The Great Restructuring II: The next ism

I continue to muse on the great restructuring I wrote about recently: more than a crisis, a recession, or a depression, what we’re enduring is a millennial shift in the economy and society, the true start of the post-industrial age. What will it look like?

I got an email from a German reader of What Would Google Do?, Joachim Günster, suggesting that we are witnessing a shift from old systems – communism (fail), socialism (never realized), capitalism (now suffering fundamental challenges) – to something new. He said that’s what I chronicled in my book and so he called it Googleism (which sounds much more impressive and less grating auf Deutsch: Googleismus).

At the Brite conference – which I recounted in my last post – Umair Haque described an economy that is fueled by the ability of people to create, by the failure of models built on screwing people, and even by love (see also Clay Shirky on love). I said this sounded like a moral imperative: a new religion. Craig Bromberg called out that it sounded like dialectical materialism. I agree. It is a fundamental shift and that it is brought on, I’ve often said, by a shift in the control of the means of production and distribution (that does sound Marxist, eh?).

Now Bromberg blogs on the notion, saying that Haque’s idea of “constructive capitalism” bears close similarity to the “march of Marx’s dialectical materialism, the resolution of class conflict through various stages of history from feudalism to capitalism, socialism, and then finally to the ultimate of abundance, the big C (no, not Citibank, for Karl’s sake: Communism!).”

Right: the post scarcity economy, the economy of abundance. Religions couldn’t do it (no heaven on earth for us, not yet); socialism couldn’t do it (because, Günster argued in his email, our individual needs and desires simply are not shared); communism couldn’t do it (because, Günster said again, nobody, especially a dictator, is smart enough to plan three years ahead); capitalism isn’t doing it (because our abundance turned out to be a big lie, a balloon with a hole in it).

So will the internet get us to the promised land? Well, no. We still do have scarcities of food and energy. But our economy will soon not be built on them. It will be built, at least in part, on the abundance of knowledge. That is a fundamental, millennial, shift, a next phase perhaps in Herr Marx’s march.

Bromberg concluded:

But what most struck me in the days after Haque’s talk, was this notion that the raison d’etre of the new networked capitalism is Love: people’s love for information, for getting it right (or at least right enough), for connection. And that this newfound love of creativity for its own sake and not just Mammon is creating behavioral change in startups and perhaps even in the way we think businesses can and should be run. Et voila, Jeff Jarvis’s question: What Would Google Do (if it were running the hotels, restaurants, car companies, governments, utilities, shops, manufacturers, and even Apple.

So where Godard once proclaimed (some 45 years ago in Masculin/Feminin) of his generation that “We are the children of Marx and Coca Cola,” we now seem to think we are the children of Marx and Google. It doesn’t have quite the same poetry, and I’m not sure about all the squishy emotion (as Shirky calls it) here, but I am noticing it, and wondering if we’re heading towards another moment of massive cultural change conflating capitalism and eros. Anybody for a Godard film night? We can always download some torrents from that secret cinema site I’ve been hearing about.

* * *

“We don’t have to reinvent the wheel, do we?” a smart leader in a challenged industry asked me under a hot sun at South by Southwest.

Yes, we do, I said. The change we’re seeing is that fundamental. Our response must be equally fundamental.

That is my problem with trying to replant old business models, line by line, in a new economy. There are a million examples from media (why can’t we charge still, damnit? why can’t we sell scarcity anymore, damnit? why can’t we control the product even though we no longer control the means of production?) to manufacturing (why not the disaggregated car?) to retail (post-stores) to religion (see this post) to education (see Union Square Venture’s Hacking Education Session) to government (you ain’t seen nothin’ yet).

That is my problem with not seeing the imperative for change. It may be instinctual to cower from it, but that accomplishes nothing. Instead, seek out change, run to it, see the opportunities in it, learn from it. I’m tempted to end here with the obvious bromide: Change is good. But that value judgment is entirely irrelevant. Change is inevitable and right now change is seismic. It’s millennial.

I am the opposite of the guy in a beard (well, a long one) and rags (worse than mine) holding up a sign (or a tweet) proclaiming: The end is near! Doom is upon us. Instead, I’m proclaiming: The beginning is near. Call me a bloomsayer. (Or don’t.)

Of course, your view of this dichotomy depends on your perspective. If you’re trying to protect a past, then yes, that end is very near. It’s here. Last stop on the Cluetrain Express. Everybody off. But if you’re trying to innovate and experiment and create and build the future, then your time is now. That’s why, in the ever-more-emotional debate over the future of news and other industries, my confederates and I (see again: Shirky) are accused of trying to tear down, to destroy, to dance on graves.

But we’re doing the exact opposite: We’re heralding new opportunities in a new world. Hallelujah, comrade.

* * *

In my own head, I keep fighting between the instinct to try to update the old or abandon it for the new. I keep thinking we can put the old wheels from the horse cart on the new truck. Except in this new economy, there are no wheels. Even the fucking metaphors don’t work anymore.

Pardon me for thinking out loud, but that’s what led me to my book. Like Bromberg and Haque and Shirky and new friend Günster – but not as smart – I keep mulling over the change and see and saying, it’s bigger than it appears in our rear-view mirror.

  • Is not the web in fact the perfect embodyment of Communism? Do we not share all equally? Is it not really from each according to their ability to each according to their need? Are not the old capitalist structures simply whithering away? ie, Newspapers. As more and more of our GNP is intellectual property (ie, zeroes and ones) is this not the perfect mechanism for equal and limitless distribution of wealth?

    • Luke

      No, seriously… well maybe once the everyone has access to the web?

    • Anna O

      Quite the opposite! Communism assumed central control and central distribution. Some coverning body (the communist party) would decide who needs what and who contributes what. Here the market forces (although the new, distributed market) decide.

    • Dear Rosenblum

      In a sense we are headed AWAY from Communism not toward it. Incomes will be more unequal in the future then equal because the dominant tools (computers) no longer smooth over differences in relative skill the way earlier dominant tools did (mass production machines). Indeed we see this in the financial sector as this sector was the last industrialized sector allowing those good at measuring a few indicators and then making a directional bet to make money divorced from their actual productivity. The future of wealth will be for those who CREATE WEALTH not for those who move it about. In future most occupations will likely have income distributions similar to professional sports (a few elite stars and most poorly paid).

      Computer tech will make it easy to find the star performer (if you can afford them) and hire them instead of those who have a record just a little less pristine. Market segmentation will take on new proportions as the skilled rich with searchable records of extremely impressive performance service each other and most below them settle for those with records of achievement far less impressive. Any service that can be performed over the internet will be. (machines that mimic human movement means that its worth putting detailed skilled physical labor over wires)

      Additionally those with skills not tied to a physical place will be more able to avoid injurious taxation or abridged freedoms that governments will increasingly resort to to paper over this crisis. Governments that try to strong arm the skilled into paying more then government services are worth to them will either leave for a better locality or failing that go on strike by functioning at a fraction of their actual capacity until they get the rewards they suspect they are entitled to absent government redistribution.

      Whether this all leads to feudalism or capitalism depends on who controls the transition. Some nations with a history of socialism will gravitate to feudalism (China, Russia, could already be considered that way). Others will rise to a throw off the soft socialist mixed economy for more pure capitalism (Switzerland, Caymen Islands, Brittish channel islands and other traditional tax havens). In the case of the United States we cannot know until that country has its Argentina style currency crisis but it seems the former will be the US goes if current trends continue.

      Net tax producers (high end private sector workers that actually produce a product rather then moving value around) will likely prosper in the future to come as never before, precisely because they will not be forced to pay for the lifes of net tax consumers (those living on welfare, pensions, government jobs, or middle men like those in the finance industry, eventually lawyers and politicians will end up here despite efforts to the contrary). The 20th century was the age of the free lunch for the semi skilled and to the sorrow of most, its about to end. Ayn Rand would have recognized what we are experiencing now as what was going on in her book Atlas Shrugged. The welfare states account is about to bounce marked “account massively overdrawn”. Consider the 1970s a warm up lap for what will happen this time.

      However it may take a few years for the very skilled to make computer security good enough so they cannot be found while living a normal life. Once that happens the exodus will begin from high tax jurisdictions to similar comfortable living in low tax places.

      One nice wrinkle is those who have mega-wealth now won’t be able to protect it all as some will be grabbed by mobs and governments but those who have amounts of wealth small enough wealth that can be moved (micro factories and semi unique skills) will effectively hide the wealth that larger fortunes cannot transfer fast enough. Real money will likely make a comeback as Gold, silver, platinum, palladium, and other goods highly resistant to decay will become the new money as fiat national notes just are not accepted or inflated to oblivion.

      I wish you were right Rosenblum but communism will likely have to wait until we create things out of base elements out of thin air without human labor. (think automation that makes 6c per hour kids in China expensive or replicators like those seen on Star Trek the Next Generation). It will be nice once we are at that point but until then humanity will continue to (try to) rob the producer out of greed or desperation or both. Governments of course will steal much of the value of anything that cannot moved quickly enough out of a jurisdiction.

      Umair Haque’s best insight is the fact that models that extract value instead of create it will fail once wealth can be protected via its anonymity and movement. Unfortunately most of humanity only knows how to extract wealth not how to create it. Thus most of humanity myself included will likely suffer in this transition, as creation is much much harder then re-allocation or destruction.

  • @davehonig

    Jeff – I get frustrated reading Gloom and doom scenarios. Unfortunately we are living thru bad economic times…So what? We will get thru it. I dont worry about things that are out of my control. But as people say these are the worst of times, I see it as the best of times. Innovation is happening at warp speeds. These are the best of times to innovate, to change with the times, to realize you cannot fit a square peg into a circle. Brands need to realize that now is the time to Innovate, now is the time to look to change. Now is the time to look into what will take your brand to the next level. If you dont, there is another brand behind you that is and will take market share away form you. We will look back 5-10 years from now and realize that 2009-2010 was a time where innovation took off and helped pave for marketers to communicate more effectively and differently than they ever have in the past.


    • Yes, I don’t think it’s doom and gloom. It’s opportunity. There’s destruction along the way and that is very hard for those caught in it. But merely trying to protect against inevitable change will only delay that inevitability.

  • Are we not asking ourselves, “Is this a crucible moment?” I believe this is the question many are asking and searching the answer for. I realize there are many out there leading the charge, and on the other side of the pendulum, are those fighting to maintain the status quo. At this moment, I’m challenged to believe that this is a crucible moment in terms of the structure of society and the world. Although I may be wrong. Time will tell…

  • I do believe that there is a piece that is obscured by the collapse of institutions. Every institution and every ideology are simply tools that people use to express their innate human desires. When they cease to function for that purpose then they collapse.

    I believe that we are at one of those thousand year shifts in society. What remains the same is that people want to work, want to provide for their families, what peace, beauty and opportunities to play with their friends and neighbors. This is the continuity that remains after everything else as collapsed. It suggests to me that while the future may be global because it can be, that the real future is local, born in the rebirth of local communities. It is clear to me that large global corporations and large complex federal governments are ill-equipped to provide for people’s basic desires. Yes, the shift is big, but it is only as big as how we care for one another. And if the social connection that the internet is fostering is any indication, we can care for one another as a local global community, if we see that we must reorganize ourselves for that purpose. I don’t see it all, but this is a growing impression that I have.

  • The problem is that a large junck of the economy is ruled and handled by the old analgo and traditional guys who made their success in a clear channel wolrd!

    So much more damge will be done than necessitiy would impose – and as it is the human factor – it is so hard to predict how deep the jump will be…. and therefore the base to build upon is not predictable in my view – we take it as it comes and start new things while managing the downturn!

  • Jeff,

    I think what we’re seeing is not communism but anarchism in the making. Communism has been tried and failed for a reason: you can’t run an economy on communism.

    Anarchism (not the same as anarchy!) is the limitation of power over other people. Our current society is the opposite to anarchism: virtually no limitation on power over other people. This is the shift we’re seeing: power is moving away from the center and is distributed across everybody. This will unavoidably lead to a major collapse because we’re not ready for this kind of transition. And nation-states in the meanwhile will do everything in their power and more to stop this transition from happening.

  • Matt Seibert

    I agree with the realization of the coming decentralization. And that the internet has given the consumer more leverage in the world of commerce. But what we have come across is merely a new form of capitalism and not communism. And without more communist or rather socialist elements in place, we could very easily lose it.
    Obviously the internet allows for a more perfect free market due to the instantaneous transference of knowledge (especially price) about products. It is a true free market. Milton Friedman would be proud. And this results in the ability to break up what Adam Smith called, “the conspiracy against the public,” an economic system in which monopolies, cartels and trusts control market price through their vast reach. But this trend toward free markets is not new. If one looks back to the origins of the megastore (Wal-Mart, Target), they will realize that here too is a system of driving down price to reinforce profit.
    Although, the Wal-Mart model is not necessarily good. In fact if Wal-Mart completely dominates the market, it could easily raise prices. I do recall Rockefeller pulling the same trick. And just ask OPEC what happens to gas prices when they cut production. But wait, I thought the internet was going to save us from these cartels and monopolies?
    Monopolies, trusts and cartels can still endanger this fledgling economy. Think for example, what if Wal-Mart started buying up Internet Service Providers and then jacking up prices. Through their ownership of Internet Service Providers, they could violate “net neutrality” and limit or outright cut off the ability of consumers to access web sites with cheaper prices. It is good for Wal-Mart, but bad for the consumer.
    This is why I believe that the idea of a post-scarcity economy is largely a fallacy. A consumer driven economy is dependent on resources, manufacturing (thanks China) and supply lines. What good is the internet if you can’t afford the computer that connects you to it? So this “post-scarcity” economy is directly related to the bureaucracies and infrastructures that it takes to maintain it.
    So how do we protect our new free economy? We need laws in place forbidding Internet Service Providers from engaging in monopolistic practices, price gouging or content limitation. I would prefer to put the entire electronic infrastructure into the hands of the public. By which I mean, electricity, internet, and other means of supporting this internet-driven economy run by the government. And we must make prices extremely low or free and consider these utilities as rights not luxuries, because it is very easy for a large business to pull the plug. In essence, only limited socialism can support our truly free market capitalism.
    We must also look into the future for new energy sources. As I stated before, how can we support this energy and information economy if the prices of the resources go through the roof from scarcity? Any successful economy sustains itself. Without sustainability, it will sputter to a stop.
    And so we must be ever watchful and vigilant of this new economy, because the bureaucracy and infrastructure that run the system are so easily altered or destroyed. How uncanny that socialism could undergird this new capitalist economy. So protect your right to a free market. Protect your right to technology. Protect your right to a better life.

    • Andy Freeman

      > In fact if Wal-Mart completely dominates the market, it could easily raise prices.

      It coule, but only so long as it could maintain domination.

      > I do recall Rockefeller pulling the same trick.

      Actually, you don’t. Rockefeller charged less than his competitors. That’s why they ganged up on him.

      • Matt Seibert

        Andy you are absolutely right. That is what I get for listening to my high school teachers. I got schooled. But thank you for the facts, it got me thinking again. So I looked it up and found out Standard Oil got taken down for anti-trust violations because they had hidden rebate programs with the railroad industry and because they negotiated with railroad companies to give their rail cars preference over others. This is interesting because they maximized the use of the networked infrastructure of their time period to crush competition. Does that leave open another potential for this behavior on our networked infrastructure?
        Standard Oil, according to the case, “…obtained large preferential rates and rebates in many and devious ways over their competitors from various railroad companies, and that by means of the advantage thus obtained many, if not virtually all, competitors were forced either to become members of the combination or were driven out of business.”

        221 U.S. 1; 31 S. Ct. 502; 55 L. Ed. 619; 1911 U.S. LEXIS 1725

        I thought about it and decided that the lack of “net neutrality” to be the potential “preferential rates and rebates” of this burgeoning economy. And if we look at the Sherman Antitrust Act, it could be applied. In essence, what were rail cars then are information packets today. Any business that limits the free flow of information potentially violates the Sherman Antitrust Act, so long as the limiting of information allows an unfair business advantage.

        How wild is that? We have another way to protect the Information Economy and the Internet now. Messing with it potentially amount to antitrust violations.

        I think I just reinvented the wheel when it comes trust-busting. At least I reinvented it for the Information Economy. You gave me knowledge and got me thinking, thank you. I had a lot of fun.

      • Andy Freeman

        Matt – thanks for a great post. I put up snark and you hit a home run.

    • Dave

      >I would prefer to put the entire electronic infrastructure into the hands of the public. By which I mean, electricity, internet, and other means of supporting this internet-driven economy run by the government. And we must make prices extremely low or free and consider these utilities as rights not luxuries….

      Whoa – then how would “the public” maintain the infrastructure if there was not someone to be in “charge” running the system? Who in turn would be “powerful” so there would have to be a group to maintain the checks and balances but then who would maintain the checks and balances on them? They would become the new closed group of power and the people are outside looking in again…. And then there is the question of how much a line worker, or technician, or facilities manager would be paid? If it is “free” then I guess they work for free…. and when updates to hardware/software are needed how is the “peoples utilities” going to pay for them? Unless of course those are free because it is a right for all people to have electricity, internet, computers, iphones and thus they must be provided for free…. and then where is the impetus for creating new platforms for electrical delivery, internet delivery? It goes on but actually the government does not run the Utilities. They regulate them yes but do not totally control them. What happens if Google decides to get into owning the infrastructure of the internet? By that I mean the thousands of miles of fiber, the transmission equipment, the delvery to the businesses and homes? These are currently owned and maintained by the telecommunications companies, Verizon ( MCI ), UUNET, Time Warner, AT&T etc….and the smaller regional CLECS ( Competitive Local Exchange Carriers ) which are the likes of Paytec, Nuvox, CenturyTel, Deltacom etc…. What Would Google Do? …. if they had the transport infrastructure also? …..

  • bilejones

    The economic system that’s currently falling apart isn’t capitalism, it’s fascism. That nasty melding of corporate interests with the state.

    • Andy Freeman

      > The economic system that’s currently falling apart isn’t capitalism, it’s fascism. That nasty melding of corporate interests with the state.

      Interestingly enough, the proposed cure is more melding and control.

      It’s like the other argument that we see so much these days “Bush spent too much so it’s good that Obama spend even more.”

  • The Günster link currently leads to a page not found, so I don’t know how he derived his conclusion that “our individual needs and desires simply are not shared”. But Maslow’s hierarchy of human needs suggests the exact opposite. It all depends on the angle you come at it from. There are lots of superficial differences between us, but also many fundamental things we share in common.

    I agree we’re at the start of something big but think it may be more of a second industrial revolution than a post-industrial age. Before the age of iron, coal and steam there was plenty of industry. It was just structured and powered differently and motivated towards achieving different goals.

    One of the founding principles of ecology is that the environment determines or “naturally selects” the forms best fitted to survive. For “environment” read “medium” in which a culture is cultivated, transported and evolved.

    What we currently call “the media” are environments for the transport of non-material information. What we currently call “media of transport” are environments for the transport of material things. The modelling of sensations of sight and sound into analogous forms of electromagnetic waves for the transport of information down wires is itself analogous to the modelling of horses into analogous forms of iron for the transport of materials down railway tracks. The start of the railway network preceded the start of the telegraph network by about 15 years – about 150 years ago. Physical environments create mental ones and cultural paradigms

    The first, best-attempt at the mechanisation of the transportation of information suffered from exactly the same problem as the mechanisation of the transportation of materials. Analogue signals need a clear channel just as trains need a clear track. So the same kind of centralised, top-down, autocratic environment was required for cultivation of analogue telegraphy and telephony as for the railways that preceded it.

    120 odd years after the introduction of the first wave of analogue telegraphy, the invention of digital packet switching in the 1960s offered the same kind of solution to the problem of analogue broadcasting as the automobile had offered to the problem of the railways a century or so before. Once Station Masters controlled all the timetables and destinations. Now digital packets can control themselves.

    If today’s journalists are the equivalent of train drivers, driving information down the wires, then the second wave of mechanisation in “the media” may be expected to democratise journalism in the same way as the motor car democratised driving. We may therefore expect to see not a shrinkage but an expansion of the activity of journalism as mainline journalists evolve into citizen journalists, citizens hire professionals to teach them how to drive, and the real high flyers become whatever the equivalent is of airline pilots and Formula One stars.

    So there is no need to reinvent the wheel. Thanks to Paul Baran and Donald Davies, digital packet switching has already been there and done that. All we need to do now is learn how to drive it. And that’s where all the trouble starts.

    Change is inevitable. Nature is doing it all the time. If it wasn’t there would be no weather and the world would be a stagnant cesspit. Certainly we need to embrace and understand the changes. Denial and ignorance have never been the best game plan. But just because it’s a natural process doesn’t mean we need to let tsunamis sweep us away. The trick is to learn to understand the forces that move them, and lever them more to our advantage.

    Which begs the question, who are the “we” for whom that advantage is levered? That’s the question that’s bothering me now.

  • Pingback: Link-Tipps der letzten Zeit | Leander Wattig()

  • Pingback: The new media owners | b r a n t s()

  • Pingback: We are the children of Marx and Google()

  • Pingback: Jeff Jarvis: Werdet eine Plattform »

  • Pingback: The Zombieconomy and Capitalism 2.0 « Fredzimny’s CCCCC Blog()

  • Pingback: Umair Haque’s radical economics | AccMan()

  • Pingback: Gain value. Give up control. Collaborate! (via @jeffjarvis) | Dan Durrant()