Digital Distributism
Part III: How to get from digital industrialism to digital distributism

By Douglas Rushkoff. Published in Medium on 18 August 2022

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In the 1990s, with the advent of digital technology, many of us believed the monopoly industrial system would finally be supplanted. Just as we could compute at home and make our own media, many of us believed we would be empowered to create our own value, or even our own money. The network was to decentralize everything, erode central authority, and make monopoly control of human value exchange impossible.

But really what happened was that we doubled down on industrialism. Instead of getting a highly distributed digital economy characterized by renewed localism or a hands-on ethos, we got what I have been calling “digital industrialism.”

In essence, we went ‘meta’ on the industrial economy. We moved from the linear growth required of industrial stocks, to the exponential growth expected of derivatives and meta-derivatives. Rather than being a merchant or retail monopoly, you become a platform monopoly like Amazon or Uber.

The same anything digital, under digital industrialism, everything becomes represented by a symbol. Just as a song, in a digital landscape, becomes an mp3, everything in a digital economy must be rendered as a quantized symbol. That’s what allows for the exponentialism accelerating formerly linear markets.

Land became territory, territory became property, property became mortgages, mortgages became mortgage derivatives, mortgage derivatives became mortgage derivative futures, which in turn became credit default swaps. None of this exponential layering would have been possible without digital representation.

Likewise, a company becomes stock, and stock becomes derivatives — all because traders in a digital environment want to compress time and achieve impossible exponential gains. They don’t want to wait three months to see the gain; they want the gain now. And so on. And because these derivatives and derivatives of derivatives are so much more leveraged, they are capable of providing much greater returns. The derivatives market is bigger than the stock market, which is already bigger than the real market. By 2013 the New York Stock Exchange was actually purchased by its derivatives exchange. We ended up in a situation where the NYSE, which was already an abstraction of the marketplace, was consumed by its own abstraction.

As McLuhan would put it, the prior dominant medium becomes the content of the new medium. Theater became the content of television, and television became the content of the net. In successive abstractions, the prior level of financialization gets financialized by the next one.

Digital entrepreneurs and investors are still using the same playbook they got from their industrial forebears — only one level abstracted from before. So the British East India Company may have inspired Walmart to colonize new regions, undercut local employers, and then underpay workers once it became the monopoly employer. Just as the East India Company sought statutes from the Crown, Walmart lobbied for legal advantages from government.

Uber and Amazon still lobby government but achieve their monopoly power less through law than through code. The drive to extract value and deplete the marketplace is the same. But the digital company is itself the medium through which the program is enacted. The fringe benefit, if you can call it that, of bankrupting communities and the planet is that this creates new markets for repair. Environmental remediation and cancer treatments necessitated by bad corporate citizenship still increase the GDP, which is the object of the underlying operating system.

The irony here is that the entrepreneurs and investors now “disrupting” marketplaces through digital industrialism have no concept of the operating system beneath their platforms. They understand MacOS and Windows, html and even Web3, but they behave as if they are completely unaware of the economic operating system on which their companies are running. The young entrepreneur is excited to disrupt the book, hotel, or taxi industry, but as soon as they have their idea, they go running to the most traditional players for capital. They reify the financial monopolies of Morgan Stanley and JP Morgan, turning their companies into mere shells for the exponential growth of capital. This is where Adam Neumann could be considered the most honest of the tech entrepreneurs, in that at least he played the oddly reversed game of capital and business completely openly. The company was the excuse for more capital.

The bigger, or at least more distributed problem with digital industrialism is that it bankrupts the landscapes in which it operates. Industrial corporatism was always more extractive than generative. But under digital conditions, these companies become capable of taking all the value from a marketplace, depleting it past functionality. Grubhub and Seamless established such powerful food delivery monopolies at such extreme margins that many restaurants could no longer stay in business. This is bad for long-term business goals, but fine for digital companies whose very purpose is short-term growth and a spectacular unicorn exit. Platform monopolies are just chartered monopolies with more absolute control, and less human awareness of and concern for the effects.

The alternative, which may only be possible now that we understand the historical narrative through this lens, would be to use digital technology to pivot the other way. Instead of doubling down on industrialism, we leverage the hands-on, participatory, and decentralized bias of digital technology to retrieve the qualities of the medieval marketplace that we left behind. I’m not suggesting we go back to the Middle Ages, but we restore the peer-to-peer elements of that economy that were vanquished by central currency and chartered monopolies.

I’m calling it digital distributism, and I mean it as a way of updating the concepts of distributism and subsidiarity that Henry Belloc and G.K. Chesterton adapted from the encyclicals of Pope Leo XIII and Pope Pius XI calling for a Christian democratic social market economy. The pope argued that both socialism and capitalism were equally flawed, and suggested instead that we strive for cooperatives, member-owned organizations, guilds, and the commons. It’s not surprising that the Popes would favor the economic state of Europe prior to the protestant reformation and closing of the Church commons. This was the Age of Cathedrals, after all, where localities were so wealthy they invested in sites for future pilgrims.

But the philosophies of distributism and subsidiarity also came from Catholic social teaching, which was dedicated to eliminating poverty and performing social justice. Distributism is, quite simply where the worker owns the means of production. The worker owns his or her tools or a collection of workers own shares in the factory, right. Instead of distributing the spoils of capitalism after the fact (as through socialism), the workers already own the means of production and profit each according to their contribution and need.

The second main tenet of distributism, “subsidiarity,” calls for no business to grow larger than it needs to in order to serve its function. No growth for growth’s sake. Subsidiarity is directly opposed to the bias of interest-bearing central currency, which requires businesses to grow — if only to pay back interest to the bankers.

So let’s say Joe’s pizza is really serving its town well and making a sustainable profit. Joe makes great pizzas, and trains apprentices to work with him. If the next town over wants a pizzeria, Joe does not expand to serve that community as well. Instead, he brings on an apprentice from that town, teaches her how to make pizza, and then she opens a pizza shop in their own town. Maybe she pays Joe with the labor of her apprenticeship, but her restaurant is her own.

Joe actually benefits from there being another pizzeria in the next town. If he runs out of cheese one day, he can call his former student and ask for some of her supply until the next delivery comes. A network of goodwill benefits all the players better than the sort of extractive race to the bottom of competition.

These smaller, worker-owned businesses are the sorts envisioned in anarcho-syndicalism — a network of coops or kibbutzes that reclaim the local, face-to-face interaction of merchants. Such appropriately scaled cottage industries relocalize and rehumanize the workplace. You stand next to your fellow worker-owners, creating value and governing the company while also getting the benefits of participation in the larger network of cooperatives — such as in the famous Mondrian Cooperatives example. Cooperatives cooperate.

Unlike industrialism or digital industrialism, which seeks to turn all humans into billionaires or gig workers, enterprises under digital distributism operate on more than one scale at the same time. On the chart above, we move from exponential growth now to a more sustainable prosperity of the sort described by Kate Raworth in Doughnut Economics. We go from a platform monopoly to a platform cooperative. And while the blockchain is still suffering from the speculative ethos of digital industrialism, it could still allow for an alternative to central currency through its potential to authenticate and record transactions. Consciously programmed blockchains could promote the circulation of money in a peer-to-peer economy rather than the extraction of value by a new class of bankers.

Investing shifts back to crowdfunding, and marketing returns to verifiable product attributes: what does the product do, how are its resources procured, under what labor conditions is it made, and what happens to it when it is disposed?

Finally, digitally distributed enterprises are liberated to eschew the false goal of scale and instead pursue more prosperous bounded strategies.