Second Life, OpenSim, Web2.0 Point to a Different Future of the Global Economy (update)

From the Department of Wild Hypotheses

(update: providing a concrete example at the end of the text)

Second Life, OpenSim, web2.0, open source stuff are pointing to a possible different future for the global economy. In a very negative sense, this future announces itself through the current financial crisis. In a positive sense, extreme customization, collaboration and more egalitarian organizations make part of a bifurcation of the development of capitalism. However, there is a very considerable danger that the other part of the bifurcation may prevail: a more protectionist, authoritarian version of capitalism.

The basis of my hypothesis is the text The Depression: A Long-Term View from Professor Immanuel Wallerstein.

Professor Wallerstein focuses on long term historical evolutions: Kondratieff cycles that historically were 50-60 years in length, and hegemonic cycles which are much longer.

The hegemonic cycles are a very complex research subject, but let us remind here one of the main conclusions of Professor Wallerstein: the United States achieved full hegemonic dominance in 1945, but now declines as the world gets multi-polar (several other powers claiming their part of the influence and power).

As the Kondratieff cycle is concerned, there is the tendency of profit rates from productive activities to go down. Companies try to counter this moving production from core zones to other parts of the world-system, but eventually start engaging in financial speculation in order to achieve really high returns.

Speculation leads to bubbles and bubbles burst. This is nothing new, and after a recession or even a depression the system picks up again, monopolizing for a while profits from innovation for instance. Now however, structural problems undermine this sequence of events, and lead to a fundamental shift in world history.

More concrete:

(...) over 500 years the three basic costs of capitalist production - personnel, inputs, and taxation - have steadily risen as a percentage of possible sales price, such that today they make it impossible to obtain the large profits from quasi-monopolized production that have always been the basis of significant capital accumulation. It is not because capitalism is failing at what it does best. It is precisely because it has been doing it so well that it has finally undermined the basis of future accumulation.

What happens next? The system, so Wallerstein explains, bifurcates. After a periode of high chaotic turbulence, which can last for 20-50 years, the new system which will emerge will not be the capitalist system we know today:

This will not be a capitalist system but it may be far worse (even more polarizing and hierarchical) or much better (relatively democratic and relatively egalitarian) than such a system. The choice of a new system is the major worldwide political struggle of our times.

This is my fast summary of the Wallerstein text, but please read the text yourself, it really is very interesting even though very controversial. Now, making it maybe even more controversial, I'd like to connect this hypothesis with my take on the bright side of the bifurcation, the "relatively democratic and relatively egalitarian" part.

Could it be that such an outcome is being prepared by this whole constellation of web2.0 (user generated content, spontaneous collaboration etc) and open source movements? Second Life and I guess OpenSim for instance are the shining examples of this movement, where people "master the atoms" of their environment, engaging into very customized production, where people collaborate for profit or for the common good but in a rather egalitarian way, where resources are shared.

Bright young people tend to shy away from the big "classical" companies, because they want to try out their own stuff, collaborate with others on a more equal footing, and make their own decisions. What previously was very difficult for small companies or organizations, such as international outsourcing and collaboration, becomes very easy thanks to the internet, the countless social media applications and the virtual environments.

Structures like the virtual corporation point in this same direction, providing a very flexible framework to enable individuals and shifting collaborative structures to set up and develop projects regardless where on the planet the participants are based.

Computer power and fast connections become ubiquitous. Social media make collaboration by streaming voice, video, shared visualization applications easy and affordable. These developments help people to emancipate themselves. There is also a whole culture involved, based on non-hierarchical orgaization, meritocracy, and reciprocity. And yes, on making fun.

Of course, these environments and structures are not total democracies, they are relatively democratic and relatively egalitarian. They provide tools for people to organize their own life and work. Even within the classical companies and institutions these new possibilities make that students, employees, intrapreneurs (those who engage in innovation inside a company), researchers have new expectations and demands (read also Edward Castronova, Exodus to a Virtual World, for a similar reasoning).

I just found a nice example illustrating the new internet thinking but also the way in which lifestyles change in this regard and posted this on my blog, MixedRealities.

To conclude: according to my hypothesis (not necessarily approved by Professor Wallerstein!), what we do in Second Life is part of this periode of 20-50 years of chaos, caused by a bifurcation in the world-system, leading to a radical different kind of economy and society. Of course, we are struggling on the side of the Good, promoting human rights, open societies, diversity, free enterprise, and tolerance. On the other side there are the forces of Evil, promoting closed societies and cultures, anti-intellectualism, populism, and who ridicule experiments such as Second Life.