This article was originally published on Ouishare.net.
Many believe that continuously evoking change is the only way to solve our many, if not infinite, problems.
The figure of the changemaker itself has been subject to much research and study. Nevertheless Western society appears to be plagued by an inability to make use of experiences gained through mistakes and has been unable to invent radically new solutions that can deal with the larger problems we face.
On this topic, I would like to share with you a lecture I recently stumbled upon by Joseph Stieglitz, the Nobel Prize winner for Economics in 2001. The lecture was held in July 2012 at the London School of Economics and was called 'Creating a Learning Society' (here are the slides).
In this lecture Stieglitz shows precisely and rather mercilessly that the technologically and industrially advanced societies of today produce innovation that undermines the value of sharing resources and protecting the environment while destroying jobs, exacerbating social issues as well as failing to solve any of the radical problems we face as a collective.
According to Stieglitz democracy itself often protects the status quo and the Washington Consensus. He emphasizes that our entire economic system has been optimized to meet the demands of the free market and maximize profits through static efficiency, which is achieved by a focus on specialization, productivity and protection of intellectual property. This has gone to the expense of dynamic efficiency, which is the ability to understand issues, adapt and then quickly implement solutions accordingly.
I have already shared some of my thoughts on the reason for this considerable flaw of our the economic system. I firmly believe that its inefficiency in innovating is closely linked to our production model that is based on standardization and large scale. Producing on a large scale is highly profitable. Products that require large initial investments weaken competition. On top of this, if you can convince consumers to have artificial demands, which are easily narrated by television ads, rather than face real problems, you can easily generate profit for a long period of time without making any contribution to human development.
Simply put, Stiglitz claims in his lecture:
Markets, on their own, are not efficient in promoting innovation.
The key issue is therefore to understand how this unavoidable, but not inexorable, transition to an economic system that is more efficient in finding real solutions to problems (and innovating) can take place. How could this new objective of creating inclusive, sustainable growth that is focused on well being take shape?
Firstly, as I partly described in The Future Proof Enterprise, a response can be achieved to some extent from within the market. There are significant opportunites for creating businesses that are less profit oriented and aimed towards interacting meaningfully with the continuously transforming market-society.
I am convinced that these enterprises (them being social, personal or traditional) will have a significantly greater chance of surviving in the long term than companies that are solely profit oriented. Even Fred Wilson, one of the most important VCs in the world, recently announced that he will be giving a class on long term enterprise sustainability called "How to be in business forever, a lesson in sustainability".
To come back to the question ”how can this transition take place?", we must ask ourselves a further question: what will be the role of entrepreneurship be in a system with less available profit and a more equitable profit chain? Who will be the leaders of this revolution? What will their goals be if not money, careers and an abundance of benefits?
The role of purely "economic" motivations has already been analyzed by many and should certainly be reconsidered in the light of a recent study by Princeton University that found that money can buy you happiness, but only up to a certain point ($ 75K).
The study shows that after reaching this point, money becomes a completely irrelevant factor. In search of a more specific answer that goes beyond the exploration of motivations, as done by many such as Dan Pink in his book Drive (magically animated by RSA in the video above), I raised this question on quora:
However, despite all these questions and theoretical concepts, it was a direct human relation that convinced me what to share today: money is no longer the only lifestyle driver. In fact, I recently spent a few days with a dear friend who is a developer that supports himself by freelancing while he travels around the world. He values the freedom to choose his own way forward above money or a career.
More and more people are trying to balance money, an inevitable need, with fun, creative and cultural expression, sense of community and meaning. They strive towards a healthier, more sustainable lifestyle and ultimately a more human existence. But apart from these people, who will promote the resilient enterprises of the future, the ones that include social impact, changemaking and economic sustainability in their budget?
Who are these future leaders who work to create their own existential balance between research, curiosity and productivity? How will they be recognized as such?
What they share is definitely a Hacker Mindset, the curiosity to understand and investigate new solutions. They know how things work and are beginning to think they can take advantage of the system from the inside and build a life from the bottom up based on new goals such as happiness, freedom, impact and social recognition through sharing. Those among you who have had the opportunity to participate in the social innovation environment know that many of these people come from within the establishment.
Some come from academia or are ex-managers, while others are born founders and self-starters, ex-consultants now freelancing or designers that are tired of impersonal work for corporations. The basic difference between social hackers and politicians or even buzzword activists is that hackers live as examples. As Catarina Mota eminently said in her recent interview on my blog:
We’re simply proposing and exploring an alternative. And we’re doing this the way hackers do everything: by executing it and thus showing a proof of concept that can be expanded.
Their goal is to provide evidence that alternative ways of producing wealth can work.
I'm convinced that, at the moment, it is crucial that we fully embrace the lifestyle we (social hackers) study and advocate, because this is the only way we will understand how to make it work. It is not about being Gandhians - "Be the change you wish to see in the world" - but simply noticing that the political decisions of our leaders are not guided by the survival instinct of mankind.
According to some, we can expect changes to be implemented through new laws or the restructuring of our production systems. Honestly, I do not see any such things at the horizon, but only see growing uncertainty.
Many profess that we must embrace a new way of living that is glocal and integrates us into communities in search of deeper meaning. However only very few truly seek to put this alternative into place.
A decision to go down this road would force us to radically confront the problems associated with a dominant free market and consumerist thought, and probably expedite the creation of alternative forms of wealth production and more genuine prosperity. In this regards we still have plenty to do.
We lack economic models, which will not be easy to find if the basic mechanisms of the market remain unchanged, as I suspect will be the case. We also lack mechanisms for incubation and facilitation: the Partner State depicted by Michel Bauwens is still far from reality, at least in many Western countries that are dominated by the overwhelming power of finance.
To produce something revolutionary, we must hack the very same production processes and use cooperative and just in time manufacturing, as Wikispeed is doing. Production should not be driven by profit, but by needs; innovation should be based on our ability and necessity to learn and improve as a society.
We must experiment with new, alternative economies that are defined by fewer formal relations as well as the exchange and sharing of skills through things like time banks and skillsharing platforms. In fact, such informal economies have already shown exponential growth in places strongly affected by the economic crisis, such as Spain.
Most of all we need to circumscribe our economy. I do not necessarily mean this in a geographical way, but believe that we must return to a more tribal, local or even rural life, in which we can measure our social impact more easily and see the value of our work. Now I would like to come back to a fundamental issue I mentioned in the introduction: learning.
The transition to a society that gives more attention to development than consumerism and profits is, without doubt, only possible in a system that knows how to systematically learn from mistakes. This is something that we seldomly do today.
Besides the fact that it is central to Stiegliz’s lecture, "Learning" is at the core of one of the most effective methodological synthesis produced by Hacker culture in recent years, as shown with the application of lean methodology to innovation as decribed by Eric Ries in "The Lean Startup."
The approach systematized by Ries has obvious points of contact with the question of the transition between static efficiencies and dynamic efficiences (remember the Innovator’s dilemma) and adapts beautifully to the needs of today’s innovator (yourself or I, writing this post). Applying lean thinking means experiencing more, through experimentation. The entire methodology is based on the concept of "Validated Learning", the systematic creation and testing of hypotheses about the value and impact of what we produce.
Those of you that have read "The Lean Startup" know that there are two basic assumptions: the Value Hypothesis (the so-called leap of faith), which stands for the idea that our product or service may actually be of value to someone, and the Growth Hypothesis, which is the mechanism by which our product or service can grow. Verifying the Growth Hypothesis would mean that a product (that someone rightly calls, the solution) is capable of creating economies of peer exchange and can grow with the help of network effects.
Those of you who have been involved in modern startups know that peer relationships (among users) are often key to growth. If you put all these pieces together in a, for academics, almost sacrilegious way, you end up with a message that is incontestable.
The theories of Joe Stieglitz and Eric Ries as well as the new values behind the growing category of Social Hackers show that we need an economy that allows the exchange and sharing of value as drivers of innovation and real learning. Therefore we must realize that when we talk about the sharing economy we refer to the deliberate creation of innovation and growth through exchange, confrontation and learning.
There is however one little big problem at this point. The only exchange medium we know, money, is very scarce at the moment, thus making it very diffcult to create a booming economy of sharing and exchange. It would be very challenging to talk to, confront and learn from each other if we were only allowed to use up to four or five words at a time. This would make language scarce and therefore learning and growth almost, if not totally, impossible.
For this reason I am still convinced that to overcome the shortage of money and bring the world of exchanges to life, one or many new sharing currencies and alternative economies are necessary, something like the ECO currency, the Dropis or Metacurrency platform: new means of exchange and sharing that aren't scarce. These will also facilitate the transition to real sociological and anthropological development that promotes learning and growth rather than ignorance towards gigantic problems.