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A Change In The Weather: Buddhist Economics

In taking note of a shift in tone, we must immediately acknowledge that it will not be the new, new thing. It’s not the hint, the vague scent, that turns out to be the key to the next Network-scale technological advance. It’s not the thing everybody must have; it’s not the ticket that wins the lottery for its owner. Nor is it the hit song that will be playing in the background of everyone’s thoughts as the Summer ends and Autumn opens before us.

The pattern is larger than this, but there were two moments that signaled a change. One of these moments was Catarina Fake’s blog post “Make Things.” In this post she describes a more humble approach to making tools for people. Her thoughts are set in the background of an overheated venture capital environment where liquidity events are plotted prior to thinking about useful products. Deployment of, and return on, capital seems to have superseded the passion to build, explore and make things. Companies become just another fungible asset class, a tool for capital’s replication and growth. Fake asks the potential entrepreneur to take a step back and ask whether capital is subordinate to, and serving a passion (as a means) or whether the passion to make things has been securitized and sold to the highest bidder (as an end).

For Fake, capital isn’t the wellspring of inspiration, instead it’s the creativity of people making things:

…I have been inspired in my work by stuff that people make. I fell in love with zines and independent radio when I was an isolated teenager living in the suburbs. Then BBSs, people’s personal web sites, Usenet, Entropy8, online zines (holy crap, the old Bitch magazine site is now a porn portal! And Maxi is squatted!), blogs, Excel, online communities, Amazon, Salon, eBay, O’Reilly books, Google, Friendster, Alamut, NQPAOFU, Metafilter, board games, Blogger, paper games, 1000 blank cards, The Mirror Project, 1000 journals, Moveable Type, 20 things, Google Maps, Flickr, Gmail,, iPhone, NaNoWriMo, McSweeney’s, Kingdom of Loathing, muxtape, vimeo, Etsy, iPad, Kickstarter …the people who make these things are my leaders.

Putting ‘cool’ before ‘capital’ is certainly a commendable reordering of priorities, but somehow it doesn’t go far enough. On one end of the spectrum, passion must fend off the temptations of subordinating itself to capital; on the other end, it faces a kind of commoditization that has forced pricing expectations toward zero.

This leads us to the second moment in this shift in tone. Jaron Lanier recently published an interview and essay called, “The Local-Global Flip.” In it he examines the Network as a local and global economic platform. When we think about making tools for people, just what kind of tools are we thinking of?

Everyone’s into Internet things, and yet we have this huge global economic trouble. If you had talked to anyone involved in it twenty years ago, everyone would have said that the ability for people to inexpensively have access to a tremendous global computation and networking facility ought to create wealth. This ought to create well being; this ought to create this incredible expansion in just people living decently, and in personal liberty. And indeed, some of that’s happened. Yet if you look at the big picture, it obviously isn’t happening enough, if it’s happening at all.

Dominance at Network scale allows the major players to generate mountains of cash by charging a small vig on every transaction and transfer of data. Not just the long tail, it’s the whole hog. It’s a big data model that requires volume and an unlimited scaling infrastructure. The promise of cloud computing is that if you actually won the lottery, your infrastructure could scale up to handle it. The reality is there’s not much room at the total-Network-dominance table. The corporations flirting with the cloud have a lot in common with McSweeny’s writer, Pat Stansik’s friend who just upgraded to a Vimeo Plus account.

Hey, I know we haven’t talked in a while but I just wanted to let you know that I upgraded to a Vimeo Plus account. It costs $59.95 a year, which might sound expensive, but after doing some research I decided that it’s a good investment. You’re probably wondering why I would spend money on something I can already do for free but trust me; this is going to be a big step in my filmmaking career.

Economist, Tyler Cowen, in his book “The Great Stagnation” notes that these Network-scale technology businesses don’t actually employ many people. Their success is picking low-hanging fruit and doesn’t translate into success for our society or our country. And Lanier observes that while the Network promises efficiency, freedom and empowerment, if you look closely you see that it isn’t actually designed to deliver on that promise.

…I’ll often get a lot of pushback and they’ll say, “No, no, no. There are all these people who are being empowered by all this stuff on the Internet that’s free”, and I’ll say, “Well, show me. Where’s all the wealth? Where’s the new middle class of people who are doing this?” They don’t exist. They just aren’t there. We’re losing the middle class, and we should be saving it. We should be strengthening it.

If we used to be a bell curve society, we’re ending up as a U-shaped society, turning into what Brazil used to be, or something like that, that’s where America is going. You can see the Apple model, and it’s not just Apple, but this notion of the elite-controlled thing serving the upper horn of the U, and you can see the Google model, which is like the seedy pawn shop and cash store kind of approach to the Internet where, “Oh, we’ll give you coupons, and we’ll sell advertising to you, and it’s free, free, free, free, free.” That attaches itself to the lower horn of the U.

The Network has the potential to make the local into the global, and it’s in this possibility that Lanier puts his finger on one of the key issues of our time. When the local player becomes global, but still plays by the rules of locality, an unsustainable economy is created.

The network effects can be so powerful that you cease being a local player. An example of this is Wal-Mart removing so many jobs from their own customers that they start to lose profitability, and suddenly upscale players, like Target, are doing better. Wal-Mart impoverished its own customer base. Google is facing exactly the same issue long-term, although not yet. The finance industry kept on thinking they could eject waste out into the general system, but they became the system. You become global instead of local so that the system breaks. Insurance companies in America, by trying to only insure people who didn’t need insurance, ejected risk into the general system away from themselves, but they became so big that they were no longer local players, and there wasn’t some giant vastness to absorb this risk that they’d ejected, and so therefore the system breaks. You see this again and again and again. It’s not sustainable.

And so we spin back around to Catarina Fake’s post about a humble approach to building tools for people. Are the tools we’re adding to the Network ones that allow adults to make a living, or do they just promise more non-negotiable social reputation points. The economics of these tools need to work for more than the rich or teenagers living under their parent’s roofs. Again, here’s Lanier:

There is this huge increase in efficiency, but the interesting thing is that increasing efficiency by itself doesn’t employ people. There is a difference between saving and making money when you’re unemployed. Once you’re already rich, saving money and making money is the same thing, but for people who are on the bottom or even in the middle classes, saving money doesn’t help you if you don’t have the money to save in the first place.

The choice isn’t necessarily a simple one between capital and passion, it may be necessary to put our concept of economics on completely different footing. E.F. Schumacher’s Buddhist Economics provides a framework for rethinking and de-centering our preconceptions about economics. What if we were to “make things,” create useful tools that were meaningful in the framework of Buddhist economics? How would those tools look different from the ones we make today? Here’s Schumacher:

Economists themselves, like most specialists, normally suffer from a kind of metaphysical blindness, assuming that theirs is a science of absolute and invariable truths, without any presuppositions. Some go as far as to claim that economic laws are as free from “metaphysics” or “values” as the law of gravitation. We need not, however, get involved in arguments of methodology. Instead, let us take some fundamentals and see what they look like when viewed by a modern economist and a Buddhist economist.

It is clear, therefore, that Buddhist economics must be very different from the economics of modern materialism, since the Buddhist sees the essence of civilization not in a multiplication of wants but in the purification of human character. Character, at the same time, is formed primarily by a man’s work. And work, properly conducted in conditions of human dignity and freedom, blesses those who do it and equally their products.

Modern economics, on the other hand, considers consumption to be the sole end and purpose of all economic activity, taking the factors of production—and, labour, and capital—as the means. The former, in short, tries to maximise human satisfactions by the optimal pattern of consumption, while the latter tries to maximise consumption by the optimal pattern of productive effort. It is easy to see that the effort needed to sustain a way of life which seeks to attain the optimal pattern of consumption is likely to be much smaller than the effort needed to sustain a drive for maximum consumption. We need not be surprised, therefore, that the pressure and strain of living is very much less in say, Burma, than it is in the United States, in spite of the fact that the amount of labour-saving machinery used in the former country is only a minute fraction of the amount used in the latter.

It’s a shift in the tone of the normal flow of the conversation. Things that solidly had one well-known meaning suddenly have an unsettling ambiguity. Now we ask not what we can do for the Network, but rather what the Network can do for us. For a brief moment, a slight crack is visible in the veneer of Network of bread and circuses. And no, it’s not the new new thing. It’s something else entirely. It starts by asking about who the economics of “free” really benefits.

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