I read the whole of [1] and it doesn't actually explain why these companies are rent seekers. Just puts the label on them with no stated justification.
the companies are rent-seekers because they gained an overwhelming market share (read: monopoly) using their VC war-chests and positioned themselves as unavoidable middlemen. this can be anything from a gig economy app like Uber or DoorDash, to the proprietary pharmaceutical recipes 'owned' as intellectual property produced under a brand name and sold with a massive markup far in excess of the material ingredient costs, as well as the 'cost' of labor under our current system. we know this because the same meds that are sold in America often cost orders of magnitude less in European countries.
the underlying strategy here is about starving or buying out competitors until one brand name becomes a literal verb. that is to say: the usage of a proprietary product or service becomes so ubiquitous that we are conditioned to rely on the profit-seeking monopolizing Silicon Valley/Wall Street juggernauts in every aspect of our daily lives. so it's no longer "i'm getting a taxi to your place", it's now "i'm Ubering to your place". or "i'm going to search the internet using a search engine" has now become ”i'm going to google".
so to use tech platforms as an example: the client-server software paradigm obscures and hides all algorithms, protocols, and personal data behind a black box server/software/system. in another article, Wendy Liu writes:
"What I want is to see Uber’s technology become a protocol. Same with Airbnb, same with Postmates, same with other companies in the gig and sharing economies. Same with lots of other important technology companies, while we’re at it. Obviously this can’t happen overnight, but if the technology is useful enough to provide real value, then it’s too useful to be subjugated to the whims of profit forever. I would love to see these technology platforms either fully decentralised, or centralised in such a way that the entity running it is not-for-profit and, ideally, accountable to all stakeholders. The actual mechanisms for making this work are beyond the scope of this post, but I want to throw this idea out there and get people thinking about it, because it’s the only way of making the future work for all of us." [1]
the most exciting emergent project where i am starting to see the development of fully distributed protocols/software become a reality is the holochain framework. the team behind this open source library are aiming to make it as simple to use as Ruby on Rails was to make centralized apps. other projects in the dweb space that i'm following are activitypub, DAT and SSB. i've heard the above described shift referred to with different names: platform cooperativism, protocol cooperativism, platform socialism, protocol socialism and more. i am personally most excited about the holochain framework, because of the way it uniquely combines proven existing tech: Git, DHT's, etc.
I think there's a decent degree of truth to this rent-seeking framing, but many of these companies are also legitimately value adding as well, and the ratio between these two things differs by company.
Groupon skews heavily to the former (because it adds no efficiency anywhere and is just various brands engaging in zero-sum price competition for eyeballs), Uber skews heavily to the latter (because Uber is barely profitable and brings significant operational efficiency due to their algo and the physical network effects).
I'm not sure I agree that non-profit is the way for some of these firms. Would either consumers or drivers be better off with a non-profit Uber? What's the incentive to make things extremely efficient? There'd be no centralized entity skimming off the top, but at the same time there might be an efficiency cost which is even bigger. So I'm skeptical.
I definitely do think a non-profit would be a great thing to replace AirBnb, Groupon et al.
Two side comments. One, those tech alternatives are very interesting to read about. Two, expensive drugs are because of the government (or because of lobbying), arbitrageurs would love to import some cheap insulin from overseas but doing that is illegal.
> many of these companies are also legitimately value adding as well, and the ratio between these two things differs by company.
humans can produce environments conducive environments for the discovering, developing and researching of science and technology, without having a profit motive, or having society split up in owners and non-owners. i'm not sure about you, but today's world is hell-ish to me. i hate the inequity i see today.
note: i'm a bit tired so excuse the long quotes and links.
"Place Silicon Valley in its proper historical context and you see that, despite its mythology, it’s far from unique. Rather, it fits into a pattern of rapid technological change which has shaped recent centuries. In this case, advances in information technology have unleashed a wave of new capabilities. Just as the internal combustion engine and the growth of the railroads created Rockefeller, and the telecommunications boom created AT&T, this breakthrough enabled a few well-placed corporations to reap the rewards. By capitalising on network effects, early mover advantage, and near-zero marginal costs of production, they have positioned themselves as gateways to information, giving them the power to extract rent from every transaction.
Undergirding this state of affairs is a set of intellectual property rights explicitly designed to favour corporations. This system — the flip side of globalisation — is propagated by various trade agreements and global institutions at the behest of the nation states who benefit from it the most. It’s no accident that Silicon Valley is a uniquely American phenomenon; not only does it owe its success to the United States’ exceptionally high defence spending — the source of its research funding and foundational technological breakthroughs — that very military might is itself what implicitly secures the intellectual property regime.
Seen in that light, tech’s recent development begins to look rather different. Far from launching a new era of global prosperity, it has facilitated the further concentration of wealth and power. By virtue of their position as digital middlemen, Silicon Valley companies are able to extract vast amounts of capital from all over the world. The most salient example is Apple: recently crowned the world’s most valuable company, Apple rakes in enormous quarterly profits even as the Chinese workers who actually assemble its products are driven to suicide." [1]
> What's the incentive to make things extremely efficient? There'd be no centralized entity skimming off the top, but at the same time there might be an efficiency cost which is even bigger. So I'm skeptical.
incentives are built into the universe, the process of discovery with colleagues is the reward/incentive. getting credit and therefore being trusted further with more democratically awarded scarce material resources could be the reward. the returns that capitalist firms supposedly need to get 'back' is not legitimate because nearly all of those inventions were made possible due to publicly funded research grants and loans. in our future socialist system with a distributed socialist version of a google/search-engine/global-index, we wouldn't need to manipulate people to buy new products ('advertising'), and everyone could use the latest inventions in a modular fashion (that is, only upgrade various components. goodbye planned obsolescence and single use hardware/products). another perspective: it's important to remember that today capital dictates what tech is popular and useful, not actual popularity or effectiveness. abolishing Silicon Valley and the global north IP regime is the only strategy that cuts at the root of this problem. besides that, the most important point is that the waged (non-property owning) knowledge workers are the ones providing the value, not the executives and property-owners (in this case intellectual property).
"In Mazzucato’s account of the enormous success of federal scientific and technical research as the foundation of the most revolutionary of today’s technologies, the most telling example is how dependent Steve Jobs’s Apple was on government-funded breakthroughs. Apple’s earliest innovations in computers were themselves dependent on government research. But by the 1990s, sales of its traditional laptops were flagging. The launch of the iPod in 2001, which displaced the once-popular but more limited Sony Walkman, and in 2007 of the touch-screen systems of the new iPhone and iPad, turned the company into the electronic powerhouse of our time. From that point, its global sales almost quintupled and its stock price rose from roughly $100 to more than $700 a share at its high.
These later breakthroughs were almost completely dependent on government-sponsored research. “While the products owe their beautiful design and slick integration to the genius of Jobs and his large team,” writes Mazzucato,
'nearly every state-of-the-art technology found in the iPod, iPhone and iPad is an often overlooked and ignored achievement of the research efforts and funding support of the government and military.'
A major government-funded discovery known as giant magnetoresistance, which won its two European inventors a Nobel Prize in physics, is a telling example of such support. The process enlarges the storage capacity of computers and more recent electronic devices. In a speech at the Nobel ceremony, a member of the Royal Swedish Academy of Science explained that this breakthrough made the iPod possible. Other major developments by Apple also had their “roots” in federal research, among them, Mazzucato writes, the global positioning system of the iPhone and Siri, its voice-activated personal assistant.
Apple is only one of many such stories. In the early 1980s, the federal government formed the often-forgotten Sematech, the Semiconductor Manufacturing Technology consortium, a research partnership of US semiconductor companies designed to combat Japan’s growing lead in chip technologies. The US provided $100 million a year to encourage private companies to join the effort, including the innovative giant Intel, whose pioneering work on microprocessors in the 1970s had been central to the electronics explosion.
Virtually all experts acknowledged that Sematech reestablished the US competitiveness in microprocessors and memory chips, leading to a sharp reduction in costs and radical miniaturization. The tiny integrated circuits with huge memories that resulted are the core of most electronic products today, long exploited by major companies like Microsoft and Apple. Their development was critically aided by military purchases in their early stages when commercial possibilities were still in their infancy." [2]
i think we're stopped from seeing the above truths because we are now so embedded in this inorganic hyper-commoditized and highly-privatized society. it has gotten to the point where education itself has been turned into an 'experience' commodity, something only for the wealthiest members of society, despite self-directed schools starting to show us that children are innately curious. every child is born wonderfully curious, yet meeting walls instead of bridges sets the boundaries.
> expensive drugs are because of the government (or because of lobbying)
the framing of 'Govt. vs. Private sector/corporations' misses the point that both solely benefit (and are directed by) the propertied class. we live in a bourgeois democracy. there is no democracy for the working class when it comes to e.g. money creation, or the many laws and economic agreements that are lauded as the emancipatory backbones of a supposed 'end-of-history' [3] democratic society.
these are some of the sources and authors that helped me earlier on my journey to understand the dynamics i describe:
I disagree with most of what you've said here, although I enjoyed reading it and learned a few things.
> humans can produce conducive environments ... without having a profit motive
This is an answer to a malformed question. It's not a question of whether people can be successfully oriented without a profit motive. We know the answer is yes. People can be oriented around altruism, team affinity, wanting to impress colleagues, racism and fear, etc.
The real question is whether the profit motive is optimal (and to what extent) for orienting people towards some goal X relative to other approaches.
This is a highly complicated empirical question, with an answer that probably differs by domain.
If you want to orient people towards genocide, the profit motive is probably the wrong way to go about things, although it can help a lot along the way. Stoking fear and disgust and team loyalty is king here.
If you want to orient people towards creating an iPhone and get it into a billion hands, or a reusable rocket with low marginal cost, the profit motive would rank extremely highly on the list, if not number 1.
> incentives are built into the universe
Incentives are bio/psycho. They're evolved and in the brain. Resources are a strong motivation and incentive. They contribute to status (ego), survival, attractiveness (for men), which are things that motivate our species.
Moreover the nice thing about profit motive is that, in general (although not always), it's aligned with consumer satisfaction, and so maximizing this selfish thing leads to a better outcome for the counter-party as well.
> [profits] are not legitimate because [of public externalities]
This is a separate question to whether the profit motive is the best way to orient people towards a goal. That's for a separate discussion around private property.
> the most important point is that the waged (non-property owning) knowledge workers are the ones providing the value, not the executives and property-owners (in this case intellectual property).
This is just not true. Entrepreneurship and capital are scarce factors of production. 20,000 engineers aren't going to magically self-assemble and operate effectively and efficiently together and invest billions of their own money in servers etc towards some common goal. We see some entrepreneurship and managerial skill donated for free in FOSS, but nothing like what we see when a profit motive is involved. Also, a lot of the value in businesses are inherent in the network, relationships, brand, the idea itself, etc, which are only tangentially related and attributable to labor.
> stopped from seeing the above truths because we are now so embedded in this inorganic hyper-commoditized and highly-privatized society
This society is also hyper-prosperous and well-off, on almost every metric, with long lives and happy people. The empiricist in me is the main reason I reject these overly critical perspectives. If the world is so good relative to all of human history, things just can't be as bad as this narrative suggests. [Climate change is a problem that demands its own solution.]
> "even as the Chinese workers ... are driven to suicide" [1]
This is a nonsense thing to say. China is (including Apple's workers) so much better off thanks to Apple and firms like Apple. Have a look at their median GDP per capita or any other metric you can think of. They've lifted hundreds of millions out of poverty.
This is the beautiful concept of economic surplus post-trade. Socialists take a 1-dimensional look at the "low wages" and are upset, but they forget what the alternative would have been without these "low wages"; more poverty, more suffering.
Further, so called "low wages" always lead to high wages a few generations down the line, due to the virtuous cycle of better nutrition, increasing tax revenues that feeds into education and infrastructure, etc.
Western socialists arrogantly risk stifling this virtuous cycle in poor countries. Imagine if nobody was allowed to use cheap Chinese labor 20 years ago, and therefore no FDI came in because it wasn't worth it to pay 5x market rates? Their economic growth would've been stunted and they would have more poverty today, not less.
> Einstein
This was before all the failed experiments with communism. Empiricism showed he was wrong about QM and wrong about this. I like to think he would have revised his opinions had he come back in 1990 and seen the new data. He even predicted the failure mode; "how is it possible ... to prevent bureaucracy from becoming all-powerful and overweening?"; but underestimated just how difficult (probably impossible) it is avoid in practice.
