John Carter McKnight and Adam Fish
This past weekend, two prominent socio-technical critics have given us radically different versions of the future of capitalism in the age of social media. Evgeny Morozov, author of The Net Delusion: The Dark Side of Internet Freedom, argues in an op-ed for FT for a dystopia of toothbrush analytics, trash bin surveillance, and our personal lives being turned into marketing data and sold back to us as irresistible products and services. Meanwhile, Jeremy Rifkin in the New York Times sees similar trends leading to “The Rise of Anti-Capitalism.” These big-picture visions are important for steering us towards futures we’d rather live in. However, studying companies and consumers at the forefront of the transformative interaction of social media and financial services gives us a different picture entirely: one where old and new, privacy and sociality, onrushing corporatism and peer to peer pushback are producing a tangled, complicated, often contradictory mess – and along with it, the future we’ll probably see.
As kids growing up in Nancy Reagan’s “just say no” 80s we endured a lot of propaganda regarding drugs. One was the myth of the “gateway drug.” We were told that drugs like marijuana with few medically provable harms were highly dangerous because they were gateways to harder more evil drugs. Gateway drugs are like linkbait, hooks that bring unwitting subjects from a one innocuous practice to one more pernicious.
Morozov claims that social media is a gateway drug for the financial sector to hook us on a new range of products and services, while increasing its control over our lives. We hear that the dark insides of our mouths, fridges, rubbish bins, and cars will be scrutinized by networked and image-recognizing surveillance cameras. Videos will be algorithmically analyzed producing “data portfolios” which will be automatically used (for a fee) by third parties to adjudicate our credit worthiness, employability, and romantic fitness. As longtime admirers of Morozov’s guts and wit we’ve been pleased to see him begin (finally) to use the name and identify the problem head-on–neoliberal capitalism galvanized by ubiquitously networked humans.
In making this argument, Morozov brings together two academic terms and says that they are co-constituting: mediatization and financialization. Mediatization claims that social practices are increasingly linked to media performance. We do it for the camera. Presidential elections, of course, are a key example of mediatization, in which every utterance, campaign stop, handshake, and tweet is delicately engineered towards manipulating the 24-hour news cycle. Mediatization assumes a new level of embeddedness in encounters with persistent, searchable, archivable, user-generated social media, a process we call social mediatization. The “social” qualifies the “mediatization” by identifying a new phase in which information is not broadcast from corporations or politicians to a passive audience, but generated and shared constantly among people, businesses, and governments.
Financialization works much like social mediatization: both identify the ways that foreign logics (financial or mediated) find their way into once-private and domestic spheres. Classic examples of financialization include online banking at home, stock investing as a hobby, and other forms of money management which were once “work” but are now billed as necessary and mature forms of personal responsibility and risk management for the middle classes.
We agree with Morozov that new possibilities of financialization have been opened up by the widespread adoption of social media. Brokerage firms and new types of peer-to-peer lending organizations are adapting their computer interfaces to look and feel more like Facebook. Insurance and investment companies are increasingly reliant upon search-generated analysis of freely-shared and often unknowingly-shared data gathered from people to determine whether to offer services and at what price.
People are becoming more and more comfortable interfacing with online money markets and insurance systems because of the increasing social media competencies they’ve developed Skyping home and Facebook-friending family. In this way, social media is like pot, a gateway drug from something we thought was just for kicks (chatting with friends and family), to something that necessitates a very real gamble: opening every facet of our lives up for corporate scrutiny.
While Morozov’s examples of evil toothbrushes, surveillance bins, and Facebook and Amazon’s fleets of delivery drones are graphic reminders of the material means of financialization, these examples are also far from the digital materiality, as Manovich called it, of social media. Firstly, attention to the affordances of actual interfaces of financial product retailers –rather than peering back into the Skype camera of a garbage can— will help us develop a more robust theory of social financialization. Secondly, while we applaud Morozov’s multi-sited or survey approach to identifying the myriad ways technocapitalist logics recede into the ordinary infrastuctures of daily life, we advance the idea that a more direct focus on financial products, economic interfaces, and their social mediatization will provide the type of explicit evidence needed now to understand the real evolution – not just potential parade-of-horribles outcomes – at this early moment in the development of social financialization.
Meanwhile, Jeremy Rifkin sees Morozov’s “Internet of Things” not as a horror of surveillance and ever-sharper financial practices, but as the birth of a maker movement. When the net cost of production not just of digitized information like music and movies but of physical objects approaches zero, he claims, capitalism faces a fundamental challenge, one in which the winners will be found in the nonprofit sector. All those networked fridges and 3D printers, he says, are enabling a second economy to grow up alongside capitalist production, an economy based on sharing of goods and information, where we live “partly beyond markets,” in “an increasingly interdependent global commons.”
Well, which will it be, dental espionage or ride-sharing our way into a global village? We’ve gone out into the field to try to find out, by examining new companies who’re trying to combine big data and the sharing economy, and asking hard questions of their managers and of the people who’re turning to them as alternatives to old-school consumerist products and services.
In our project, “Third Party Dematerialization and Rematerialization of Capital,” funded by the Engineering and Physical Sciences Research Council’s “Digital Economy Research In The Wild” initiative, we are researching Zopa Limited, the sort of financial innovator Morozov has in mind when he speaks of Silicon Valley’s ability to “disrupt” Wall Street with “better data and better engineers.” Zopa is a “non-bank” – as regulation designed to discourage upstarts and protect the market share of slow-to-innovate and too-big-to-fail firms limits the use of the value-laden term “bank” – a “peer-to-peer lender.” Zopa uses a proprietary algorithm to evaluate credit risk, and then matches individual borrowers of relatively small sums with potential investors of a bit of spare cash. Zopa claims that their highly stringent credit-evaluating algorithm, their lack of legacy infrastructure, both buildings and IT, and their individual evaluation of potential borrowers – rather than trusting entirely to automated processes – enable them to offer better rates to borrowers and lenders than high street banks can bother with.
Zopa is a successful financial firm with only one top executive from the financial industry – their risk analyst. With Big Data experts and social marketing managers, Zopa explicitly applies Silicon Valley logics to a segment of what once was a UK high street banking monopoly – short to medium-term unsecured consumer lending and borrowing.
Yet Zopa neither deploys fleets of drones or the latest gimmicks of “gamification” – the techniques developed from the realization that we’ll do nearly anything for the quick hit of an endorphin rush from “rewards” as ephemeral as points or levels in a colorful game interface. While gamification is often claimed as the missing link between financialization and social mediatization – we’ll do anything for rewards, and we want all our friends to see our status, so we’ll click to create the data for others to profit from – today’s reality is remarkably more old-fashioned.
The twin challenges of social financialization are managing and marketing trust and risk. Once solely the province of banks, who used neoclassical architecture, three-piece suits, and free toasters to convey social messages of high trust and low risk, the largely dematerialized companies of social financialization necessarily use social media and internet user interfaces to do the same job.
The trend-surfers and hipsters of the world aren’t Zopa’s clients: rather Zopa works to appeal to the newly financialized: older people with a bit of extra money who are neither wealthy nor connected enough to be worth the time of innovation-challenged, blue-blooded UK banks, and young families yet to see the “recovery” talked up on the newly-ubiquitous financial media.
Zopa designers see their job as creating an online presence that looks enough like a bank to convey messages of trustworthiness and low risk, while simultaneously appealing to a demographic that feels abandoned by banks in their oscillations between high risk/high return algorithm-driven trading and “credit crunch” unwillingness to lend to anyone who might actually have a need for funds.
It is in these everyday, slightly dowdy design choices that social financialization is being built, in a process of connecting the dots between a lost age of bricks-and-mortar rhetorics of trustworthiness – a trustworthiness coupled with incentives against too much financial literacy, too much desire to look behind the neoclassical facades to interrogate actual banking practices – and Morozov’s all too likely future of trying to level up our gamified toothbrushes to lower our dental insurance premiums.
We need the cautionary tales of the dystopias we’re building and the utopian visions of data power to the people, but more, we need to know if our gateway drugs of social financialization really are harmless hits and performance enhancements, or whether they will lead inevitably to refrigerator madness. One thing we suspect is true: we can’t “Just Say No.”