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"We were so keen to believe that Web 2.0 would make the world fairer that we rejected all evidence to the contrary"

Exciting as they sound, the Wired editor’s theories have no sticking power

Few attempts at rewriting the rules of business have been met with as much hostility as the latest theory touted by Chris Anderson, editor of the technology magazine Wired. His latest book, Free: the Future of a Radical Price, expounds a philosophy of “freeconomics” – businesses in a vast range of industries, he argues, should emulate the giant giveaway of the internet. Bold, perhaps, but also spectacularly badly timed. And the response has reflected that. The Economist, for one, has roundly criticised Free. “The lesson of the two internet bubbles,” it intoned, “is that somebody, somewhere, is going to have to pick up the tab for lunch.”

What is really puzzling is that the backlash against Anderson’s ideas has taken this long to happen. The response to his first book, The Long Tail, an analysis of online businesses which sell a wide variety of items in very small quantities, compared Anderson to Copernicus, no less, and its title became a buzz-phrase for the new media and marketing classes. But eventually his theory wilted in the face of empirical evidence.

Both books contain a grain of truth; however, in each case it is buried beneath a pile of dramatic, improbable extrapolations. Anderson correctly notes that digital technology has lowered the cost of production (and reproduction) of digital goods, the cost of transactions, and the cost of ­acquiring customers. However, the giveaways his freeconomy depends on require someone else to pick up the tab, and in the current economic climate, with profits evaporating and jobs being shed, there is little enthusiasm for altruism or wild punts. In addition, media owners and executives have turned viscerally on the notion of giving away their key products. Rupert Murdoch, who could be heard lauding Web 2.0 a couple of years ago, now echoes the fairly common view that aggregators such as Google are parasitic. Understanding how such flimsy ideas became so popular in the first place involves looking back to the infancy of the magazine that incubated them.

In 1992, Louis Rossetto, an expatriate American living in Amsterdam, was getting exhausted. For a fruitless two years, he had been pulling a blueprint from his backpack. It was for a new magazine that would foretell dramatic changes in business and society as computers became networked – but nobody wanted to know. However, his fortunes took a turn for the better when he met Nicholas Negroponte, the well-connected Boston socialite and academic.

Negroponte was seeking a publicity vehicle for his “concept factory”, a novel business proposition spun out from the venerable Massachusetts Institute of Technology. Negroponte’s Media Lab didn’t trouble itself with boring engineering and scientific research – the empirical bedrock of technological innovation, which takes years to bear fruit. The Lab was designed to coax corporate sponsorship with attention-grabbing ideas. This was Hollywood with P T Barnum thrown in.

Few of the whimsical concepts from the Lab – furry alarm clocks that run away, “ambient furniture” – would ever be viable products, but they generated acres of newsprint. And the press coverage drew in the sponsorship. Negroponte sold the proposition that his whizz-kids knew the future, and if you, too, suspended disbelief, so could you. A new business had been created. Negroponte became Rossetto’s first investor, and his flagship guru. Wired magazine was born.

Wired married an admirable American can-do spirit to the techno-utopianism of earlier media prophets such as Alvin Toffler, a former associate editor of Forbes magazine who has been writing since the 1960s about technology’s future and its impact. But Wired also inherited Toffler’s bossy, declamatory tone. The future wouldn’t just be different, it would be unrecognisable; history would be erased, and existing businesses must leap out of the way. The necessity to preach “rewriting the rules of business” in every issue set Wired on the path to hubris.

The answer to the puzzle of Anderson’s popularity lies in the roots of Wired itself – a mix of manifest destiny and opportunistic hucksterism. Anderson is primarily an evangelist for a vision that dictates a specific shape and structure for the internet. This may be premature. And, coincidentally, it is a vision that directly benefits one company, Google, at the expense of the telecommunications and media industries. Both of Anderson’s theses were inspired by critiques of the internet that fatally undermine this vision. Arguably, both amount to exercises in public relations rather than economics.

The Long Tail was a response to an essay by Clay Shirky, a prominent technology writer who also teaches at New York University. Shirky’s argument dampened much of the nascent utopianism about blogs, pointing out that the readership of early blogs followed what economists call a Pareto curve, or “power curve”: a small number of sites (the “head”) attracted a huge number of readers, but most (the “tail”) had few or none. This jarred with the utopian notion of the internet as a new kind of democracy. Why bother to participate if our fates were decided for us by a few block votes?

So Anderson turned the notion upside down. The blockbuster was over, he proclaimed, and, like a man possessed, he began to see long tails everywhere. It was the Guardian that lauded this logic by comparing Anderson to Copernicus. The implicit message was that the little people would win. Many people were so keen to believe that Web 2.0 would make the world fairer that they rejected any evidence to the contrary. It was only last year, with an exhaustive study of online music sales by the economist Will Page and an experienced digital retailer, Andrew Bud, that a more useful picture of digital markets begin to emerge.

Page and Bud found that most of the songs available for purchase had never been downloaded, and that the concentration of hits was more pronounced than ever before. On the file-sharing networks, the same pattern emerged. So, carrying a huge retail inventory, though cheaper than before, was of little or no value.

Now, with Free, Anderson has turned to the criticism that the internet destroyed the value of movies, newspapers and music. Firms could, and now should, cross-subsidise this unprofitable activity, he argues. But cross-subsidies aren’t new: they have been the subject of decades of observation by economists. Nor are they a panacea. Alan Patrick, co-founder of the Broadsight media and technology consultancy, points out that despite falling marginal costs, the idea of anything being “free to produce” is a myth; the costs are hidden elsewhere in the system. While at McKinsey, Patrick ran simulations of the “free to produce” business model and found that “it results in wholesale value destruction with no accruing market benefit, unless you can build an extremely commanding lead and get the whole positive dynamic of increasing returns working for you. But that’s hard and rare.”

Explaining the popularity of Wired-style theses should keep sociologists busy for years to come. They will doubtless note the business culture’s appetite for upbeat nostrums, and the media’s desire for myth-making. Business pays lip-service to genuine innovation these days, but, like the modern politician, it is keen to hear about the virtues of constant structural reorganisation, or how to adopt the ephemera of radical change. A speaker who can supply this market with new buzzwords can command 20 times the income of an American magazine editor. So one can hardly blame Anderson for trying his luck. And the buzz-phrases wouldn’t have spread without frequent repetition by an uncritical media. This could be evidence of a lack of confidence or expertise in explaining technical subjects – but it’s the same cynical resort to novelty that Negroponte banked on when he backed Wired magazine.

Anderson’s vision today looks curiously conservative and static, and is both deeply reductive and pessimistic about human nature. We are happy to pay when we perceive value, even for the most unlikely products, such as bottled water. The ideas at the heart of Free do little to explain that. For the “little people to win”, we need to draw on our human capacity for organisation and inventiveness, and engage in real, not virtual, politics. Fittingly, and not surprisingly, Free has had a critical mauling. So, perhaps the Wired era is over, departing like a snake-oil salesman at a medicine show who – having poisoned the town – can’t leave quickly enough.

Andrew Orlowski is Executive Editor of the Register

Chris Anderson: for and against

The Long Tail’s fans . . .

"Each year produces a book that captures the zeitgeist . . . This year
Chris Anderson’s The Long Tail has helped to reinterpret our world."
Times

"It is a powerful idea that provides us with a new(ish) way of looking at the world. Copernicus did the same thing for many people when he pointed out that the earth went round the sun."
Guardian

"I strongly recommend this one to anyone who wants to understand how economics is changing."
Telegraph

"Mr Anderson’s book does an excellent job of spotting trends and fitting them into an easily accessible theoretical framework."
New York Times

"The Long Tail does something that only the best books do – uncovers a phenomenon that’s undeniably going on and makes clear sense of it."
Slate online magazine

"By applying the long tail to the online world, Anderson brings intellectual order to what often looks like pointless activity."
New Yorker

"[Most technologists and bloggers] are envious of Mr Anderson, whose brainwave quickly became the most fashionable business idea around."
Economist

. . . and its critics . . .

"Is most of the business in the long tail being generated by a bunch of iconoclasts determined to march to different drummers? The answer is a definite no . . . our research also showed that success is concentrated in ever fewer bestselling titles at the head of the distribution curve."
Harvard Business Review

. . . and the response to the yet-to-be-released Free . . .

"Anderson’s idea of freeconomics offers a beautiful, if infantile, dream of a return to the Garden of Eden."
Guardian

"Free to produce is a myth – the costs are hidden elsewhere in the system."
Alan Patrick of the Broadsight consultancy

"Reality is reasserting itself . . . the lesson of the two internet bubbles is that somebody, somewhere, is going to have to pick up the tab for lunch."
Economist

This article first appeared in the 04 May 2009 issue of the New Statesman, Flu: Everything you need to know

PHOTO: JUSTIN MERRIMAN/ GETTY IMAGES
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Political tribes: why democracy is no match for the visceral pull of “us” against “them”

How Donald Trump epitomises and supercharges white American tribalism.

During the Vietnam War, the US thought it was fighting communism. Afterwards, the consensus was that the Vietnamese had been fighting for national independence. But Amy Chua, in her extremely stimulating Political Tribes, suggests an additional factor: many Vietnamese thought they were fighting the country’s Chinese minority.

Ethnic Chinese made up only 1 per cent of Vietnam’s population, yet controlled 70 to 80 per cent of national wealth. They were what Chua calls a “market-dominant minority”. North Vietnam’s leader, Ho Chi Minh, was backed by communist China, but when he attacked “capitalists”, most Vietnamese knew exactly which ethnic group he meant.

After the war, many of Vietnam’s Chinese were either massacred or fled: they made up the great majority of the “Vietnamese boat people” of the late 1970s. The story makes the central point of Chua’s book: American decision-makers, both at home and abroad, have tended to focus on markets and democracy while overlooking tribe. The political salience of tribalism only became unmissable with Donald Trump’s election as US president.

Most people, argues Chua, a law professor at Yale University, don’t simply seek to be free or rich as individuals. They want to thrive within their tribe (usually an ethnic one), often while hurting other tribes. Now, the US risks tottering into the kind of winner-takes-all, tribalised polity that we usually associate with the developing world.

Tribe has always been Chua’s topic. Her 2002 debut, World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability, anticipated America’s debacles in Iraq and Afghanistan. Nine years later, she hit fame with her Chinese-American how-to memoir, Battle Hymn of the Tiger Mother, about how ethnic Chinese parents supposedly raise their children to be workaholic winners. Then The Triple Package, co-written with her equally high-achieving husband, Jed Rubenfeld, sought to explain (not altogether convincingly) why certain tribes (such as Jews, Mormons, or Nigerian Igbo) tend to succeed in the US.

Chua has a gift for simplicity, sticking to her main argument and homing in on what matters. She is a digger of surprising facts, which she presents in clear if artless prose. Her occasional oversimplifications, and her willingness to plunge into areas in which she is not an expert, only increase her influence on public debates.

The chief tension in US history is between the rhetoric of universalism and the reality of white dominance. As Chua says, the US officially thinks of itself as a “supergroup”, which can accept people of all tribes as Americans. Hardly any other big country sees itself this way. Even in very diverse states, one tribe usually dominates – in China, for instance, the Han Chinese. Yet whenever American decision-makers discover another country – generally after invading it – they tend to impose upon it the supergroup logic. They assume that once the country is given markets and democracy (or at least a pro-American dictator) then any pesky tribal issues will soon fade away. The prescription worked brilliantly in post-war Japan and West Germany, but then Japan had always been unusually ethnically homogenous, and Germany had become so through genocide. In the first half of Political Tribes, Chua argues that things went wrong when the US applied the usual prescription to more ethnically complex states such as Vietnam, Iraq, Afghanistan and Venezuela.

In Afghanistan in the 1980s, American funding helped create the Taliban. In 2001, the US identified the Taliban as an anti-democratic, demonic force that had to be eradicated. That wasn’t totally wrong, but the Taliban was also a resistance movement of ethnic Pashtuns, who feared that their fragmented collection of tribes and clans was losing control of Afghanistan. The US toppled the Taliban in 75 days. Then it installed a new Afghan regime, which (though the Americans don’t seem to have dwelled on the fact) consisted mostly of ethnic Tajiks. Nearly 17 years later, the Afghan war is the longest-running in American history. Trump has sent more troops, while saying: “We don’t want to talk with the Taliban. There may be a time but it’s going to be a long time.”

In Iraq, too, the US initially ignored tribal divides. Peter Galbraith, in The End of Iraq, tells the famous anecdote of the three Iraqi-Americans who were invited to watch the Super Bowl with George W Bush in January 2003. This was two months before Bush invaded Iraq, yet the visitors soon realised the president wasn’t familiar with the distinction between Shia and Sunni. When they tried to explain it, Bush allegedly blurted out: “I thought the Iraqis were Muslims!” The story would have been hard to credit, were it not for everything the Americans did after the invasion.

In countries with sharp ethnic divides, democracy often just makes these worse. When there’s suddenly a free election, the largest tribe – in Iraq, the Shia – tends to grab power and punish smaller tribes. Islamic State was created largely by disaffected Sunni Iraqi military officers. In Myanmar, too, more democracy seems to have led to greater persecution of the Rohingya. Western countries (not only the US) misread Aung San Suu Kyi as a democratic hero; she is in fact a tribal leader.

While democracy can hurt small tribes, the other American prescription, free markets, can alienate big tribes if a country has a market-dominant minority – and it usually does. When Hugo Chávez became president of Venezuela 20 years ago, the US understood him as a communist stooge. In fact, the brown-skinned Chávez was backed by most of Venezuela’s non-white majority, who were sick of a white elite controlling the economy. But when Chua pointed this out in her first book, many white Venezuelans insisted that they were colour-blind, and that racism didn’t exist in their gloriously miscegenated country. She got death threats.

At times in Political Tribes, Chua overstates her argument. Whatever the country, her moral is always the same, “the blindness [to tribal identities] has been the Achilles’ heel of US foreign policy”. This is broadly convincing but surely exaggerated. Even for the average half-awake layperson, two days in Latin America is enough to establish the centrality of race. Surely American policymakers couldn’t have missed it? But Chua – a canny marketer – makes her points strongly. 

After her tour of American blunders abroad, in the second half of the book she comes home. By now, the reader is primed to see the US as just another messed-up tribal society. Other writers have made this argument over the past two years, but Chua does a better job than most of explaining how the country got there.

We’ve heard a lot since 2016 about how the white working class voted for Trump in a scream of post-industrial economic pain. That is partly the case, but it doesn’t explain why vast majorities of whites in all income groups (and most white women) voted for Trump. He was the candidate of whiteness. Many of his voters were upset by the browning of their country. The 1965 Immigration and Nationality Act abolished the old racist quotas favouring immigrants from white countries. Non-whites arrived and, shockingly, demanded rights.

Perhaps the biggest social change in the West since the 1960s is that ethnic minorities, women, gay people and now transgender people have stood up and said that there are no such thing as second-class humans. Some on the American left have taken their claims to extremes. They ditched Martin Luther King’s dream of a country in which people wouldn’t be judged on “the colour of their skin” (which was also Obama’s ideal); instead they revel in the unique identity and unmatched victimhood of their own subgroup. Chua describes how the acronym LGBTQ has spawned variants including GLBT, LGBTI and LGBTQQIAAP, as “identity groups quarrelled about who should be included and who should come first”.

Still, many members of the former second class have successfully stormed the first-class cabin. White Anglo-Saxon Protestants – for centuries, the US’s proverbial first-class humans – are now under-represented at elite universities, in the music charts, and even on the Supreme Court, which was entirely Catholic and Jewish until the Catholic-turned-Episcopalian Neil Gorsuch took his seat last year. Meanwhile, non-whites such as the writer Ta-Nehisi Coates have claimed a right to retell the national story – helping shift it from Ronald Reagan’s “shining city on a hill” to an account of genocide and slavery.

Just as Iraqi Sunnis lost power after Saddam Hussein fell, American whites now fear decline. True, they remain dominant compared with blacks or Hispanics. They are richer, live longer, and have a police force whose self-understood mission seems to be lethal control of black men. But whites are no longer unquestionably first-class Americans.

Even so, says Chua, most of Trump’s 63 million voters are not white nationalists. If you take “white nationalism” to mean that all non-whites should be killed or expelled from the US, only 4 per cent of Americans admit to supporting it, according to an NPR/PBS Marist poll last August. In another survey for the Pew Foundation, even 56 per cent of Republicans said it was “neither good nor bad” that non-whites will become the American majority in the next 25 to 50 years.

Rather, when Chua tries to explain what racial arrangement most Trump voters want, she describes a video in which the Trumpist TV host Tomi Lahren lays into the black American football player Colin Kaepernick, who kneeled in protest at the national anthem. Lahren delivers a lecture on the “patriots” who died for the flag, and concludes: “Colin, if this country disgusts you so much, leave. I guarantee there are thousands and thousands of people around the world that would gladly take your spot.” This video has had 66 million views. Parsing Lahren, Chua argues that Trumpist whites want minorities to be grateful, to know their place, to buy the white narrative of a good America, and not to imagine they are first-class citizens.

Trump now articulates that position daily. He both epitomises and supercharges American tribalism. With him in charge, all other American groups – blacks, women, Mexicans, gays, ad infinitum – feel even more threatened than his base does. Meanwhile, below the radar, new American groups keep spawning. Chua catalogues them diligently: the millions of followers of the “prosperity gospel”, who think Jesus will make them rich; the mostly white, armed “sovereign citizens”, who think they would have been rich but for the federal government’s elaborate scam to rip them off; fans of World Wrestling Entertainment, who aren’t very interested in the reality-fiction distinction, and who embraced Trump years before he went into politics; mostly Hispanic followers of quasi-Catholic “narco-saint” cults, and so on.

Politically, the US seems to have reached the point that the future president John Adams feared in 1780: “A division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to each other. This, in my humble apprehension, is to be dreaded as the greatest political evil under our constitution.” Meanwhile, the American patriotism vaunted by Lahren is waning. Trump’s own rhetoric is often caustically anti-American. “In these conditions,” warns Chua, “democracy devolves into zero-sum group competition – pure political tribalism”.

Chua’s conclusion – dripping with optimism about America, in 20th-century, high-patriotic style – doesn’t sound credible. She describes individual Americans who have reached across the tribal divides, and offers some cheerful vignettes from Yale: “I’ve seen a former Navy SEAL and a human rights activist bond over Trivial Pursuit.” She points out that the US is doomed if the left simply writes off the country as inherently racist since its foundation, and the right keeps dreaming of a white Christmas. If American tribes are to continue their common project, they will have to believe that the US can one day attain its promised universalism. Only non-Americans have the luxury of dismissing this as sentimental claptrap. She closes with lines from the black poet Langston Hughes:

O, yes,

I say it plain,

America never was America to me,

And yet I swear this oath –

America will be!

Chua admits that her extolling of individual outreach can seem like “a Band-Aid for bullet wounds”. An equally plausible scenario for the US is that Trump loses the 2020 election, condemns the vote as rigged and urges his followers to fight it, unleashing a low-level civil war (possibly while boarding a plane to Moscow to escape money-laundering charges). Then, the Iraq war will have finally come home. l

Simon Kuper writes for the Financial Times. His books include “Football Against the Enemy” (Orion)

Political Tribes: Group Instinct and the Fate of Nations
Amy Chua
Bloomsbury, 293pp, £20

This article first appeared in the 04 May 2009 issue of the New Statesman, Flu: Everything you need to know