The Rise of Democratic Capitalism
Capitalism sometimes gets a pretty bad rap in some circles. The rich-poor gap is widening. The 1% is getting richer. Developing countries’ natural resources are exploited on a regular basis. Etc. Etc.
But what’s often forgotten is that it’s also provided us with the majority of the advances that human-kind has seen over the centuries, and has increased the quality of life for everyone on earth tremendously. Average income per capita, globally, has increased 1,000 percent since 1800, and has increased 1,600 percent in developed countries. And, adjusting for affordability and quality improvements, the standard of living of ordinary Americans has increased 10,000 percent since 1800. (1)
It’s between those two diametrically opposed views of the free-market where we stand today. A system that has increased quality of life, yet is deemed to be wildly ‘unfair’ to certain groups of people on earth. Which begs the question:
How do we adjust our capitalist system so that it continues to increase the quality of life for human-kind, yet also produces a more equitable outcome?
My hypothesis is that the further development of democratic capitalism is the answer. And the great news is that the foundation for it is already built.
A harbinger of this development is that the entire concept of a person who simply consumes — who absorbs or devours something while providing zero value in return, except for a small sum of money perhaps — is becoming a thing of the past.
The interactions between consumers and brands has evolved. Individuals are now part-owners of the “brand” itself. This evolution of commerce is fairly obvious and has already been the subject of much more in-depth analyses by other people. The gist of it however is that the average ‘consumer’ is able to affect hundreds of peoples’ opinions in regards to brand X. They are able to help or hurt the company, sometimes in disproportionate ways depending on their status within a given social circle or professional network. Therefore they have a hand in setting the value of a given brand.
But it can, and likely will go even further than simply a ‘part owner of the brand.’ Seen below is a vastly over-simplified diagram of the evolution of private-sector communications strategies over time, and an introduction of what I call the “Co-sumer.”
The first is the oldest form of communications — showing how firms traditionally would simply blast people with messaging and hope some of it sunk in.
The second stage consists of being slightly more nuanced — including better targeting, day-parts, analytics, and other technologies and techniques which drove better results for clients.
Third on the diagram you can see the current state of communications. There exists some overlap with consumers, some co-creation of the brand, and an ongoing conversation (primarily on social channels) of what value the firm provides.
While finally, in the fourth and final stage, we a company’s interaction with the world ceases to be an interaction between two separate entities and is instead a co-creation. In this stage, Company X will be developed in part by the decision-makers within the company itself, and in part by the co-sumers who are talking about, collaborating with, working for, and purchasing products/services from, Company X. In this scenario, when a company is built in the future, there may be thousands of complete strangers who also help build it, shape the brand, create the value proposition, develop the product, staff the operations, and otherwise mold it into its final form.
What I’m suggesting is that the idea of consumers owning the brand of a company is only the tip of the iceberg. Among select companies, the consumers may also be an employee, contractor, partner, or otherwise be engaged with the company in a more involved manner (e.g. Uber who has anywhere from 500k to 1.5M drivers worldwide who each have influence over the brand and operations of the core technology company).
What is happening, little by little, is the rise of democratic capitalism, and along with it, the birth and proliferation of the Co-sumer.
The concept of co-sumerism began simply enough with the co-ownership of brands. This was a result of the obvious: social media, ubiquity of mobile phones, the internet in general, etc.
Then co-sumerism moved logically to the workforce with the increasing ability of technology to help manage hundreds or thousands of freelancers/contractors. Here you have the examples of Handy, Postmates, ODesk/Upwork, e-lance, Amazon’s Mechanical Turk, Instacart, virtual assistants, and a million other examples of platforms and business models that use a distributed workforce.
Finally, we are now living in a time when even small companies, from startups to sole proprietorships, can be co-owned by numerous stakeholders, with the advent of crowd-sourcing equity investments, and of course, enterprises established with a Kickstarter-like beginning. This is mostly the result of a change in regulations in recent years, instead of advancements in technology, though the shift in modern society’s collective mindset — required to make those changes in regulations — is an equally important investment in a more democratic private-sector.
And now is where it gets interesting. Because this trend is continuing to march down the paths of open architecture, increased transparency, and the distribution of core business operations to a broader audience. The private sector firms, even global powerhouses, who don’t participate in this conversation will eventually be left out in the cold. Co-sumers will increasingly prefer companies that treat them as an equal partner and not as as an unintelligent consumer who can be tricked by cheap advertising, swindled out of their money, and left with a low-quality product or service. The days of getting ripped off by businesses are over.
So what does this mean for the future?
In short, all other areas of a company will slowly be swallowed up by a more democratic process as well.
The regulation of companies will eventually become entirely transparent. Instead of industry veterans moving into high-paid government positions to regulate the industry they just parted with, it will be a transparently managed process that is viewed in real-time on the web, and voted on by individuals who will be affected by the industry/company in question.
Environmental impact can be more accurately accounted for when experts are able to access all of the relevant data needed to model the potential outcomes of a project, and financial resources will only be invested in projects that meet the standards of the community overseeing the project. Ideally, that community would consist of the individuals whose lives would be affected by the project in question.
Major infrastructure and financial investments will, again, be decided upon by communities who are impacted by those investments, not just a few shareholders aiming for maximum profit.
Customer service will be handled by past customers who know the issue and who have been through something similar (this already happens to some degree within online forums).
What this means is that the walls between private industry and the open, public, democratic world are slowly crumbling. The reason companies like Airbnb and Uber are so successful is somewhat about economics, to be sure. They took underutilized assets and put them to work for the benefit of society. But I believe their success is also about the release of a latent societal desire to take back control of an aspect of the world that has long been in the hands the controlling minority. Where you could stay on vacation was previously limited to the options provided by hoteliers and major corporations like Sheraton. And would you believe it? Not everyone wanted to stay in a beige box with terrible art and a funky yet sterilized smell.
Instead, we want unique experiences and Airbnb tapped into that. And there’s more to come, as described above and in so many things I’m not touching on here.
Before the industrial revolution people worked directly with other people to arrange a place to stay, or for a ride to the neighboring town, much in the same manner to which we are finally returning. Yes, corporations and the shift to a more “centralized world” (such as placing all shopping in one area, all homes in another, a centralized power plant outside of town, centralized waste management, etc.) provided a number of massive benefits. But we’ve learned how to move beyond that. It’s a combination of new technology and ingenuity that has enabled us to in a way to move forward, but seen in another light, it has simply allowed us to return to a more simple world where individuals are able to connect with another person and find a way to make both of their lives better through a small exchange of value.
It’s this return to an economy that operates at the level of people. A more human sized economy, digestible through new technologies, that will allow us to move capitalism forward in the most beneficial way. And it’s the reason we need to keep biting off pieces of the larger corporate economy and democratizing it, in essence, ensuring that the value that is created by all of us is not funneled up and stored away in the coffers of the oligarchs.
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References:
(1) Conscious Capitalism by John Mackey and Raj Sisodia, page 12–13, Data from Angus Maddison “Statistics on World Population, GDP, and Per Capita GDP, 1–2008 AD”
