You talk early in “Who Owns the Future?” about Kodak — about thousand of jobs being destroyed, and Instagram picking up the slack — but with almost no jobs produced. So give us a sense of how that happens and what the result is. It seems like the seed of your book in a way.
Right. Well, I think what’s been happening is a shift from the formal to the informal economy for most people. So that’s to say if you use Instagram to show pictures to your friends and relatives, or whatever service it is, there are a couple of things that are still the same as they were in the times of Kodak. One is that the number of people who are contributing to the system to make it viable is probably the same. Instagram wouldn’t work if there weren’t many millions of people using it. And furthermore, many people kind of have to use social networks for them to be functional besides being valuable. People have to, there’s a constant tending that’s done on a volunteer basis so that people can find each other and whatnot.
So there’s still a lot of human effort, but the difference is that whereas before when people made contributions to the system that they used, they received formal benefits, which means not only salary but pensions and certain kinds of social safety nets. Now, instead, they receive benefits on an informal basis. And what an informal economy is like is the economy in a developing country slum. It’s reputation, it’s barter, it’s that kind of stuff.
So instead of somebody paying money to get their photo developed, and somebody getting a part of a job, a little fragment of a job, at least, and retirement and all the other things that we’re accustomed to, it works informally now, and intangibly.
Yeah, and I remember there was this fascination with the idea of the informal economy about 10 years ago. Stewart Brand was talking about how brilliant it is that people get by in slums on an informal economy. He’s a friend so I don’t want to rag on him too much. But he was talking about how wonderful it is to live in an informal economy and how beautiful trust is and all that.
And you know, that’s all kind of true when you’re young and if you’re not sick, but if you look at the infant mortality rate and the life expectancy and the education of the people who live in those slums, you really see what the benefit of the formal economy is if you’re a person in the West, in the developed world. And then meanwhile this loss, or this shift in the line from what’s formal to what’s informal, doesn’t mean that we’re abandoning what’s formal. I mean, if it was uniform, and we were all entering a socialist utopia or something, that would be one thing, but the formal benefits are accruing at this fantastic rate, at this global record rate to the people who own the biggest computer that’s connecting all the people.
So Kodak has 140,000 really good middle-class employees, and Instagram has 13 employees, period. You have this intense concentration of the formal benefits, and that winner-take-all feeling is not just for the people who are on the computers but also from the people who are using them. So there’s this tiny token number of people who will get by from using YouTube or Kickstarter, and everybody else lives on hope. There’s not a middle-class hump. It’s an all-or-nothing society.
Right, and also I think part of what you’re saying too is that it’s still in most ways a formal economy in that the person who lost his job at Kodak still has to pay rent with old-fashioned money he or she is no longer earning. He can’t pay his rent with cultural capital that’s replaced it.
Yeah, well, people will say you can find a place to crash. People who tour right now will find a couch to crash on. But, you know, this is the difference … I’m not saying that there aren’t ever benefits, like yeah, sometimes you can find a couch. But as I put it in the book, you have to sing for your supper for every meal. The informal way of getting by doesn’t tide you over when you’re sick and it doesn’t let you raise kids and it doesn’t let you grow old. It’s not biologically real.
Did the internet destroy the middle class?
The authur must own Kodak stock. Hippies greatly expanded the informal economy way back when. Didn’t the guy making the buggy whip make this same lame argument when Ford began to mass produce automobiles? The reason the economy functions the way it does is……drum roll……Capitalism. The guy or gal with all the money is the Capitalist. His or Her only motivation is to get more money. “Show me the money!” For a Capitalist, people are a necessary evil. They need people (workers) to produce stuff that can be sold for a profit. That is until some machine comes along that can do the job of the worker better and cheaper. So we have three choices. 1. Allow the Capitalists to do whatever they want to do. OR 2. Control what the Capitalist can do by law. OR 3. Try some other economic system. #3 should be our obvious choice because #1 and #2 don’t work.