The Data Economy Is a Barter Economy
What is the best way for businesses to use data in a way that feels ethical to consumers and does not spark a regulatory backlash? This question is sparking endless angst in today’s C-suites. All manner of policy responses have been suggested, but one simple and important place to start is to change the way we talk about it. Borrowing an idea from cultural anthropology and describing this exchange as “barter” will clarify the minds of regulators and investors to focus on the scale and nature of long-concealed exchanges that now lie at the heart of the tech world, and how to create a more acceptable framework that protects consumers.
The use of consumer data today is expanding exponentially — as is public and political criticism of these practices. Just think of the political scandals that exploded a couple of years ago around Cambridge Analytica. Or regulators around the world examining whether social media platforms such as Facebook have abused their monopoly powers.
The new bipartisan bills calling for tighter tech regulation that are now circulating in the U.S. Congress — and the appointment of Lina Khan to head the Federal Trade Commission — will only inflame this debate.
So, what is the best way for businesses to use data in a way that feels ethical to consumers and does not spark a regulatory backlash? This question is sparking endless angst in today’s C-suites. All manner of policy responses have been suggested: breaking up tech giants, redefining monopoly controls, introducing new privacy laws, and letting consumers “own” their data to name a few.
One simple and important place to start is to change the way we talk about it. Policy makers, economists, techies, lawyers, business leaders, and consumers should borrow an idea from cultural anthropology and consider the concept of “barter.” Doing this will clarify the minds of regulators and investors to focus on the scale and nature of long-concealed exchanges that now lie at the heart of the tech world, and how to create a more acceptable framework that protects consumers.
At first, this might sound odd. After all, anthropology is one of the least-known social sciences — it’s probably most famously associated with Indiana Jones. And the word “barter” conjures up images of swapping meat for berries — an image that seems far removed from the modern C-suite, let alone Silicon Valley.
Economists tend to assume that barter is a prehistoric practice that disappears whenever societies invent money — that, at least, was the scornful view of Adam Smith, the 18th century intellectual, and it has shaped economic thinking today. Most Western executives have absorbed a cultural assumption that because “money makes the world go round” — to cite the cliché — the most important things in an economy are measured in monetary units and/or organized with money. Transactions that happen without money (i.e. those which are “free”) are thus downplayed and/or ignored.
Anthropologists, however, have a much broader vision of how the economy works. They look at how exchanges bind societies together in a broad sense and know that money-based exchanges are only one of the flows that bind us together. Systems of social credit, gifts, and barter matter too, even if they are rarely discussed in public and cannot be easily factored into an economic model.
Looking at what is hiding in plain sight — i.e. non-monetary flows — can help frame the modern digital economy.
