Feudalism And The “Algorithmic Economy”
Posted by Tyler Durden on April 25, 2017 11:40 pm
Tags: Access economy, Business models, Car sharing, Computer technology, congress, DVR technology, Economy, Google, House of Representatives, how much effect technology, Information Technology, ISP, Labor, Location-based software, Lyft, New York Times, None, remote locations using software technology, Senate, Sharing economy, smartphone, smartphones, Social networks, Strategic management, Transport, Transportation network companies, Uber
Categories: Access economy Business models Car sharing Computer technology Congress DVR technology Economy Google House of Representatives how much effect technology Information Technology ISP Labor Location-based software Lyft New York Times None remote locations using software technology Senate Sharing economy smartphone smartphones Social networks Strategic management Transport Transportation network companies Uber
For the sake of this essay, feudal economic models imply the idea that a very tiny segment of the society is fantastically rich while the bulk of society works hard, has few choices about the work they do, and tend to be poorly compensated for their efforts.
feu·dal·ism: noun, historical
the dominant social system in medieval Europe, in which the nobility held lands from the Crown in exchange for military service, and vassals were in turn tenants of the nobles, while the peasants (villeins or serfs) were obliged to live on their lord’s land and give him homage, labor, and a share of the produce, notionally in exchange for military protection.
Welcome to the Algorithmic Economy, a future which uses machines to determine how effective you can be and how little they can pay you in the process.
There are no unions in this economy. There are no bosses to complain to. There are no people you can ask for redress. Because in this economy, the people doing the labor are considered the least important part of the machine and it’s best if they never communicate with someone living if it can be helped.
This is just like something out of a dark and dystopian science fiction novel, except its likely happening to you, right now. If it isn’t, unless you are very fortunate, it will be, soon. I write about the near-future in my speculative fiction. Often these are my most unpopular stories because they paint technology in a less-than-ideal light.
In a world in desperate need of positive imagery, a number of famed science fiction writers such as David Brin are recommending writers look at creating more beneficial, beneficent and Utopia-oriented stories, where people see the future as something to look forward to rather than promoting the more popular (and definitely easier to write) dystopias.
I have heard David Brin and know this work does need to be done, but having the extensive background in computer technology that I do, I still feel compelled to point out just how powerful and how much effect technology can have on our society now and in the near-future.
In “Dark Harvest” I point out the future of human trafficking improving its capacity to provide “slaves to order” using social media habits to gather intelligence on users making it possible to predict their behaviors and habits. Such technologies which I see being furthered by companies like Facebook, Instagram, and now Match.com are making it even easier to find, isolate and extract people from their lives without warning and without recourse.
In “We Now Return You to Our Scheduled Advertising” I posit a world overrun by “push” information technology being used to ensure advertising cannot be stopped from being heard by potential customers.
In our current world, television advertising is diminishing due to the power of DVR technology. As a result, smartphones (because they are harder to secure) are becoming a means of forcing users to endure advertising they don’t want in order to get content.
Companies are also learning how to hack your smartphone to send you content you did not ask for, by forcing your browsers to accept cookies, they can target you with specific advertising based on your search requests. Stores can, with the right software installed, direct information to your phone in order to influence your shopping decisions.
How long before such technology becomes part of the shopping experience you cannot opt out of? Recently it became possible to push an ad to speakers at remote locations using software technology. While it was immediately repudiated, it did not stop someone from discovering it could be done.
With recent laws being created, it will be possible to extract your data from an ISP and create profiles allowing advertisers to send information directly to you, no matter where you are.
THIS WEEK, THE House of Representatives followed the Senate in voting for a resolution that throws out Obama-era regulations that would have banned your internet service provider from selling your web browsing history to advertisers. What possible reason could Congress have for repealing such a consumer-friendly policy? The refrain on the House floor yesterday was “consistency.”
“What America needs is one standard across the internet ecosystem,” said representative Greg Walden (R-OR). If services like Google and Facebook can turn data into profit, the logic goes why can’t the cable companies?
But the House’s resolution doesn’t actually apply a single, consistent standard to the internet. It maintains the broken status quo, one in which internet service providers aren’t actually at a disadvantage to websites and apps. If anything, they’re held to a lower standard. (Wired.com)
I have also written about the nature of technology in a non-fiction format discussing the future of employment, opportunities for work and the eventual need for some kind of subsidy to offset the lack of employment opportunities in the future in an essay called: “Humans Need Not Apply.”
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In this essay, I posit something I call the “Algorithmic Economy” though it is often called the “Sharing Economy” or the “On-Demand Economy” by economists and other writers on this subject.
I prefer the “Algorithmic Economy” because it speaks to the creeping effects on decisions being made by companies and organizations, which not only include automation used in factories, but the development of apps and programs which use algorithms to direct, control and manage Human behavior.
As programmers using design-thinking engage computers to map, monitor and control Human endeavors, it is becoming more prevalent that computers are effectively in charge of Human behaviors utilizing a number of algorithms (programmed behaviors and decisions made by programmers to elicit a desired response from Humans or there programs) to enrich corporations using such technology such as Lyft, Uber, TaskRabbit and many other such “on-demand” driven businesses.
The continued existence and economic support of such companies has created companies whose values seem far greater than the benefits such corporations provide to their workers. The company is perceived to have a fantastic value which benefits investors, disrupts previous businesses or services, often unfavorably, and enriches only those at the very top of the workforce in those companies, usually executives and senior developers.
At Uber, for example, depending on the city, drivers who are, in essence the bulk of the workforce for the company can make as little as $9-$11 an hour as their only compensation for working with the company. While they are promised upwards of $30 per hour in advertising, such rates vary widely depending on the number of drivers, the time of day, the density of calls and the optimization of algorithms designed to reduce wait time for customers and to provide customers with reductions in costs per mile.
None of these reductions, however improve the amount of money made by drivers and passengers weren’t until recently even able to use the Uber app to leave tips for employees through the service because Uber decided they paid well enough that tipping wasn’t a requirement.
In fact, one of Uber’s more successful passenger programs, Uber-Pool, reduces the earning capacity of drivers by at least one third since, it cuts the cost of long trips to a third of their value under the expectation the driver will be able to make up those costs by moving multiple passengers, simultaneously.
A driver is expected to upon receipt of an Uber-Pool passenger expect at any time, their trip may be interrupted by a call to another passenger. They are expected to navigate to this new location, find the next passenger, assure the current passenger of no serious delay and get back on the road depositing the two (or three) of them in order to nearby destinations.
Unfortunately, this multi-passenger event rarely happens, in essence, reducing the cost of long trips to one third of their value since pooling occurs far less often than Uber is willing to admit. A $20 trip becomes a $7 trip of which become $5.25 after Uber gets its cut.
Adding insult to injury, Uber does not treat its drivers as employees, thus they are not compensated for the use of their vehicles, their repairs, wear and tear, their gasoline, their healthcare, or any other such requirements of normal companies for their employees.
Instead, the drivers must bear the entirety of the expense of their “economic opportunity” while turning over one-quarter of what they earn in every transaction.
If Uber were honest, they would reveal to most drivers, that under the majority of circumstances, drivers lose more money than they earn (due to the costs of incurred during their driving and vehicle operation), depending on how the algorithms are structured where someone is working. I suspect more than Uber is at fault here. I would suspect the entire workforce development of the future is heading toward this path.
More workers are doing part-time work, on-call work, unscheduled work, without significant healthcare, sick leave, or vacation pay than ever before. Corporations have grown to the point they are unable to cut any more costs during their operations and continue to pay out to investors and executives their incredible levels of profitability without cutting corners on the only remaining element of running a business: their workforce.
Rather than restructuring pay or expectations for investors, these business engines will continue to impoverish their workers, using gamification to extend their hours, while reducing their pay and opportunities for healthy lifestyles.
The New York Times reports:
The secretive ride-hailing giant Uber rarely discusses internal matters in public. But in March, facing crises on multiple fronts, top officials convened a call for reporters to insist that Uber was changing its culture and would no longer tolerate “brilliant jerks.”
Notably, the company also announced that it would fix its troubled relationship with drivers, who have complained for years about falling pay and arbitrary treatment.
“We’ve underinvested in the driver experience,” a senior official said. “We are now re-examining everything we do in order to rebuild that love.”
And yet even as Uber talks up its determination to treat drivers more humanely, it is engaged in an extraordinary behind-the-scenes experiment in behavioral science to manipulate them in the service of its corporate growth?—?an effort whose dimensions became evident in interviews with several dozen current and former Uber officials, drivers and social scientists, as well as a review of behavioral research.
Uber’s innovations reflect the changing ways companies are managing workers amid the rise of the freelance-based “gig economy.” Its drivers are officially independent business owners rather than traditional employees with set schedules. This allows Uber to minimize labor costs, but means it cannot compel drivers to show up at a specific place and time. And this lack of control can wreak havoc on a service whose goal is to seamlessly transport passengers whenever and wherever they want.
The Algorithmic Economy isn’t only going to stay in disruptive companies like the On-Demand workforce, it will make its way into other workforces, slowly, insidiously removing time, opportunities for growth, limiting costs by reducing perks except for the elite, in order to create the second age of feudal endeavor.
Their goal is to create a workforce bound by their economic debt to the system, forced to take whatever work they can find, while being paid as little for that work as possible, understanding ultimately, the creation of an indentured workforce is not only the result but an expected one, keeping society enfeebled and unable to create opportunities for further development.
Since all new creativity is held hostage in the hands of insensitive investors who promote the development of White business leaders to the exclusion of any other forms of creativity. Seventy five percent of all investment dollars are placed into the hands of White men. In the tech industry, most companies are run by, lead by, and pay the bulk of their company’s value to White men, the primary beneficiaries of such investment effort.
The Algorithmic Economy resembles feudalism complete with peasants who lack choices, and lords who decide who can become a lord, who remains a peasant, and defining the value of a peasant’s worth based on what the lord is willing to pay the peasant.
Like the feudal lords of old, neo-feudalism says they are willing to pay indebted students, just enough to not have any opportunity next year, either.
The older workers who might have known their worth will have to find a way to live off the land, creating their own slower growing opportunities because no one is funding anything which offers an opportunity for people to experience economic parity or the ability to own an operation which treats them humanely, pays them fairly, and doesn’t believe exploitation is an effective work and pay structure.
For most older workers, their opportunities lie with older exploitive corporations such as Walmart, known for its low pay and older workforce, or at the hands of the aforementioned Uber, who has, at least in the Bay Area, has a much older, and more minority workforce.
The driver diversity makeup is distinct from the much Whiter corporate office workers who draw the lion’s share of the money from the Algorithmic Economy they have helped to create and surely recognize how their algorithm exploits their workers.
If Uber’s programmers are smart enough to recognize how those numbers and gamification ensure their own prosperity, they are also aware that drivers earn less, stay with the company for less time and will eventually leave the company once they understand how they are being exploited.
Can such companies change their behaviors? It is unlikely given the expectations of double digit growth by investors and the stock market. Thus we can assume, such companies will continue to make money for the elite members of society while being a drain on every other aspect of our social fabric undermining individual wealth and earnings, employment opportunities, home ownership, and community development.
People without money can’t improve themselves or their communities. People who exploit those people don’t help with those communities either, creating a vacuum effect, taking money from communities without ever returning an equal or greater amount of money to those areas, ensuring the slow and inexorable decline of society over time.
Do a bit of research on the subject of the On-Demand economy. While prognostications promote the idea it is good for investors, almost no mention of the people doing the work and their eventual fates are ever mentioned. There is an amazing collection of essays on the On-Demand economy which point out the future of this industry and what it means to the modern workforce.
There will be arguments on both sides of the fence, pro and con, but my entreaty to you is simple: Read about it. Learn about it. Pay attention to the disruptive force it is having on your society because while you may believe it doesn’t affect you, you’re wrong.
Don’t take my word for it. Watch it and see for yourself. It is happening before you eyes. Don’t blink.
The workforce of the future will be smaller than you think.