Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity

by Douglas Rushkoff

  Having taken in this much new capital, however, Twitter now needs to produce. It must grow. As of this writing, the $43 million Twitter profited last quarter is considered an abject failure by Wall Street. In 2015, Twitter investors complained* that the company was too far from reaching its “100x” growth potential and forced out the CEO. Shareholders are demanding that Twitter find better ways of monetizing its users’ tweets, whether by injecting advertisements into people’s feeds, mining their data for marketing intelligence, or otherwise degrading the utility of the app or the integrity of its community. Whatever actually may have been disruptive about Twitter will now have to be made less so.

  It’s not that Twitter isn’t successful; it’s just not successful enough to justify all the money investors have pumped into it. There was already enough revenue for the employees to be happy, the users to be served, and even the original investors to be well compensated in an ongoing way. But there may never be enough to satisfy shareholders who expect to win back one hundred times their initial $20 billion bet. To do that, Twitter must grow into a corporation bigger than the economy of many entire nations. Isn’t that a bit much to ask of an app that sends out messages of 140 characters or less?

  This disproportionate relationship between capital and value—or invested money versus actual revenue—is the hallmark of the dominant digital economy. If anything, the digital economy has laid bare the process by which cash, labor, and productive assets from the real, transactional marketplace are extracted and converted into frozen capital—all in the name of growth. Once money has been “captured” in a stock price, it tends to just sit there as if in a bank vault. This, in turn, puts pressure on the company to make more money, faster, in order to justify the new total value of all the stock. The disparity between a company’s net worth and its revenues gets even more extreme. Strangely enough, the companies do keep growing, but they don’t create or produce any value.

  This part isn’t new. In fact, for the past seventy years or more, according to economists at the Deloitte Center for the Edge,5 corporate profits over net worth have been steadily decreasing. Companies are accumulating money and assets faster than they can utilize them. This doesn’t mean that corporations aren’t still rich. It just means they don’t know how to apply the assets they already have. They have grown too much for their own—or anybody else’s—good.

  What is new here is that by applying our technological innovations to growth above all else, we have set in motion a powerfully destabilizing form of digitally accelerated capitalism. We are worsening the disparity between rich and poor, punishing those who actually work for a living, losing human control over the capital markets, and letting shortsighted investors stifle long-term innovation. For many, digital technology is just an invitation to game the markets in new ways, creating increasingly abstract and ultrafast instruments for beating the system instead of creating value.

  There are better approaches to achieving prosperity in a digital business landscape. If we can get over our addiction to growth, we have the potential to move toward a much more functional, even compassionate economic system that favors money flow over accumulation and rewards people for creating value instead of simply extracting it. But first we have to acknowledge and address our current state of affairs, and the instability and insecurity under which so many of us are trying to function.

  For many of us, the current system, however convoluted, is better than nothing, and changing to one in which we must create real value is frightening. Most people are not cultural creatives capable of launching a business on Etsy, programming a new iPhone app, or growing artisanal organic yams. We work in cubicles managing spreadsheets, calculating sales targets, and budgeting ad spends—or in retail stores, on factory floors, and in warehouses—doing jobs that may have no application or value outside that single corporate setting. We are simply fighting to stay employed, pay our mortgages, save for our kids’ college, and make sure we have something left for retirement. And in spite of the digital boom—or maybe because of it—it’s getting harder to do any of those things. The path to a better tomorrow must first make today a bit easier on us all. We have to take practical, baby steps.

  But to begin, we must accept the story of an infinitely expanding market for the myth that it is. As we’ll see, growth may be a requirement of interest-bearing currency and venture capital, but it’s not a requirement of business or commerce. If we are going to do something better than digitize the industrial economy and amplify the worst of its effects, we have to recognize how the expansionist agenda of our colonial forebears operates in today’s more limited environment, and why it is at cross-purposes with our potential goals as a digitally enabled society.

  Neither individuals, small businesses, corporations, nor even whole governments need to live and die by their rate of growth. This is not bad news but good news. And the sooner we accept this, the sooner we’ll all be off the hook. Then, and only then, will we be capable of ushering in the sort of economy we deserve. Ongoing, sustainable, and distributed prosperity is simpler than it sounds, and well within our reach. It could be our new normal.

  This is the true promise of a digital economy. Uncovering the unacknowledged operating system driving our businesses is just the first step. Mustering the willingness to do business differently or even change that system instead of continuing to feed its growth is next. We won’t do this all at once. We can’t just install an update, as we do on a smartphone, however much we might like to believe in technological fixes for the world’s problems. There’s no algorithm for this. There’s only slow, incremental change, enacted consciously but differently by all sorts of people and institutions. That’s the difference between an industrial society and a digital one: one-size-fits-all solutions that take over the entire planet no longer work. Instead, a broad set of distributed solutions coexist, in many places and on many scales at once.

  But they all come down to rejecting the notion that the only healthy career, company, or economy is one that grows at a rate defined arbitrarily by a bank, a group of investors, or the startup ethos now so dominant in Internet culture. As members of a digital society, we are uniquely positioned to strive toward a more sustainable, steady state of distributed wealth.

  Here’s how.

  Chapter One

  REMOVING HUMANS FROM THE EQUATION

  DIGITAL INDUSTRIALISM

  Back in the late 1980s, before I could make a living as an author, I used to type for my rent money. A bunch of us aspiring writers would go into a Park Avenue law firm after it closed at night, put on earphones, and transcribe hours of depositions—mostly from factory workers describing accidents they had on the job, supervisors explaining what the worker had done wrong, or doctors detailing why a finger or toe had to be amputated. It was gruesome stuff, the human collateral damage of industrial production.

  We “word processors” got paid more per hour than most of the workers whose cases we mindlessly chronicled. That’s because we were computer literate at a time when almost no one knew how these machines worked. As writers, we knew the ins and outs of then-obscure software such as WordPerfect and could pull in thirty bucks an hour (a king’s ransom in the slacker era) helping “real” businesses transition to the digital age.

  On my way into the typing pool each evening, I would pass by an artsy young phone receptionist from the day shift packing up to leave. We’d exchange pleasantries and obscure music and comics references as I worked up the courage to ask her out. But before I even had the chance, she was replaced by a computer. What digital giveth, digital taketh away.

  Like many other companies in the late 1980s, the law firm had adopted a new technology known as the auto attendant. From then on, instead of being greeted and routed by a live human being, callers would get the now-familiar computer-operator script: “If you know your party’s extension . . .” It was probably most people’s first real experience interacting with a c
omputer. But the whole innovation always struck me as a step backward—and not just because it cost me my chance with the artsy receptionist.

  From the company’s side, it’s simply a cost-saving measure. After an initial technological investment, they can dispense with the operators, as well as the paychecks, health benefits, air-conditioning, sexual harassment suits, and other costs associated with human employees. Reducing the bottom line is a great way to create the illusion of top-line growth.

  It’s the callers who pay the price. Most of us are all too familiar with the frustration of winding down a series of menus, entering in all our numbers and dates and codes, only to get stuck in an endless loop or, worse, disconnected. Any efficiency gained by the company is more than offset by the efficiency lost to everyone else. Sure, a company’s shareholders may be happy about the reduction in employees—right until they’re trying to reach someone in investor relations on the phone and find themselves as fed up as everyone else.

  In essence, the cost of the single company’s receptionists has been externalized to all the callers, costing more total time and money to the entire network of businesses and customers. And since every company is doing it, refusal to go digital amounts to a competitive disadvantage. Resistance to this automation is so novel, in fact, that some banks and cable-TV providers now advertise the fact that they have real humans answering the phone.

  But in the longer term, and especially in a highly connected digital economy, nothing is external. The time and expense that a company passes on to its customers, suppliers, and vendors eventually come right back in the form of reduced sales volume, higher costs, and less feedback, respectively. A company should want its human customers to enjoy interacting with it. We should want to cost our suppliers as little as possible so that they can in turn offer us the best prices. And we should want to interact directly with our vendors, so we know what exactly is happening on the front lines. A living human interface provides better intelligence than any survey a company can offer after the fact. Automated menu items dump every incoming human request or problem into a preconfigured category, like bins on an assembly line. The call that requires an unforeseen category, well, that’s the customer a company loses, and the intelligence that slips through the cracks of a hopelessly industrial-age approach to digital technology in the workplace.

  The headlines, just like the displaced workers themselves, blame computers for this conundrum. But it’s not the fault of digital technology at all; rather, it’s the fault of a digitally charged business model that stresses the efficiency and growth of companies at the expense of the human beings they should be serving. And serving humans isn’t merely some New Age value system that needs protecting against the realities of real-world business. It is the fundamental reason for business in the first place: to create ongoing value for customers, employees, and owners.

  Somehow, growth has become an end in itself—the engine of the economy—and human beings have come to be understood as impediments to its functioning. If only people and our idiosyncratic demands could be eliminated, business would be free to reduce costs, increase consumption, extract more value, and grow bigger. This is one of the primary legacies of the industrial age, when the miraculous efficiency of machines appeared to offer us a path to infinite growth—at least to the extent that human interference could be minimized. Applying this same ethos in a digital age means replacing the receptionist with a computer, the factory worker with a robot, and the manager with an algorithm. It’s all just a new, digital way of running the same old program.

  Counterintuitively, perhaps, the greater opportunity of our new digital environment is to retrieve the human values we left behind in that last big technological upheaval. The word digital itself refers to the digits—the ten fingers we humans use to build, to count, and to program computers in the first place. That we should now be witnessing a renaissance in makers, crafts, and artisanal production is no coincidence. The digital landscape encourages production from the periphery, lateral trade, and the distribution of wealth. Instead of depending on centralized institutions for sustenance, we begin to depend on one another.

  The transparency offered by the digital media landscape has the potential to lay bare the workings of industrialism. Meanwhile, digital technology itself provides us the means to reprogram many business sectors from the ground up, and in ways that distribute value to their many human stakeholders instead of merely extracting it. But doing so requires a rather radical reversal in the way we evaluate business processes and the purpose of technology itself. By reducing human beings to mere cogs in a machine, we created the conditions to worship growth over all other economic virtues. We must reckon with how and why we did this.

  MASS MASS MASS

  For a happy couple of centuries before industrialism and the modern era, the business landscape looked something like Burning Man, the famous desert festival for digital artisans. The military campaigns of the Crusades had opened new trade routes throughout Europe and beyond. Soldiers were returning from faraway places after having been exposed to all sorts of new crafts and techniques for building and farming. They even copied a market they had observed in the Middle East—the bazaar—where people could exchange not only their goods but also their ideas, leading to innovations in milling, fabrication, and finance.

  The bazaar was a peer-to-peer economy, something along the lines of eBay or Etsy, where attention to human relationships and reputations promoted better business. There was no middleman, no central platform through which exchanges were conducted, except for the appointed time and place of the bazaar itself.1 Since people transacted back and forth, all sorts of interdependencies developed that in turn fostered more and better commerce. Pete the wainwright bought oats from Joe the oat seller, who needed to provide a good product not simply because he wanted to keep a customer but because he needed good wagon wheels. To give Pete bad oats meant risking more than future business; it meant that the craftsperson making Joe’s wife’s wagon wheels would be sick on the job. This was a bound community of commerce, where transactions were informed by a multiplicity of values.

  The quality of goods and services was maintained by a system of guilds covering each of the major trades. It wasn’t a perfect scheme, as guilds often favored the children of existing members, but it was characterized less by competition among members than by the standardization of prices, the training of apprentices, and the exchange of best practices. Members of a guild could decide to make a rule, say, to take Sundays off. This would ensure a shorter workweek for all members without putting anyone at a competitive disadvantage.

  Thanks to the emergence of the bazaar, Europe in the late Middle Ages enjoyed one of the most rapid economic expansions in history. For the first time in many centuries, the economy grew. People ate more, worked less, and became quite healthy—and not just by the standards of that era.2 The problem was that while the merchant class was gaining wealth, the aristocracy was losing it. Noble families had enjoyed the spoils of feudalism for centuries by passively extracting the value of peasants who worked the land. They never worried about growth because they didn’t need to. Things had always been just fine with them as the lords over everyone.

  As the new trading economy grew, however, all this began to change. With many former peasants going into business for themselves, the aristocracy lost its monopoly over value creation. The people’s economy was growing while the aristocracy’s remained stagnant or even shrank. The nobles had no way to keep up. They looked at this new phenomenon of growth and wanted some of it for themselves. They got their growth, but through forced and artificial means. Where the growth of the peasant economy could be considered natural, or even appropriate, the aristocracy’s efforts to usurp it were less so. It’s one thing for growth to help peasants achieve subsistence. It’s another for those who already own pretty much everything to use growth purely as a means to prevent others’ enrichment. But that’s exactly what
happened.

  The nobles still had the power to write the law, and in a series of moves that took place in different countries at different times, they taxed the bazaar, broke up the guilds, outlawed local currencies, and bestowed monopoly charters on their favorite merchants. In exchange for stock, kings granted certain companies exclusive control over their industries. The peer-to-peer, or “P2P,” nature of the economy changed—not overnight, but over a couple of centuries—to the top-down economy we know today.3

  Instead of making and trading, craftspeople had to seek employment from one of the chartered monopolies. Instead of selling their wares, people now sold their hours. Counterintuitively, perhaps, business owners learned to seek out the least qualified workers. A skilled shoemaker might demand pay befitting his expertise. An immigrant seeking day labor could be gotten on the cheap and was easily replaced by another if he protested his hours, conditions, or compensation. But how could a bunch of unskilled workers create a viable product? Welcome to the industrial age.

  What we now call industrialization was actually an extension of the aristocracy’s effort to usurp the growth it witnessed in the peasants’ marketplace and to imitate it by other means. Industry was really just the development of manufacturing processes that required less skill from human laborers. Instead of having to learn how to make shoes, each worker could be trained in minutes to do one tiny part of the job. In the long run, many industrial processes have ended up more efficient than production by individual craftspeople, but that’s most often because their total costs are hidden or externalized to others. (The government pays for wars to procure cheap oil and roads to convey mass-produced products, while we all pay for the environmental stresses caused by corporate agriculture, and so on.) Prices may be low, but the costs are high. It was never really about efficiency anyway; industrialization was about restoring the power of those at the top by minimizing the value and price of human laborers. This became the embedded value system of industrialism, and we see it in every aspect of the commercial landscape, then and now.