Tag: formal economy

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Jaron Lanier and The Disappearance of the Middle Class

// Posted by on 03/23/2014 (11:56 PM)

Timberg’s article “Jaron Lanier: The Internet destroyed the middle class,” includes a very interesting interview between Timberg and Lanier about his book, “Who Owns the Future?”, and the… Read more


Timberg’s article “Jaron Lanier: The Internet destroyed the middle class,” includes a very interesting interview between Timberg and Lanier about his book, “Who Owns the Future?”, and the problems that arise when the concentration of wealth and power is in the hands of very few people.

One of Web 2.0 intellectual Jaron Lanier’s main arguments in his book, “Who Owns the Future?”, is that “free” information on the Internet is leading to the disappearance of the middle class. Lanier criticizes big Web entities, such as Facebook and Google, and their business model. One of the examples he gives in the interview is that Kodak (now bankrupt) employed more than 140,000 people, while Instagram employs 13. Where did all those jobs disappear? This concentration of wealth leads to an intense concentration of formal benefits.

Many of his arguments are also highlighted on The Colbert Report, where Lanier suggested the concentration of wealth is “unhealthy,” because “real wealth” is dependent on everyone else’s wealth– a community of wealth. If there is a concentration of wealth, then that is not real wealth, it is “fake, brittle, phony, it falls apart.” Open economy is a new development, and it is not sustainable.

Lanier argues that we have talked ourselves into a weird double-economy—if material things are what’s being distributed, then we believe in material markets, but if it is information, creativity, the work of comedians and journalists etc., we think it should be shared and open. But, there is danger in that, as this shift from a formal economy to an informal economy puts all the information and workers into one area, so regular people are not getting credited for their information and value their work provides. In the formal economy, people who make contributions to the system receive formal benefits such as salary and pensions. Therefore, Lanier’s proposed solution is that those people involved in the informal economy facilitated by the Internet be “rewarded in micropayments when their data enriches a digital network.” An example Lanier continues to highlight is the issue of online translators. The algorithms that make up the online translators take away people’s jobs, as these corporations “mine” peoples’ skills without crediting them.

Lanier does not completely discredit the development of the informal economy. He believes that there is beauty in the trust that these systems work on, but in a world that is still in most ways a formal economy, one cannot rely on informal benefits, such as cultural capital, to pay for rent or raise kids, etc., “it is not biologically real.”

In Lanier’s view, the benefits of reinstating the middle class distribution of wealth and power are huge—“democracy is destabilized if there isn’t a broad distribution of wealth.” This idea of democracy and the Internet is one we have been grappling with throughout the whole course, and is one that continues to be questioned as we explore further.

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