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.

 

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).

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.

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.

Demonizing the “Founder” of McDonald’s: It’s Much More the System than the Man

Although it is rooted in the 1950s and the creation of McDonald’s, the movie “The Founder” is a not-so-subtle attack on ruthless Trumpian-style and –era business practices.

The “founder” in question is Ray Kroc (who never founded anything- not the restaurant, its system, menu additions like Egg McMuffin, the idea that the real money was in the owning of the land on which the franchises were built and the rent that came from it, and so on). After many early failures as a Willy-Loman-like salesman, Kroc was drawn to the McDonald’s brothers’ revolutionary new business model in San Bernardino, California because it had placed an unusually large order for several of the milk shake machines he was hawking. The brothers were happy with their modest success and had no interest in building an empire. Kroc did and to his credit he was willing to work hard and risk all- including his home- on the future of the business which he saw in franchising (another idea and system not founded by Kroc).

But Kroc, like Trump, was ruthless and unethical both in his business and personal life eventually lying repeatedly to succeed. He ultimately screwed the McDonald brothers out of the $100 million a year he had verbally promised to them, but had refused to put in writing. In the end, one wonders whether the deceit was worth it. True, Kroc became a billionaire but he sold his soul in the process. In addition, after his death his wife gave it all away, much of it to the Salvation Army.

The movie is strong on the system that the McDonald brothers created. Its essence is depicted in a neatly choreographed scene on a tennis court with a chalk-drawn and re-drawn floor plan of the restaurant. The system they created drew heavily on Taylorism and time-and-motion studies, as well as on Henry Ford’s assembly line. Indeed, McDonald’s pioneered the assembly-line production of burgers (and other foods) and the treating of its customers as if they were on an assembly-line (especially in the later drive-throughs).

Beyond the McDonald’s “system”, the McDonald brothers created high(er) quality burgers and shakes (both eventually compromised by Kroc), finger food that did not require utensils, a self-service restaurant that kept customers moving because there were no seats, and a clean restaurant and environment that discouraged teenagers from hanging around and making a mess and lots of noise.

Kroc also quickly recognized the value of the name and of the golden arches (also created by the McDonald brothers). As depicted in the movie, he saw a similarity between those arches and church steeples and courthouse structures. In my terms, he is depicted as implicitly recognizing that he was creating a new “cathedral of consumption”.

One of the major problems with the movie is the failure to address some of the larger issues that are part of the process of “McDonaldization”. These include the broader changes that contributed greatly to McDonald’s success (the post WWII growth of automobile sales and travel, the national highway system, and the suburbs) as well as the broader changes it has wrought, especially the McDonaldization of society and of many of its institutions (schools, churches, etc.). Also missing is coverage of the many irrationalities associated with fast food chains (adverse impact on health, the environment, etc) and of McDonaldization more generally (e.g., increased homogenization), as well as even broader issues such as the globalization of the chain, its basic ideas, and its irrationalities which all played a major role in the “globalization of nothing”.

In the end, the movie focuses too much on one “demon” (Kroc), but minimizes larger demons (capitalism) and totally ignores others (the McDonaldization of society and its many irrationalities). As is true in much of the popular media and its products, The Founder individualizes and psychologizes when it needs to “sociologize”.

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.

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.

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”.