A 2-post collection

Tech companies are ripping society apart (and this is only the beginning)


We are in the grip of a technology revolution and, as many are quick to point out, we’ve been here before. The industrial revolution in the 1800s saw a fundamental shift in the way that society operated, but despite the disruption to traditional livelihoods broad ideas about capitalism and the economy remained true. This analogy is used to reassure anyone worried about robots taking jobs & technology companies running rampant. Society will adapt and things will return to some sort of equilibrium.

I believe that this view is misguided. There are elements of the current technology revolution that are leading us towards the most unequal dystopia imaginable. These aren’t unintended consequences that can be cleaned up later like the smog rising from industrial factories: these are paradigms embedded directly in the current technology revolution that, left unrestrained, will corrode the very fabric of society.

1. Today’s technology creates vast wealth for a tiny few

Technology’s aim is to reduce cost. A store front used to cost money; with the web it’s now free. A map used to cost money to print; now maps are available on your smartphone for free. This has two effects: creating more abundance for consumers, and more wealth for technology companies. An online shop is cheaper than a physical shop because an online shop employs no one and costs no rent. In addition to this, a physical shop can only service a few dozen customers whilst a digital shop can service millions. Essentially this means that for a lower cost a shop owner can generate many millions of times more revenue and profit - with very little associated costs.


As more and more jobs are replaced this shop analogy will hold true for every industry we interact with: abundance for many, profit for few. This has started happening already: since 2003 the top 1% of wage earners have seen their annual household income rocket in comparison with other groups. If this wasn’t bad enough each year we will see greater increases for a smaller percentage. 1% will become 0.9, 0.8 and so on until the cost base of operating most industries is so low that just a handful of people will be profiting.

2. Today’s technology replaces good jobs and replaces them with terrible & insecure jobs

As technology companies there is job growth in some areas. Amazon is now one of the largest employers in the US. This is a problem, though, as the vast majority of Amazon’s (and most technology company’s) jobs involve low skilled, low paid work, in Amazon’s case inside fulfilment centres. In early 2017 their CFO said that “The headcount [we’re adding] is predominant[ly] still the headcount in our fulfillment area.” As artificial intelligence capabilities increase these jobs will be replaced (one of the key problems now is that robots can’t grip very well) with equally low skilled jobs like cleaning and delivering, and in the meantime there is no opportunity for employees to move up within Amazon. There is a clear divide between the engineering class and the lower skilled work done by the vast majority of employees.

The fulfillment centre of the future

This is compounded by the fact that there is a clear divide among demographics: almost all of the high paid engineering work is done by white or asian middle and upper class men. Technology companies typically generate a tiny number of high skilled jobs that often go to well educated people from a privileged background. These high skilled jobs will stay but the low paid jobs will go. As low skilled worker’s wages stagnate because of an increase in supply due to automation more money will be freed up to pay high skilled engineers. Again, this is already happening: wage growth amongst the top 10% has increased substantially in recent years yet in the bottom 10% it has actually decreased.


3. Today’s Technology is almost impossible to tax

One would hope that the societal damage that is being caused by technology companies would be offset by an increase in tax payments. Ironically though technology companies pay even less then their historical counterparts.


Through a combination of tax loopholes (operating in the UK, based in Dublin, Luxembourg or similar) and writing off any profit as expansion cost whilst delivering the actual value through an increase in stock price, technology companies are simply not paying enough tax.

The disruption to society can be solved through retraining and reskilling but these initiatives cost vast amounts of money.

4. Workers can’t be protected from technology by traditional institutions


It used to be trade unions that lobbied for workers and protected them, to some extent, against the excesses of capitalism. Unions today are becoming more and more irrelevant. Many jobs today are insecure and irregular: people have portfolio careers and so don’t neatly fit into the union mould. Collective bargaining works less well when there’s an oversupply of people ready to pick up where you left off, and the lobbying power of technology companies in government prevents genuinely progressive legislation from being written.

There are signs that the traditional union model is being replaced by something more flexible but we’re still a long way off. While unions organise, technology companies have taken the initiative and offered readily available work - as long as workers accept the insecurity (often called “freedom” by tech companies).

What next?

Society gives business a licence to operate. A genuine conversation needs to be had about the impact of today’s technology on the society of the future. There are real dangers that left unregulated technology will push society to a point of no return, increasing radical and potentially unsavoury political actors to take advantage of this dissatisfaction. There is a chance to avert this nightmarish future, but we need to act now.


The Ethics & Governance of Decentralisation

Decentralised systems have the power to transform the way that we live and do business. Up until a few years ago if you wanted to start a company you needed to do it in a particular jurisdiction, usually a country. Today, using the Ethereum network you are able to start and manage a company, mint your own coin & create secure ways to vote on key topics without having any one country's backing. Disputes are reconciled by impartial smart contracts - bits of code that make decisions in a computational way, arbitrated by thousands of nodes based around the world. If one of the nodes goes down it doesn't matter - others will pick up the slack.


The distribution of Ethereum nodes, from Ethernodes

Decentralisation & Anarchy

The debate around decentralisation from a political standpoint isn’t new. The political philosopher Alexis de Tocqueville wrote in 1840 that:

Our contemporaries are constantly excited by two conflicting passions; they want to be led, and they wish to remain free: as they cannot destroy either one or the other of these contrary propensities, they strive to satisfy them both at once. They devise a sole, tutelary, and all-powerful form of government, but elected by the people. They combine the principle of centralization and that of popular sovereignty; this gives them a respite: they console themselves for being in tutelage by the reflection that they have chosen their own guardians.

Modern governments work because they combine elements of centralisation and control - they hold the monopoly of the legitimate use of violence, for example - with decentralised rule: you are able to decide who is in power with a democratic vote. What de Tocqueville highlights, though, is the need for both elements of governance. A purely centralised government leads to tyranny and an exclusively decentralised government leads to anarchy.

Unrestricted decentralisation is a threat for government - and decentralised currencies and tokens are no different. In the past few days China has legislated for a “comprehensive ban” on crypto currency exchanges. This ban is seen by many as an inevitable outcome of an innovative technology moving quickly; it’s easier to ban that to regulate, but eventually the technology will prevail. However, the problems with decentralisation run much deeper than this - something that de Tocqueville predicted in the mid 1800s.


Alexis de Tocqueville - The first crypto philosopher?

Decentralisation creates a moral vacuum

The reason political systems have evolved to have elements of both centralised & decentralised systems is because decentralisation on its own creates a world that is just as tyrannical, cold and morally ambiguous as the most despotic dictator. In Ethereum’s short life we’ve already seen examples of this. For example, The DAO - a digital decentralised autonomous organisation - was created in May 2016. It raised more than $150 million, with the aim of distributing funds to ventures that people could vote on.

In June 2016 a hacker stole around $50 million of the DAO’s funds. Though there is still dispute as to who was behind the attack - a note supposedly from the hacker read:

I am disappointed by those who are characterizing the use of this intentional feature as "theft". I am making use of this explicitly coded feature as per the smart contract terms and my law firm has advised me that my action is fully compliant with United States criminal and tort law. For reference please review the terms of the DAO
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In one sense they were right - in a decentralised network the only truth is what is in the smart contract. One of the critical elements of a judicial system - discretion - is removed, and every decision is subject to the cold and calculated world of computer as judge and jury.

Whilst the attacker of the DAO undoubtedly abided by the rule of the law (i.e they didn’t attempt to change the DAO to remove the funds, they simply exploited a well known vulnerability) they did not abide by the spirit of the law which can be characterised as: don’t take things that aren’t yours. The Ethereum community agreed that a “hard fork” should take place - reversing the transaction that allowed the attacker to steal the cash and reversing the currency. This fork created two currencies: “Ethereum classic,” the original currency with the theft in place and “Ethereum” which returned the tokens to their rightful owners. Vitalik Buterin, the creator of Ethereum wrote in July 2016 that:

We would like to congratulate the Ethereum community on a successfully completed hard fork. Block 1920000 contained the execution of an irregular state change which transferred ~12 million ETH from the “Dark DAO” and “Whitehat DAO” contracts into the WithdrawDAO recovery contract.
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As Alexis de Tocqueville noted, the best systems of governance has elements of both centralised & decentralised systems, perfectly executed in the DAO example. Though many would argue systems like Ethereum are completely decentralised, in order to avoid morally dangerous outcomes there needs to be regulation and decision making that comes from trusted gatekeepers. A world of complete decentralisation leads to anarchy.

The future of decentralisation

Decentralised technologies are here to stay, but in their current form simply aren’t compatible with the ethical requirements of a civilised society. Regulation isn’t bad - bad regulation is bad - and turning a blind eye to systems trying to revolutionise the way that we do the most fundamental things in our lives isn’t the answer. There must be an interplay between governments and decentralised systems - to ignore either isn’t utopian: it’s dangerous.