We live in strange economic times. Once, recovery from a recession meant that more people would end up being employed and others would find themselves earning more. Now, the widespread discussion of the economy’s alleged green shoots are accompanied with intimations of a jobless recovery, with wages continuing to stagnate, as they have for decades.
What happened to the worker’s bargaining power? Have firms squeezed it away by extracting more productivity from fewer employees? Has the shift to an economy that makes fewer and fewer tangible things and deals instead with information lead to a structural, fundamental devaluing of labor?
Economist Arnold Kling has argued that in the current crypto-recovery, “we are superimposing a heterogeneous labor force on top of a trend of rapid productivity growth.” Translated into English, that means that lost jobs aren’t being replaced with ones that the unemployed can actually perform, while those lucky enough to still be employed are being worked harder to keep output levels stable.
Derek Thompson, at the Atlantic Business Channel concurs: there is an incredible amount of slack in the jobs market that is going to take a long, long time to make up, unless consumer demand surges extraordinarily in the next few months. But the weak jobs market is, of course, also a weak consumer market.
Yet although jobs are becoming scarcer, in some ways it’s never been a better time to be a consumer. Americans live in the midst of unmistakable signs of abundance, a superfluity of stuff that is mostly getting cheaper all the time. Attitudes toward life’s necessities tend to be marked by a preference for disposability; we replace perfectly usable goods out of a strange inertia that leads us to prefer shopping to rehabilitating what we already have. Habituated to consuming as an end in itself, Americans are encouraged to regard consumption as itself a form of production, the meaningful work they do in their lives to produce their social selves and refine their various enjoyments.
So although productive work is becoming harder to find, Americans nevertheless continue to keep themselves busy enjoying the so-called consumer surplus, whether in the form of the discount-store effusion of cheap goods, or increasingly, in the form of digitized entertainment, which, as Wired editor Chris Anderson points out in his breezy new book, Free: The Future of a Radical Price, often costs nothing now. “The Web has become the biggest store in history and everything is 100 percent off,” he declares.
In the book, Anderson runs through ways in which giving cheaply produced, low-margin products away can help businesses sell other products with better profit margins—variations on the long-established retail theme of “loss leaders”. By and large, “Free” (with a conceptualizing capital F) in Anderson’s book turns out to refer not to a stable notion of pricelessness but instead to a group of gimmicks (“cross-subsidies” and “versioning”, in economics jargon) for disguising the real costs of things or what it is that customers are actually paying for. The lesson is a familiar one: In the traditional economy, there’s no such a thing as a free lunch, after all.
Far more interesting, and deserving of its own book, is Anderson’s suggestion that two different economies now exist side by side, “the formal economy of business” and “the informal economy of volunteerism”. The latter is the basis of what he declares to be “an entirely new economic model,” one in which money is “often taken out of the equation altogether.” This is the “amazing gift economy of Wikipedia and the blogosphere, driven by the nonmonetary incentives of reputation, attention, expression, and the like.”
On this topic, Anderson seems less like the marketing consultant he sounds like in the book’s other sections and more like a giddy technoutopian, arguing that the era of scarcity is over. Minute marginal costs for manufacturing and distributing digital goods will allow vast swathes of the business world to secede from the cash nexus. In this world of abundance, we will suddenly discover that “money isn’t the only motivator” and our creative acts of production will be guided instead by our own authentic motives. Anderson argues, “The potential for such a nonmonetary production economy has been in our society for centuries, waiting for the social systems and tools to emerge to fully realize it.” And it turns out that the future is now.
But one must be wary of getting too hung up on the particular color of money. It seems just as likely that the absence of explicit cash payments will simply mean that we’ll begin paying closer attention to the other ways we reciprocate amongst ourselves. Anderson notes that “the currencies of trust, goodwill, reputation, and equitable exchange still dominate the goods and services of the family, the neighborhood, and even the workplace,” and that “no cash is required among friends.”
But as social networks and other technological innovations extend these modes of exchange beyond the circle of friends, we’ll lose one of the most salient markers for indicating who our friends actually are. And worse, we’ll start keeping score in aspects of our lives that we’re once spared from such hyperrational calculating.
At that point things turn somewhat dystopian. “The quantification of attention and reputation is now a global endeavor,” Anderson warns, in the midst of describing the magic usefulness of hyperlinks, which permit that quantification. “It is a market we all now play in, whether we know it or not.” The implication is that whether we want to or not, we are forced to count up our friends and consider how to cash in on what they represent—though not in actual dollar figures, so it will seem okay.
The Long Tail:Why the Future of Business is Selling Less of More
(Hyperion; US: Jul 2008)
Thanks to the internet, then, we will all have to take our own popularity into greater account, install site meters for the self we craft online. But what of the web ethos that every niche, no matter how insignificant, has its place online? Anderson, as you may recall, is also the author of The Long Tail, his 2006 book that issued one of the guiding prophecies of our digital age, the belief that the internet’s infinite shelf space for digital goods would spawn an entire new industry of cultural niche servicing. Gatekeepers are no longer necessary—everything should be published and distributed, and of course, all of us creative souls should be contributing content. No one had the authority to reject it anymore.
Though some aspects of the long-tail idea haven’t held up well to scrutiny—it turns out that the shrinking distribution and overhead costs associated with digital goods only strengthened network effects and channeled more people to the same mass-market options—it remains an article of faith in the Web 2.0 era. The internet has given all of us with access to it an immeasurable subsidy in the form of virtually unlimited choice among subcultural niches. We need never fear that any entertainment product with which we hope to underwrite our identity at any given moment will have gone out of print.
In order for us to realize this supposed surplus, though, we need to make a few basic changes in the way we present ourselves. First, our identities must become much more fluid to make use of all the new possibilities. We must become much more mercurial, though we’re likely to experience this internally as an expansion of our selfhood, not a more rapid acceleration through ever more superficial identities. And along with a more changeable identity, we would need more opportunities to display it, a place where others could mark the changes and reward us for them with attention.
Your Face on the Face of It
Image (partial) by ©beef200%. See full-size images of his artwork here on FlickR.com
Your Face on the Face of It
To reframe that, the Web’s infinite niches make for richer possibilities for identity construction—it creates, as it were, a bubble in personal identity. We thereby need a platform where our social production—in this case, of our own identity—can be consumed, where the value of those identities can be realized. We probably never stop to consider what we are doing as a kind of production; instead it seems to us that we are just being social. In that gap, capitalism senses an opportunity.
The work we perform to produce our social being is necessary, inescapable work, albeit work that we have always performed willingly and enthusiastically, since its benefits accrued directly to us. It’s immediately rewarding, so no one needs to pay us to do it. But that doesn’t mean there isn’t surplus value to be extracted from that labor, especially once we are provoked into undertaking it more and more routinely as tastes and trends change and ever wider stretches on the long-tail frontier are opened for colonization.
Tech firms may have finally figured out away to expropriate the value of that labor. Facebook, one of Anderson’s pioneers of “Free”, is a company that provides a platform for displaying our ever-shifting identities. The data warehousing and communications services it provides appear free to us, but as Anderson’s book repeatedly shows, freeness is a matter of perspective.
In exchange for its services, Facebook will harvest our social production in a variety of ways and monetize it in ways that we can’t or wouldn’t—selling our preferences and those of our friends to advertisers, repurposing our photographs and aggregating our opinions and tracing changes in the various demographics we represent through the matters about which we gratuitously express enthusiasm. When it comes to services like Facebook, Anderson points out, “whether you know it or not, you’re paying with your labor for something free.”
We won’t put a price tag on ourselves or our friends or our pleasures, but Facebook will happily do that behind our backs, in economic exchanges that don’t include us. Rather, we have become the stuff being exchanged, both in what we are and what we do online. If you use Gmail, for example, an advertiser will pay Google for the information the company has gleaned from your emails to your friends—emails that obviously no one paid you to write. The business model is predicated on the indifference of the content providers to the economic exchanges built up around their practices.
As unmediated offline social encounters are streamlined out of existence, we increasingly find ourselves in a position where we feel required to produce ourselves socially in an online milieu. After all, you are virtually invisible if you have no online presence; you have nothing to add to the conversation if you haven’t been keeping up with online memes on YouTube; you are inaccessible if you are not Tweeting and following others’ Tweets.
The compulsion to live online and make our online tracks as visible as possible allows such companies as Google, Facebook, and Amazon to thrive by monetizing the content we generate in the process. The network effects that work so well for those companies actually work against us, since we get utility out of social networks only insofar as we contribute, and our contributions are limited only by our ingenuity, which prompts us to make more and more—for nothing.
What has any of this to do with the jobless recovery? It may be that the “free economy” is where those jobs missing in the jobless recovery are actually turning up. If fewer of us are unemployed in the conventional sense, but more of us are producing more than ever online for free, the nature of production—of what counts as work to businesses—may also be undergoing a fundamental change.
In an article for Fast Company, economist Tyler Cowen argues that ” more and more, ‘production’—that word my fellow economists have worked over for generations—has become interior to the human mind rather than set on a factory floor… You use Twitter, Facebook, MySpace, and other Web services to construct a complex meld of stories, images, and feelings in your mind. No single bit seems weighty on its own, but the resulting blend is rich in joy, emotion, and suspense.”
Cowen suggests this allows us to internalize everything we once needed the brick-and-mortar world for, allowing us a sweet escape into solipsism, alone before our computer screen. We can “create our own economy” without having to reference to the terrible one that exists for Americans collectively.
Pleasure, however, seems to require social validation; the pleasure derives from the recognition we secure. We construct the “complex meld” of stories, images, and feelings online precisely because the potential for an audience makes that blend in turn meaningful to ourselves. It makes sense, then, to tweak Cowen’s point of view slightly and consider the space of all those Web services not as a reclusive imaginative playpen, but as merely the new location of the factory.
Then a different picture of our economic future emerges. It’s possible that we are all happily slaving away there in the Web sweatshop without even realizing we’ve been chained to our monitors. The satisfaction we derive from all this, as Cowen notes, can’t be measured in money or in profits. How do you measure the depth of your own soul? Instead, it appears to be free to us, even though it is the result of our own labor.
So if, as Anderson suggests, the future of business generally consists of iterations of Facebook’s Free model, then will it revolve around large firms finding ways to exploit the social production we are willing to perform without compensation, what Nicholas Carr has called “digital sharecropping”? Carr explains the ruthless logic of this system:
One of the fundamental economic characteristics of Web 2.0 is the distribution of production into the hands of the many and the concentration of the economic rewards into the hands of the few. It’s a sharecropping system, but the sharecroppers are generally happy because their interest lies in self-expression or socializing, not in making money, and, besides, the economic value of each of their individual contributions is trivial. It’s only by aggregating those contributions on a massive scale—on a web scale—that the business becomes lucrative. To put it a different way, the sharecroppers operate happily in an attention economy while their overseers operate happily in a cash economy.
Or as Anderson puts it, with unintentional cynicism, “There’s a lot of Free out there, and lot of money to be made off it.”
Champions of the economy’s new “free” sector are essentially cheering this divide between the attention economy and the cash economy. Anderson’s book offers companies ways in which to widen the crater and allow more of the traditional economy, the one in which we used to have paying jobs, to fall into it. Thus Anderson is eager to declare “the end of paid content.” Forward-looking companies, he suggests “want content to be free.” That is, they want us to provide it to them for free. Content, no matter how esoteric, juvenile or amateurish, doesn’t simply appear from nowhere.
Anderson tries to sell this as being beneficial for old-guard content providers, like journalists. Because professionals can train and/or edit the work of the coming legions of amateur writers, “leveraging the Free—paying people to get other people to write for non-monetary rewards—may not be the enemy of professional journalists. Instead, it may be their salvation.” Anderson seems to be arguing that journalists need to align themselves with the new tech firms and try to get paid for abetting their efforts in soliciting high-quality volunteer content.
Old media forms are endangered right now because they don’t exploit volunteers; their content providers are aware of little but the money at stake in what they are doing. But the surfeit of free information competing for our attention makes it hard for media companies to get much money for any particular piece of information, which can easily be pirated and redistributed anyway.
Media of the future, if Anderson’s predictions about what is viable are taken to their logical extreme, would consist entirely of freely donated material that has been repurposed—a view which prompted Malcolm Gladwell to ask incredulously from his New Yorker perch, “Does he mean that the New York Times should be staffed by volunteers, like Meals on Wheels?”
Anderson suggests that talented people will be able to make up lost revenue by monetizing the difference between general and particular audiences. The material for general audiences becomes the loss leader for the tailored material that specific audiences will be enticed into paying for. Anderson uses himself as the example: He is willing to give away Free in order to book lucrative speaking gigs. This is obviously akin to bands giving away mp3s to get people to see them in concert and buy their T-shirts and whatnot. Anderson is content to speculate that some will do a better job of translating reputational currency into cash. But what about the rest of us?
Of course, the benefits of online participation are real and substantial. It’s good to be part of ongoing conversations with friends or even interesting strangers; it’s fun to watch YouTube videos and download scads of music without needing anything other than an internet connection. But no matter how much we might love attention, we can’t use it to meet our basic needs. I can’t send my landlord some attention in the mail in lieu of a rent check. Ultimately, we all have to participate in the cash economy, something that nearly one in six people in the US is having a hard time accomplishing to their satisfaction, according to the most recent unemployment figures.
If the transformations the economy has undergone in recent years have led to our competitive advantage resting in various forms of information processing, and if firms have figured out how to extract that processing from our preening online hobby activities and self-fashionings, then what need do those firms have for hired employees? At his blog, Mike Konczal presented this chart from the Minneapolis Fed, suggesting how the demand for labor has shifted in recent decades:
Source: “21st Century Structural Unemployment” from Rortybomb
Office work, administrative work and business services are precisely the sorts of things that can be moved online, where the labor force is augmented by free-sourced alternatives. As Cowen explained in his Fast Company article, “The reallocation of consumer time into the ‘free sector’ on the Web will liberate the efforts of many producers and intermediaries, just as the automobile’s advent shifted workers out of making buggies for the horse.” That is to say, employees will be liberated from their gainful employment.
“In fact,” he continues, “it’s an economic miracle that Twitter can get by with no more than 50 employees. It’s not quite a perpetual-motion machine, but if other parts of the economy were equally efficient, we’d all be swimming in free or near-free stuff.” Absent the wages we once received, that “stuff” is what we will be expected to subsist on. Let them eat Facebook profiles.
In order to reclaim the fruits of our labor and stop working on the digital plantation, we may be forced to become self-consciously mercenary about what heretofore we have been content to share out of a spirit of convivial sociality. We will need to start viewing our social behavior as our intellectual property, our various selves as proprietary content to which we retain the broadcasting rights and which we have no intention of licensing for reuse without our express written consent. Ironically, the free economy may end up destroying the spirit of uninhibited sharing altogether.