The new digital economy

Bec Allen
Bec Allen
Apr 7 · 9 min read

The changing relationship between business, the state, and consumers in the digital age.

Photo by Joshua Sortino on Unsplash

Human advances in technology and the desire for global connectivity birthed the Internet and its complex and decentralised backbone of platforms, data packets and infrastructure. The exponential growth of our online and increasingly mediated world reveals a landscape where vast numbers of the global population use the Internet as the primary medium to socialise, politicise and to conduct business (Freedman, 2016, p. 85). Designed to connect us, the Internet has become a site for technological innovation that can at once benefit consumers and challenge their ethics. The study of the Internet from an economic viewpoint reveals two perspectives. The first is a utopian idea held by many digital enthusiasts. John Perry Barlow’s “Declaration of the Independence of Cyberspace” set a precedent that the Internet would liberate humanity and release it from government and corporate control:

“Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.” (Barlow, 1996)

Barbrook (2005) refers to this utopian perspective as the championing of an ultimate “anarcho-communism” where consumers believe they are liberated from corporate dominance by a new, “hi-tech gift economy” designed to become the “antithesis of the commodity” driven economy (p. 7). The second perspective holds that an Internet utopia was never possible. While the online environment has certainly facilitated innovative relationships between business, the state and consumers, the opposing perspective argues that the digital economy offers the “continuity hypothesis” of a “contemporary society [that] does not differ in any significant way from nineteenth-century capitalism” (Fuchs, 2012, p. 418). This essay will argue that while the digital economy has certainly transformed the relationship between business, the state and consumers it has also strengthened capitalism’s command of our global society. The essay will begin by analysing the nature of the digital economy with a focus on the commoditisation and ideological control over information. It will then move towards discussion around control of the network and the notion of the free economy before offering analysis of the attention economy and the gift economy.

As the world becomes increasingly networked and mediated, the economic interactions between business, the state and consumers continues to show much innovation but at the same time it reveals the social and technological command of capitalism. The Internet has facilitated the rise of new economic tactics and commodities which have disrupted the ways in which consumers interact with businesses and governments. Currently, Web 2.0 technology is inexpensive, widespread and embedded in a wide variety of physical objects (Weber and Bussell, 2004, p. 63), making a consumer’s ability to set up their own business, access products or lobby for political change easier than ever. Bennett (2003) argues that the “multidirectional”, “distributed” and “flexible” nature of Internet communication creates a fertile environment for “leaderless” and inclusive networks” (p. 24). Similarly, Castells (2005) highlights the historic importance of the Internet, with consumers having the ability to communicate without using the institutionalised channels of the past (p. 13). But infused within the digital economy are two opposing perspectives which frequently result in a notable friction; the Internet as a distributed and open mode of communication where everyone has the opportunity to participate, and the Internet as a platform for “netarchical capitalism” where information is centralised and privately owned” (Kostakis and Bauwens as cited in Langley and Leyshon, 2017, p. 15). The Internet of Things (IoT) is a useful illustration of the way the digital economy functions. IoT can be best described as a network of ordinary, physical objects such as wearable technologies, televisions, household appliances and mobile phones, which have the capacity to send and receive data about consumer behaviour. The ‘things’ use computational algorithms to learn about consumer habits which may include location, identity and routine (Tsai, Lai, Chiang and Yang, 2014, p. 78). Howard (2015) refers to the collaborative network of the IoT as “pax technica”; the “political, economic and cultural institutions and networked devices in which government and industry are tightly bound in mutual defense pacts, design collaborations, standards setting, and data mining” (p. xx). Despite the convenience offered by networked objects, and by the Internet more broadly, it is important to consider how the information that is generated from the network is exploited and to question whether the Internet is a tool for capitalism or a tool for the people.

In the digital economy it is information, rather than oil or electricity, that has become the key commodity to be bought, sold and traded (Freedman, 2016, p. 88). As with the IoT, consumers generate volumes of information that are algorithmically mined and analysed when they browse the Internet, engage with social media or even build their own website. “Miners” generate basic data sets about consumers’ “click-stream” behaviour as well as deeper, personal information detailing an individual’s name, income, location, and “other demographic and psychographic elements” (Broder, 2000, p. 57). Although data is an important aspect of improving platform functionality and the overall consumer experience, it is advertisers in particular that benefit from the mining of consumer information in order to serve them advertising. Benady (2016) argues that while enthusiasts champion a democratic and open Internet, consumers should be aware that it is advertising that is generating the growth of the Internet and is the major income stream for most social networks and websites (p. 1). The recent class action case against Facebook and Cambridge Analytica provides further insights into the misuse of consumer information for political outcomes and is a good example as to the ways in which the digital economy has facilitated a new kind of relationship between consumer and the state. A Facebook personality quiz revealed the names, email addresses and political associations of 72 million consumers to Cambridge Analytica who used this data to create political propaganda for the 2016 American presidential elections (Bowcott and Hern, 2018). With phenomena such as these in mind, Castells (2005) warns that the Internet can not signify liberation from the capitalist paradigm when the network is saturated with an “oligopolistic business multimedia system controlling an increasingly inclusive hypertext” (p. 13). Further, it is these controversial aspects of the digital economy that illustrate Fuchs’ concept of the capitalist “continuity hypothesis” discussed earlier and exemplifies his theory of “informational capitalism” where “human cognition, communication and cooperation” are commodified in the online environment (2012, p. 419).

Who gets to decide how we share the information we generate collectively in the digital economy? Neoliberalist principles, according to Mudge (2016) hold that the economic market is “morally superior to politics and hierarchies” (p. 7). Perhaps the “openness” of the Internet has inadvertently given way to a neoliberalist paradigm where economics is determining its form and content. Not all sectors of our society are afforded the education, resources and consultation required to participate in the digital economy and to determine how information is shared. Christen (2012) highlights that the Internet is both an ideological and technical framework which, for many, can be considered “just another colonial mash-up” (p. 2879). Christen challenged the “information wants to be free” mantra of the early 1990’s through her work with Warumungu Elders in Tennant Creek in the development of an online dilly bag or a “safe keeping place” to preserve and to protect cultural knowledge and songlines (p. 2883). Christen highlights the widespread debate about keeping information “free” is one that generally emphasises a challenge to neoliberalism and the desire to preserve the “openness” and free flow of information. The debate does not contemplate Indigenous perspectives on the of knowledge-keeping, circulation and cultural protocols which may restrict information being shared with certain members of the local and broader communities (p. 2881). The network represents both an innovative disruption to capitalism and an extension of its mechanisms of control. Much like information flow via legacy media forms, power now rests in the hands of those who have the ability to program and control the communication networks (Castells in Ampuja, 2014, p. 454) and this is impacting upon our understanding of ‘free’.

The notion of ‘free’ in the digital economy can imply the freedom to share information or a commodity that is free of charge. Kelly (1997) argues that while the industrial economy derives value from the scarcity of its resources such as diamonds, oil or gold the digital economy derives value from the plentitude of information. In this free economy, Lessig (2006) highlights that technology is becoming cheaper and more capable which brings the “marginal cost of technology in the units that we consume close to zero” but also warns that although the commodity is free, there is usually someone making money from it. Google may provide most of its products for ‘free’ but according to Hulsey and Reeves (2014), they are the world’s most ambitious collector of consumer data. Hulsey and Reeves highlight that Google’s free geo-location game, “Ingress” uses surveillance technology to track consumer movement, redirecting them through “targeted commercial and non-commercial spaces” (p. 390) and presenting them with targeted ads at strategic locations during their game-play (p. 392). In addition to applications being ‘free’ in the digital economy, so too is code. The Free/Open Source software (F/OSS) movement advocates for the free use, modification or distribution of source code (Rossi, 2004, p. 4). In the interests of keeping information free and open, it can be argued that the F/OSS movement attempts to challenge capitalistic notions of placing proprietary restrictions on intellectual property. However, Lessig (2006) emphasises the complexity of this movement in the context of a digital economy where the idea of code being free is not as simple as one would assume. Free code can be considered both “free as in beer” and “free as in speech”. The “free as in beer” analogy implies that code is provided to the consumer at no cost, although the consumer cannot modify or redistribute the code. “Free as in speech” suggests that the code may be remixed and distributed at will. Although the F/OSS movement champions the free and open development and sharing of code, it is clear that capitalist principles have permeated the movement’s intentions. Despite this complexity, vast amounts of consumers continue to contribute their free time to perfecting software programs and generating big data that major corporate players such as Google are turning in to profit.

That capitalist entities generate significant financial profits from the free labour of consumers is no secret. But what motivates consumers to hand over their privacy and free labour in this digital ‘gift’ economy so enthusiastically? Goldhaber (1997) argues that attention, in addition to information, is a prominent commodity of the digital economy. He contends that humans intrinsically seek attention as a survival mechanism which may explain the exponential upsurge in the use of social media (p. 9). Crogan and Kingsley (2012) theorise the attention economy as an incarnation of the information economy (p.3) whereby the “media ecosystem delivers attention to advertisers and therefore to consumption (p. 13). Extensive studies of human online attention patterns use data sets collected from sophisticated eye-tracking technology and artificial intelligence to measure visual appeal, audio and text (Castell and Jenson in Guo, 2016, p. 409). The concept of a ‘gift’ economy illustrates a further motivation for the impetus behind consumers contributing online for free. Veale (2005) points out that consumers continue to “champion gift economy principles” due to the immaterial benefits they receive such as reputation, notoriety and pride (p.1).

The Internet and its digital economy represents mediated landscape that is not dissimilar to the capitalist, and indeed the neoliberalist paradigms of the physical world. As increasing numbers of consumers access the network to socialise, politicise and engage in the economy, existing relationships between business, the state and consumers are challenged. While the utopian perspective of the digital economy holds that we are now liberated from corporate dominance it is also clear that this perspective is countered by the big players such as Google and Facebook who continue to profit from and to commoditise on our free and gifted labour. That we continue to give our attention willingly and often knowingly to an economy that encourages our participation through the promises of reputation and pride is of concern.

References available on request

Curious

Being curious is about exploring perspective. Through the lenses of technology, media and culture we are ‘trained’ to perceive our world in a predetermined way. These musings are about my admiration and distrust of these three entities.

Bec Allen

Written by

Bec Allen

Bec is an Arts Worker and Media Educator who works with young people in the remote Western Australia https://www.curiouswill.net/

Curious

Curious

Being curious is about exploring perspective. Through the lenses of technology, media and culture we are ‘trained’ to perceive our world in a predetermined way. These musings are about my admiration and distrust of these three entities.

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade