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Prosumerism - A Technological Alternative to Traditional Capitalism

Updated on July 4, 2014
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Prosumerism History and Definition

The Futurologist Alvin Toffler first coined the term 'prosumer' in his 1980 book 'The Third Wave'. The Third Wave expanded upon predictions that Toffler had been making since the early 1970s, suggesting that over time technology would blur the previously distinct lines between 'producer' and 'consumer', gradually merging the two roles into one. The portmanteau 'prosumer' expresses the merging of these two roles by taking the first part of the word 'producer' and the second part of the word 'consumer'.

Since then there have been many technological developments which have moved us closer to Toffler's vision, and his work has remained popular amongst a wide range of groups from economists and big business leaders to tech visionaries and the general public around the world. In 2006, for example, a translation of The Third Wave was the second best-selling book in China, beaten only by a book written by Communist revolutionary leader Mao Zedong.

Today the term 'prosumer' can mean many things to many people. For example, a corrupted version of the term which is generally presumed to be a combination of 'professional' and 'consumer' is very popular amongst marketing executives to describe a demographic of retail consumers and hobbyists who want to buy professional grade products.

On the other side of the coin, there is a growing group of people who see the prosumerism trend as an opportunity to tilt the balance of power away from big business and towards the ordinary consumer. By actively participating in the process of production, and sharing the results with peers, consumers can gain access to a broader range of more personalized products, often for a lower price (or even free), whilst at times even earning a second income from their creations. This effectively allows ordinary consumers to take greater ownership over 'the means of production' and take a greater share of the wealth created, without the political tyranny or artificial wealth redistribution of socialism, and without violating the capitalist principle that each person should be rewarded only according to the value they are able to create for society and the economy.

The purpose of this hub is to explore this idea that prosumerism can empower ordinary consumers and limit the excessive power of big business over our lives - and in fact, already is doing that in many areas. In it I will present the facts as well as expressing my own opinion, that prosumerism can provide a viable alternative to traditional capitalism, which retains its many benefits whilst counter-acting its less desirable side-effects, and without any of the sudden, revolutionary, and economically painful effects associated with all previous alternatives to our current form of capitalism.

Alvin Toffler on How Wealth Will Be Created in the Future

Media Digitization and Decentralization

The media industry has probably been affected more than any other by modern technology, and .provides an excellent example of the rise of the prosumer. In fact, this website itself is a prosumerist media enterprise, and in writing this article and publishing it here I am acting as a media prosumer.

The digitization of music, movies, books, magazines, newspapers and other media has presented a massive challenge to big business, whilst bringing lower prices and increased sharing options for consumers. And of course, when combined with the power of the internet, and social media in particular, it has massively increased the opportunities for people to create, distribute, and potentially profit from their creative talents without needing the backing of a traditional media company.

Today we rarely pay for our news content, and a legion of bloggers and independent website owners are supplementing the traditional mainstream media. Writers on sites like Hubpages produce magazine style articles, and the self-publishing of books is now no longer purely a 'vanity publishing' exercise, but a genuine alternative to the traditional route. Independent film makers and other video producers share and profit from their work on YouTube and other sites, and there are many examples of musical artists breaking into the charts after gaining popularity through distributing their own independently produced music over the internet.

Many of the people doing these things do not do so as a full-time occupation. They do it for the love of the art itself, and perhaps to earn a small second income or build a name for themselves. A large proportion of the content they produce is available for free. These people, these talented and passionate amateurs, are classic prosumers. They have a passion for a particular media and they use the technology available to them to both consume and create content independently of traditional media channels and companies. Those who do make a full-time income as a prosumer often do so through an involvement in more than one activity, perhaps writing online articles and self-publishing books, releasing their own music whilst also writing a music blog, or producing videos at the same time as writing.

In many cases the traditional media companies have struggled to keep up with the new consumer demand to be able to access content for free and share it freely with their peers. In the future some of the trends and new technological developments described below could mean that a much broader range of industries will be faced with the same challenges that the media industry is already facing. At the same time, a much wider range of opportunities will arise for enthusiastic amateurs to become 'prosumers'. As well as drawing a larger number of people into prosumerism, this has the potential to enable many of today's part time prosumers to make the transition to full-time by adding new income streams whilst reducing their expenses by accessing a broader range of free products.

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The Open Source Movement - Formerly The Hacker Culture

Hackers made the internet, and have played a leading role in defining our relationships to modern technology and the culture which surrounds it.

The name 'hacker' has, over the years, taken on a number of connotations which the original hacker movement do not approve of. Today when people talk about hackers what they often means is 'crakers' or more straightforwardly, computer criminals. Originally hackers were a subculture of technology enthusiasts. They were the tinkerers and the innovators who built the internet and much of the software which we use today.

Within the hacker culture there has always been a strong ethos which values the free availability of technology. Hackers were always most interested in the excitement of exploring what technology can do, and sharing this with the world - often much more than they were interested in profiting from their creations. Because of this they have often created software and given it away for free, just for the Kudos and because they thought it was cool, or worked together with peers in open collaborations to create something they wanted themselves and which would then be made available to anyone who wanted it. One of the best examples of this spirit is Tim Berners-Lee, the man who invented the World Wide Web itself, and then gave it away for free.

Because much of modern technology, especially on the software side which the hackers were most active within, was created by maverick individuals, these people generally dislike intellectual property rights, which they see as stifling innovation by real people rather than protecting innovation by businesses with big R&D budgets. They prefer for their peers to give things away for free so that they can freely build on what others have done and take things to the next level, and so created a culture which gave great kudos and high social status to anyone willing to do this.

Over time the hackers' natural distrust of authority, both government and big business, spawned another sub-culture - the crackers. These people took the hacker culture's dislike of intellectual property to the next level, by using their skills for illegally 'cracking' intellectual property protections to make branded software and commercial media products available to anyone for free. It was within this environment that what most people today think of as hackers arose - both the criminal contingent whose interest is in breaking into software for their own personal gain, and the idealistic 'hacktivist' types like anonymous who use criminal methods to promote their own take on the hacker culture's 'free and open' ideology.

The more conservative branch of the hacker culture went on to found what is now known as the 'open source movement' and pioneer the use of 'creative commons' licenses. Open source projects are primarily developed by volunteers through open collaborations. They are given away free to the end user, and other developers are free to take the source code and change it to create their own spin-off or to use a program within a larger project. Thanks to the open source movement there are now thousands and thousands free and open alternatives to branded software products. This is great for consumers on a budget who want a free product, but it also seems to have promoted rather than stifled innovation just as hackers have always contended. The creative commons license takes the same principle and applies it to a much wider range of products, especially media products. Under these licenses the creator will give away their product and allow others to reproduce and change it, putting on their own unique spin - perhaps in return for just an 'attribution' crediting the work to the original creator.

The idea that technically savvy or creative and artistic consumers can collaborate to create their own products without the involvement of business and without any money changing hands (except, perhaps, for donations given to those taking the time to manage a project by people who have appreciated the result) is deeply prosumerist, and both the open source movement and the creative commons license structure are today at the very heart of the new prosumer economy.

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Open Hardware and DIY 2.0

Open source hardware is hardware whose design is made publicly available so that anyone can study, modify, distribute, make, and sell the design or hardware based on that design. - The Open Source Hardware Association

The 'open hardware' or 'open source hardware' movement seeks to take the open source ethos which has proven to be so successful in the software world and extend it to cover physical products. It has been enthusiastically adopted by members of the maker movement, who are taking the concept of DIY to a whole new level.

A 'maker' is anyone who makes their own stuff, from craft items and household items to personal technology. Whereas DIY is concerned with building, improving and maintaining property for yourself rather than hiring experts, the maker movement is all about making, improving and maintaining your own consumer products. As such, it actually covers a really wide range of prosumers, but the label itself is probably most popular amongst tech-savvy gadget lovers who either make their own gadgets or use cutting edge-technology like 3D printing to make things for themselves. Some of these people also like to call themselves 'electronics hackers', to express the roots of their DIY ideals within the hacker culture.

In addition to solo 'makers' the open source hardware ethos can also be adopted by organisations, and has been particularly influential in the development of 3D printing technology. Many of the early 3D printing companies which helped to develop the technology to where it is today embraced the open source hardware ideal.

3D printing itself presents a massive opportunity for prosumerism. This article has already looked at the way that the digitization of media allowed regular people to play a major role in media production, sometimes profiting from their work and sometimes doing it purely for the pleasure. In the same way, 3D printing has the potential to 'digitize' a massive range of physical consumer products, which can then be shared as digital files and printed out at home. The effects of this could be huge, with some commentators already comparing it to the industrial revolution of the 17th and 18th centuries - and its main effects will be the challenge it presents to big business and its potential to turn many more of us into prosumers.

Open Education

One of the most important things that you can do if you want to be a good prosumer is to continually learn new things, experiment with new things, and to share what you learn with others. This means that you need to educate yourself.

Fortunately one of the most significant new trends to embody the 'free and open' ideals of hacker culture and prosumerism is open source education. It is now easy to find free internet courses to learn about virtually any subject and at any level, from simple beginners courses to advanced post-graduate studies. You can do this through 'open courseware' from top universities like MIT, which makes the lectures and course materials from real university courses available for anyone to study at home for free, or through dedicated online learning sites like Coursera or Udacity which offer college level courses, some of which are graded and can earn you genuine US college credits, and which have been specifically tailored for distance study over the internet. Most of these sites offer their courses for free, but charge you if you want to be graded and get college credits.

The resources described above are based on the open source ideal, but are arguably not prosumerist. I say this because the courses are generally created by traditionally universities. There are, however, other more prosumer oriented options. For example, Udemy not only offers a wide range of both free and paid courses, it also allows anyone with expertise in a given area to create their own course, and choose whether they want to offer it for free or charge a small fee.

The Peer to Peer Economy - Crowdfunding, Crowdbanking, and Digital Currency

Banking is at the very centre of our current economic system, and in its current form is the epitome of 20th century capitalism. In much the same way, alternative banking services are likely to be at the centre of any major shift towards a prosumer economy.

Peer to peer lending and investment has the potential to replace many of the traditional functions of banks, thereby reducing the power and prevalence of the kind of 'casino banking' and out of control money markets which caused the global financial meltdown of 2008.

Crowdfunding is a way for new business ventures and creative projects to fund themselves through large numbers of small investments from regular people, rather than a single large investment from an organisation such as a bank. In the early days this was used by creative and social ventures to seek donations, in return for gifts such as free tickets or products, signed memorabilia and so on. Today regulatory changes have already been made in many territories to allow people to effectively buy shares in a new business through small investments on crowdfunding websites, meaning that anyone can easily become an 'angel investor' with just a few dollars in their bank account and to profit from supporting individual inventors, entrepreneurs, and small start up companies.

Crowdbanking, or peer to peer lending, allows both private individuals and businesses to get access to loans using a similar method. The finance for each loan is made up from a large number of small investments made by regular people, who then profit from the interest payments made on the loan. You can crowdfund a car loan, or even a mortgage, and get a competitive interest rates as well as knowing that the profit will all go to regular people rather than the 'banksters'. On the other side of the coin, anyone with a few hundred dollars or more to invest can get very competitive returns, and complete control over their risk-to-reward ratio by selecting the interest rate they want and the level of credit score they are willing to accept from borrowers.

Although crowdfunding and crowdbanking can go a long way to shift the balance of economic power away from the big banks and back towards regular people, the newest disruptive technology with the power to bring radical changes is peer to peer digital currency. The most famous example of this is Bitcoins, but there are others too, such as Litecoin.

Our current global economic system puts a vast amount of power into the hands of central banks. These central banks play a leading role in shaping national economies; they have the power to create and issue currency, set interest rates, and more. They supply all of the other banks with money and in many ways excerpt more power over our national economies than our governments. What many people do not seem to understand about central banks is that they are private, profit-bearing enterprises which are run for the benefit of their shareholders - not for the benefit of the citizens in the country's whose economies they control. There is a strong argument that inflation - the perpetual devaluation of the currency which we each have in our pockets and bank accounts - is purely a result of central banks creating money from nothing each year and then lending it out for a profit. Effectively, the rise in prices which we see each year due to inflation may be nothing more than the fee we are paying to central bankers for issuing currency.

Peer to peer digital currency provides an alternative way to issue currency. There is no central power who controls this process and takes all the profit, but rather the whole thing is open to anyone who wants to get involved and is controlled by peer to peer interactions amongst individual people. Some believe that in addition to allowing anyone who gets involved to take a share in the power and profit currently taken by the big banks, peer to peer digital currencies could also end inflation.

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Hobby Craft and the New Cottage Industries

Prior to the first industrial revolution cottage industries dominated the economy. The technology of the 17th and 18th centuries changed that, enabling centralized businesses to mass produce products using large workforces. The idea behind prosumerism is that the technology of the 21st century will reverse that trend, and lead us back into an economic model that dominated by the modern equivalents of the 'cottage industry'.

Communication technology is continuing to reduce the need for people to gather in a single location to work together on an economic enterprise, whilst other technologies are enabling new ways to fund, collaborate on and promote enterprises which are low cost and organized in a peer to peer fashion, reducing the need for a central management team to pay for and organize everything, and to take the bulk of the profits.

Whilst many of the prosumer activities I have looked at so far might seem a bit 'techy' and only open to those with technical skills, one of the most surprising results of these trends has been the re-emergence of 'craft skills' as a viable way to earn a living. Websites like Etsy specialize in allowing people to sell their own craft products, whilst many other people have been able to make a living by making and selling their own products on large sites like Amazon and eBay. You don't even need to make and sell your own products to make money from a craft or other skill which you have - you can make money by writing articles on Hubpages or posting videos on YouTube teaching other people your skill and showing them how to make cool stuff!

Freelancing and the Independent Economy

Although some companies take advantage of freelancers in the same way that they take advantage of temporary agency staff, freelancing is a growing trend with significant 'prosumerist' implications.

Communications and computer software technology has made it much easier for people to work from home as a freelancer rather than going into a central workplace as a traditional employee, and many people have taken advantage of this opportunity. A good analogy of the move from traditional employment to freelancing is the shift in governmental systems from monarchy to democracy. A traditional employee is effectively the 'subject' of their employer. They are told where to go and what to do and how much they will be given in return. A freelancer has much more freedom over what they do, as well as more freedom to set their own rates.

Being a freelancer also allows people to take advantage of the tax advantages associated with being considered a business by the government rather than a lowly human being.

The prosumerist vision is for an economy in which most people are independent workers rather than corporate drones.

Characteristics of the Emerging Prosumer Economy

The movement towards a more prosumer oriented economy reduces the importance of big business in the creation of wealth and the development of the economy. As such, one of the main characteristics of the prosumer economy is a shift away from the interests of business, and towards the interests of consumers, who are themselves taking on many of the economic functions previously performed only by businesses.

One of the main ways in which this manifests, and one of the main battlegrounds which will define the extent to which prosumerism succeeds, is in our attitudes towards intellectual property. Intellectual property is even more important to big business now than it has ever been. It is also more widely used than ever - today even genes and plant extracts can be patented. Whereas in the past strong intellectual property rights where essential for innovation, as they enable big business to invest in research and development and be confident of getting returns on their investment, today the extent (and unthinking application) of intellectual property rights is stifling the true source of innovation in the modern world - individual makers, tinkerers, hackers and inventors - just as technology is offering us the potential to empower these people more than over before. Of course that isn't to suggest that we should do away with intellectual property rights altogether, but rather that we should rethink the system, and that as individuals we should try to support open source and open hardware projects as much as possible - for social reasons as well as for the simple benefit of getting stuff for free.

One example of the way that the current intellectual property system is stifling innovation is in the rise of a new breed of businessperson - the 'patent troll'. Patent trolls are experts in the legal system, and make their money by buying up as many patents as possible, and then suing anyone creating something even remotely similar. Not only do these people never use the patents themselves to make anything useful for the economy, they are having a devastating effect on small business and individual creators through spurious infringement claims. That is because they know that even if a company hasn't infringed on a patent, it can often be prohibitively expensive to fight the case in court - perhaps even more expensive than just paying these patent trolls whatever fees they ask for. You can learn more about patent trolls here.

Another problem with the patent system, which was recently recognised by the British government, is that regular people often create innovations which could be patented, but the system is so expensive and difficult that they don't bother. It is only big business which uses this system, and in many cases they may be patenting ideas which were originally created by solo innovators who couldn't afford to do so themselves. Patents can also be used suppress the competition. If a new technology is likely to harm the profitability of a company (for example by making similar or better products available to consumers for a much lower price) it is standard business practice to simply buy up the patents and do nothing with them other than refuse anyone else the right to take advantage of the new technology they represent.

Prosumerism itself reduces the importance of intellectual property rights to the overall economy as more products are made available under the creative commons license. This will continue to happen whatever we do, but to fully support the emergence of a prosumer economy would require a rethink of some of our legal structures.

In a prosumer economy the role of the amateur and hobbyist is amplified. One characteristic of such an economy would be a rise in the number of people working part-time in a range of different roles, perhaps related to their hobbies and interests at the time, rather than in a single full time career role. It is well known that this is already happening. Recent years have seen a large increase in the numbers of people working in part time positions rather than a full-time job, and this has been presented to us as a symptom of the recent economic crisis - but it may also be partially due to a shift away from the traditional economy and towards a prosumer economy.

Further supporting the shift towards a prosumer economy would also require us to change the tax system, which is currently set up largely to benefit business, supporting businesses to create wealth and jobs (which until recently has been very necessary as they were the only significant economic drivers), and instead refocus it to benefit individual human beings and support them to create wealth themselves. In the past business was almost the only game in town when it came to supporting the economy, creating wealth, and providing productive employment. Already today individuals are proving to be more innovative than big budget R&D departments when it comes to developing new technologies (see Apple, Facebook, 3D printing, Microsoft - all created by individuals with few resources), and prosumers are contributing a significant proportion of the economy's growth and wealth creation. In the future we have an opportunity to shift this balance further away from big business and towards real people - but the policies which our governments adopt will be critical in determining to what extent this happens and how successful it is.

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How You Can Support Prosumerism

There are many, many ways that you can become a prosumer yourself and also support the movement towards a more prosumerist economy. Way too many to list here, in fact. But here are some of the most obvious places to start:

  • Always look for free, open source alternatives to paid, branded software. Next time your Microsoft office suite renews, or you see some software you'd like to buy, consider that the 10-15 minutes you're likely to spend looking for a free alternative will pay you back amply in financial terms, and will also support the prosumer economy.
  • Contribute to open source projects whenever and in whatever way you can. You don't have to be a programmer to do this - you can help with translations, graphics, promotion, reporting bugs, or with small financial contributions to your favourite projects as and when you can afford it.
  • Get a hobby. In fact, get as many as you can find the time for. In a prosumer economy, hobbies are the new jobs.
  • Make stuff! Learn how to make and customize things for yourself, your friends and family, and perhaps to share over the internet. You may even make some money from it!
  • Teach others to make stuff, and through sites like Hubpages or Youtube you can even make some extra money whilst doing it!
  • If you have money to invest, choose crowdfunding or crowdbanking over the regular banks and stock markets which so recently brought the global economy to its knees. You'll probably make more money anyway, and you'll definitely be doing the right thing (imho).
  • Get Bitcoins or some other similar digital currency and use them to pay for things wherever possible.
  • Consider working as a freelancer or making a second income from your hobbies. Conversely, try not to work for others so much - perhaps reduce your hours and become more of a prosumer to reduce your expenses and supplement your income.
  • Instead of idealising useless reality TV stars as celebrities, raise up people who contribute freely to society (like Tim Berners-Lee who I mentioned earlier) as the best celebrities.
  • Get involved in citizen science!

In summary, as succinctly as possible: "Buy less. Make More. Share More. Sell Some. "!

A Viable Alternative to Capitalism as we Know it?

What is Your Opinion about Prosumerism?

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    • NateB11 profile image

      Nathan Bernardo 3 years ago from California, United States of America

      Two things have always bothered me about our economic system: That I had to be a slave to a job and that I've never had the capital to start my own business. That's why the Internet has been very exciting to me, because of the opportunity for freelancing and the fact you can make money without capital and you're not tied to a job. I've also never liked the idea that big businesses control all the products and we have to beg them for it.

      Very interesting to read about the culture that all this has come from and learning more about where it can go.

    • FlourishAnyway profile image

      FlourishAnyway 3 years ago from USA

      Although I hadn't heard of prosumerism, I like your explanation and buy into the concept enthusiastically (as evidenced by my being on HubPages). I particularly like your suggestions for how people can live the values endorsed here. Excellent information, including the description of hacker culture. Voted up and more.

    • electronician profile image
      Author

      Dean Walsh 3 years ago from Birmingham, England

      Thanks for the comments guys. NateB11 - That's exactly how I felt from when I first left school; working for someone else's benefit never really made sense to me. FlourishAnyway - That's great, I love the fact that we're all prosumers here on Hubpages, and that the site's full of people who embrace the concept even if they don't know it!

    • grand old lady profile image

      Mona Sabalones Gonzalez 3 years ago from Philippines

      I never read The Third Wave and was very appreciative of the video that you included in your article. It seems like the author predicted many things that came true, even before the age of computers.

      The prosumer economy is finding its way in the Philippines. I like it that way, but I still like malls, too because I love walking through them. Eventually, they can probably work better together:)

    • electronician profile image
      Author

      Dean Walsh 3 years ago from Birmingham, England

      Yes, I'm sure they can work together - there is no way that it will replace the traditional economy entirely.

    • Jo Robertson profile image

      Jo Robertson 3 years ago from South Africa

      South Africa has a lot of families where the housewife is involved in "home industry", that is, selling savoury pies, samoosas, chutney, chakalaka, vegetables from their gardens, spice combinations, clothes, cakes, and so on.

      I'm working myself on getting some sort of product on the shelves of my local butcher or spice shop, but first I need to fine-tune my technique so that my results are consistent.

    • electronician profile image
      Author

      Dean Walsh 3 years ago from Birmingham, England

      That's great, good luck with it!

    • Mrs. Obvious profile image

      Mrs. Obvious 2 years ago from Northern California

      Thank you so much for writing this. I am sickened by the current state of capitalism in our society, and had never heard of prosumerism. Fantastic concept. I love the idea of bowing out of the economy and taking matters into our own hands as much as possible. Thank you also for the section on what we can do to participate as a prosumer. I am an entrepreneur at heart, but the tenets of big business go against my nature. I have been looking at social enterprise lately as an alternative to traditional businesses and this concept is something I needed to hear that will help me in my search for the "what's next" in my life. Great hub!

    • electronician profile image
      Author

      Dean Walsh 2 years ago from Birmingham, England

      I hope you succeed in finding something both profitable and fulfilling! Thanks for stopping by.

    • Seasons Greetings profile image

      Laura Brown 2 years ago from Ontario, Canada

      I think it's going back in the history of civilization. Before we became consumers we were producers. Much of the current work force is more about serving the business itself than actually making/ producing anything.

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