the value chain. This was by design, even if the intentions behind that design have been submerged and forgotten. Remember, industrialism’s primary intent was to subvert a rising middle class and their peer-to-peer market system. Merchants and craftspeople were creating value from the bottom up and threatening the passively earned income of the aristocracy. The object of the game was to get people out of the way, because they create value independently, demand compensation, and value their relationships over their purchases. And the game remains the same to this day.
Removing the human hand from industry has its obvious advantages, some of which benefit everyone in the long run. We should be grateful for the printed book for easing the spread of knowledge and ideas, even if its happy invention was part of a larger, less beneficent drive toward mechanization. Industrial processes often let us reap more, produce faster, and distribute more widely. But they do all this from a rather flawed starting place, which is why they are now reaching a point of diminishing returns.
Our measures of econ
omic success, from corporate profits to gross national product (GNP), specifically ignore the human component of the economy. That’s how an environmental disaster and its resulting cancer rates can still be considered a net positive to the economy. They require more spending on cleanup and chemo, so it’s good for business as we currently define it. In less morbid examples, from corporate layoffs to tax law, we have set in place an economic system whose growth works against our own prosperity. We have lost track of the purpose of the economy.
To whose benefit? Certainly not the workers being paid less, the craftspeople whose skills are devalued, the consumers whose social ties are degraded, or the communities to whom costs are externalized. Yet we continue to optimize our businesses and our economy for growth, even as we transition toward an entirely different technological and social landscape—one with very different potentials.
This is why the leading voices today are those that still treat the emerging digital economy as Industrialism 2.0 or, as Massachusetts Institute of Technology professors Erik Brynjolfsson and Andrew McAfee put it in the title of their respected business book, The Second Machine Age. It’s no wonder such ideas captivate the business community: for all their revolutionary bravado they are actually promising business as usual. Workers will continue to be displaced by automation, corporations will remain the major players in the economic landscape, and it’s up to people to keep up with the pace of technological change if they want to survive. This is not a revolutionary vision but a reactionary one. Everything is supposed to change except the economic platform and its bias toward growth—which is probably the most arbitrary piece in the whole puzzle.4
Digital media and technology, more than simply giving us the means to build new machines for old purposes, offer us new outlooks on sacred truths. We gain the opportunity to reboot our economies along fundamentally different premises. Yes, we have an important new set of tools, but we are also living in what we may call a new media environment in which to make decisions about their use. As members of a newly digital society, we are learning to think about things in terms of programs and programming. Everything from the U.S. Constitution to religion to the banking apps on our iPhones can be understood as lists of commands—programs with functionality and intent.
When it comes to digital business, so far most efforts lack this depth of vision. We still tend to see digital technology as a new tool through which to scale up industrialism. So instead of mechanical looms replacing humans, it’s robots and algorithms. Instead of creating distributed mechanisms to enhance the emergent peer-to-peer marketplace, we create platforms to extract value from its participants and deliver it upward. We’re in a new environment but remaining true to the old growth agenda.
That’s only natural. We tend to use new media in old ways, at least until we discover their innate possibilities. The first television shows were simply stage plays with a camera in the audience. The first graphical computer interfaces imitated the real-world office desktops they replaced. Likewise, our digital economy is still more in its “horseless carriage” phase than in that of the automobile—more “moving pictures” than full-fledged cinema. That is, we conceive of the digital in terms of the limits of the previous landscape rather than the potentials of the new one.
It’s time to understand these potentials not as threats to business as usual but as the true promise of digital economics.
THE DIGITAL MARKETPLACE: WINNER TAKES ALL
Those of us who thought the digital marketplace was going to look something like a Burning Man festival got it wrong—at least in the short term. The distributed nature of the net, with its decentralized connectivity and ad hoc social activity, appeared to augur an equally distributed marketplace. Instead of buying everything at Walmart and watching our personal and community wealth extracted by a highly centralized corporation, we would now enter a new phase of peer-to-peer commerce. The values of the bazaar would be revived by the Internet. A new, digitally enabled, people-driven economy would dominate as industrialism’s extractive growth mandate receded.
So what went wrong?
In a nutshell, we went and implemented our digital business plans without any real awareness of the deeper principles we were espousing, much less the ones we were challenging. For too many—and there’s no point in name-calling here—the Internet was supposed to take care of all this. If we just built the platforms for Internet commerce, they would be inherently decentralizing, empowering, and good for mankind, as if by their very nature. We made the same old mistake of underestimating the importance of our roles as purposeful human programmers in determining how these platforms would impact the existing marketplace.
In the earliest days of networking, most of us couldn’t even imagine commerce occurring on the Internet. Back in the early 1990s, the Internet was still more like a public utility than a commercial platform. Government and schools paid for it and maintained strict rules on how it could be used. It was treated much like a commons: People who wanted access to the net had to digitally sign an agreement attesting to their intentions to do nonprofit research and promising not to try to sell anything. Sending an advertisement through e-mail or posting an offer of commercial services on a Usenet group would get you kicked off the net.5
Those of us who were interested in digital networks and personal computing were considered freaks by the yuppies who had taken real jobs after college. Computing was seen as a West Coast phenomenon, a tool for creating graphics for Grateful Dead shows when it wasn’t outputting payroll ledgers or guiding antiballistic missiles. My first book on cyberculture (originally canceled by an editor who thought the net would be “over” by my 1993 publication date) put me in contact with former 1960s celebrities such as Timothy Leary, as well as present-day counterculture enthusiasts.
I was actually in the greenroom of a CNN bureau, about to go on TV to explain “cyberspace” to Larry King, when I met Matthew Nelson, the unassuming boyfriend of my publicist. He had assembled a presentation on his laptop, with pictures, of his vision of a new way of using the Internet as a marketplace. It was a simple window, with little square icons, each containing a picture of a record album. The idea was that you’d be able to click on one of those icons, which would then fill the window with a new set of text and images. These might let you play selections from the record and ultimately click on a button that let you buy the record or CD, which could then be mailed to your home. Someday, maybe connection speeds would be fast enough for the music to be downloaded electronically to your computer. Later that afternoon, he had an appointment with an executive at AT&T, whom he hoped to convince of the promise of this new technology.
Matthew’s demo helped me make my case on TV: No, Larry, the net isn’t just for Star Trek geeks. It has a legitimate application in the marketplace. With everyone treating Internet users as if we were crazy people, getting acceptance from major corporations felt less like selling out than winning converts in powerful places. Before too long, Matthew and his brother Jonathan’s company, Organic, Inc., became one of the first publicly traded Internet giants, responsible (or to blame) for not only the first e-commerce Web sites but also the first banner ad.6
Matthew was likely just as surprised by where this all went as I was. The information superhighway morphed into an interactive strip mall; digital technology’s ability to connect people to products, facilitate payments, and track behaviors led to all sorts of new marketing and sales innovations. “Buy” buttons triggered the impulse for instant gratification, while recommendation engines personalized marketing pitches. It was commerce on crack.
With a few notable exceptions—such as eBay and Etsy—we didn’t really get a return of the many-to-many marketplace or digital bazaar. No, in online commerce it’s mostly a few companies selling to many, and many people selling to the very few—if anyone at all.
Take music. The best part of an online music catalogue is that it is unlimited in size. The local rec
ord store can hold only so many items in its bins. A Web site can list everything and anything, however obscure, at virtually no additional cost. A surfer in New Zealand can purchase a recording by a lute player in Norway. Wired editor and economist Chris Anderson called this the “long tail” of widespread digital access, which would support many more times the artists, writers, and innovators than could be supported through traditional distribution channels. His theory was that the low cost of reaching customers online would enable thousands of hitherto unpopular titles to become popular. Since the marginal cost of selling different music files was negligible, Anderson argued, the online merchants would now make a profit by “selling less of more.”7 The marketplace would become more diverse and support more creators as the long tail of former losers fattened.
Yet it turns out that’s not what’s happening. Instead, according to Nielsen SoundScan, a few blockbuster hits make up a greater percentage of all the music sold than ever before. In the days of physical albums and CDs, the industry rule was that about 80 percent of sales came from the top 20 percent of products on offer at that moment. That means that the bottom 80 percent still accounted for 20 percent of all sales. On iTunes today, the bottom 94 percent sell fewer than one hundred copies each. Just 0.00001 percent of tracks sold accounted for a sixth of all sales.8 And these figures are roughly the same for every creative industry, from books to smartphone apps.
Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity Page 3
