Bitcoin, Blockchain in the Age of Prosumer Capitalism

Producer capitalism, which continues to this day, was dominant from the Industrial Revolution to the end of WW II. It was (and is) based mainly on the exploitation of producers (especially the proletariat). Consumer capitalism grew increasingly predominant, mostly in developed countries, after WW II and remains of central importance to this day, at least in the U.S. (about 70% of the U.S. economy today is accounted for by consumption) and other developed countries. Consumer capitalism relies primarily on the exploitation of consumers through excessive costs for goods and services and by encouraging hyperconsumption. While both producer and consumer capitalism continue to exist, we are now in the era of the emergence of prosumer capitalism. This economic system is rooted in the synergistic exploitation of the prosumer as both producer (prosumer-as-producer) and consumer (prosumer-as-consumer).

In prosumer capitalism people are exploited as prosumers-as-consumers in that, as in the case of consumer capitalism, they pay more than they “should” for their goods and services. The level of exploitation is amplified because they receive little or no economic compensation for the increasing amount of the work they perform in consuming products and services. That is, they are exploited as “working consumers” (prosumers-as-producers), as producers of their own services (e.g., in “working” online, in fast food restaurants, etc.). In some cases (e.g., 3-D printing; additive manufacturing) they are even producing the goods that they will ultimately consume. The exploitation of both prosumers-as-consumers and –as producers is synergistic. In that way, the two types of exploitation build off one another to create unprecedented levels of exploitation…and profitability.

As a highly fluid currency, Bitcoin (or any of the other digital currencies already in existence, or that could be created in the future), as well as blockchain, have the potential to power all forms of global capitalism. This is especially the case in prosumer capitalism since both Bitcoin and blockchain are systems of prosumption that fit seamlessly into prosumer capitalism.

 

It’s Time to Pay Digital Prosumers for the Data They Now Provide Free of Charge

A recent New York Times article made the case that users- prosumers- provide highly valuable information to internet sites such as Google, Facebook and Amazon.com. That information is currently worth $1,000 per user, an amount that will rise rapidly in the coming years. The argument is made that these companies, as well as the data brokerages (with current revenue of $150 billion a year) that purchase and sell such data, ought to be taxed. While this a radical suggestion, at least as far as those who run these companies are concerned, it does not go nearly far enough. If we are willing to say that these companies should be taxed for this information, a far more consequential change would involve actually paying prosumers for the information they now provide, consciously and unconsciously, free of charge.

Hidden from view is the fact that the vast success and wealth of Google, Facebook, Amazon.com, and other companies of their ilk are largely based on the free labor provided by prosumers. As things now stand, prosumers are even more exploited than the workers in traditional capitalist businesses. Such workers have generally been paid as little as possible (the fast food industry is a notable example), but those prosumers who “work” on these online sites receive no pay at all. They are expected to be satisfied with rewards such as the ease of ordering products online and of maintaining contact with, and being informed about the lives of, family and friends. This just not enough!

After all, those at the top of these digital businesses are billionaires many times over largely because of this free labor. (Admittedly, these entrepreneurs deserve to be rewarded for their ideas and for the infrastructure they provide online prosumers that allows them to consume and produce). In thinking about paying prosumers, consider how much it would cost these digital businesses to hire traditional market researchers to collect and compile all of these data. In fact, given the vast and rapidly growing amount of data, it would be impossible for them to do at any price.

Digital businesses are getting an incomparable gift from their users. It is time for them to offer economic rewards to these prosumers commensurate with their contributions to the corporate bottom line.

The “Sharing” Economy, Uber, and the Triumph of Neo-Liberalism

Ride-sharing is a form of prosumption- those who are using (consuming) their cars provide (produce) rides for those in need of them. Ride-sharing can also be seen as part of the sharing (of cars in this case) economy, a collaborative system (the collaboration of those with rides to offer and those who need them), and a peer-to-peer (p2p) systems (drivers providing rides mainly to other drivers who happen to be without their cars). These ideas and systems associated with the sharing economy (another is airbnb) were, in principle, not based on a profit-making model, but were generally more communal and altruistic in nature. However, they all have, at least in part, been transformed by the entry of profit-making businesses that in the pursuit of profit are altering these systems, especially their more romantic characteristics.
Many drivers can, and do, engage in ride-sharing free of charge for altruistic and communal reasons. However, the rise of profit-making companies like Uber and Lyft that charge drivers a portion (roughly 20%) of every transaction for use of their online platforms has transformed ride-sharing into a job (at least part-time) and a profitable business. Unlike most forms of prosumption- using ATMs, scanning one’s groceries, using self-check-in kiosks at airports and hotels- the “producers” (the companies and the drivers) earn a money from the process.
These ride-sharing businesses been proliferating despite the fact that they have encountered opposition nationally, and to some degree globally, from taxicab companies and local governments. This is because their app-based system accessible via smartphone is highly attractive, especially to younger people, who can summon a car more quickly without standing on corners and hailing, sometimes fruitlessly, taxicabs. The latter characteristics make the taxicab seem old-fashioned to younger people. Thus, they are likely to continue to shift in the direction of ride-sharing, while the older generation will likely remain wedded, at least for a time to the taxi industry. However, while the taxi industry will not disappear, this generational difference suggests a long-term shift away from taxi industry and in the direction of the ride-sharing industry. While the traditional taxicab industry is being threatened, it is difficult to defend it because it has tended to be monopolistic and has successfully resisted unionization efforts. For their part, drivers are not well-paid and must deal with difficult (sometimes dangerous) work, with little in the way of job protection and benefits.
Yet, ride-sharing through Uber and similar companies is not without its problems. Uber drivers would seem to be even more powerless and difficult to unionize than traditional taxi drivers. Among other things, they work on their own, are widely dispersed and have little opportunity to come into contact with one another. This gives Uber great power to release them and to alter the percentage they earn from each ride. The income of Uber drivers is limited because unlike taxi drivers, they are not supposed to accept tips. While the income is attractive for those who now do this in their spare time, it might be less satisfactory for those who try to do it on a full-time basis
Another point worth mentioning is that unlike in paid jobs, those working for the ride-sharing business provide many of their own “means of production”. Uber does provide the crucial (and expensive) online system that supports and drives ride-sharing, but the drivers provide and maintain their own cars as well as the smartphones that connect them to the online system.
This a near-perfect neo-liberal system in which capitalist organizations earn profits while giving those who work for them relatively little and leaving them largely on their own to fend for themselves.

E-Games and Prosumption

People have long played e- (or virtual) games, especially those involving many players. They have traditionally consumed multi-player games by buying them and by observing the actions of others playing them. Of course, they also produced them by creating the action that is the game. That is, people have always prosumed of e-games. These games are an example of playbor, a phenomenon with much in common with prosumption, because those involved labor as they play.
Many throughout the world continue to play e-games; in fact, the numbers involved are growing rapidly. However, the games are rapidly becoming mass spectator sports with millions of online viewers, thousands of others viewing the games in person at sports arenas, and millions of dollars in prize money. A major on-line site for these games is Twitch. The coming of age of these games was heralded by Amazon.com’s recent $1.1 billion purchase of Twitch, which had 55 million visitors in July, 2014 (Wingfield, 2014a).
While gamers were always prosumers, the consumption aspect of the process was dominant at first as they purchased computers, internet time, games and products associated with many games. While that is still true for gamers, some are now more involved in producing games, often as members of teams and for prize money. Others consume these games either online at home or in a stadium with thousands of other fans. The most successful of these gamers are earning large sums of money.
Prosumption is key to the profitability of these games and why Amazon.com was willing to pay over a billion dollars for Twitch. The secret of Twitch’s success is “because it supplies its own content and audience, comparable to an oven that produces its own food” (Carr, 2014: B5). In other words, the consumers (audience) of these games are also their producers.This is made clear by the creator of Minecraft: “’No fake doors that don’t lead anywhere, no trees you can’t cut down, and no made-up story being told to the player to motivate them…Instead, the player would make their own story, and interact with the game world, decide for themselves what they want to do’.” (Wingfield, 2014b)
It is clearly the most avid of the consumers who eventually become producers of these games for others to consume. Furthermore, even the most successful producers of today’s games must continually consume the actions taken by competitors in a game and, more generally, the entire gaming environment.
As in many cases of prosumption, it is the prosumers who do the vast majority of the work involved in production and consumption while owners of sites such as Twitch reap most of the economic benefit. Twitch succeeded because it invested the money needed to provide the infrastructure and huge bandwidth needed by those involved in multiplayer games, the major competitions, and the commentators on them. The audience flocks on its own to the site to provide the content. The vast majority of those who do so earn little or nothing for their efforts.

Carr, David. “Amazon’s Bet on Content, In a Hub for Gamers.” New York Times September 1, 2014: B1, B5.

Wingfield, Nick. “Virtual Games Draw Real Crowds and Big Money.” New York Times August 31, 2014a: 1, 13.

Wingfield, Nick. “In Games Like Minecraft, Tech Giants See More Than Fun.” New York Times September 11, 2014: A1, B2.

Wingfield, Nick. “Virtual Games Draw Real Crowds and Big Money.” New York Times August 31, 2014: 1, 13.

Customer Service or Disservice?

Consumer Reports (September, 2014) offered a revealing analysis of the accelerating trend toward customer self-service, or one aspect of what, in my terms, is “prosumption as consumption”. Customers who engage in self-service are, by definition, producing as they consume. To its credit, Consumer Reports makes no bones about why self-service has been embraced so enthusiastically. The reason? “To save money”. For example, if customers themselves place an online order, the cost to the company is pennies, while ordering from a live agent could cost between $2 and $10. In most cases, the corporations involved do not pass the savings on to customers in the form of lower prices. When multiplied by thousands, if not millions, of transactions, such savings mean much greater corporate profits. While such cost savings and profits have long been possible, they have been greatly increased in recent years by new digital technologies and by consumers who are not only familiar with them, but greatly prefer using them to interacting with paid employees.
Why do consumers do this work without pay or economic gain of any kind? Among the reasons offered by Consumer Reports are consumers’ feelings of empowerment, the ability to handle transactions more quickly, and the possibility of avoiding contact with employees who are increasingly likely to be less than stellar in their work. In fact, because corporations much prefer self-service customers, they are likely to hire fewer workers of lesser ability, to offer little training, and to accept marginal performance of the job. While many customers are cognizant of the incapacities of service workers, they generally seem unaware of many of the costs of self-service such as the loss of human contact, the paid jobs that are lost because they are willing to work for no pay, and the dehumanization of their relationships with corporations.
Because of the increasing acceptance of self-service by consumers, some corporations have taken the outrageous step- with nary a peep from consumers- of charging them fees for handling tasks the corporations used to perform without charge. Among the examples are airlines charging customers $50 for a paper ticket, $25 for having the audacity to make a reservation by phone, $20 for asking for a receipt for an e-ticket, and a $10 fee for having a boarding pass printed out by an agent. Fees such as these are likely to increase in price and to proliferate in number and variety in the coming years thereby further increasing the costs to consumers and profits for the companies.
Profit-making organizations have discovered that they can increase their profits by cutting personnel costs and by exploiting consumers to an ever-greater degree. There are many more customers than employees to exploit, they accept their exploitation meekly and, indeed, they often embrace it eagerly. This system greatly reduces the possibility of class consciousness among the declining number of employees who are ever-more fearful of losing their jobs. Worse, the system can operate without fear of the development of class consciousness among consumers who are too diverse and self-interested to think of themselves as a class, to become a class, and to act as a class. As much as one might like to hear it, we are not likely to hear consumers utter the clarion call- “Consumers of the world unite, you’ve nothing to lose but your iPad”.