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This is the real cause of the severity and longevity of the 2007 crash. Rather than figuring out how to compensate for central currency’s extractive bias, a highly digital finance industry chose to exploit it. The digital perspective that allows us to see money as an operating system doesn’t necessarily motivate people to revise the core code so that it serves people better. That would be a pretty heavy lift, even for the most idealistic among us. So instead, bankers and financiers sought to leverage the structural flaws of the money system for their own gain.
this metaphor is getting a little old by this point, but still worth remembering
instead of refactoring codebase ... think about who the players are in this analogy. in a communal software system, who has the ability to refactor? who has the ability (and incentive) to exploit flaws? it's almost a tragedy of the commons-type scenario
[...] speculators saw in digital technology a gateway to a new, virtual form of colonialism: a new place to lend and deploy capital, new territory for growth.
Alas, the big data profiles of teenagers can’t support the same robustness of growth as entire continents of slaves and spices. Besides, consumer research is all about winning some portion of a fixed number of purchases. It doesn’t create more consumption. If anything, technological solutions tend to make markets smaller and less likely to spawn associated industries in shipping, resource management, and labor services. They make the differential between real growth and return on capital worse, not better. This means they push the banks and investors even further away from anything like real earnings until eventually there’s a complete disconnect between capital and value.
big fan of the colonialism metaphor tbh. shoot that shit straight into my veins
I don't agree that it doesn't create more consumption though. Maybe not more overall (perhaps??) but definitely more in certain sectors (useless commodities, experiences, etc)
[...] Credit-card companies are earning 3 or 4 percent on every purchase. That’s more than the growth rate of the entire economy. And it doesn’t even account for the primary source of credit-card company revenue, which is all the interest customers are paying (or further accumulating) on their balances. When a whole marketplace is not only paying up to the bank in the form of debt-based money but also paying a trusted authority to verify transactions, marginal costs become unsustainable. Merchants must mark up their prices to account for all the transaction fees, and commerce slows. Only giant retailers, with the ability to borrow money less expensively or even offer their own credit cards, are capable of reducing these fixed costs by filling some of the roles of the trusted central authority themselves.
connect this to merchants marking up prices to account for costs of advertising. equivalent
It’s yet another example of the industrial-age ethos that places human needs and values below those of the greater machines and systems in which we live. By contrast, the digital media environment invites us to look at the systems we use as changeable programs, and people as the end users for whom those systems are built. Computer programs like Bitcoin may be the most explicitly digital expression of this drive to hack economics as if it were an operating system. But the Bitcoin protocols are still more concerned with replicating the functions of money than they are with serving the needs of humans. [...]
that marx quote about systems we create instead dominating ourselves
[...] Neither the financial advisor nor the plan administrator is liable for results. Under the new scheme, a much larger portion of the same pot of retirement money could be extracted in fees to support the careers of many more financial advisors and services, since now everyone gets a customized, personal account.
Financial firms also won a vast pool of new clients with very little financial acumen and no real bargaining power—a far cry from the professional, corporate pension managers of the past. The industry made every effort to market retirement plans as tools of empowerment for individuals. As their own marketing research shows, however, they were actually pitting the unique weaknesses of individual investors against themselves, leveraging the investors’ ignorance of the marketplace and its rules, as well as known gaps—what gamers would call “exploits”—in people’s financial psychology [...]
on how the rise of the 401(k) as an individual plan represented the apotheosis of neoliberalism's effects on the psyche/attitudes
At one well-meaning Southern California fitness app startup I visited regularly, the young founders held weekly meetings at which the chief technology officer would educate his engineers on different aspects of the development process. But as time went on, he grew less likely to lecture on programming biofeedback interfaces than on business strategy. It was as if he had cracked a new sort of code. He spoke of scalable solutions, long-term contracts, and high switching costs—steps they could take to ensure “defensible outcomes” and achieve a “platform monopoly.
He had fully accepted the startup playbook’s emphasis on massive growth above all else and was now turning his tremendous capacity for programming toward that singular, highly limited ambition. The product was less important now than the prize. He and his partner were not in a position to entertain a true disruption of the marketplace, anyway. They had won one of those pitch-your-idea contests by coming up with an idea literally overnight. The venture capital flowed in days later, and these kids were—like so many other young entrepreneurs who accept tens of millions of dollars up front—obligated to build a company worth a billion dollars.
lolll this is like exactly what I'm saying in Silicon Inquiry
[...] As long as there is a chance, however small, for a company to become a billion-dollar supersuccess, the investor would rather push on. This means abandoning even surefire profit models if they aren’t going to generate the outlandish returns required by the venture capitalist’s overall portfolio strategy. He or she would prefer to let the company die, squeezing out every possible megawin, than let it carry on as a moderately successful enterprise. Without a major exit through acquisition or IPO, it is worthless on the level that venture capitalists are playing the game.
I’ve sat in on more than one board meeting, watching as investors teach their young company founders about the realities of the startup landscape and why they have to shoot for the stars. Every company must become the universal solution in its vertical—or more. You are not just a personal health app; you are the platform through which all health apps will be executed! You are not just a game; you are a gamification operating system and social network!
reading this makes me wanna cry cus that's exactly how we thought at macro. i remember that diagram on the whiteboard where we positioned ourselves as this universal layer underlying all these social networks. and we didnt even take VC. but we internalised all that bs logic anyway. sobbing rn
So they accept the hypergrowth logic of the startup economy as if it really were the religion of technology development. They listen to their new mentors and accept their teachings as gifts of wisdom. These folks already gave me millions of dollars; of course they have my best interests at heart. [...] The founders’ original desires for a realistic, if limited, success are quickly replaced by venture capital’s requirement for a home run. Before long, they have forgotten whatever social need they left college to serve and have convinced themselves that absolute market domination is the only possible way forward. [...]
oh man
While these may be democratic developments, they’re also as sure a sign of a bubble as any we’ve seen. Opening the floodgates to more angel investment doesn’t mean there will be a greater number of successful startups; it simply means more money will come in at the very top of the funnel. More startups get funded, but a smaller percentage of them survive and pay off. We’re back to net-exacerbated winner-takes-all extremes. Under the pretense of individual empowerment, unsophisticated investors enter a market where good information is even scarcer than it is on Wall Street. True, they have proxied their participation to more experienced investors, but those investors are now competing to find winners in an even more crowded marketplace. The more authority amateur investors gain over the placement of their funds, the more likely they are to be exploited as the lowest levels in new pyramids.
why opening the VC funding world to smaller investors ("democratising" it, a la AngelList) is actually A Bad Thing
The most ambitious commons-inspired project to date, the Ecuadoran government’s “Free, Libre, Open Knowledge” program, or FLOK, seeks to transform the entire nation from its current extractive, oil-based economy to one based on a protected commons of both real and digital resources. Under these policies (still in development), intellectual property would be considered part of the commons. This would lead to the creation of hyperlocal factories, schools, and labs, freed from the constraints of licensing fees. So the thinking goes, this would then allow companies to operate with greater fairness, efficiency, and sustainability. The FLOK project originates with a specific set of Latin-American socioeconomic concerns. Foremost among these is “biopiracy,” the practice of industrial agricultural companies such as Monsanto, which patent organic technology developed over centuries by local and indigenous farmers. Here in the United States, we can find an analogue in the practice of tech giants such as Apple or Google, that rely on the open-source commons for many of their products’ architectures, profiting without paying back into the digital commons. In response to these challenges, FLOK proposes the development of peer-production licenses under which only commoners, cooperatives, and nonprofits would enjoy free usage of intellectual property bounded by the commons; corporations would have to pay.
At first glance, the so-called “sharing economy” appears to be based in these commons principles. At least in some superficial way, this is true. We have gone from buying music on records or CDs to downloading MP3 files to simply subscribing to Pandora or Spotify. Owning music—or a car, for that matter—is becoming less important than having access to it. This is certainly a step on the path from hoarding to sharing. Except the many sharing platforms and services are not sharing at all but renting. We don’t collectively own the vehicles of Zipcar any more than we collectively own Spotify’s catalogue of music. And as private companies induce us to become sharers, we contribute our own cars, creativity, and couches to a sharing economy that is more extractive than it is circulatory. Our investments of time, place, and materials are exploited by those who have invested money and actually own the platforms.
on why IP needs to be part of the commons and the currently model of corporations giving us 'access' to content is not the solution