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
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.
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