Monday, May 13, 2013

Jaron Lanier on System D

In an interview on Salon, Jaron Lanier, the computer scientist, musician and artist who's now worried about our increasingly wired world, offers a bracing take on informality.

Lanier, who has written a new book called Who Owns The Future?, bashes the informal economy for being outside the social contract and ushering in a winner-take-all society, in which a few people (Mark Zuckerberg, Sergey Brin, etc.) get really rich and everyone else slaves.To Lanier, the growth of casual labor and permanent freelance jobs and unpaid interns who are doing work that used to be done by full-time employees undermines development and democracy. Some excerpts from his comments in the interview:
This is getting back to the informal economy where you’re living in the slum or something, so you’re desperate to get out so you impress the boss man with your music skills or your basketball skills. And the idea of doing that for the whole of society is not progress. It should be the reverse. What we should be doing is bringing all the people who are in that into the formal economy. That’s what’s called development. But this is the opposite of that. It’s taking all the people from the developed world and putting them into a cycle of the developing world of the informal economy
If you look at the infant mortality rate and the life expectancy and the education of the people who live in those slums, you really see what the benefit of the formal economy is if you’re a person in the West, in the developed world. And then meanwhile this loss, or this shift in the line from what’s formal to what’s informal, doesn’t mean that we’re abandoning what’s formal. I mean, if it was uniform, and we were all entering a socialist utopia or something, that would be one thing, but the formal benefits are accruing at this fantastic rate, at this global record rate to the people who own the biggest computer that’s connecting all the people.
The whole idea of a job is entirely social construct. The United States was built on slave labor. Those people didn’t have jobs, they were just slaves. The idea of a job is that you can participate in a formal economy even if you’re not a baron. That there can be, that everybody can participate in the formal economy and the benefit of having everybody participate in the formal economy, there are annoyances with the formal economy because capitalism is really annoying sometimes. But the benefits are really huge, which is you get a middle-class distribution of wealth and clout so the mass of people can outspend the top, and if you don’t have that you can’t really have democracy. Democracy is destabilized if there isn’t a broad distribution of wealth.

The thing is that the value of the informal economy around the world -- conservatively estimated at $10 trillion -- is seven times the value of the luxury economy. At the same time, if we look globally, there isn't really a broad distribution of wealth. Indeed, if you have assets of $2,138 (this doesn't have to be cash in hand, but could be the value of your Vespa or VW, your iPad or Prada bags, or any of your other analog or digital doohickeys) you are a member of a super-elite group--the wealthiest 50 percent of people on the planet.

Lanier makes some interesting observations--but he's looking at System D from the outside. What has happened in the world is not that System D businesses and entrepreneurs have broken the social contract and undermined democracy, but that the formal world has. Walmart -- the world's largest retailer -- doesn't offer health insurance to many of its employees. In this, it's no different from the owners of a roadside kiosk in Kinshasa. Yet the big corporation is lauded while the sidewalk entrepreneur is derided as exploitative. In Nigeria, UAC -- a venerable formal firm whose shares are publicly traded -- has made a determination to sell its Gala sausage roll exclusively through a massive labor force of street hawkers. The government makes no effort to rein in UAC but instead criminalizes street peddling. All around the world, big businesses are protected, while the small fry are persecuted. Global inequality has been created by the formal economy. So what use should people on the bottom have of formality?

Lanier's right: who gets to own the future is indeed a relevant question. But, today, more than half the workers of the world are united in earning their money off-the-books--and the response of the dominant, formal system is to banish these people as illegal and criminal.

I'd say that any system that turns half the workers of the world into criminals is by definition not serving the people. System D has the potential to serve as a mechanism for broadening economic agency and reducing inequality. But we all have to be willing to think outside the box to make it happen.


Theresa said...

Thank you for your comment on Lanier's book and the Salon article about him. I read that Salon article and I was really bothered about his comments about the informal economy, but didn't really know how to put my gut reaction in context. I'm glad to see that other people are bothered about this also and have already given this whole area a great deal of thought. I think Lanier kind of fetishizes the "formal" economy without really analyzing how much value it's giving to the people who work in it.

I'm new to your blog and didn't realize anyone was writing about the informal economy. If I were you I might consider approaching Salon with a counter-argument article or interview; people need to hear that there's a different POV about the value of the informal economy.

Theresa said...

Also - do you have a link for the assertion that having assets of $2138 makes you part of the richest 50% on the planet? That's an amazing statistic if true.

rn said...

Theresa: Thanks for your thoughts. You can download the UN report with that statistic on income inequality here:

It's on page 7.