Capitalism 2.0 - an early manifesto

This is a document I penned several years ago in an attempt to express my impetus for SEAM. It is a little dated but I hope it is informative.

Capitalism 2.0

Brexit, Trump, the Greek financial crisis… We are witnessing the collapse of the status quo. People are turning to right-wing strongmen to solve their economic and social insecurities. Unfortunately, our political systems aren’t up to the task. Presidents, prime ministers, demogogues… they all come and go without having nearly as much impact as they would like us to believe. Democracies require well informed and politically engaged public, yet nations remain deeply divided, polarized and incapable of making progress.

This could not have come at a worse time. We are facing long-term challenges from mass extinction, global warming, declining fertility, mental heath issues, refugee mass exoduses, income inequality and a precipitous poverty gap – so many crises that demand a well-orchaestrated and pan-global approach. Now is the time to come together, not fall apart.

Contrary to popular belief, we are not suffering from a crisis of leadership or apathetic citizenry. Instead, the problems we face are systemic. We have created a global system that values capital over creativity, treats people as assets rather than individuals, and favours short-term gains over long-term goals.

Let’s take a moment to reflect on how we got here. All of us are born highly creative, risk-seeking creatures that are gradually re-programmed at school to become rule-abiding, risk-averse pupils. As we age, we face tremendous pressure to compete with and to outperform our peers for limited spaces. Our success is measured by standardised tests that prioritise groupthink over critical reasoning and self-reflection. Forced to specialise early on, we follow a path already chosen for us, resulting in a lack of purpose and agency, which has contributed to an epidemic of anxiety and depression in institutions of higher learning. Within the last couple of years, for instance, Yale reports that a third of its female students have been on anti-depressants at some point during their undergraduate years.

Upon graduation, out into the working world, the situation isn’t much better. In a previous generation, Baby Boomers had lifetime employment and robust social services to rely on. Nowadays, Millenials have Uber and Starbucks. Dubbed “The Precariat”, these unfortunate drones of the “Gig” economy have no security and no safety net. They have traded stability for flexibility and have somehow been convinced that this is a good thing.

This is what the system wants: people to be splintered, disorganised and unable to bargain collectively. It is a system in which people cannot grow, learn and evolve in such a way as to reinvest in themselves. It is a system in which real wages have stagnated for decades, whereas intangible assets on the stockmarket have skyrocketed. The rich have gotten richer, because they have spare cash to invest in those assets, which governments inflate through quantitative easing. It’s a virtuous circle or financial racket, depending on your perspective, but it means that a majority of the population must run on the treadmill just to stay in place. Maybe you don’t mind grinding away at your job, because you find it meaningful and fulfilling. If so, you are in the minority. Many can’t take the stress and turn to substance abuse, which is what is happening in the US with its opiod crisis and rampant gun violence.

Essentially, the heart of the system is morally bankrupt. It has financialised everything, eroded fraternity and altruism to that point that all relationships are transactional. Trust can be scored like any other value which is measured by money. It is a model of scarcity not abundance. It’s every man for himself. It is an erosion of public institutions for the public good in favour of private enterprise for the benefit of a few.

Government is not run by politically engaged citizenry but by bankers and corporations who dictate policy – both foreign and domestic. Politicians work for them not for us. The bankers’ greatest contribution to the world is the derivative – complex financial instruments which cleverly offload risk to the most vulnerable in our society. It is a game of musical chairs that results in volatility and recession. The Corporations’ biggest contribution to the world is the monopoly – an ability to create private rent-seeking opportunities from publically funded projects and services that were paid for with tax-payer money. For example, the “Four Horsemen of the Apocalypse” – Amazon, Apple, Google, Facebook – dominate their markets, dwarfing the next largest companies by market capitalisation and consume their competitors like The Borg, all the while employing fewer people than they replace and putting ever greater burdens on social welfare to which they do not contribute. They offshore earnings and use tax avoidance schemes to boost shareholder value while robbing the public coffer of income. To add insult to injury, they might even benefit from tax-payer funded government research and patent the results all for themselves.

I have seen how the system encourages corrosive behaviour in the industry in which I loved and worked for thirty years – the film business. Once proud creators of cutting-edge entertainment, it is now the bargain basement bin of cookie-cutter franchises. There was a time when the big screen was the only place for big ideas and ground-breaking storytelling. The film studios were once called “Dream Merchants” but now they are dream crushers… gatekeepers… basically, the ones whose job it is to say ‘no’ to big ideas. Streaming services have taken on the mantle of cutting-edge entertainment. They take the chances and push the boundaries. They invest in original new content. Hollywood, by contrast, has become another business division within a media conglomerate, chasing low-hanging fruit and pursuing projects that they can pre-package, de-risk and, if necessary, run as a loss-leader to support some other business division, such as the amusement parks, where the real money is to be made. Sadly, financialisation has taken its toll on the interpersonal relationships within the workplace, too, so that Harvey Weinstein has become Hollywood’s poster-child.

The problem with the film industry is not unique. They are caught up in the same system of global capital as the rest of us. Like many businesses these days, they rely upon creative accounting more than human resources. They forgot where real innovation comes from – not from a balance sheet but from giving artists the resources to take creative risks. In the video game business, another area I’ve been involved with for a number of years, I have seen a familiar pattern. Small independent teams will create something of tremendous value, because they followed their convictions and took healthy risks. Then, they are acquired by larger firms, which milk them to death and eventually destroy all the goodwill which the original firm had painstakenly built up. This is one of the reasons why both the film and video game industries have such enormous revenues but relatively little in the way of profits. They will tell you that this is because they are hit-driven businesses that put a lot of money up-front into a slate of projects hoping that one of them will become a blockbuster and pay for all the others. This sounds reasonable until you look at another hit-driven business with even bigger sums of money involved – the pharmaceutical industry. Take a look at the disparity in R&D. It doesn’t take a genius to spot the difference. Big pharma spends on average 17% of revenue on R&D. Hollywood spends less than 1%. After raiding the larder of DC, Marvel, Potter, MGM and excitedly releasing Spiderman XVII, they find themselves with few options left, since they put nothing back into the cookie jar.

The truth is, within any industry, be it artistic, industrial or scientific, the real wealth, the real value, is created by human endeavour and ingenuity, by people who make things – not by the ones who “copy, rinse and repeat”. In other words, real innovation comes from the creatives, not from the management or the investors. And, yet, the investors are the ones who reap most of the rewards from the fruits of the labor. Most creatives are freelancers. Much of the work they do is work-for-hire. Rarely do they receive a piece of the back-end, or a share in the upside of what they create, yet this is automatically guaranteed to shareholders who do none of the heavy lifting. We have become accustomed and complacent to this imbalance of power – as if this is just the natural way of the world – and our society suffers for it.

It is time to recognise that capitalism is not working as well as we’d hoped. Despite ushering in a profound period of prosperity for the industrialised world, it has come at a terrible cost to the less fortunate, while creating perverse incentives for everyone else. It has turned the global economy into a casino, where you’re either one of the winners or losers when, in reality, the house always wins; which is to say that banks and the mega-corporations. It is a capricious system that eats its own and leaves a global mess for future generations to contend with.

We can do something about this. There are examples of people coming together to successfully buck the system. Linux has the greatest share of the Internet Server market, demonstrating the power of crowdsourcing. Kickstarter has shown us that consumers have an appetite for financing creativity and can be used to bypass the gatekeepers, demonstrating the power of crowdfunding. Blockchain technologies are rapidly removing the middlemen and heralding a world of decentralised autonymous organisations.

We are working on our own solution, which we will announce in the coming months. We think of it as Capitalism 2.0.

We aim to solve our most intractable problems by combining the forces of crowdsourcing, crowdfunding and the blockchain into a single platform. It will be a creative community that enables people from all over the world to discover, share and innovate more easily. By removing the structural impediments to mass-collaboration, anyone can rapidly prototype and test solutions to creative challenges, build upon the work of others to increase shared knowledge, collaborate with strangers to learn new skills and trade perspectives that enhance critical thinking, while being rewarded for any implementation or future derivation of their work. In fact, they will not only share in the upside from any commercialization of their intellectual property, they will also share in the ownership of it, too.

Forty minutes into his presentation on the current economic crisis, Yanis Varoufakis makes a case for cooperatives! Of course, I am happy to hear this, as we formed the SEAM Studio as a cooperative in September of last year.

Of course, he goes much further with a radical idea of removing the banks (middlemen) and the need for a stock market. Okay, that’s pretty radical. Don’t let me steal his thunder. Watch it for yourself.