Online Companies Like Facebook Have Created a "Meaningless Economy"
Companies like Facebook no longer depend on traditional economic exchanges to turn profit, so what does this mean for the consumer? When we're not paying money, we're paying in other ways, says Douglas Rushkoff.
Douglas Rushkoff is the host of the Team Human podcast and a professor of digital economics at CUNY/Queens. He is also the author of a dozen bestselling books on media, technology, and culture, including, Present Shock, Program or Be Programmed, Media Virus, and Team Human, the last of which is his latest work.
Douglas Rushkoff: In the original .com era companies were measured by how much money they made. The idea was that you sold a lot of stuff and took in a lot of cash and that was the way you could get a valuation and then get acquired or do an IPO. Now, consumers don't have money anymore. People are poor. So companies can't really use revenue as a way of showing what they're worth, plus they have no real business plans. So what they do instead is use likes as a metric of their worth. If a company can have a lot of people saying I'd like it, I like it, I like it, then that more ethereal abstract metric, I've got a million likes; I've got 20 million likes, that becomes marketable. So if I want to sell a record and make money and go to a record company or a CD company, I can show look, my song on YouTube has 500,000 likes and the record company or the sponsor will then promote my music, not even because they're going to make money with that music but because then I'm supposed to sell my likes, my views, my followers to their sponsors.
So, a guy like Jay Z comes out with an album through Samsung that he gives away for free because what it really did was installed spyware on people's android phones that could see what they were doing. So what Jay Z was doing was rather than selling his music he was selling his likes. A company like Tumblr had no revenue but they had lots of likes and users who all clicked on each other stuff, they had those phantom metrics. And with that they were able to sell themselves for a billion dollars. This year Yahoo is taking Tumblr, the billion dollars, as a loss. They're writing the whole thing off because they didn't buy a company, they bought likes. But this is the new economy that we're in. It's an abstracted absurd essentially meaningless economy.
All of these companies, Facebook, Twitter, Google, they're all advertising based, they're all market researched based. The idea is that these companies will somehow replace advertising and marketing and market research and consumer data. The problem is all those industries combined never account for more than three or four percent of GDP. They can't because if advertising becomes the majority of your marketplace who's left to advertise? If my talks are supposed to advertise my books and my books are supposed to advertise my TV appearances and my TV appearances are supposed to advertise my books, where is the revenue? That's the problem in our society now is that every company now is a data play or an advertising play, but how can the whole NASDAQ stock exchange be one big advertising play? It can't. You still need enough razor blades and bananas and milk companies to support all of that stuff. So it won't support the entire economy.
So that's why we don't really use revenue anymore in playing this out. The bottom layer of the Ponzi scheme, which is what we're in now, where these companies are still trying to get shareholder value and IPOs on Wall Street, this bottom layer is made up completely of likes. It's made up not of the revenue that the companies make but the amount of likes, the amount of traffic, the amount of data they can show. But if your company's endgame is what they call a big data play that oh the data we collect is going to be so valuable, you've all ready lost. Everybody is collecting data. The one thing that there is a glut of is data. So that's not what you want to be trying to collect right now.
The problem is most business people, whether they're in investment baking or whether they're the hungry little startup people, they are so oblivious to the operating system beneath their technologies that they end up really driving their businesses off cliffs. And all I'm asking people to do, especially if they're programmers, especially if they're developers, to look and say wait a minute, what am I optimizing my business for? Am I optimizing it for the extraction of value from people and places, which is a losing proposition? Or am I optimizing it to promote the circulation of value between people and places, which is a winner's game? The whole point of a digitally distributed economy is that it's networked; it's distributed. You don't redistribute the spoils after-the-fact. You don't say oh I've made too much money; I'm going to give back 90 percent of it now before I die into all the schools and things I think need it. No, that means you've had and extractive silly sick business, which let you get hundreds of billions of dollars but killed your marketplaces, destroyed public areas, destroyed the planet.
There are three factors of production. Adam Smith, everyone's known this: land, labor and capital. In the current VC driven technology startup marketplace, the only one of those three that we value is capital. The VC makes all the decisions and land and labor are left out of the equation. That's why we have zillions of unemployed people and why we're destroying the planet. It's really simple. Where if we include land at labor the places where we do our business and the people through whom we do our business. If we include them in the value equation all of a sudden business is positive rather than a net negative on our society.
Online businesses were originally measured by how much they sold. Makes sense, right? That's how economics is taught. But today, the largest online companies depend on an "economy of likes" to make money, says media theorist Douglas Rushkoff. Valuations for companies like Facebook depend largely on their user base, he says, rather than their actual profits. An interesting case in point is Jay-Z's partnership with Samsung.
When the technology company gave away one million copies of the rapper's album Magna Carta Holy Grail on users' phones, paying Jay-Z $5 million, they weren't really purchasing his music — they were purchasing this fan base (and installing spyware on their phones via the album download). The attraction of this business model to investors is that the ability to measure consumer behavior directly, via spyware or "likes," is meant to replace traditional modes of advertising. But when everyone is an advertising company, asks Rushkoff, what happens to the real economy?
Indeed companies who are extracting huge profits from society without giving us something tangible in return, like razorblades or bananas, are harming the real economy. Business should benefit society directly, not indirectly, as when billionaires donate their absurd wealth to our schools. That's a robber baron society. We just want a society.
A large new study uses an online game to inoculate people against fake news.
- Researchers from the University of Cambridge use an online game to inoculate people against fake news.
- The study sample included 15,000 players.
- The scientists hope to use such tactics to protect whole societies against disinformation.
Researchers hope the technology will further our understanding of the brain, but lawmakers may not be ready for the ethical challenges.
- Researchers at the Yale School of Medicine successfully restored some functions to pig brains that had been dead for hours.
- They hope the technology will advance our understanding of the brain, potentially developing new treatments for debilitating diseases and disorders.
- The research raises many ethical questions and puts to the test our current understanding of death.
The image of an undead brain coming back to live again is the stuff of science fiction. Not just any science fiction, specifically B-grade sci fi. What instantly springs to mind is the black-and-white horrors of films like Fiend Without a Face. Bad acting. Plastic monstrosities. Visible strings. And a spinal cord that, for some reason, is also a tentacle?
But like any good science fiction, it's only a matter of time before some manner of it seeps into our reality. This week's Nature published the findings of researchers who managed to restore function to pigs' brains that were clinically dead. At least, what we once thought of as dead.
What's dead may never die, it seems
The researchers did not hail from House Greyjoy — "What is dead may never die" — but came largely from the Yale School of Medicine. They connected 32 pig brains to a system called BrainEx. BrainEx is an artificial perfusion system — that is, a system that takes over the functions normally regulated by the organ. The pigs had been killed four hours earlier at a U.S. Department of Agriculture slaughterhouse; their brains completely removed from the skulls.
BrainEx pumped an experiment solution into the brain that essentially mimic blood flow. It brought oxygen and nutrients to the tissues, giving brain cells the resources to begin many normal functions. The cells began consuming and metabolizing sugars. The brains' immune systems kicked in. Neuron samples could carry an electrical signal. Some brain cells even responded to drugs.
The researchers have managed to keep some brains alive for up to 36 hours, and currently do not know if BrainEx can have sustained the brains longer. "It is conceivable we are just preventing the inevitable, and the brain won't be able to recover," said Nenad Sestan, Yale neuroscientist and the lead researcher.
As a control, other brains received either a fake solution or no solution at all. None revived brain activity and deteriorated as normal.
The researchers hope the technology can enhance our ability to study the brain and its cellular functions. One of the main avenues of such studies would be brain disorders and diseases. This could point the way to developing new of treatments for the likes of brain injuries, Alzheimer's, Huntington's, and neurodegenerative conditions.
"This is an extraordinary and very promising breakthrough for neuroscience. It immediately offers a much better model for studying the human brain, which is extraordinarily important, given the vast amount of human suffering from diseases of the mind [and] brain," Nita Farahany, the bioethicists at the Duke University School of Law who wrote the study's commentary, told National Geographic.
An ethical gray matter
Before anyone gets an Island of Dr. Moreau vibe, it's worth noting that the brains did not approach neural activity anywhere near consciousness.
The BrainEx solution contained chemicals that prevented neurons from firing. To be extra cautious, the researchers also monitored the brains for any such activity and were prepared to administer an anesthetic should they have seen signs of consciousness.
Even so, the research signals a massive debate to come regarding medical ethics and our definition of death.
Most countries define death, clinically speaking, as the irreversible loss of brain or circulatory function. This definition was already at odds with some folk- and value-centric understandings, but where do we go if it becomes possible to reverse clinical death with artificial perfusion?
"This is wild," Jonathan Moreno, a bioethicist at the University of Pennsylvania, told the New York Times. "If ever there was an issue that merited big public deliberation on the ethics of science and medicine, this is one."
One possible consequence involves organ donations. Some European countries require emergency responders to use a process that preserves organs when they cannot resuscitate a person. They continue to pump blood throughout the body, but use a "thoracic aortic occlusion balloon" to prevent that blood from reaching the brain.
The system is already controversial because it raises concerns about what caused the patient's death. But what happens when brain death becomes readily reversible? Stuart Younger, a bioethicist at Case Western Reserve University, told Nature that if BrainEx were to become widely available, it could shrink the pool of eligible donors.
"There's a potential conflict here between the interests of potential donors — who might not even be donors — and people who are waiting for organs," he said.
It will be a while before such experiments go anywhere near human subjects. A more immediate ethical question relates to how such experiments harm animal subjects.
Ethical review boards evaluate research protocols and can reject any that causes undue pain, suffering, or distress. Since dead animals feel no pain, suffer no trauma, they are typically approved as subjects. But how do such boards make a judgement regarding the suffering of a "cellularly active" brain? The distress of a partially alive brain?
The dilemma is unprecedented.
Setting new boundaries
Another science fiction story that comes to mind when discussing this story is, of course, Frankenstein. As Farahany told National Geographic: "It is definitely has [sic] a good science-fiction element to it, and it is restoring cellular function where we previously thought impossible. But to have Frankenstein, you need some degree of consciousness, some 'there' there. [The researchers] did not recover any form of consciousness in this study, and it is still unclear if we ever could. But we are one step closer to that possibility."
She's right. The researchers undertook their research for the betterment of humanity, and we may one day reap some unimaginable medical benefits from it. The ethical questions, however, remain as unsettling as the stories they remind us of.
Many governments do not report, or misreport, the numbers of refugees who enter their country.
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