 | December 6, 2005 |
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 The paradox of the economy is that we buyers have all the power, but there are so many of us and we are so uncoordinated that it is the sellers who effectively wield power -- they tell us what they have to sell to us, what the limits and restrictions are, and, thanks to oligopolies' ability to fix prices, what we will have to pay for them.
This economy is therefore not really a market economy at all, because of these profound distortions:
- Demand for a product does not ensure that someone will enter the market to supply it -- large suppliers at every level of the economy, from manufacturing to retail, conspire (e.g. by restricting access to shelf space and the media) to ensure that small and new players cannot enter the market unless they are exceptionally clever, patient and wealthy.
- The price for a product is not where the supply and demand curves overlap, but rather the highest price the suppliers, by oligopoly agreement, can extort from buyers.
- The desire of consumers for socially and environmentally responsible products is not accommodated in the market -- because such responsibility has a cost associated with it, suppliers will always seek to use the cheapest materials and the cheapest labour from the most unregulated parts of the world, even if that entails bribing local officials to deregulate or not enforce what regulations exist.
- Suppliers are interested only in maximizing return on investment for their executives and shareholders, not in customer satisfaction or product quality. Suppliers therefore have an interest in (a) supplying a product that will prematurely break or become obsolete, and which has an inadequate warranty, so the customer is forced to buy a new one frequently, (b) suing customers who try to circumvent inflated prices for their products by ingeniously trading or sharing with other customers (essentially trying to reduce price distortions created by suppliers), (c) lobbying governments for absurdly broad intellectual property rights and suing potential competitors to block them from entering their markets and introducing innovation or quality into their products, and (d) lying to their customers in pervasive and hugely-expensive advertising campaigns (the cost of which are passed along to the customers in the inflated price).
The Internet has justifiably terrified suppliers, because it provides a new and powerful avenue for customers to organize and to share information and even products (suppliers want customers to throw out their old products, not sell them used to other customers who would otherwise be forced to buy new ones), and for small entrepreneurial companies to get rid of the large, expensive middlemen that currently stand between them and their customers. Most importantly, the Internet provides a vehicle for customers to disruptively innovate the entire economy the way (as Clay Christensen explains) unusual companies have disruptively innovated markets and displaced incumbent producers.
There are three elements to such a disruption:
- The creation of broad, free 'information markets' that will allow customers to identify and support
- innovative new suppliers and innovative products,
- small niche and local suppliers,
- suppliers with better quality products and services,
- socially and environmentally responsible suppliers, and
- markets for used and free products.
- The creation of millions of small, entrepreneurial, networked natural enterprises that are not beholden to executive and shareholder greed, but which are instead responsible to their collective workers, their customers, and the communities in which they operate.
- The introduction of a Generosity Economy (my preferred name for a Gift Economy), built around people in small, networked intentional communities, working together in their collective interest to
- ensure that all citizens have everything they need for a comfortable subsistence life free of charge,
- enable people with time and personal talents and other gifts to produce things and share them with people who can benefit from them, free of charge, peer-to-peer or through public institutions like libraries, public broadcasters and public research programs, while compensating those who give much more than they receive,
- tax bads (non-renewable resource use, pollution, waste, and hoarding) instead of goods and services, in order to fund (a) above,
- identify and fund projects to deal with urgent non-recurring human needs (like diseases and relief efforts) as they occur,
- address the Tragedy of the Commons, and
- remedy the steady loss of electronic freedom and discouragement of innovation in the face of huge, expensive 'digital rights' campaigns and over-reaching intellectual property law campaigns.
Information markets, natural enterprises and intentional communities. How might we bring these three building blocks about?
Information markets have been around for awhile, and Consumer Reports has been doing good work in this area for decades. But CR cannot afford to give the product of their substantial and expensive research away free. This is a real shame, because it means the poor need to go to the library to learn how to spend their money more effectively. There are some sites like Insider Pages and ePinions that provide customer opinions on some products and services for free, but the content is thin and the quality variable. What we need to do:
- Get Open Source software developers, independent product evaluators, government 'watchdog' agencies, social and environmental rating organizations and other content providers collaborating to develop easy-to-use, well-promoted, secure, reliable one-stop 'information markets' that will allow customers to 'do their homework' before they buy, will allow customers to identify and be canvassed about unmet needs, dissatisfactions and new product ideas that innovators can resolve, and that will support viral marketing to allow innovative new suppliers to crack into markets without needing huge advertising expenditures.
- Develop free, easy-to-use, attractive 'virtual markets' for used and free products.
The main obstacle to developing natural enterprises is education: Few business schools, MBA programs or high school commerce programs currently provide information on how to start up and run your own entrepreneurial business, and those that do are often tainted with outdated (pre-Internet) and discouraging information about what is involved in starting your own business, cluttered with unscalable and often-irrelevant 'management' advice, and replete with myths about entrepreneurship being complicated, grueling, risky, and high-stress. What we need to do:
- Develop new, innovative curricula on new enterprise formation, which include novel ways to find partners and to market, finance, and run your business in an egalitarian, low-stress, enjoyable way that does not compromise principles of social and environmental responsibility or require entrepreneurs to sacrifice family and personal life, leisure time or enterprise control to succeed. These curricula would include substantial courses in business innovation and business research, as well as other critical business skills like critical thinking and collaboration.
- Rather than teaching these new curricula in classrooms, provide the core readings online and free of charge, and have the programs located out at various successful entrepreneurs' business locations in each community where they are offered. The entrepreneurs would voluntarily host the students for one 'class' each, offer a tour of their establishment, and answer students' questions, focused on the 'theme' for that class. Class facilitators would organize the visits, moderate the Q&A, and, with the help of the volunteer entrepreneurs, critique students' business plans for their own proposed enterprises.
- Offer these new curricula starting in high school, and encourage universities to make them mandatory prerequisites for admission and financing organizations and governments to offer financial incentives for students to take them.
- Refuse to tolerate an economic and educational system that fails to equip students to make a meaningful and dignified life for themselves when they leave it. Encourage governments to provide substantial support for new innovative enterprises, by providing such businesses with preference in government contracts, and through grants and short-term loans to them. It would be hard to find an investment with a better ROI than one that gives people self-esteem and self-reliance, makes them independent and encourages a more innovative, responsible and entrepreneurial society.
Community-based councils will be the last piece of the puzzle to fall into place. As long as the majority of people are employed by large organizations that may transfer them often and unpredictably, or require them to work standard, inflexible shifts, most communities will continue to be bedroom communities, where the people have nothing in common except their economic class and proximity to their workplace. True communities need to be self-selected and self-managed intentional communities. What we need to do:
- Teach young people in school about intentional communities, how they are set up and run, and about the value of community. Enable them to visit existing intentional communities.
- Change zoning laws to encourage, rather than discourage, the establishment of intentional communities, where all or most of the property is held in common and where more than half of the land area is protected from development and kept in (or allowed to revert to) its natural state.
- Create Internet-based tools that allow communities to collaborate and share information and resources.
- Allow communities to self-manage, subject to a regular audit by an independent body that ensures they meet certain standards of egalitarianism (no cults), social and environmental responsibility, and quality of life. Certification as a self-managed community would allow you to run your own schools, health facilities and any other local, county and state government functions of your choosing, and to opt out of paying the commensurate taxes to those governments. Such communities could also elect to have their own currency, or a currency shared with other self-managed communities.
This is a bottom-up prescription for change. Over time, more and more of the economy and people's political and social life would revolve around intentional communities, natural enterprises and information markets. The world would become much more local, more egalitarian, more networked and more responsible. Large corporations selling heavily-hyped products trucked halfway around the world to exploit cheap and unregulated material and labour markets would soon find they were irrelevant, unable to compete with products crafted with pride by local entrepreneurs and distributed inexpensively through the Generosity Economy. Although national governments would still be needed as regulators of community welfare and commerce, other levels of government would eventually disappear into irrelevance as well.
It is telling that Christensen's study of disruptive innovation finds that almost all such innovation occurs quietly from below, rather than trying to compete head-on with existing companies' well-established and fiercely defended and promoted products. With information markets, natural enterprises and intentional communities we can quietly disrupt and replace not only the rapacious multi-national corporations and the distorted and dysfunctional economy they thrive in, but the bureaucratic, inept and often corrupt governments that support them. All from below. |
3:26:12 PM  Original Location: http://blogs.salon.com/0002007/2005/12/06.html#a1364 |