Last week, I figured out that I am a part-time locust. Here’s how it happened.
I was picking the brain of a restauranteur for insight into things like Groupon. He confirmed what we all understand in the abstract: that these deals are terrible for the businesses that offer them; that they draw in nomadic deal hunters from a vast surrounding region who are unlikely to ever return; that most deal-hunters carefully ensure that they spend just the deal amount or slightly more; that a badly designed offer can bankrupt a small business.
He added one little factoid I did not know: offering a Groupon deal is by now so strongly associated with a desperate, dying restaurant that professional food critics tend to write off any restaurant that offers one without even trying it.
Yet, I’ve used (and continue to use) these services and don’t feel entirely terrible about doing so, or truly complicit in the depredations of Groupon. Why? It’s because, like most of the working class, I’ve developed a locust morality.
Thinking about locusts and the behavior of customers around services like Groupon, I’ve become convinced that the phrase “sharing economy” is mostly a case of putting lipstick on a pig. What we have here is a locust economy. Let me explain what that means.
Why locusts? Because I just learned a fascinating fact about them: they are not a separate species.
Locusts are the swarming phase of certain polymorphic grasshoppers that are normally solitary creatures, but under certain conditions (such as overcrowding, certain chemical trigger conditions and other subtleties I don’t get) they change their physical appearance, get a lot stronger, a lot more gregarious and aggressive, and form huge nomadic swarms. The picture above shows the two phases of the desert locust. At one time, they were thought to be distinct species.
When I first learned about this bit of science trivia last week, my immediate reaction was “wow, locusts are basically zombie grasshoppers!” But the more I thought about it, the more it struck me that this is a case of fact being stranger than fiction. Locusts are stranger and scarier than the zombies of our imagination.
And the more I thought about it, the more I also realized that I was a locust. Maybe 1/8 locust as a consumer, and probably 1/2 locust as an economic producer.
If you’ve ever participated in the “sharing economy” in any way, not just the worst-case act of offering or using a Groupon deal, you’re a locust too. Participation in anything from Airbnb to Zipcar (convenient A-Z phrase there) makes you at least partly a locust. It also does not matter whether you use a p2p resource base, one supplied by a small business sector, or one supplied by a big company. You’re a locust in all those cases.
I expect there are people out there who avoid operations of known dubious repute like Groupon, but the idea that this alone frees you of complicity in the locust economy is laughable. It is far bigger, and far harder to escape from than you think.
Zombies versus Locusts
For some time now, I’ve been fond of the idea that consumers are like zombies, and that during recessions, they are scarier than big capitalists (vampires). A few years ago, there was a vigorous online debate about the relationship between the state of the economy and the relative popularity of vampire and zombie movies.
Apparently, zombie movies are more popular during recessions.
It’s not hard to see why the analogy is so attractive. The identification of mindless consumerism with zombie behavior is very tempting. I offered my own related spin a few years back (The Gollum Effect).
But locusts bring a whole new level of detail, real-world precedent and seriousness to this class of metaphors. Because unlike fictional zombies, locusts aren’t the dumb instruments of a witch doctor or a mutant virus. They are actually smart and self-interested automatons, which makes them more scary.
In 19th century America, huge Rocky Mountain locust plagues were a feature of agricultural life. One swarm was recorded at 198,000 square miles (larger than California) and over 12 trillion insects, the “greatest concentration of animals ever speculatively guessed” according to the Guinness Book of World Records (via Wikipedia).
The economic devastation was big enough ($200 million between 1873 to 1877) to measurably impact the national economy during the plague years.
Then they suddenly and rather mysteriously went extinct. More on that later, let’s cover the basics first.
I didn’t quite understand the entomology I read up on, during my few hours of browsing locust facts, but I came away with the amateur understanding that the reason for locust swarms is probably some mix of
- Opportunistic exploitation of a pattern of scarcity epochs punctuated by abundance spikes
- An element of predator satiation: a survival strategy based on overwhelming predators with numbers so that more of the species survives.
Locust swarms are also among the rare nomadic biological entities besides humans (nomadism is not a predictable pattern of movement, unlike migration,which is typically a sustainable pattern of movement through a resource landscape that’s not being devastated by the movement). They are nature’s rioting mobs, moving opportunistically from one store of food to another, without much concern for sustainability.
Whatever the biological details, the key point is that locusts devastate their foraging base.
Locust swarms don’t create new value. At a systemic level, the most charitable thing that can be said about them is that they efficiently strip mine value in a tyranny-of-the-biomass-majority way.
They out-compete other species through sheer numbers, and leave others to pick up the pieces as they return to their solitary, non-swarming grasshopper phase. In this case, human farmers. The collapse of locust swarms completes the cycle in a way we’ll get to.
Locust economies are built around 3-way markets: a swarming platform “organizer” player who efficiently disseminates information about transient, local resource surpluses, a locust species in dormant grasshopper mode, and a base for predation that exhibits a scarcity-abundance cycle.
So long as different locations are not synchronized, a locust market will usually have a surplus somewhere, even if it is a zero-sum or negative-sum market overall. Where that surplus comes from varies. In human farming, it is a natural consequence of the plant-harvest model.
Unfortunately, within the human world, it seems that the prey base is usually some sort of small business sector (either independent or franchisee chains). I will call this the Jeffersonian middle class, as in economic actors driven by the producerist values espoused by Thomas Jefferson (basically “small, local and independent”).
The war between the 1% and 99% seems to play out with the 1% and the 90% collaborating to prey on the 9% in the middle — the Jeffersonian middle class.
This is a very different class than the paycheck middle class, which has a superficially similar financial life. But during hard times, the paycheck middle class turns into the locust class in both production and consumption behaviors.
In a locust economy, the Jeffersonian middle class is a terrible place to be. It is no accident that the worst-hit victims of the locust plagues of the 19th century were small farmers living the Jeffersonian dream handed to them by the Homestead Act of 1862.
Abundance and Scarcity
Locust swarms are aggressively and energetically social. Remind you of any contemporary pattern of human behavior?
There seems to be an implicit holier-than-thou assumption among sharing economy evangelists that social sharing is primarily about virtuous behaviors like generosity, empathy, minding the planet, conserving resources, avoiding waste and so forth. Only secondarily do they see it as a zero-sum/negative-sum adaptation to recessionary conditions — Bruce Sterling’s favela chic.
They rarely think of it as a predatory behavior at all.
I haven’t yet worked out the details, but it seems to me that there is a curious interplay of scarcity and abundance in locust economics. On the one hand, there is local scarcity. Only so much wheat to eat locally, only so many local coupons offered by restaurants desperate for marketing leverage.
Once you’ve used up your coupon from the local paper, you have to pay full price. But if you can obtain news about another coupon in the neighboring town, the game changes.
Once locusts acquire an informed kind of market mobility through better discovery mechanisms, they can range over a much larger area of wheat fields or restaurants. You can continuously derive savings at the expense of other economic actors (wheat farmers or restaurant owners).
Once you increase your foraging range sufficiently, “local” means the smallest area within which you never have to pay full price.
So the abundance here is an illusion created on top of local scarcity via cheap discovery of transient local surpluses, artificially created by small Jeffersonian middle class actors hopelessly looking for leverage, and co-opted by swarming-platform owners.
Whether it is underutilized inventory of living space, coupons, parked cars or anything else, for most of the people, most of the time, if you have enough of the market navigation information, and are willing to travel a little further than you normally do, you can always find a deal.
The catch is of course, that for platform organizers to be profitable, they have to aggregate such slightly evil locust instincts and create locust swarms. No individual restaurant patron sets out on a 20-mile drive to a neighboring suburb with the malicious intent of helping bankrupt a restaurant there. Most sincerely believe they are just enjoying an exploratory adventure, and most would probably go back if they discovered something sufficiently unique and amazing via a Groupon deal.
But the way the aggregation model for the swarming platform works, the only incentives that can be offered are the ones that work on those least capable of hooking a returning customer through unique value. A truly unique restaurant will likely be well-known and constantly overbooked anyway, and have no need to offer a financially crippling deal. Even if a particular individual charitably decides to return to “give back” to a particular restaurant, there is a good chance the locust attack has put it out of business, making individual good intentions moot.
So the system can only create transient locust swarms out of individual slightly evil intentions. A locust market is one which looks more information-efficient than grasshopper markets, but really just has a pattern of information flow that favors different actors.
I suspect it is possible to design an incentive scheme that would actually be sustainable, but still offer customers some opportunity for consistent savings through nomadic swarming. Some sort of hybrid locust-grasshopper economy. But I’ll leave that question aside for now.
Software and Locusts
I’ve been thinking a lot lately about Marc Andreessen’s famous line, “software is eating everything.” The specific choice of the word “eating” is revealing.
Locusts also eat everything.
Well, almost everything.
What’s really going on is that software-enabled human locust swarms are eating everything they can access. Which generally means small business front-end layers wrapped around larger platforms. The locust swarms cannot actually take on true Big Industry unaided, for the most part. When Big Industry owns its own last mile (think McDonald’s) it is rarely stupid enough to offer up lunch for locusts.
Those who believe that the Internet-enabled economy is going to replace “hierarchies with networks” everywhere (whatever that mathematically nonsensical phrase is supposed to mean) are perversely choosing to ignore the reality of what is happening. It isn’t the 1% fat cats who are becoming victims of the new economy. It is the little capitalist in the middle. The brave little Jeffersonian middle class capitalist who could.
The long tail and the big head together are killing the middle everywhere. In education, locust swarms mean that this is a very bad time to be a mid-level education provider. If you’re not a top professor at a top university, or a long-tail independent provider of some sort of personalized education (such as bloggers offering courses on a very small scale — a game I am trying to get into), you’re in deep trouble. The education-seeking swarms will get everything they need from the top and bottom of the distribution and leave the middle to starve.
Hotels, taxis, education, music, publishing, restaurants. The list of locust-devastated/soon-to-be-devastated industries is growing longer every day. I suspect the locust economy is now bigger than California’s economy.
The smart Big Money is moving rapidly into swarming infrastructure (with apologies to John Hagel, I am starting to think “Pull Platform” is also lipstick on a pig — the 1% figuring out a way to use the 90% to feed on the 9% via a temporary alliance for mutual benefit).
The smart Little Money is moving into locust makeovers. People with little capital are figuring out how to arm themselves to be better locusts.
Is there a way to reclaim the middle? Is there hope for the Jeffersonian Middle Class?
The Myth of Jeffersonian Resilience
The Jeffersonian middle is the place where decency, goodness, hard work, an admirable work ethic, modest and non-predatory entrepreneurial ambitions and mainstream culture live. This is not the regular middle class but the Jeffersonian middle class that idealistically seeks an autonomous, meaningful existence.
The typical member of this class does not want to either build a billion dollar company or live off a passive-income lifestyle business based on exploitative arbitrage. He or she wants to work hard at a meaningful activity and asks only to be left alone to be content with modest rewards and economic autonomy.
These are the Clueless of the economy.
In fact both zombie and vampire narratives (and this locust narrative that I hope catches on) are based on the fears of this class. Even though the class itself is relatively small, it also serves as the class that the rest of society aspires to, or pretends to aspire to.
Wage slave and Big Company Executive alike dream of retiring to run small bed-and-breakfast or restaurant operations. So all like zombie and vampire stories.
It is also the class that foolishly believes in resilience without mobility at a small scale. Unless your idea of small-scale resilience is totally isolated communes behind an economic firewall that seals out the global economy (I have yet to see a working example of that ideal), you are coupled to the larger economy and vulnerable to bigger actors — Hamiltonian swarming-platform actors who believe in growing as big as they can, as fast as they can.
Because you see, it is not the Big Guys alone that you have to figure out. It is the Big Guys in an alliance with locusts whom you are predisposed to be contemptuous of, but are capable of sneaking through your defenses.
Being in the locust swarm full-time or part-time, sucks. But it is often the only way to make ends meet in the long tail. Being in the 1% (assuming you are okay moving from being slightly evil to Mr. Burns evil) is by definition not an option open to all.
But being in the Jeffersonian middle is probably the worst position to be in. Jeffersonian middle class dreams are not resilient even in grasshopper economies.
Unlike truly secure capitalists, who generally have enough wealth to cash in long positions in a declining economy for privileged starting positions in new ones as investors (Rockefeller’s descendants are still pretty darn rich several generations later), small-scale capitalists barely have enough resilience to ride out the economic volatility of a single human lifetime.
To be totally brutal about it, if you’re in the middle, you’re probably screwed no matter what the economic conditions are. Since industrialization began, there has rarely been a period where small business has been good business. If you’re not willing and able to grow big, your fate is to get eaten alive by either locusts (or directly by bigger organisms) or go out of business.
The resilience of the Jeffersonian middle class is a myth based on the false sense of security that comes with owning a business rather than relying on a paycheck. A very special kind of self-sustaining myth based on continuous churn.
To take coffee shops as an example, an unending supply of idealistic wannabe cafe owners enters the sector every year, operates at a loss for a few years, and exits. The result is that even under normal business conditions, without swarming locust consumers, this is a loss-making business with an extinction rate of around 90% at the 5 year point in the US. Starbucks has the scale to be profitable and resilient. Locust coffee drinkers happily drink the excellent, loss-making coffee from small, local Jeffersonian coffee shops and callously retreat to Starbucks or DIY homebrew if the prices go up.
Starbucks survives, coffee drinking grasshoppers survive, small coffee shops go in and out of business.
Add the locust-swarming platforms into the mix and you get mechanized, efficient predatory dynamics that speed up the idealism-to-extinction churn rate.
Throw in a recession, and instead of the devastation of true abundance (such as a harvest season), you get the devastation of a system in a state of scarcity that is trying desperately to send fake abundance marketing signals, in a hopeless fake-it-till-you-make-it attempt at survival.
The Fate of the Locust
Being a locust, and allying with the Big Guys to prey on the Medium-Sized Guys is no picnic either. Ultimately, it is a pact with the devil. Locusts are created out of a downwardly mobile paycheck middle class via dynamics I’ve written about before. Becoming a locust is smarter than staying trapped in either a doomed paycheck lifestyle or a faux-resilient Jeffersonian middle class. But only by a whisker.
The blogging/publishing component of my business (which is much smaller than my consulting business) is primarily an intersection of many locust economies. I am a prosumer locust in an alliance with Amazon, Google and various other locust-swarm pull platforms.
But what happens to locusts when all the crops have been eaten? To take an example close to home for me, what happens when traditional media is really gone, and there’s nobody slogging away to provide blogging fodder for locust media types in armchairs, like me? Almost all of my own consumption is traditional media — books, news stories and such — that I am helping Amazon and Google kill. I don’t really read other bloggers much.
Turns out, in nature, locusts most likely turn to cannibalism as a way to manage both supply volatility and secular supply decline during their swarming phase.
But ultimately, the swarms disappear. The intent of the swarming phase — riding temporary abundance to survival of the species — has been accomplished. In some cases, as with the Rocky Mountain locusts, if other factors come into play, they may even go extinct. In this particular case, the likely explanation is that farming destroyed vast quantities of locust eggs through large scale plowing of Midwestern lands via industrialized agriculture. So the small farmer and locust both disappeared, giving way to large scale agribusiness.
If traditional media gets killed and bloggers are forced to primarily work off each other’s work, an unpleasant endgame and shakeout will be triggered. I hope it does not come to that.
You can observe such cannibalization dynamics in the internal, so-called p2p dynamics in any locust market. Truth be told, participating as a provider in a p2p network like Airbnb or sharing a car is simply more inconvenient than owning your own place or car and having it always available.
When software eats everything by turning inefficient grasshopper consumers into efficiently swarming locust consumers, we pay for small new income streams and cheap deals by way of increased economic coordination costs and shadow labor.
In other words, in a locust economy, you cannot just decide to go somewhere and get in your car to drive there. You have to coordinate with other potential users of that shared resource. You have to keep your apartment clean and sharing-ready. You have to do minimum-wage work that you might consider beneath you (though such status concerns don’t bother me, annoying chores do).
In the sharing economy, we may not be eating each other literally, but we’re certainly eating into what Richard Dawkins called the extended phenotype of our neighbors. To the extent that your belongings are a logical expression of your genes and memes sharing them amounts to allowing others to eat them.
So the harsh bottomline of the locust economies, once the Jeffersonian middle class prey base has been bankrupted, is that we locusts turn on each other.
We call it peer production and prosumer economics, but it isn’t Jeffersonian producerism. It is locusts in their cannibalistic phase.
When the harvest is gone, software eating everything translates to prosumers eating each other.
There ain’t no such thing as a 50%-off lunch.
Now if you’ll excuse me, I have an expiring Groupon to use across town, and a meeting with a fellow locust to get to after. I hope that Zipcar downstairs is available. And then I have to get back home and clean my apartment — great use of a PhD in aerospace engineering, eh? — before my Airbnb guest gets here.
(Okay, I made up most of that last paragraph. Only the meeting-another-locust part is true. For now.)