Diginomics

Book Preview

Table of Contents

Monopolising your attention

In 2015 researchers showed that Google could change an election. All they needed to do was tweak their algorithm to change what you found when you searched for a politician. Previously, in 2012 a different research group had shown that subtly shifting the contents of your Facebook newsfeed could make you happier or sadder or make you more likely to vote.

Google and Facebook play an ever bigger role in what we do and discover online. No longer is Facebook just updates on your friends, it's the primary source of hard news about the world around us. Recent scandals over censoring content like the Napalm Girl or fake news in the Trump election show just how powerful and influential Facebook is.

These companies are not just fabulously wealthy. They have the power to shape what we think and do. They are also monopolies built on closed, proprietary information – their algorithms, their software and their databases. For-profit businesses, their motivations are ultimately not our welfare but their own. Their founders and rulers are our modern-day kings. And they make their money and preserve their power by selling your attention to the highest bidder.

At its most extreme, the current situation threatens our fundamental economic and social freedoms: free enterprise and free markets are disintegrating in the face of monopoly, free choice means little when there is only one, and even freedom of thought is threatened by powerful interests that have the capacity to shape how we think and act.

We should all be concerned by this. But what can we do?

Openness and restoration of freedom and opportunity: free enterprise, free markets, free choice

This book offers a diagnosis and a cure. The cure is called openness. A new approach that would make information such as algorithms, software and songs freely available to all whilst paying their creators more and more equitably. Openness would solve the problem of these immense concentrations of information power, promoting competition, providing transparency and increasing the incentives for innovation.

However, openness will not be easy to achieve. It will take collective, political action: for even if an open world is better for all of us, it will be opposed by those who gain from the current system and stand to lose out in an open future that brings increased competition and transparency. But the stakes are high: ignore openness and we will have a dystopian future of spiralling inequalities, lost liberties and foregone innovation and growth.

Open Medicines

If you care about affordable healthcare you should care about openness.

And it isn't just about high-tech. Information monopolies are harming every single one of us, often in areas we little associate with the digital world.

Take healthcare. In many countries around the world high prices for medicines are an everyday concern. And even where we don't pay individually, we're paying for those high prices in our taxes. In the United States, the issue is so common-place that it played a central role in the hit TV series Breaking Bad. There the hero, Walter White, a decent middle-class high school teacher is driven to crime to pay for his cancer treatment. Walter White may be fiction but his situation is not. Americans spent over four hundred billion dollars on pharmaceuticals last year – that is $1400 for every man, woman and child. And this average number conceals the everyday reality: those who actually fall sick may have to spend tens or hundreds of thousands.

And there are many who cannot afford what they need. There are Walter Whites all over America and all over the world. If citizens of the richest country on earth can't afford medicines imagine the situation in poorer countries like India or South Africa. Countries facing epidemics of AIDs or Ebola or Malaria.

Why are these drugs so expensive? It is not their manufacturing costs which are often a tiny fraction of their retail price – a drug that costs hundred thousand dollars to buy may cost only a hundred dollars to make.

The answer is the patent on their formula. Drugs are so expensive because of the patent monopoly on the information inside them. The patent is our creation – it does not exist in nature. Patent monopolies are created, maintained and enforced by our governments. Remove the patents and prices would fall. We know this because patents don't last forever. Once patent monopolies expires, prices drop. But whilst in force, patents can help deny access to medicines to millions and help funnel money from the poorest in society into the balance sheets and profits of some of the richest corporations on earth.

If we were to eliminate patents and open up medicines we could help the lives of billions. With open medicines, any company could use these drug recipes to manufacture medicines and make them available to anyone at the cheap cost of manufacture. If you think this far-fetched consider that countries around the world have implemented this exact approach for decades, very successfully. India did not have patents on pharmaceuticals until 2005 and Italy did not have them until 1979.

We have patents for a reason

At the same time, we have patents for a reason: to support the research and development of new medicines. Discovering new drugs is expensive. Without monopoly protection the argument goes, competition would drive down prices such that an inventor would get little or no return on their substantial investment. Without the anticipation of a return they might never invest and rather than high-price drugs we'd simply have no drugs at all.

But we have better open-compatible options for funding innovation

This logic is not wrong, so much as misplaced. As we shall show, there are open-compatible ways to fund medicine that are more effective than patents at rewarding innovators and stimulating innovation. Put simply: we can have our cake and eat it too. We can make medicines available to everyone at the cost of manufacture and fund medical innovation at level we do today.

If you are wondering how, consider this: most of the major breakthroughs in medicine from Pasteur's germ theory to Fleming's 's discovery of Penicillin were done in government-funded labs. This work was paid for by us all, collectively through our taxes, and then made openly available. Fleming did not hide or patent his discovery of Penicillin but instead published it for everyone to see and helped save millions of lives. More recently, HIV/AIDs was not only identified in government funded research labs but many of the cures were too. For example, it was government funded researchers who discovered the breakthrough HIV drug AZT and then proved it worked in clinical trials. And we don't have to rely on the state to pick winners: we can combine collective funding with market-based distribution using remuneration rights and prizes.

This means more for everyone

In this open world my relative need not die slowly because he cannot afford his treatment – and Walter White need never turn to crime. Not only that, but an open world would see more money more efficiently distributed to researchers and innovators. That means more medicines, created faster, better and cheaper. Whilst this might mean no Breaking Bad, back in the real world Walter – and my relative – will be happier and healthier, and the same is true for the society around them.

Robots and the Future of Work

If you care about a robot taking your job you should care about openness.

Sixty years ago the digital computer was invented. Since then it has doubled in performance relative to cost every eighteen months. That means the smartphone in your pocket has more power than all of the computers that put a man on the moon in 1969.

As they have improved, digital technologies have taken on more and more of the tasks that humans used to do: from manufacturing cars to scheduling appointments. And if we believe some of the grander promises for "AI", the next few decades might see computers taking over much more from drafting legal contracts to driving cars.

Robots should be wonderful - no more boring jobs!

On the simple face of it this should be wonderful: machines can take over mundane and tedious tasks sparing us their burden – just as electrification saved our great grandparents hours of back-breaking labour carrying water, tilling fields and chopping wood. Similarly, these digital machines can save us hours of unexciting mental labour – filing taxes, booking appointments, driving in rush hour.

We can start to imagine a future without work – or at least a future where it is always stimulating, something we choose to do. Instead of sweating away in the office, you can spend your time on a beach sipping martinis brought to you by a robot waiter. Or, less hedonistically, a future where every one of us has the time – and resources – to do what really matters to us: building our own house, reading War and Peace or just spending time with friends and loved ones.

But who owns the robots?

This seems marvellous. So why are we so worried? The answer is simple: this future would be marvellous if it were evenly distributed. But right now that isn't what the future looks like. Instead, it looks like a world of immense inequality where the one percent own all the robots making them fabulously wealthy whilst the rest of us, the ninety-nine percent, are left with only our labour now made worthless by those very robots.

This is a world where innovation has finally disrupted not just the labour market but made it obsolete. The winners are the shareholders in the few dominant high-tech AI/robot businesses. Everyone else is a pauper – subsisting on handouts from the state.

Robots are owned by the few

This world is so frightening to us because it is so close to what we already see. As of 2016 the world's five richest companies are all infotech-based – and they themselves exhibit some of the most unequal ownership structures in the world with a tiny group of founders and others owning a great portion of their equity.

Meanwhile, innovations in digital technology have been driving down the wages not only of blue-collar workers but also those in traditional middle-class white-collar jobs. The results can be seen a simple statistic: that in 2016 six of the world's eight richest people were tech billionaires, and between them owned almost as much as the the poorest half of humanity.

Robots are made of information – not steel

This is not about robots but about information, and the way information is owned. A robot may be made of steel but its essence is the software that powers its digital brain. A smartphone may be made of metal, plastic and silicon but what really makes it work, where the value lies, is in the designs of those silicon chips, and the data and software that run on them.

Opening up information would democratise the robot revolution

If we were to open up that information, make it available to everyone, we could democratize the robot revolution. The value generated by our infotech advances would be shared with the many rather than concentrated in the hands of the few. No longer a case of the 1% versus the 99%, this would be a world of the 100%.

Like pharmaceuticals we'd need to understand how we could have openness whilst still paying for innovation. If software is open to everyone, who would pay to create it in the first place? But like pharmaceuticals we have an excellent answer. Tried and true open-compatible funding models exist – we just aren't using them as we could or should be.

An Open World

The fundamental choice between open and closed

As we enter a digital, information age we face a fundamental choice: open or closed. Choose open and we make an open world where all non-personal information, all software, research, medical formulae, statistics, are free and open to everyone. It is a world where we are richer, freer and healthier. Choose closed and we get a closed world, impoverished financially and culturally, it is a dystopia of spiralling inequalities, exploitation and exclusion.

Open means abundance for everyone

The opportunity – and danger – are huge. Choosing open is perhaps the single greatest policy opportunity – and choice – of the twenty-first century. The path we take will impact the lives of every person on this planet. Choosing open is a chance to transform our economies and societies, to create a future beyond the tired "isms" of capitalism and socialism, to build a better, more equal, and freer world.

Is this too good to be true? (Something for nothing?)

But maybe this sounds too good to be true. Isn't an open information economy like money growing on trees – something for nothing? Or the equivalent of getting to have our cake and eat it too – free, unlimited access to information and more innovation and creativity at the same time.

Claims like these make us suspicious. The world we know is not like that. More for you, means less for me. It's zero sum. And money – or bread – does not grow on trees. When Jesus fed the five thousand with five loaves and fishes it was a miracle – extraordinary not ordinary.

So how can this be any different?

Information is different because it is costlessly copyable

The answer is simple: information itself. Information is different from bread or cars and all the other physical things we have been used to for thousands of years. It is different, and special, for one reason: costless copying. In the physical world, one loaf of bread does not mean food for all, one car does not mean cars for everyone. But in the world of information, that is exactly what happens. As if miraculously, digital information, whether it is a photograph or a drug formula, can be copied as often as we want and at practically no cost.

We need to pay for the first copy – and we can open-compatibly

Of course, we still need to find a way to pay for the first copy. After all, it costs real money and real resources to create new software, movies or medicines – even if we can share them freely once created. The answer is to use the collective mechanisms we already have, especially in the form of our governments. Just as we all pay taxes for things like national defence or parks, so we can use the same mechanisms to fund the creation of information.

Moreover, it need not be a government committee deciding which authors get paid, or what software gets written. We can use traditional, demand-driven market mechanisms to allocate all or part of the money collected. Innovators and creators can obtain "remuneration rights" rather than the patent and copyright monopolies they get today. Remuneration rights would give their owner the right to payment from a remuneration rights fund according to the value they generate -– for example, how much their medicine improved health or how many times their song was played.

It's about the rules not the technology

Software is eating the world according to the famous headline. Too often that is the story we focus on – the astonishing advance of digital technology and its impact on this or that particular part of our lives.

But we need to step back and see the systemic change. A focus on the tech makes us miss the real questions and the real choices: who owns it, who controls it and how is the associated power and wealth distributed and regulated.

You can use a hammer to build a house or kill a man. Likewise digital technology can bring us a better world or a worse one. What determines that is not technology itself but how we use it, and, especially, the social and economic rules we create for it.

Choose open not closed

And the most important of all those rules is the choice of open versus closed. That choice determines the economic and social structure of our information age. From openness comes freedom, equality, innovation, and even a different, better culture built on sharing, collaboration and generosity. From closed comes monopoly and exclusion, exploitation and inequality.

This then is not a book about technology or for the digerati. It is a book about power and freedom and it is for anyone who cares about inequality or growth, culture or liberty in the years to come. Most of all it is a book about hope. An open world, a world in which information is openly and freely available to us all, is not only desirable and necessary – it is possible too.