The Restless Mind

Summary: Umair Haque believes edge principles can restore economic equilibrium. He forgot the human factor.

If you study or build platforms you’ll eventually run into strategist Umair Haque. His BubbleGeneration blog is chock full of dense posts about edge principles, strategy decay, and the coming macropocolypse.

I’m a big fan of Haque and I’m intrigued by his almost biblical view on the “macropocolypse.” His thinking goes a little like this: companies have strayed from their original mission of co-creating value between them AND customers; instead, they now transfer value AWAY from customers TO shareholders. Aggregating value without positive redistribution is, in his mind, disingenuous, non-sustaining, and evil.

Haque certainly has no difficulty finding evidence of strategic rot in the current financial crisis. CEOs pocketed millions as their banks tricked everyone into a pyramid scheme that now the Fed, using our money, has to bail out. It’s a great example of Capitalism gone wrong.

I differ, though, in thinking that edge principles can fix things. In Haque’s view, co-creation and p2p value exchange have the ability to restore balance to our unidirectional system. He cites companies like Google and ETSY as platforms that provide equilibrium among the actors and grow stronger by doing good rather than evil. ETSY, for instance, provides the framework to return us to cottage-scale industry and ensure the buyer/seller value system is 50/50. Google, who delivers value by enabling the p2p voting system we lovingly call Pagerank, grows in perfect step with the user base. The more we use it, the more value it returns TO us, rather than AWAY from us.

These edge mechanics are self-sustaining, essentially, because both parties get what they want. When partners in a relationship both get what they want, there’s no room for deterioration.

Unless you introduce fear.

Here’s where I think Haque misses the issue. Every human-made system disproportionately aggregates value—because of fear.

Fearing invaders and barbarians, farmers relinquished control to Feudal lords. In return for protection the lords amassed the farmers labor and resources. Worshipers surrendered their souls to God lest they burn eternally, enabling the Church to amass enormous wealth and real estate. In return for law and order, citizens gave up personal power to governments who in turn accumulated taxes and legal jurisdiction. And as a “you’re welcome” for helping us keep up with the Joneses (ie. social disinheritance), corporations have aggregated pretty much everything on the planet.

Men trade their assets for the perception of protection. As a result, their assets are aggregated. Aggregation, if you study physics, creates mass, which in turn creates gravity. Gravity is power. It exerts a level of control over its subject that is immutable.

These rules don’t change in the post-grid era. While it’s true that ETSY provides a measure of equilibrium between buyer and seller, it does so in return for control of the platform and the data. That ain’t trivial. Controlling the data means ETSY can monetize the long tail, an aggregation effect that does little for individual sellers or buyers but certainly does something for Jim Bryers. Controlling the platform is everything. If they push you off—you don’t exist. No access to the global, frictionless, one-click market they’re building.

The same for Google. Pagerank gets better the more we use it, but Google owns my data. And aggregating my data has done more for them than me. Thanks to Adsense and Adwords Google is one of the world’s most powerful corporations. What do I get for my Pagerank contribution? I can quickly find videos of the A-Team.

The same is true for every platform on the horizon from 23andMe to flickr to Facebook. Our fear of being diseased, disconnected, or disenfranchised leads us to trade our assets for the perception of protection. We continue to plug into the network because our unhappiness does not outweigh our fear of being unplugged. (Isn’t that what the Watchowski’s were trying to warn us about?)

That’s where edge principles fall apart. Once someone can aggregate and control the platform (social, economic, or political), flow stops being bi-directional and co-creation becomes a shell game. The platform owner amasses close to absolute power. And, as many a good writers have reminded us, absolute power corrupts absolutely.

The future of Capitalism may be in doubt, but the networked future has the certainty of the past—a few control the many using whatever nomenclature suits the few and soothes the many.

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PS. I promise my next post will not include fear as a central point. (Hey, I didn’t create the human condition. I’m just observing it