Mission Economy

The computer [BBC Micro] was advanced for its time and went through successive iterations, spawning a cottage industry of new enthusiasts who modified it to improve its performance, wrote software and games for it, and were devoted readers of magazines dedicated to the burgeoning phenomenon. Acorn later faded, but its spin-out company, ARM Holdings, is today one of the world’s leading chip designers and software developers. ARM’s chip architecture was pioneered in the second processor for the BBC Micro. Another legacy of Acorn is the Raspberry Pi Foundation and its ubiquitous low-cost computer, which helps educators all over the world get digital technology in the classroom. This is a good example of how mission-oriented procurement can foster a scaling-up process in business that is not the outcome of focusing on incentives for business but on public needs. And business benefits in the process.

How to govern digital platforms in a way that fosters value creation for the majority of citizens, rather than private profits for the few, is a major issue today. The large technology companies have amassed record profits from the use of technologies such as the internet and artificial intelligence. These ‘big tech’ companies, sometimes called FAANG (Facebook, Apple, Amazon, Netflix and Google), have benefited from network economies which give early movers an advantage since consumers want to be on the same platform as others they can interact with. This, mixed with vast advertising revenues, has created a platform economy characterised by strong and increasing returns to scale, in which companies such as Amazon and Google hold enormous market power. The problem is they have increasingly used this power to extract what I have called ‘algorithmic rents’ in a modern capitalist system that looks more like ‘digital feudalism’⁴² – the ability to use algorithms to manipulate what people see and what they want. As the social psychologist Shoshana Zuboff has argued, we think we are lucky because we can search Google for ‘free’, but actually Google is searching us for free, and making a killing in the process.⁴³ The abilities of these large companies to sell our personal data, and manipulate searches so that their advertising revenues increase, are big problems which competition authorities have to grapple with, along with the problems associated with tax avoidance (the common strategy of shifting the source of profits to minimize tax owed). The fact that much of the ‘tech’ underlying ‘Big Tech’ is a product of public investment creates an even stronger case that publicly funded technology must serve the public interest. This requires regulation from a market-shaping perspective, and the need to find ways for governments to reward value creation, not value extraction.

We can start by recognising that capitalist markets are an outcome of how each actor in the system is organised and governed, and how the different actors relate to one another. This holds for the private and public sectors and for other sectors such as non-profits. No particular kind of market behaviour is inevitable. For example, the market pressures often cited as forcing a business to neglect the long term in favour of the short term, as too many companies do today, is the product of a particular organisation of the market. Nor is there anything inevitable in government bureaucracies being too slow to react to challenges such as digital platforms and climate change. Rather, both are outcomes of agency, actions and governance structures that are chosen inside organisations, as well as the legal and institutional relationship between them. It is all down to design within and between organisations.