April 24, 2014

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Who Owns the Future? Not the Middle Class

Jaron Lanier, in the latest contribution to the public conversation about how we live with technology, blames the Internet for the fall of the middle class.  Only the problem is he’s wrong.

In his new book Who Owns the Future? Lanier–often described with the word visionary–argues that the information economy in general and network technologies in particular are to blame for the plight of the middle class. I haven’t read the entire book yet (that will have to wait until after my team puts in our proposal to NSF’s Smart and Connected Health ). I suspect I will agree the political spirit of much of what Lanier writes, but on this point I have to push back now, even at the risk of missing the subtlety of his full argument.  We probably agree on many points, but this one is crucial to tease out because of it’s political implications.

In Venture Labor I traced why seemingly rational, well-educated young people rushed to be a part of the first wave of dot-coms in the 1990s and early 2000s. My point was the entrepreneurial spirit of the dot-com era was a response to growing job insecurity, not the cause of it. Young graduates of the 1990s found that risky Internet startups offered the best options in an economy that increasingly felt (and was) closed off to them.  They acted as “venture labor,” risking layoffs in the hopes of a future stock payout because they had, relatively speaking, few other choices.

Technology itself was not the cause for the disruption in the U.S. labor market that limited entry-level jobs and made work in general less secure and more contingent. Tech giants Kodak and IBM once offered stable long-term careers with the best benefits in America. The layoffs there and elsewhere that reshaped corporate America and eliminated hundreds of thousands of middle-class jobs began before there was even a commercial World Wide Web. The blustery rhetoric of Internet innovation saving a tired, weakened American economy was not possible without the tropes and metaphors that Ronald Reagan introduced into political speech in the 1980s. The challenges the middle class faced then and continue to struggle with are not the result of technological change but broad economic and political shifts that began well before html. Tom Streeter has called the spirit of the dot-com era “Romantic” (as in Henry David Thoreau, not Match.com; a dialogue on Streeter’s book edited by yours truly is over at Culture Digitally). The romantic individualism that pervades the culture of the Internet means that that these responses to economic change were talked about in terms of rugged individualism and self-fulfillment, not in terms collective or social. That’s not accidental. A generation of layoffs, political rhetoric about the virtues of good ol’ American risk-taking, fatally weakened labor unions, and permanently slowed job growth. In other words, social responses to economic problems lost traction and a cultural vision of rugged individualism and entrepreneurial pluck saving the economy won.

This brings us back to the point of Lanier’s book. We have many reasons to be politically suspicious of Big Data and Moore’s Law. But hanging the collapse of middle class wages on these phenomena, as Lanier does, hides the fact that the problem has been with us longer than the Internet has. Take this passage from Lanier in an interview in Salon with the very smart Scott Timberg who writes on jobs in cultural industries:

The way society actually works is there’s some mechanism of basic stability so that the majority of people can outspend the elite so we can have a democracy. That’s the thing we’re destroying, and that’s really the thing I’m hoping to preserve. So we can look at musicians and artists and journalists as the canaries in the coal mine, and is this the precedent that we want to follow for our doctors and lawyers and nurses and everybody else? Because technology will get to everybody eventually.

In the book, Lanier writes that because “Networks need a great number of people to participate in them to generate significant value. But then, when you have them only a small number of people get paid. That has the net effect of centralizing wealth and limiting overall economic growth” (p 2).

I applaud Lanier for pointing us to the woes of the economy as a dark side of the Silicon economy. But his blame for it on technology is very much misplaced. As Janet Maslin pointed out in her New York Times review of Who Owns the Future?, the book “may not provide many answers, but it does articulate a desperate need for them.” I, for one, am glad to see we’re finally talking about them.

Comments

  1. Chris S says:

    My caution (not having read the book either) is that although those trends you describe predate the Internet and web adoption, they definitely do not predate the “information economy” and “network technologies”. If Lanier specifically labels the Internet as the cause, he would be on shaky ground. But if he is describing the Internet as an example of these trends, then you two agree much more than you differ on this subject.

    The information economy – knowledge work – has been steadily growing as a fraction of the economy since the 1960s, where it was already more than 60% [1]. This would be a necessary precursor to any of these changes, since it allows physical separation of the work and the destination of the work’s results.

    Network technologies were already impacting these service areas long before the Internet. Find a consultant who was around for the shift from ‘courier’ to ‘fax machine’, and they’ll tell you about moving from finishing reports and sending them on their way, to finishing a report and having it instantly available to the client. Before that, the telex – and even the plain old telephone – was already collapsing time and distance for its network of users.

    The Internet and the ubiquitous mobile phone drove these trends even harder, but the groundwork for the changes Lanier is describing was laid long before.

    [1: http://www.ritholtz.com/blog/2012/01/the-shift-from-manufacturing-to-service-economy/ ]

  2. Dean C. Rowan says:

    “The romantic individualism that pervades the culture of the Internet means that that these responses to economic change were talked about in terms of rugged individualism and self-fulfillment, not in terms collective or social.” But then there’s Howard Rheingold in ’93 going on about “virtual community,” and if I recall correctly, there was a lot of communal hype at the time, but it was framed in terms of the effect of the adoption of new technologies, not in terms of their mode of operation. (I mean, “personal” computer, right?) The figure of a “network” itself is a collective one. So I think there is a problem right off the bat in the paragraph in which the sentence I’ve quoted appears. Does anybody really blame “technology itself” for social and economic woes? (Never mind that I teach my kids that if you have to plug it in, it’s already broken.) Technology is designed precisely to be used for leverage, and if there is a powerful interest in hammering away at organized labor, as an example, that interest will deploy new tools to accomplish the task more effectively.

    • BanFrenchRoast says:

      Technology will always favor wealth concentration on the net (net benefit that is). Technology requires massive capital investment. That will only be made by those who have already have massive capital and want more. The deployment of the technology thus always favors making stronger the very powers who (collectively) control the game. The only “risk” they take is dividing up the spoils amongst themselves. Compare that to the enormous risk labor and even the rest of society takes from disruption, often of 100% of cash flow. Imagine a technology that eliminated bosses, owners, investors, hedge fund managers and others who create massive economic inefficiencies with their over-sized demand on the benefits of any new technology. It could happen in theory, but it would be suppressed. Certainly its use would be suppressed. Don’t look for financial transactions taxes any time soon. But you will see relentless effort to destroy remaining social benefits. Internet technologies in particular are enabled by massive investments in the cloud or end nodes.

      These people have gotten better and better at extracting wealth from others without returning anything in the form of shared labor value. I believe this is what Scott Timberg decries as the collapse of the “formal economy”. That’s how a “something for nothing” deal turns in to “nothing for everything” when you pull back see the bigger (social) picture. It is an extension of the illusion presented by the Walmart Economy. Prices enabled by near slave labor look good until one day after your job is eliminated too, and then no price looks good, no matter how “low”.

  3. Timothy Dunnigan says:

    I find this argument quite persuasive. I find Jaron Lanier reflexively contrarian and little else.

    I think that Chris S. adds to Dr. Neff’s argument, actually. It seems to me that the decline of industrial production in the U.S. coincides with the decline of the middle class. The technology and information economies have filled some income gaps this decline creates, but only at the margins of high and low income earners.

    I agree with Mr. Rowan that organized labor has suffered, but disagree that technology has “hammered away” at it. It has suffered because its demands continued to increase at a time that its economy (industrial production) was in decline. This was, seen most charitably, a tragic course. A more critical view is that it hastened the decline of industrial production in this country.

    • BanFrenchRoast says:

      No, productivity has gone up consistently. What happened was all that extra “leisure time” we were promised back in the 1970s was diverted into extreme wealth concentration of the super economic elites. The wealth increase happened, but the super elites won by grabbing it. Warren Buffet was perfectly right, the super rich won the class war. All the economic statistics bear that out. Reaganism was the worst thing that ever befell the vast 90% majority of this country. But the people keep falling for ideological brain washing, exploitative religion, racism and ethnic fear and class division.

    • Harvey says:

      “The automatic factory and the assembly line without human agents … makes the metaphorical dominance of the machines … a most immediate and non-metaphorical problem. It gives the human race a new and most effective collection of mechanical slaves to perform its labor. Such mechanical labor has most of the economic properties of slave labor … However, any labor that accepts the conditions of competition with slave labor accepts the conditions of slave labor, and is essentially slave labor.”

      Norbert Wiener, “The Human Use of Human Beings: Cybernetics and Society”

      The issue with replacement of human labor isn’t that it does not free up humans’ time or is less economical, the question is what then do the ‘freed up’ humans do? So much of human existence is based on the concept of value – or specifically value produced. What value then is a human who produces no value?

  4. paul says:

    “Networks need a great number of people to participate in them to generate significant value. But then, when you have them only a small number of people get paid. That has the net effect of centralizing wealth and limiting overall economic growth”

    This isn’t a result of the technology per se, it’s a result of a bunch of people with money and power making decisions about how the technology should be implemented to benefit them.

    (My personal hobbyhorse on this is the stifling of micropayment systems, which in turn had a huge effect on how the internet was organized and how people could attempt to monetize it. 15 years later we have a few micropayment systems crawling back, but all of them are drarfed by the inside-out micropayment systems that are brokered ads.)

  5. Puzzled says:

    This is a really puzzling analysis. It’s puzzling to attack a book’s thesis as “wrong” and two sentences later admit you haven’t read the whole book. You don’t strike me as capturing his thesis at all. Your own work about the psychological and sociological reasons that some people moved into certain jobs in the 1990s does not seem especially relevant to the issues Lanier raises. Lanier is talking about structural issues–how the ability to network certain kinds of work via globalization has contributed to an ever-shrinking number of middle-class jobs. He doesn’t blame the technology either, so much as the way it fits into a set of social forces that appear to me to be the same ones you are describing. I am especially puzzled by your statement that “his blame for it on technology is very much misplaced.” It sounds like you feel there’s a need to defend technology, which is troubling. He gives a very coherent argument about how the concentration of computing power in the hands of a few–despite all the rhetoric of democratization that suggests otherwise–continues to put even more wealth in those same hands. The more money, the easier it is to buy the fruits of technological power, and the more fruitful it is to put middle-class folks out of jobs and keep the profits for the owners. We see it happening everywhere. That’s his target, not “technology” exactly, and your assertion that he is “wrong” seems without a serious argument to support it.

  6. Jacques T. says:

    I suggest that readers interested in these topics read the much more coherent and accessible work by Jason Benlevi – “TOO MUCH MAGIC: Pulling the Plug on the Cult of Tech”

    http://www.toomuchmagic.com