Book Review: The Shrinking Digital Economy

Who owns the future?
Jaron Lanier (Allen Lane/Penguin 2013)

Coming from a techno-geeky visionary, the message is both unusual and uncomfortable: as global digitalization disrupts valuations of intellectual work, middle class intellectuals over the world fall prey to the profit hunger of a global dataserver elite. In his new book, Jaron Lanier, US computer scientist, philosopher and musician, forms an meticulously orchestrated attack on what he judges to be Silicon Valley’s parasitic culture.

The illusion of free information only works when only a minor part of the economy is based on information, writes Lanier. As the global process of digitization makes more and more work based on information, the “information is free” thinking will instead result in impoverishment of an ever growing part of the labour force, leading to what Lanier sees as a period of devastating hyper-unemployment.

If we do not shape up, that is.

And of course, that is exactly what Lanier proposes in “Who owns the future?”.

His claim: we have to force back the process of digitization and put it firmly in the hands of the individuals, who must be justly rewarded for all information that is so easily copied and reused.

Is he right? Has capitalism reached a point of deep dysfunctionality? And why haven´t the renowned political economists taken heed yet?

As a part time musician – complete with dreadlock hairstyle – Lanier often uses the shrinking music industry, or more to the point, the record selling industry, as example.

His book is an impressively reasoned crossover between computer philosophy and economy, and it is in the analysis of the economic effects of digitization his arguments carry their weight.

His central claim is that as we move over to an information economy, it will only grow as more information is monetised (valued and paid for), not less.

Capitalism only works if there are enough successful people to be customers, not less. Hence, Lanier is out to save capitalism, and well actually, not only the system, but the global middle class that he sees as the backbone of a working economy, now increasingly deprived of just wages.

The recurring crooks in Lanier’s view of the current faltering system are what he calls the “siren servers”, the elite computer networks with growing clout and huge brand names – like Facebook, Google or Amazon. Lanier writes that their business model is typically based on collecting, publishing and making profits of other peoples’ work, be it software, viewpoints, music or social interactions. With enough public attention and market clout the siren servers have gained the power to force down the market values of intellectual work in a constantly growing range of areas.

As customers of course, we benefit from a lot of free services on the net, to the cost of letting ourselves be spied on. But according to Lanier the creative middle class contributors lose both income and employment, and hence, great Silicon Valley fortunes are made by shrinking the economy instead of growing it. Lanier points out that many working middle class jobs are traditionally based on levees – protective walls of regulation – that safeguard professional standards and functions, for instance taxi drivers licenses. But with the new digital economy, where valuable work can be swiftly copied or linked anonymously, the levees disappear one by one. He concludes that capitalism therefore has simply come to suffer a “memory disorder” in need for urgent treatment. We should instead strive towards a “humanistic digital economy”, where the source of code and information is transparent and pays small sums to the individual originators. Lanier wants to introduce a global digital nanopayment system, where the small payments should be proportional to both the market value of the information (code) and the degree of work contribution being used in the final products.

Is this viable? Putting such a monetization system in place on a universal scale is of course a truly daunting task, and will take many years and widespread social unrest until it can be a realistic alternative. Such a system will furthermore be a political venture, with the need for a centralized top down power structure, since the devastating effects Lanier sees before us will play out in society as whole, not only in the limited Silicon Valley environment that presently lead the way ahead, where visions of yet new Holy Grails seem to glimmer beyond every new groundbreaking free service.

And if it is politically viable, can it be pursued technologically? Lanier is actually short on details here.

Lanier has already, not surprisingly, been criticized for his lack of faith in the ability of the market economy to reshape and rebuild itself after disruptive processes, and he himself also alleges not being an professional economist. Should the digital economy after all create more jobs in other ways and through functions we do not know of today, then his vibrant fears must be happily disposed of, and put in a historical waste bag with the 19th century luddites. In my own humble judgement, it is possible to imagine a digital future where information work not is based on royalties and patents, but by providing services and the constant adaptations that cater for the ever changing needs and behaviors of the customers. And market capitalism has for centuries managed to adapt to changing socio-technical conditions. Lanier’s claim that increasing middle class poverty will follow the commoditisation of information is not necessarily a logical conclusion of the current changes. Furthermore, even if the middle classes indeed have historically prospered parallel to the establishment of democracy and rule of law, the masses of people with lesser education may well turn out to be the future backbone of the information era economies.

For now, we could safely say that the jury is still out, and any final judgement will hardly be passed out within this decade. But the disruptive forces of digitisation are nevertheless very real, unemployment in the western world is high. Should it remain so and keep rising well into the years after 2020 – then I am sure that the effects of commoditisation of information must be addressed with stern regulation on a global scale. The development of our employment figures will most likely show us the necessary direction. Then again, maybe we soon have to learn to live with a completely different kind of digital economy.

Whatever the outcome, Lanier’s visions for a more just digital world shouldn´t be judged as a final prescription, but instead as a sharp contribution to a discussion about a challenge that is indeed both huge and global.

Paul Frigyes
Journalist, covering issues on new and traditional media