Is Digital Capitalism Aligned With Public Interest? Probably not.

2017 has been (another) very eventful year. The consequences of the shift to digital are more apparent and far-reaching than ever. When reflecting on the trends that currently are reshaping the world, one can take many perspectives. What I consistently end up with when pondering current events, is the following question: In the digital age, is “traditional” capitalism still sufficiently aligned with the interests of the people? And my answers is: probably not. Read on why, and what Swiss cheese has to do with it.

The basic idea of capitalism is clever: acknowledging that the pursuit of self-interest is the best motivator for people to get stuff done, and then building a framework which ensures that the results of this pursuit are channeled into overall improvements for everybody. Genius. And this approach indeed has led to unprecedented wealth, growth and prosperity, over many decades, if not centuries (depending on where you look and when you start counting).

Capitalism, freedom and transgression

In capitalism, the framework of rules, laws and norms is supposed to guarantee that everyone’s self-interested actions don’t cause irreversible damage to the systems in which self-interested individuals pursue their goals – to prevent capitalism from destroying itself. Considering how capitalism has lifted hundreds of millions out of poverty and, in the process, created a large number of stable democracies, this approach has worked fairly well – even though one can argue that the capitalism of the 20th century came with a “bug” of externalized, concealed costs that generated forms of collateral damage which only became apparent in hindsight, particularly when it comes to the negative effects on the environment and climate. But capitalism already has created the solution to this problem, in the form of renewable energy sources, electrical transportation and so on.

The framework in which capitalism of the past had been embedded in wasn’t perfect. Actually one cannot design a set of perfect rules that are never violated for a system which strives to give as much freedom to the individual as possible. If you want to offer freedom, you have to allow for the existence of room for transgression of rules. Otherwise there is no freedom. Loopholes and exploitable flaws are the consequence of providing freedom. The key is to be successful in incentivizing the majority of the participants in the system to not overstep the rules, and to make sure that those few who severely exploit the loopholes and those who break the rules, cannot threaten the stability of the system itself. For a long time, that goal had been achieved.

Then came information technology and the internet and everything changed.

The framework that now looks like a Swiss cheese

The internet created a completely new space for individual self-expression, commercial activity and innovation. It multiplied the freedom that people and organizations already enjoyed in the analogue capitalist era. But it also started to weaken the established framework which previously had ensured a state of equilibrium between self-interest and collective interest. Either by offering new ways for circumvention, or by simply not offering any enforceable rules at all. The phenomenon of the internet first was too new, and then it became too big too fast to control it.

Global connectivity weakens the effectiveness of national laws and undermines existing gatekeepers. It dramatically reduces the costs to reach a global audience. It creates a global, very competitive marketplace of ideologies. It allows a small number of organizations to morph into gigantic corporations which, powered by economies of scale and accumulative advantage, capture market by market while hoarding vast amounts of money. It enables individuals to earn money in sometimes genius, sometimes absurd ways. Nowadays people can even make a pretty good buck by writing made-up news about politics or creating disturbing videos for kids on YouTube, influencing millions of minds in the process.

The internet has been a boon for the pursuit of self-interest, completely in line with the spirit of capitalism. This would not be a problem, hadn’t the framework tasked with preventing the capitalist system from eating itself, suddenly become toothless and featuring more holes than a Swiss cheese. Without checks and balances, the individual pursuit of self-interest by millions inevitably directs resources and attention away from public interest.

The way I see it, capitalism in the digital age has lost its equilibrium. In aggregate, the goals of self-interested players in the digital sphere are not aligned anymore with what’s good for today’s societies. Facebook, just as one and possibly the most significant example right now, simply cares about self-preservation and continued growth. There is nothing Mark Zuckerberg can do about it. He can’t just wake up tomorrow, shocked by what he has created (like some of his former colleagues), and decide that it might be better for the world to just shut the service down. I have called this “Zuckerberg’s lock-in effect“. Therefore, whatever mission this company or any other tech giant comes up with, has to be considered meaningless post-rationalizations.

The bright side

Fortunately, there is a bright side: The absence of effective frameworks to bring digital capitalism in balance with the interests of the people also provides new wiggle room for individuals who do care about the bigger picture and the public interest. The digital age’s freedom is there for everyone to leverage (as long as uncensored internet is available, of course). The freedom offered by the capitalism of the 20th century was rather limited in comparison to the opportunities today. Back then, structural, technological and geographical boundaries prevented out-of-the-box thinking and the creation of large-scale cross-national networks of ideas. Today is very different. This results in all kinds of powerful movements and emerging concepts for new paradigms, such as basic income, the rise of women or the philosophy underpinning the blockchain.

What happens next is anyone’s guess. If the interest of digital capitalism’s entities indeed has become too decoupled from the interests of society at large, as I suspect, then the already frequent shocks to political systems, institutions and the democratic way of living as a consequence of this misalignment will likely keep getting stronger and even more numerous – which would feed the current rise of anti-tech attitudes. On the other hand, the emerging “native” movements and paradigms of the internet era could, theoretically, lead to an upgrade to capitalism, aligning it back with public interest, and helping to break the accelerated concentration of capital, data and (information technology) knowledge in the hands of very few.

If that ends up happening, then capitalism will have won, after all.

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Photo: Flickr/Filter Forge, CC BY 2.0

8 comments

  1. Larry "Wingnut" Wendlandt
    Reply

    “Considering how capitalism has lifted hundreds of millions out of poverty”

    Are “they” still peddling that distorted adage?
    Actually, capitalism’s ever-skyrocketing price tags on everything including survival supplies… has shoved MILLIONS into poverty.

    Putting frosting or make-up on a dog turd… does not make it delicious. Capitalism is a disgusting servitude-infested pyramid scheme, packed with “or else” felony extortion in the flavor of old Chicago mobs, and we all know it.

    Time to own up to disgusting get-a-leg-up rat-racing systems.

    MaStars – Mothers Against Stuff That Ain’t Right
    Anti-capitalism-ists (system fighters, not people fighters)
    Bessemer MI USA

    • Thanks of for your comment. You are entitled to your opinion. However, the emotional,one-sided nature of your comment makes it obvious that there is no point in trying to have a fact-based exchange about capitalism with you.

  2. Larry "Wingnut" Wendlandt
    Reply

    Hi Martin. Well, ya didn’t censor me away, so that’s a miracle step in a debating direction. Thanks!

    Want to read “the big rant”? http://dailycollegian.com/2015/09/28/we-cant-end-capitalism-but-we-can-change/ – first comment.

    Yes, I write with scolding, because I’m not only attempting fair debate and fair-weighing of my claims, but I am also trying to pull heart-strings and get changes made… and quickly, before the pyramid collapses and crushes folks on the bottom (which it is doing right now).

    There’s lots of indoctrination and propaganda that most “normals” need to remove… before a fair weighing of my claims can be done. Are you really that open-minded to a different view? Few are.

    Can you REALLY see what happens to 18 year olds? Can you see the parental policy reversal at age 18…. from share share share… to fight fight fight? Can you see the “join or starve”, join or die, join or get no enjoyments? Can you see the “fulfill this ORDER or else” done to almost ALL workers? Can you see how this is the exact same felony extortion that Chicago mobs did to businesses pre-Elliot Ness? Pay-up or else. Capitalism is PACKED with that extortion, and most participants blinder-up to avoid seeing it.

    Are you REALLY open-minded enough to look at capitalism WITHOUT wearing rose-colored glasses? If so, you’re different from most, and I applaud your adventuresome spirit.

    Thank for your reply, and thanks for the no-join, no-censoring commenting area. That is different, too. If you wish, let’s start by debating this “lifting out of poverty” that the people in my tiny economically-dead town are apparently not receiving. I got people starving nearby, with no toilet paper, and no “marching on the pyramid” slots to do any “lifting”. There’s no sign of any lifting happening around here. Most capitalists blame one another instead of blaming the system.

    Want to read every blog-comment I’ve ever written during my 20+ year campaign against the system called capitalism? http://webpages.charter.net/wingthing/misc/AC.zip

    If you wish to actually fairly weigh/debate my claims, you might need some de-programming prep… especially if you are currently coated-with “Yay America”. Try to imagine the forces I have pushed against during my campaign. Shove first, listen for explanation for joining a disgusting system – later… has become a necessary approach vector, unfortunately. I tried it friendly, in the beginning. It didn’t work. Nobody wants to hear bad news, especially about how they were conned into a servitude-infested pyramid scheme/competer’s religion. Its inventors are long-go dead of old age, but not its popularity.

    Best regards!
    Larry

    • As I am European and not American, my view is probably a bit different, and you for sure won’t hear a “Yay America” from me.

      I do understand why you are being triggered by the line “lifting millions out of poverty”. It’s often used by hardcore capitalists who, no matter what, defend their ideology, without acknowledging its flaws. So by using “their” vocabulary, I might create associations which put me in their category. However, I think my text is nuanced enough to show that I am neither a passionate evangelist nor an anti-capitalist.

      In my eyes, it is totally valid to have a critical view of capitalism. No matter where one stands, as far as I see it, practicing what Nick Szabo has called “Quantum Thought” is the only way to go here: Trying to acknowledge both the good and the bad, at the same time. And then come to a conclusion. When I do that, I see that the improvements that happened to many people thanks to capitalism outweighed the costs, which undeniably were quite high as well. If your general point of view is a more negative one, then in your eyes, the costs are weighing more than the benefits.

      But as I also highlight in my text: Lately, the side with the pro arguments for capitalism, as it looks right now, is getting thinner, whereas the cost/disadvantages are growing.

  3. Larry "Wingnut" Wendlandt
    Reply

    Classy and informative reply, Martin. Thanks. I am glad that you are examining capitalism, and happy that you are willing to own-up to what is seen. That’s all anyone can ask-for.

    As you might have noticed, my primary push is for the abolishing of economies and ownership, which means price tags on survival supplies… (actually, ALL price tags) leave, as well. Of course, monetary incentives for doing work… will go with it.

    The “new” work sites… need to be VERY enjoyable to be-at. (We’re talking carnival-grade atmospheres.) The all-volunteer work force… must “get to” go to work, and not “have to”. They will be there… by request.

    Sure, producing great (reparable and built-to-last-forever) survival products… is one-of the primary goals, worker happiness/safety/love is an equal priority.

    I don’t know how much of my “crap” that you have read, but somewhere… I talk about ‘Treehouse Teaming” which is the force that causes teams to come together over great causes for no pay, and they have a blast. No bosses, no deadlines, no ‘termination’ or ‘firing’. Such “teaming” often generates great products, great friendships, great purpose, great self-satisfaction, and great memories. THESE are the characteristics we need to seek… in our all-volunteer work-sites.

    TMI. All in all, there are really two separate issues to deal-with. #1. Is capitalism a disgusting slavery/pyramiding system that has to go? #2. What shall we do instead? We must be careful here, because we don’t want to “replace” or “reform” capitalism. We want it gone… far far away. (at least I want it gone, and I think a few young adults are in the neighborhood).

    We want competition… replaced with cooperation, except… we never want to cooperate with the competer’s church called capitalism. Competition is the opposite of cooperation.

    We won’t be replacing capitalism. We’ll be designing a brand new cooperative survival/happiness system, and it makes reparable products that last forever and never land in dumps. It also provides VERY nutritious foods with no profit-optimizing fillers… and tries to allow everything to vine-ripen.

    Actually, when we examine life in a U.S. military commune-ity, we see MUCH lower fears for survival, and much more adopt-one-another teaming and trusting. No fear for survival… other than the bullets of combat. But I’m speaking of the “team” that is a US military base. (I was USAF-active for 9 years… loved it… because of how very “giving-a-crap-about-one-another” it was, and hopefully still is.)

    Teaming. It’s a great feeling, and when fear-for-survival is gone, talents/inventing bloom, and so does some child-like play/spirit. Good stuff.

    Okay, that’s all I have for today. Very kind of you to engage with me, Martin. How many readers do you think are nearby? Perhaps they could also give their views. I’d certainly be interested in hearing ANYONE having reasonably-kind comments on these issues.

    You too, Martin. Expand/Expound on anything… I’ll listen and ponder it. :) Be well.

  4. Larry "Wingnut" Wendlandt
    Reply

    Hi again. I forgot to comment on why I have a negative view of capitalism. It is because it is both morally disgusting/appalling, AND it is illegal.

    Morally, SOME kids are born set-for-life (often children of early earth-materials-exploiting “founders” such as mining and logging moguls). OTHER KIDS are born set-for-servitude… with no great family name and no “foothold” on the steep sides of the pyramid. To be brief, some are born set-for-life (millionaires just by being born), and some are born “behind the 8-ball”. That’s… disgusting.

    Let’s talk about forsaking. Any forsaking seen in capitalism? (Its packed to gills with it).

    How about coveting? Yup, plenty. Our heroes are the rich, and our goals is to have as many toys.

    Worshipping green paper false idols (money and entitles-of-ownership)? Overflowing.

    Now, onto the illegal part. ANY time… you terrorize a human (mostly 18 yr olds)… into “join or starve” or “fill this order or you’re fired” or “pay-up or else”, or use exploitive tactics like “get a job marching aboard the pyramid, or else you get no happiness like a car, a girlfriend, a house, a boat, a motorcycle, whatever” (bling dangling, similar to fooling fish with artificial lures)…
    …THAT is felony extortion.

    Ownership: It is my assumption… that before ANYTHING can be owned or sold, its original owners must agree to allow selling or ownership. ALL things on the planet… are made from earth materials. Have the original owner(s) of earth material… been consulted? I don’t think so. Therefore, all ownership is illegal.

    How’s that for some reasons to have a negative view of pyramiding? Am I justified? (Wingnut checks his saddle… for burrs.) :)

  5. Larry "Wingnut" Wendlandt
    Reply

    Hmm, kind of sleepy, here. :)

    Ok Martin, you study the internet/web, and have virtual offices. One would suspect that you see the web… as a type of commune, where (ideally) everyone has an equal say.

    Good/bad? Thoughts?

    Have you noticed… that even those who are not at all educated-about an issue/decision, and who cannot even START to “see” the far-reaching ramifications/impacts of a decision/topic… also have a say? Should they? Should their kneejerk “vote” be tallied with the same result-influence… as those who have studied the topic thoroughly?

    *shrug* Computers allow decision-by-committee… everyone having a say on the most-minute details of any issue/decision. A true democracy would try to exploit computer networks so that the will-of-the-people can be properly measured/seen.

    Any comments on any of that? (thx)

    • I’m sorry I am kinda in holiday mode right now, so I force myself to take a break from all online comment discussions at the moment. And your question is way too deep to just write a quick two sentence reply (which is a compliment).

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