#Leadership : Is Capitalism Ending?…The End of Capitalism Has Begun. The Creative Economy—is Emerging.
“Without us Noticing, We are Entering the Post-Capitalist Era,” writes Paul Mason in The Guardian in an article entitled The End of Capitalism Has Begun. “At the heart of further change to come,” he continues, “is information technology, new ways of working and the sharing economy. The old ways will take a long while to disappear, but it’s time to be utopian.”
Image Wikipedia “W.E.F. Britten – The Lotos-Eaters” by Alfred, Lord Tennyson,
Readers of this column will note some similarities between Martin’s article and the case that I have been making that a new economy—the Creative Economy—is emerging.
I find much to agree with in Mason’s article, including:
- The 20th Century way of running organizations is dying and new ways of working are emerging.
- New technology facilitates and requires the change.
- The change goes beyond technology. Technology has helped create a new route forward. But the change also requires a change in mindset to take full advantage of the technology.
- “We have blurred the edges between work and free time,” says Mason. Many of us now expect work to provide meaning and offer opportunities for genuine human flourishing.
- The transition to the Creative Economy has already started. The future is already here, as William Gibson observed: it’s just very unevenly distributed. But the old ways may take a long while to disappear.
All of that makes sense. The areas where I have problems with Mason’s article are the following:
The “sharing economy” is not a business? Martin offers a romantic picture of the sharing economy. “We’re seeing the spontaneous rise of collaborative production” he writes. “Goods, services and organizations are appearing that no longer respond to the dictates of the market.” Not so. Airbnb and Zipcar are still market-driven phenomena. If they don’t satisfy customers, they will go out of business, just as surely as their predecessors.
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In fact, the “sharing economy” is a misnomer. Airbnb is a rental platform: homeowners aren’t sharing their homes out of love for their fell0w-man: they are renting them to customers for money with the help of Airbnb. It’s a business, not pure good-heartedness. There are buyers and sellers and money changes hands. This part of the new economy needs to shed its aura of “dealngs based on brotherly love” and call itself what it really is: “the rental economy” or “the access economy.”
We have less need to work? Information technology has not, as Martin suggests, “reduced the need for work.” Work is needed for a variety of reasons beyond putting food on the table—human dignity, community, reciprocity and the creation of meaning in people’s lives.
Unemployment is ultimately degrading and soul-destroying. The fact that the economy as a whole could theoretically produce enough food for the entire world doesn’t mean that it makes sense for much of the population to go on permanent vacation. An economy where a large part of society comprises Lotos-eaters living in dreamful ease is neither economically realistic nor socially desirable.
Google prevents access to public information? “The giant tech companies,” writes Martin, “are based on the capture and privatization of all socially produced information, such firms are constructing a fragile corporate edifice at odds with the most basic need of humanity, which is to use ideas freely.” On the contrary, firms like Google enable unprecedented free access to all the public ideas that have ever been created. Mason’s article has this back-to-front. What Google is capturing in private is private information about the users, which is, and should remain, private.
Is Wikipedia displacing firms like Apple? Mason writes that “The biggest information product in the world – Wikipedia – is made by volunteers for free, abolishing the encyclopedia business and depriving the advertising industry of an estimated $3bn a year in revenue.” This is true, but so what? Martin implies that cooperatives like Wikipedia will displace existing private sector firms.
This is improbable. Wikipedia doesn’t challenge the hegemony of tech companies like Google and Apple. It emulates them. Wikipedia is in fact a public sector version of Apple’s ecosystem of App developers. Both function in the same manner–vast numbers of individuals pursuing a goal that they believe is worthwhile. Apple captures a profit from it while Wikipedia has opted not to. The model works in both private and public sector. The exemplars are complementary, not in competition.
Global firms are doomed? “Almost unnoticed,” writes Mason, “in the niches and hollows of the market system, whole swaths of economic life are beginning to move to a different rhythm. Parallel currencies, time banks, cooperatives and self-managed spaces have proliferated, barely noticed by the economics profession.”
While it is true that mainstream economics has paid scant attention to the Creative Economy, it is unrealistic to think that niche products and services will put Google out of business. The niche products are sometimes valuable but so is Google. Google is useful precisely because it offers me information from around the world, not just from my little village. The Creative Economy includes both: large global platforms that are valuable because they are global and tiny niche initiatives that meet a narrow local need. It’s not either-or. It’s both and.
“A new kind of human being?” The emergence of the new economy is not, as Martin suggests, being shaped by “the emergence of a new kind of human being.” The Creative Economy is emerging because of economics: it makes more money than the Traditional Economy. Certainly new mindsets and new ways of understanding and interacting with the world are required to successfully manage it. But “a new kind of human being”? That is neither realistic nor necessary.
What we are looking at is not the end of capitalism, but rather the next phase of its evolution. The world that is emerging is still a market-driven phenomenon that is recognizable as capitalism.
Describing the shift towards the Creative Economy with a haze of warm and fuzzy utopianism not only falsely characterizes the positive changes that are under way. It risks deferring their eventual acceptance.
The Creative Economy is indeed potentially better—better for those doing the work, better for those for whom the work is done, better for the organizations orchestrating the work and ultimately better for society as a whole. It has no need of of fake PR.
Forbes.com | July 20, 2015 | Steve Denning
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