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.

 

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Bitcoin, Blockchain and Prosumption

Bitcoin (and other cryptocurrencies) and its underlying blockchain system are prosumption systems. There are no producers or consumers associated with Bitcoin and blockchain. All of those involved both produce and consume; they are prosumers. One journalist makes this absolutely clear in the case of Bitcoin when he points out that those who use the system are “both customers and owners of both the banks and the mint” (italics added). While the “customers” in this context are, in the terms of this approach, prosumers-as-consumers, those associated with the banks and especially the mint (the “producers”) are prosumers-as-producers. Bitcoin (and blockchain) involve both the production (especially by “miners” in Bitcoin) and consumption of data by all “nodes” in the system.

While all involved in Bitcoin (and blockchain) are prosumers, some are at times more producers (prosumers-as-producers), although they must also of necessity consume information. Such prosumers (actually their nodes) function as miners whose computers and their software compete to order new and unordered transactions into a block. They must also create a hash for the block. This involves solving difficult computational problems. Miners (and others) also serve as prosumers-as-producers when they verify transactions (e.g., creation of a new block) undertaken by others. They thereby help to maintain and secure Bitcoin’s network.

While all of this is challenging for the miner, it is easy for others (really their computers) involved in the blockchain to check (to serve as prosumers-as-producers) to make sure that the requirements are met.

As in many other instances today, it is not prosumption that is new. What is new are the technologies (e.g. Bitcoin and blockchain) that make possible new forms of prosumption.

While Bitcoin may yet fail for myriad reasons (a bursting of the current economic bubble, theft of large numbers of bitcoins, loss of faith in digital currencies, etc.), it fits well with various developments in the social world. One is the increase in prosumption and the technologies that expedite, even require, it. Others include the increasing importance of consumption and the spread of consumer culture, globalization, and rationalization (McDonaldization). Blockchain has a similar fit with contemporary social changes, but it is more likely to succeed even if Bitcoin fails. Blockchains, both public and private, have many other uses.  For example, they can be used to track almost everything including voting; use of, and payment, for music and art; and locations of cargo containers

 

An Ignored Factor in Job Loss and Job Change: The “Working Consumer”

The McKinsey Global Institute’s November, 2017 report deals with the future of work (including job loss and change) through 2030, especially in light of automation (and AI). While the report covers a wide array of causes of job change and loss, it, as is usually the case in economic reports, has nothing to say about the role of unpaid non-marketized “working consumers” (a kind of prosumer) in these changes. This omission is especially striking because the report does discuss the implications of the shift from unpaid non-marketized occupations (those that do such domestic work as “childcare, early childhood education, cleaning, cooking and gardening”) to others that are presumably paid and marketized (e.g., workers in the previously non-marketized occupations who are employed by agencies that sell their services in a broader marketplace). The non-marketized unpaid work performed by prosumers is far more important economically than that of the occupations discussed by the report. Further, unlike domestic workers prosumers are not likely to be marketized any time soon.

Among the many examples of the working consumer are prosumers bypassing the services of tellers and doing their own banking via the internet or on ATMs, doing all of the work involved in making purchases (of all manner of goods and services; for example, buying airline tickets online and bypassing travel agents), serving as their own wait- and bus-persons in fast food restaurants, pumping their own gasoline at self-service stations, and so on. While it is the case that this shift to the working consumer leads to the creation of new paid jobs (computer-related occupations relating to the burgeoning online sites), it is likely, at least in the short run, that job loss far exceeds those gains.

The source of the problem lies in the fact that the McKinsey researchers, as well as other economists and technicians associated with these kinds of reports, lack the concept of the prosumer. As a result they are unable to see, let alone analyze and quantify, the prosumer’s role in job change, primarily job loss. While the concept of the prosumer is gaining increasing attention in sociology (and other fields), it has yet to be noticed by economists. Yet, prosumers are doing infinitely more unpaid, non-marketized work than, for example, domestic workers.

It is also worth noting that advances in automation and IT will bring with them an increase in “prosuming machines” that produce and consume largely on their own. Such machines are likely to lead to significant job loss in the future.  For example, autonomous vehicles will be a cause of job loss for Uber, taxi, truck drivers, as well as those in associated occupations. However, far greater job loss will result from the interaction of working consumers and prosuming machines (e.g. the use of ATMs rather than human bank tellers).

Viewers as Prosuming Machines or as Directors of Highly Personalized Movies?

A recent (January 30, 2017) New Yorker article deals with interactive filmmaking. This revolutionary change will allow viewers to affect, consciously and unconsciously, what transpires in movies, perhaps on a moment-to-moment basis. Of course, from my point of view, such viewers (audiences) are prosumers. While viewers- and audiences- are inherently prosumers, this technological development allows for a great expansion of their role in the prosumption process. This is especially true of the productive aspect (which has always been there) of the prosumption of movies.

One of those at the forefront of this development had been influenced by the interactive “Choose Your Own Adventure” novels he had read when he was young (as well as by video games which inherently clearly involve both production and consumption). At central points in those stories, readers are allowed to make choices in the direction taken by the story and instructed to go to the page where the story moves in the chosen direction.

Early experiments in interactive movies put controllers in the audience members’ hands, but this technology offered them only limited options. Momentum started to build when Investors began to see the economic potential inherent in interactive technology, including the fact that it would allow them to collect useful and potentially profitable information on audience members.

The technology already exists allowing audience members to make conscious choices in the direction taken by a movie’s story. Envisioned is a system that tracks viewers’ story preferences and provides it to them. This would be much like the online tracking of our interests and then having ads appear that are in line with them. Even further, there soon will be eye-tracking technology leading to movies that focus on where viewers direct their attention, rather than having the focus predetermined by a director.

Such systems are, and increasingly will be, “prosuming machines”. They will consume an audience member’s preferences- either explicit or implicit in, for example, eye movement- and customize ensuing, or even ongoing, content in the movie to those preferences. In the process, as prosumption itself becomes increasingly unconscious, human prosumers will be transformed into prosuming machines more and more lacking in agency.

However, another possibility is technology that would allow viewers to move objects on the screen. In that case, viewers would have much more agency as they actively direct the movie as it unfolds. The next step, at least conceivably, would allow the audience to be able to insert entirely different objects, as well as people and events, into the story.

Whether it is unconscious or conscious, viewers in the future will be much more productive prosumers of the movies.

Amazon.Go: New Heights of McDonaldization

Not that I can take any credit for it, but Amazon has unwittingly managed to wrap up much of what I have been thinking and writing about for the last three decades in one nice little material world bundle, Amazon Go. The prototype of this updated version of a convenience store now exists in Amazon’s new office building in downtown Seattle.

It is a highly McDonaldized setting in which, as in all McDonaldized settings:

  • Its operations are very efficient (e.g. no checkout lines; just “walk-through”, “grab-and-go”, and “walk out”),
  • It is calculable, with an emphasis on speed in getting through the store and offering quickly eaten finger foods
  • It is predictable, specializing in pre-prepared meals and “chef-made meal kits”
  • It makes great use of non-human technologies: smartphone apps to gain entry; sensors to keep track of what is being taken off the shelf and is purchased; automated technologies to total the purchases and to charge them to the consumer’s account. This is made necessary by the fact that few employees are likely to be present since there will be no checkout counter- a clear threat to the 3.5 million cashiers in the United States.
  • The threat to jobs is one of the irrationalities of this rational system. It will help to further reduce the number of paying jobs (using technology similar to that used in driverless cars that is costing taxi drivers their jobs) and to add to the working class discontent that helped fuel the rise of Donald Trump, Brexit, etc..

 

From the point of view of consumption, Amazon Go is a place (a new means of consumption, or cathedral of consumption) to which people are drawn to consume. However, it is better thought of as a place (a means of prosumption) where people go to prosume, that is, produce what they consume. Consumption is traditionally a process where others, especially employees, produce in various ways what others consume. This has declined in recent years as there are ever-fewer employees to do such work. Consumers are required do an increasing amount of that work either on their own (carrying their own trays in fast food restaurants, gathering their own food in supermarkets) or with the help of new technologies (e.g. self-checkout and check-in systems). This is especially the case in online sites and stores, including Amazon.com, where the consumer does all of the work of finding, ordering and paying for a purchase. This kind of a system is more difficult to create in a bricks-and-mortar store, but Amazon’s Go, if it is successful and widely implemented, will be an important step in that direction.

“Deglobalization”? Not a Chance

In a recent (November 13, 2016) New York Times essay, Ruchir Sharma argued that the lesson of globalization’s past, and of President-elect Donald Trump’s proposals that relate to globalization, “is that just as night follows day, deglobalization follows globalization- and can last as long”. This, of course, is a deterministic “grand narrative”. It is derived from generalizing from a single historical case of the great wave of globalization in the early 20th century (there were a number of other epochs, or phases, before that) and its descent into what might be termed deglobalization with the start of WWI. Determinism, grand narratives, and generalizing from a single case are all “no-nos” in contemporary sociology and most other social sciences.

A more nuanced view requires a perspective on globalization that views it as a dialectic of a series of “flows” and “barriers”. We have recently experienced a period in which the flows (of people, money, ideas, etc.) have been in increasing ascendancy over the barriers. These flows have gone through, around, under and over many different kinds of barriers (especially national borders in Europe). However, the pendulum is now swinging back in the direction of strengthening some of those barriers- and creating new ones- in at least some sectors of society and parts of the world. However, that shift should not be seen as deglobalization, but rather as an aspect of the globalization process itself. Thus, we are not undergoing a process of deglobalization, but rather we are at the early stage of another phase of the globalization process.

Sharma, Chief Global Strategist at Morgan Stanley Investment Management, not only fails to see this, but he has a limited view of globalization as primarily an economic phenomenon (with a little politics thrown in). Such a narrow perspective means that he fails to see that globalization has continued apace, and even accelerated, in many other sectors of society, especially on the internet and, more generally, in the cultural, social, and intellectual realms (among many others).

We may be an era in which there is increasing interest in creating barriers in some sectors of society (e.g., trade, migration), but that is decidedly not the case in many others. Sharma, and those who adopt his perspective, need to develop a broader (especially less economistic) and less deterministic view of globalization. Yes, night does follow day (at least for the foreseeable future), but one should not leap from that to the idea that deglobalization follows globalization. There are trends, but no inevitabiities, in the social world.

The Selfie as a Form of Prosumption

As is the case with most recent forms of prosumption, the selfie is made possible by a series of technological innovations including cellphones, their front-facing cameras, the computer and the internet on which photos are posted, and most recently selfie-sticks. While it has long been possible to photograph oneself, that process is now infinitely easier and the photos can be disseminated more quickly and easily. Taking selfies is clearly an example of prosumption in that the producer of the photo is almost always its first, and frequently only, consumer. As a recent newspaper article points out, at the production end of the prosumption-as-consumption continuum, those who take selfies “have become their own Hollywood directors” (Kate Murphy, “What Selfie Sticks Really Tell Us About Ourselves”, New York Times- Sunday Review, August 9, 2015: 5). After the subjects have viewed (consumed) the photos of themselves, they can then engage in a range of additional acts of production such as using “body-slimming, skin-smoothing and age-defying apps” in order to improve their appearance.
Furthermore, the viewer of other’s selfies is not merely a consumer of the photos, but is also a producer in the sense, according to an art historian, that “`the viewer of the selfie is free to interpret the work not governed by the intent of the person who took it’”. While making clear the productive role played by the consumer (viewer), this is a surprising statement since such interpretation is, and has always been, the case not only in all photographs, but in art, movies, theater, symphonies, operas, and the like. The viewer of these, and of most other things, is always free to interpret them and in fact they must interpret them in order for them to be meaningful. Meaning does not come only from the prosumer-as-producer, but also from the prosumer-as-consumer as well as from the interaction between them and their interpretations.
What do we gain by thinking of selfies as a form of prosumption? For one thing, it underscores once again the utility of that concept in our technologically advanced age. For another, it allows us to compare selfies to other contemporary forms of prosumption such as blogs and writing on Facebook walls. The more examples of prosumption we have, the better we will be able to get a broader sense of the phenomenon and of the similarities and differences among its increasing, and increasingly varied and important, manifestations. We cannot truly understand the nature and significance of prosumption unless we view various contemporary manifestations through that lens. It remains the case that few can grasp the increasing importance of prosumption because they continue to operate with a dichotomous production-consumption lens rather than the far more appropriate integrative lens of prosumption.

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.

McDonaldization without McDonald’s?

McDonaldization without McDonald’s?

In its key U.S. market, McDonald’s sales and customer visits were down in the first half of 2014 and they were flat globally. That, in itself, is not terribly worrying to the company since such declines have occurred before and McDonald’s has always roared back. However, a recent survey in ConsumerReports (August, 2014) makes those declines much more worrisome for the company. A survey of the dining experiences of over 32,000 subscribers to the magazine showed that of 21ranked burger chains, McDonald’s was tied for last with Burger King. McDonald’s, like Burger King, had a score of 71. This compared very unfavorably to the top-ranked chain, In-N-Out Burger, with a score of 88. While McDonald’s customers were satisfied, they were not nearly as satisfied as the customers of all the other burger chains (except Burger King). McDonald’s also ranked last when customers were asked to rate burgers on a scale of 1-10 with 1 being the least delicious burgers they have ever eaten and 10 being the most delicious. McDonald’s burgers got a score of 5.8 (the next lowest was 6.6 for Jack in the Box) compared to the best score (8.3) at The Habit Burger (In-N-Out Burger was 2nd with a 8.0 score). Overall, the mass burger chains, those that are the most McDonaldized, tended to rank toward the bottom in both ratings. The same can be said other kinds of chains. Of the chicken chains KFC was at the bottom in terms of the taste of its chicken and the same was true among the Mexican chains of Taco Bell and the taste of its burritos.
McDonald’s (as well as the other mass chains) is in no immediate danger, but these data should lead us to wonder about its long-term future. Other retail giants have fallen in the past (e.g., Woolworth’s, Montgomery Wards) and still others are presently in danger of collapse (e.g. Sears). There will come day when McDonald’s falls, but given its global power and its public relations skill, such a collapse will not occur any time soon. Similarly, these developments do not spell the end of the process of McDonaldization. However, it may well be that McDonald’s position as the paradigm of that process is being undermined leaving us with the possibility of a new paradigm (In-N-Out Burger?). In that case, the lack of fit between the paradigm and process would be awkward, but whatever the new paradigm, it would still be highly McDonaldized.
One of In-N-Out Burger’s great advantages is the higher quality associated with using fresh hamburgers rather than the frozen burgers of McDonald’s and other large chains. The calculability dimension of McDonaldization points to the tendency to emphasize quantity rather than quality. More frozen burgers can easily be stored, shipped, cooked and served than fresh burgers. However these quantitative gains come at the cost of lower quality. In the end, a high degree of McDonaldization brings with it the tendency toward mediocrity. Thus, McDonald’s may be done in by the very process that bears its name, but that is not to say that chains like In-N-Out Burger (as well as others like Chipotle) are not McDonaldized. They are simply less McDonaldized in some ways and on some dimensions that give them various advantages over the most McDonaldized systems. The success of these somewhat less McDonaldized chains promises to reduce, but certainly not eliminate, the irrationalities of rationality (e.g., the tendency toward mediocrity) associated with McDonaldization.

The Current Status of the “Arab Spring”

George Ritzer, Introduction to Sociology. Sage, 2013.

Chapter 1, Page 1

The Current Status of the “Arab Spring”

The dramatic changes associated with Arab Spring that began in 2010  continue to reverberate in 2013. Egypt, Libya and Tunisia, among others, are trying to create and institutionalize more democratic regimes. Other parts of the Muslim world such as Bahrain and Jordan are experiencing unrest, although significant change has yet to occur. Especially notable is the civil war that has raged in Syria since early 2011. The euphoria of the early years of Arab Spring has given way, at least for some, to worry about its negative consequences. While the deaths of tyrants like Saddam Hussein in Iraq and Muammar el-Qaddafi in Libya, and the departure of others from Tunisia and Yemen, are welcome developments, those despots had managed to suppress internal differences in their countries and to exert at least some control over their borders. However, their demise and the continuing failure to replace them with strong democratic regimes have had a variety of dangerous consequences.

As a result, new areas of violence and bloodshed have arisen (including the killing of the American Ambassador to Libya in 2012), especially in the African area known as Sahel. This is a band of land that stretches across North Africa from the Atlantic Ocean to the Red Sea and lies between the desert areas to the north and the grassy plains to the south. It cuts through several troubled countries, most notably two recent and interrelated trouble spots Mali (Hagberg and Korling, 2012) and Algeria.

Mali has been experiencing for some time a low-level civil war involving the Tuareg minority in the northern part of the country, but the country was  destabilized by a coup d’etat in 2012 that overthrew the president and further weakened the government. The war in the north took on a new form and was heightened in intensity by weakened borders with neighboring Libya and the resulting influx of weapons and fighters, the existence of members of al-Qaeda in the Islamic Maghreb in northern Mali, as well as the influx of battle-hardened militant Islamists from elsewhere in the Middle East. The Islamists began to move south conquering a vast portion of Mali and by late 2012 they threatened to take over the entire country. The French intervened militarily in Mali (their former colony) in order to prevent it from becoming a radical Islamic state.

As this was happening, radical Islamists, claiming that they were retaliating for the French incursion in Mali, invaded a gas-production complex in neighboring Algeria taking a number of hostages. Members of the Algerian security service stormed the complex and in their wake many hostages and militants were killed (Nossiter, 2013).

The events in Mali and Algeria were described by an expert on the Middle East and Africa as “the darker sides of the Arab uprisings” (Worth, 2013: A1). None of this is to indicate that the Arab Spring has been a failure, but it does demonstrate that a series of changes have been set in motion and it will take years to determine their long-term implications.

The developments in the Sahel area of North Africa reflect current thinking on globalization (see pp. 5-9), especially the increasing fluidity of global flows of many kinds. They also reflect the declining ability of structures such as national governments and borders to impede many types of flows.

References

Hagberg, Sten and Gabriella Körling, “Socio-political Turmoil in Mali: The Public Debate Following the Coup d’État on 22 March 2012.” Africa Spectrum 2-3, 2012: 111-125

Nossiter, Adam. “Algerians Find Many More Dead at Hostage Site.” New York Times January 21, 2013: A1, A8.

Worth, Robert F. “Jihadists’ Surge in North Africa Reveals Grim Side of Arab Spring.” New York Times January 20, 2013: 1, 13.