COLUMN - THINKING OTHERWISE - The Digital Economy of W. Brian Arthur

“We Irish think otherwise.”  Bishop Berkeley

 

In 1850, a decade before the Civil War, the United States’ economy was small—it wasn’t much bigger than Italy’s. Forty years later, it was the largest economy in the world. What happened in-between was the railroads. They linked the east of the country to the west, and the interior to both. They gave access to the east’s industrial goods; they made possible economies of scale; they stimulated steel and manufacturing—and the economy was never the same.

W. Brian Arthur, "The Second Economy"

 

 

 

To: W. Brian Arthur, PhD

      Xerox PARC

      Palo Alto, California

 

Dear Brian,

 

Thanks very much for your perky and delightful essay on, “The Second Economy.” (W. Brian Arthur, McKinsey Quarterly, October, 2011).

 

Some thoughts. Consciousness emerges by pushing more and more processes into unconsciousness. I don't need to know how my liver is doing when I am writing a poem. I do want to know how my body is feeling when I am making love, so consciousness is a floating attractor, variously contacting other continents when it needs to.

 

In the shift from a consumptive economy to a contemplative one–the real meaning of our Euro-American fascination with Yoga, Suf'ism, and Buddhism–jobs will disappear as a source of our identity. The job as a configuration is an industrial concept. The Dark Age and Medieval monk did not have a job; he had a vocation, a calling.

 

Like the mitochondria that moved inside the eucaryotic cell–as described by biologist Lynn Margulis–and went to work as little farms inside a molecular and genetic information system, the monks in "The Plan of St. Gall" had artisanal and productive crafts (including making beer for B vitamins in the winter!) but they did not see themselves as having a job. 

 

So we are going to have to miniaturize all the previous economies (foraging, farms, and factories) inside this new planetary economy you describe. In a way the farmers' markets inside my town in Monument Square are starting this process, as they include artisanal booths for crafts as well. The task is, as you suggest, distributive, because now in the etherealization of money, only Goldman Sachs is manipulating "the difference that makes a difference" in microtime transactions. Therefore, I see the tax on financial transactions that economist Hazel Henderson has called for as critical, because it would create a fund with which to award "fellowships" and start-up funds to more people than just the bankers.

 

The Tea Party and the Libertarians as well as the Occupy Wall Street demonstrations around the world are indications that third and fourth parties are separating–in a meiosis-like cellular process–from the early industrial formations of Tory and Whig, or Republican and Democratic.

 

 

 

In anthropological terms, the Libertarians are a classic "revitalization movement" (see A. F. C. Wallace's defining paper) that appears whenever the old “mazeway” of a culture's movement through space and time is put under stress or threatened with erasure. I have called this movement of rural White Protestants "the Ghost Dance of the Rednecks." The first Ghost Dance of the Redman was a response to the railroads you describe as creating the new American economy. Now the Robber Barons like the Koch Brothers want to return to a Victorian economy of a class of serfs with no public health, environmental protection, or public education. This is another "revitalization movement" of early formative industrial capitalism, one that indicates that Business also feels threatened with cultural erasure by a new international scientific elite. The businessman’s denial of global warming and climate collapse is prima facie evidence of this fear. 

 

The Tea Partiers and Libertarians see global warming and health insurance as deceits used by the intelligentsia to scare the populace into socialism with new and massive systems of government control. This union of the confused and unemployed populace with the top one percent of the wealthiest recalls the convergence of the masses and the I. G. Farbens and Siemens corporations working together to forge the fascist concept of the State in the Great Depression of the 1930s.

 

So the challenge to you economists is: How do we create the cultural transformation out of a "growth" mentality into the next economy/world-view?

 

Imperial Rome gave us latifundia and bread and circuses; the Middle Ages gave us rituals and faith in the Great Chain of Being that bound peasant and lord together. The Enclosure Acts ended that relationship and gave us the market system, replacing crofters with sheep in the Highland Clearances and giving us market-based genocide in the Irish Famine. Nassau Senior, the first Chair of Economics at Oxford–ironically then called "moral science"–said at high table: "The trouble with the Irish famine is that not enough of them died."

 

If we are becoming a global noosphere of transnational interconnectivity–as your paper suggests–one consequence is that all wars now become forms of suicide bombing. The toxic weapons we used in the first Gulf War with Papa Bush, and the depleted uranium artillery shells we used in the second Iraq war with Baby Bush, have proved toxic to our own soldiers and they have returned home with more than Post-Traumatic Stress Disorder.

 

Canadian Soldier with Test Results

 

The response of the Military-Industrial complex to this new vulnerability has been the use of drones, and soon will be robotic instruments for teleporting violence.

 

 

Iraqi Victim of Depleted Uranium Weapons

 

In this noosphere, we all use the Internet and the digital infrastructure; even terrorists use the Internet to recruit new followers. Unfortunately, both governments and terrorists are now becoming similar. "We become what we hate." The President or the CIA can now declare a U.S. citizen to be a terrorist and murder him or her without due process of law. Authoritarian America and authoritarian China are now converging into one system of anti-democratic governance as our joined economies become a mutually dependent system, but one closed to any system of management except control from the top. The recognition of this political transformation is what is really behind the recent globalization of movements as different as the Arab Spring and Occupy Wall Street.

 

It would now appear that industrial and service economy "jobs" are disappearing at the same time that national currencies are in crisis and public universities and community colleges are being stripped of funds, so that they cannot take up the slack by employing the unemployed. We seem headed for a crisis greater than the Great Depression. The solution, it would seem to me, is not a propping up of the old economy through government bailouts but an entire restructuring of civilization.

 

On human terms, I fear this is not possible. Homo sapiens is just not that sapient. Earth Day began in 1968, but it was followed by forty-four years of reaction with Reagan, the Bushes, and now even Obama. I am afraid that we are in for a catastrophic transition and a massive dieback, unless you economists can come up with something that is not Business as usual. Germany and the U.S. came out of the Great Depression through war. As William James suggested, we need to come up with the moral equivalent of war.

 

Your paper on the new digital economic infrastructure suggests to me that the old industrial economy is now going through a process of miniaturization in which, as you suggest, productivity goes up, but unemployment goes up as well as jobs simply do not come back on the scale once characteristic of industrial society.

 

In the industrial revolution, prefigured by the change in infrastructure brought on by the Enclosure Acts, agriculture was miniaturized as a new and smaller content within the structure of the new industrial society. Sheep replaced crofters and the dispossessed agricultural laborers migrated from the land to the cities and slums of Manchester and Birmingham, or emigrated to a North America emptied of aboriginal peoples by small pox.

 

After World War II, many Americans—I among them–took part in a second wave of migration from the old industrial Rust Belt to the West Coast where first the aerospace industry, then the electronic industries and service economy absorbed them with their government-supported expansion of the defense industries for the Cold War.

 

Now in the digital revolution, factories and work forces are miniaturized, and industrial cities such as Detroit seem unlikely to spring back to what they were in the post World War II era. And, as you point out, the service economy of office workers, bank tellers, and teachers is contracting while the population is still expanding.

 

In the first contraction of agricultural and the expansion of industrial society, Art became a new economy as it was extended from the aristocratic to the middle classes. Where chamber music was once played in the large homes of the aristocracy, large symphony halls took their place, galleries proliferated for the new medium of canvas paintings for upper middle class homes, and the popular author, such as Charles Dickens, became a celebrity supported by a vast readership.

 

In the second contraction of the industrial and expansion of the service economy, Education replaced Art as the new superstructure. The University of California became the largest public university system in history, but it was simply the top of the pyramid of state universities, community colleges, and good public school systems. The critic as Professor in a collective became more important than the solitary Romantic Artist.  Roland Barthes proclaimed the death of the author with his or her system of author-ity. Derrida’s philosophy of différance may not have adequately described the literary work, but it certainly described the new monetary system that Nixon introduced to replace Breton Woods. Value became a mercurial fluid and not a stable solid. The solitary visionary of a Beethoven or a Blake became a thing of the past, and the Romantic Artist became replaced by the Rock Star or the Celebrity. The Celebrity is, however, a mirage, as it requires an atmosphere of hot air to produce and maintain its ephemeral illusion of individuality.

 

Now economic value has become an atmosphere and not a fluid currency, but we still treat money as if it were a currency that flowed through channels, and so we are experiencing a crisis of money and credit in which one percent of the population becomes the accumulating reservoir of money.

 

So it would seem to me that it is not just industrial productivity that is experiencing a process of miniaturization; it is the whole economy that is being miniaturized in a larger emergent structure. The economy is like a system of continents within the planetary atmosphere—which means that money should not be stored in the one percent at the economic stratosphere, but should be inhaled by everybody to sustain the life of a new planetary civilization.

 

But what seems to come between emergent civilizational economies are plunder economies and Dark Ages. If one reads Caesar’s Gallic Commentaries and Tacitus’s Germania, one realizes that what later became the European aristocracy was first simply a protection racket. Raiders on horses would take slaves home to do the work, while they increased the number and scope of their raids and drunken feasts. They soon found that if they took everything from the farmers, the farmers would starve, and they themselves would have no crops to plunder the next year. So the man on a horse coerced the farmer into an agreement; he would protect him from other raiders, if he agreed to give the lion’s share of his harvest to him. Out of this arrangement, the Plunder Economy evolved into the next economy–Feudalism based upon land tenure and oaths of fealty. The myth of blue bloods and the divine right of kings was the mythological system that grew up, like kudzu around a telephone pole, to cover the old protection racket of the Germanic barbarians.

 

Buckminister Fuller said that the first people to think on a planetary scale were the pirates. Piracy was the next Plunder Economy that came at the shift from land-based economies to mercantilist and capitalist ones. Queen Elizabeth used the pirates and privateers like Francis Drake to help her break the power of the land-based barons and contribute to the growth of trade that supported the Tudor monarchy.

 

What we see now with Mitt Romney’s Bain and Company and Goldman Sachs is the Plunder Economy that is the transition between hypercapitalism and a global ecology of noetic polities. As the headlines have recently indicated, corporate entities like Apple Computer have more cash on hand than the federal government. The Occupy Wall Street movement is a recognition of this fact of life. As their signs say: “We are the 99%.”

 

Although the OWS movement is often criticized for lacking a coherent ideology, it is precisely its lack of an ideology that is its uniquely relevant characteristic, its arête. This New Left movement expresses an ecology of consciousness, an affirmation of diversity, and not an ideology characteristic of the industrial thinking of the 1930s. As they say in the one page hand out given to the visitors and supporters at Zuccotti Square:  Occupy Wall Street is an exercise in “direct democracy.” We feel we can no longer make our voices heard as we watch our votes for change usher in the same old power structure time and time again. Since we can no longer trust our elected representatives to represent us rather than their large donors, we are creating a microcosm of what democracy really looks like. We do this to inspire one another to speak up. It is a reminder to our representatives and the moneyed interests that direct them: we the people still know our power.

 

 

Although Obama has pretended to be sympathetic to the occupiers of Wall Street, he is more their cause than their colleague. When Obama orphaned the liberal progressive wing of the Democratic Party, he formed the New Left by leaving it out in the cold.

 

Following President Clinton, Obama chose to continue the shift to the right in which the Democrats became what used to be the Rockefeller Republicans. When Geithner was put in charge of bailing out the banks—thus encouraging the reckless and high risk-taking speculations that caused the crisis of 2008--Obama created the new corporate culture in which the banks were too big to fail. For investors, this new culture–as Paul Volcker has pointed out (New York Review of Books, November 24, 2011, p. 75)–meant that their profits would be private, but their losses would be reimbursed out of public funds. Risk-taking no longer had any risks. Small wonder that nothing changed in the behavior of Goldman Sachs et alia in which they paid themselves large fees from companies they raided and ravaged.

 

This New Left movement is neither socialist nor communist, for those ideologies were expressions of twentieth century industrial thinking. Communism was the category-mistake that sought to eliminate all differences to appropriate all property by the State. But a weather system, as well as an ecosystem, works through the thermodynamics of difference. Too much can give us a hurricane, too little can give us a drought. What is needed now is not a cascade, or mudslide, but an energizing of interruptions of flow through a system of terraces. Nature works through pulses of light and dark, hot and cold, not a uniform extension of sameness. Mars may have once been a living planet, but when it lost its magnetic field, it lost its atmosphere, its weather, its ecosystem of pulses.

 

Earth’s magnetic field allowed life to evolve and cell membranes to form. What is needed now is an economic magnetic field to protect difference and pulsation. What is not needed is the extremes of obscene wealth and abject poverty, for that would be like having a continental weather system of only hurricanes and droughts—a weather system that we are most likely to get as industrial climate change continues to bear down on us.

 

Whether the Tea Party may like it or not, the only entity positioned to generate a magnetic field is the federal government. Its task is now to redefine and create the system of terraces for the circulation of money. The Banks will not do it; the government of ordinary businessmen refuses to do it. So the difference engine that will drive the emergence of the new system will probably be catastrophes.

 

In the meantime, it would seem to me that I am merely rediscovering the wheel--the very old idea of a Guaranteed Minimum Income, first proposed by Thomas Paine at the beginning of the shift from agrarian to industrial society, and later advanced by such thinkers as John Maynard Keynes, Robert Theobald, and Daniel Patrick Moynihan.

 

I enjoy my social security check each month and use it as a fellowship to support my writing and research. I am sure that some young people–after the manner of Jobs and Wozniak who worked in a garage and gave birth to the Apple computer that challenged the rule of IBM—would use their GMI fellowships with equal imagination.

 

The small tax on financial transactions that Hazel Henderson has been calling for seems to me to be the source of funds to support a GMI.  Such a financial transactions tax could become the system of terraces that can step down the abundance at the top that threatens to break like the faulty dam it is and drown us all in the collapse of money as a cultural system. Or, to change the metaphor from our Lindisfarne Fellow John Todd’s observations on terraces in Java to our other Lindisfarne Fellow Lynn Margulis and her comments on planetary Gaian evolution and cyanobacteria, it is the slight outgassing of oxygen through photosynthesis that got rid of the toxic methane atmosphere to give us the beautiful blue sky we still enjoy for the time being.

 

Yours in the Fellowship of Lindisfarne,

 

Bill