While reading Profit and Gift in the Digital Economy by Dave Elder-Vass (2016), I was reminded of a contradictory development within modern capitalist economies. We are shifting from an economy based on wage labor, which simultaneously fueled production and consumption, which has been keeping the capital accumulation regime going, to an economy based on unilateral gifts given by individuals to powerful monopoly corporations, who have to pay us virtually nothing in return, thus feeding a cycle of growing income inequality, reactionary populism and frustration with the status quo among what Donald Trump described as the “forgotten men and women”. Declining purchasing power among consumers in developed countries subsequently pushes down rates of economic growth, which will produce not only a crisis of legitimacy but also a crisis of accumulation. To understand this contradiction we have to remind ourselves of the major trends happening in the economy.
The digital revolution implies greater dependence on major monopoly capitalist firms like Amazon, Apple, Google, Facebook and Microsoft. They get to consume a greater share of our attention, and can control the channels of a giant networked customer base (as opposed to e.g. Halal food carts), thus earning more profits than any other firm can. Amazon is a giant bazar displacing the big retail competitors. Apple/ Microsoft are giant suppliers of computers, smartphones and what forms the hardware of consuming many online services. Google is a giant library, which contains all of the world’s knowledge with steadily improving algorithms. Google also runs Youtube, which is a way to access our media entertainment. Facebook is a giant social network that we use to keep in touch with people and share silly thoughts and experiences with others in the network.
In addition to the monopoly power of these internet giants increasing, the invention of self-driving cars, self checkout kiosks, free media streaming (as opposed to buying CDs, DVDs etc.), automated warehouses, software in the service sector and robots in factories implies a mass displacement of mostly routine jobs, which are not growing since the last great recession of 2008 (see graph). Considering the fact that the labor force is continuously growing, the absence of routine jobs means that there will be more frustrated unemployed and underemployed workers, who will vote for the next Donald Trump that hails from some corner in the country. Capitalism is built on labor-saving technology, which pushes out the frontier of production, while eliminating old jobs with the potential promise of creating jobs elsewhere in the chain.
Source: St. Louis Federal Reserve
Managerial and professional positions may be on the rise, and if we follow the “bullshit job” argument by David Graeber (2013), they can technically be endlessly extended. What he is referring to is the growth of unproductive service jobs that don’t exist to feed, clothe and shelter us, but to entrap us in extended periods of busyness, e.g. advertising, contract lawyers, financial services, education and health care administration, human resources or public relations (see graph). While some may object that these are all necessary aspects to a modern economy, one should be reminded that many health care jobs don’t contribute to the health and welfare of the citizenry. The lack of an efficient single-payer health care system bloats up profits and administrative expenses in the US.
Source: Michael Roberts
But while we may be inclined to criticize these jobs, our laborist political economy (“work or starve”) convinces us that given the strong force of automation coming down our way, we should defend these jobs as long as possible, no matter how useless they are. As long as we can convince some powerful employer to buy our labor services, we should shut up and be grateful that we can get the means to fill up the gas tanks and keep the lights on at home, even if we perceive our job as socially meaningless. That is how absurd our economic system has become.
The devalorization of labor (either in the form of displacement of expensive, organized labor or in the maintenance of deskilled, low-cost workers with little or no rights) is also connected to an increasing donations/ gifts. Amazon Mechanical Turk, Uber, Google, Facebook, Youtube and Wikipedia are useful representations of this gift economy. But what do I mean by gifts? One may argue that gifts are given in exchange for another favor from that person in the future. Think of lobbyists bribing politicians to make them pass a law friendly to the lobbyists’ industry. But gifts may also be given without any expectation of return. Think of giving the street beggar some small change. For most of us engaging in the internet economy, donating our time for free, we never expect any monetary returns, even as the platforms we are on and their investors make money like there is no tomorrow. Let’s take a look at what I will call the “unilateral gift economy”.
In Amazon Mechanical Turk, one can fill out surveys or complete any tasks that can be done online, which are demanded by requesters. Pay is often very low, in part because there are so many MTurkers (supply) relative to requests (demand). A recent paper by Dube et al. (2018) found that there is substantial monopsony power by MTurk requesters. A monopsony is a market condition where there is only one buyer (i.e. Amazon). Monopsony power is reflected in the inelastic labor supply, which means that regardless of what the price is, the number of MTurkers does not change. In a very elastic labor supply situation small price changes result in substantial shifts in the labor supply. There are simply too many MTurkers, who are desperate for any job that they accept any compensation even if very low.
Now you might object that MTurk sounds like just another job, because responding to a request means work and that becomes compensated even if that is not enough to live on. In a technical economic sense those critics are right. But from a critical perspective, isn’t it also true that once one becomes so absorbed in doing MTurk jobs with so little compensation that MTurkers might use reasons other than making money and paying bills to continue doing it? Subjectivity is very important here. Scholz (2016) reported surveys/ interviews of MTurkers, who participated on the platform because filling out surveys would “benefit science”. These are MTurkers, who used a higher non-economic rationale to justify why they continue to do a lousily-paid job.
Uber is another example of a job, whereby the sheer scale of the number of drivers in the industry pushes down the total compensation in the industry (Schor and Attwood-Charles, n.d.). Subsequently, many Uber drivers that I had encountered were not using earning money as a primary reason to drive, but their ability to communicate with customers, being out of the house, having something to do. As such, drivers are pre-emptively undervaluing their labor, and consent to the unilateral transfer of gifts to the powerful company. It turns out that Uber has also developed algorithms to encourage their drivers to drive more hours to hit certain earning targets, which becomes the gamification of work. Perceive what you are doing as entertainment or fun competition and not work, which eases the unilateral gift transfer to Uber.
Google seems to deliver users the best of all worlds: access to the world’s combined knowledge for free. Even just 30 years ago, knowledge was concentrated in a few minds and a few education institutions. Encyclopedia Britannica and Brockhaus were encyclopedias that were compiled by some very educated people, who then have their works read by an audience of other educated people. But Wikipedia and Google open up knowledge to anyone with an internet connection. Now, we can critique that only educated people will look for interesting information, while others will search for computer games and online porn. But that is beside the point. The key point is that the free receipt of information is not so free.
The famous saying is that if the product does not cost anything you become the product. That is the world of Google, Facebook and Youtube. The economic success of Google despite the free offering of their product is the targeted advertising that is made possible by tracing any online web searches to your individual account. My entire web search history is tied to Google Chrome and I am always logged in with my email account. That is very convenient, because all of my web searches and bookmarks can be pulled up anytime and anywhere that I am logged in. If I have recently searched for neckties, then lo and behold I will see many commercials of neckties on the sidebar. As a result, advertisers who are greedy for user data to target their products to potential customers know that they have to advertise via Google and may even pay a premium to do so. Thus, Google takes a huge chunk of the globally available online ad revenues.
Elder-Vass (2014: 189) claims that Google is embedded in both the capitalist and the gift economy, which does make sense. Targeted ads make Google capitalist, while the free user service and the need to please users with fancy, convenient features make it part of the gift economy. But this demarcation does not allow us to weigh which economic aspect dominates. To the extent that users are providing free data to Google, which profits indirectly from users, the users are uncompensated workers, thus providing a giant gift to Google.
A similar principle exists for Facebook, which is perhaps even more pernicious than Google in aggregating information on individual users. While Google has to infer my tastes and preferences indirectly via my search preferences, any Facebook comment, like/ hate/ love/ disgust etc., sharing of link and inputting of personal data into the profile produces a very explicit and direct expression of my tastes and preferences. Thus, Facebook is as good if not better poised than Google to profit from individual user data.
In the case of Youtube, our video preferences get saved to an individual account, which is often tied to the Google account, and as such it ensures that we constantly watch things on Youtube. In that sense, it is similar to Facebook, Twitter or Gmail in that it can permanently occupy our attention space, which confronts us with more commercials, which showers Youtube with even more profits. While writing this post, I listen to my favorite pop song playlist, getting advertisements in regular intervals (perhaps every 2-3 videos). Video content creators might be put in a position to earn a share of the advertising royalties in pay-per-view agreements. But video creators have to individually negotiate that with Youtube if they want to get any royalties. In the absence of such agreements, Youtube collects all the revenues. It can, therefore, not be surprising that many hobby video creators (e.g. people doing Jackass-style stunts, share their family cooking recipes, or just tell stories) just treat their activity as an entertaining hobby that will enliven the life of their viewers (i.e. a gift) rather than a way to earn royalties.
Music producers, in a classic “if you can’t fight them, join them” manner, had first tried to sue Youtube for copyright infringement for posting music videos, but then realized that it was too stressful/ uneconomic to force removal every time someone uploaded a bootlegged copy of a song. Youtube could not be held to account for such copyright infringement so long as it removed unlawful use of copyrighted songs when told to remove them. The music producers (there are only very few, and the official music videos are sponsored in VEVO) are back to making money, though the total revenues in the music industry have declined, making artists more dependent on live performances to make a living.
Among all of the major examples of the online gift economy (with capitalist underpinnings), only Wikipedia is unambiguously not for profit. It is not listed in the stock market, and is operated by the non-profit Wikimedia Foundation. When going to the Wikipedia page (which had been very useful to me in many of my investigative blogs), you will find the regular pleas for donations from users. There are no ads, and thus no other way to generate revenues to keep the staff which maintains and hosts the site. But it is precisely because of the pure gift economy ethos that all the Wikipedia contributors (which is, again, anyone with internet/ computer access) will ask for nothing more than the feeling of benefiting the community with knowledge in their respective areas of expertise as opposed to any material compensation, as was the case with contributors to other professionally curated encyclopedias. One donates his/ her time and knowledge to contribute to publicly available knowledge, and this is a pure gift economy.
So what are the implications of these three large forces? These forces include (1) the intensification of monopoly capitalism with the giant internet providers; (2) the decline of routine and productive jobs; and (3) the rise of a unilateral gift economy to the benefit of these monopoly companies.
Concerns about surveillance are certainly becoming louder. In China, the social credit system bars people with unpaid financial debts to purchase flight or train tickets (TodayOnline 2018). Facebook is drawing intense public scrutiny for allowing Cambridge Analytica to draw on Facebook profile data for political influencing in the 2016 presidential elections (Tam and Real 2018). When the trolls take over or the state with its own controlling needs, then civil society is besieged because it is unlikely that such a large, complex social network can be democratically held accountable. The few thousand employees in Silicon Valley, who create the products that we all need, hold tremendous amounts of power over the rest of us, who cannot afford to quit Gmail or Facebook for fear of becoming a social isolate. Citizens groups might want to pressure lawmakers and the internet giants themselves to subscribe to a code of conduct that will avoid excesses in surveillance and opinion manipulation, but I doubt how effective that can be.
With respect to the economic forces a play here, we are reminded of the contradiction of capitalism. The growth of monopoly internet firms reflects not the initial failure of capitalism but its success, because it is the objective of firms to control the entire market. Rockefeller had attempted this by consolidating the oil and railroad industry, and in today’s economy it means the control over the digital information channels, but also the centralized controls over the productive portions of our economy (extraction, manufacturing and agriculture). The fact that Silicon Valley firms are swimming in cash should be a source of happiness if that wealth can feasibly trickle down to the rest of us. But the decline of productive/ routine jobs and the rise of the gift economy (i.e. our contributions of time and data to internet companies) imply that there is no such trickle down to be expected.
On the contrary, the existence of a homelessness crisis in cities like San Francisco and Los Angeles indicates a microcosm of a failing social economy. As the tech giants continue to attract more investor capital and grow their user networks, they attract a few thousand engineers form the elite universities, who use their high salaries to buy the scarce attractive residencies in the Bay Area, thus driving up home and rental values for everyone living there, even poor people with minimum wage jobs that have lived in the Bay Area for their entire life. No wonder there is a homelessness crisis. The internet monopoly firms’ drive to accumulate capital is an utter success, but this will be the utter failure as the lack of broad purchasing power in the economy will diminish any future sources of growth, which can by itself negatively affect investor animal spirits and push down ad revenues for these internet giants. Add to that demographic aging and decline, and I can hardly see how the economic growth mantra shall continue indefinitely.
From the perspective of social theory, the unilateral gift economy is even worse than Marxist labor exploitation, because labor is at least compensated for part of their labor, but now we are being paid nothing for any information that we hand to the internet giants.
What is to be done? We certainly know that the endless accumulation of academic credentials or a massive jobs program are no longer sensible tools to ensure broad-based economic benefits. The removal of mass routine production jobs is probably for good. Even as we still have unmet needs in public infrastructure (roads and rail lines have been left to decay), these are temporary priming the pump mechanisms that won’t generate sustainable full employment.
I would also argue that we should stop second-guessing about finding new mass employment industries, because the goal in life is not to have a job for its own sake. Reasonable policies would be to increase paid vacation benefits and shorten weekly work hours so that we can distribute work that is not automated to a broader set in the population. This step might have to to be financed from profits, though- as Kalecki (1943) noted- a full employment equilibrium might produce higher profits as both production and consumption increases. If the market does not generate full employment (as it never does), then the state might have to step in by creating public employment financed by the giant revenues from the internet firms. Because how likely is it that Facebook will hire millions of social media app developers, which it could easily afford at the moment?
In the absence of the full employment option, there are still two other alternatives: Jaron Lanier (2013) is a supporter of so-called micro-payments, which means that we are no longer treated as Facebook’s and Google’s consumers, who are passively benefiting from their service, but we are treated as workers, deserving of financial compensation for inputting our data. To the extent, that we are wasting more and more hours of the day with those internet companies, the survival of the masses might be made possible via these micro-payments. The difficulty lies in the indeterminancy of “fair” compensation levels. Should you just be paid a flat-rate for owning an account (which almost works like a basic income), or should you be paid for the number of likes/ views you get on your post? What happens to very poor people lacking stable internet access, or people who are not voyeuristic enough to display all their life stories on social media or use other non-internet sources for gathering information? Therefore, I think that micro-payments are an interesting idea, but hard to define in practice.
So far we are still assuming that we can rely on a market mechanism to ensure the fair distribution of economic resources. But I find that perspective deeply troubling, because in a market the best networked people will earn the most income compared to those with fewer networks, thus continuously reproducing socially undesirable concentrations of wealth. Mark Zuckerberg (2017), CEO of Facebook, knows that he is not going to create millions of Facebook jobs to cushion the social dislocation of low-wage jobs or lack of jobs, so he supported the universal basic income (UBI), which is in part financed by a wealth tax that would burden people like himself and other similarly situated people. Zuckerberg frames this position as allowing people to experiment with entrepreneurship the same way he has.
It is probably true that there are a lot of people working boring jobs to keep their pensions and health care, while they really want to become independent entrepreneurs like Zuckerberg. But there are also people, who want to take it easy, spend more time with the family and work a job without the threat of being fired becoming an existential threat. But that is not inconsistent with the principle of a UBI. Only when a basic income is conditional, as with the conditional cash transfers in developing countries requiring parents to send their children to be vaccinated and to school, can we mandate desirable behavioral traits on benefit recipients. But conditional cash transfers, even if well intentioned, are still constraining the behavior of individuals.
UBI will decouple economic survival from work and wage labor and has the positive side effect that we don’t have to intervene in the labor market to ensure more job opportunities. We also don’t have to get bogged down by complicated evaluations of how many likes or how many web searches we do to get “fair” compensation. The only question that arises is whether s UBI can weaken the pillars of capitalism, which is based on the exploitation of wage labor. But to some extent, if the only economic benefit that individuals can generate is like Wikipedia, where we gift our knowledge to the broader world community, and not producing food or cars, then it should be possible to subsidize this gifting, which is not based on economic greed but the love of sharing information with others. Payment for service as opposed to payment for time can negatively influence professional autonomy (Crouch 2015). Take, for instance, the doctor, who gets more money for prescribing more medical tests to patients even if they are not medically necessary as opposed to a doctor, who gets paid a fixed salary, and autonomously decides to prescribe tests in accordance to what he/she thinks is necessary for the patient’s health.
This would suggest that it is okay for Facebook, Google, Wikipedia and co. not to sponsor our free work for them as long as those wealthy and powerful entities pay their taxes to fund a universal basic income. The question is merely whether the state actors can be convinced to embrace that solution.