WHICH GETS US TO THE CORE QUESTION:

This week sees the publication of "Who Owns the Future?," which digs into technology, economics and culture in unconventional ways. (How is a pirated music file like a 21st century mortgage?) Lanier argues that there is little essential difference between Facebook and a digital trading company, or Amazon and an enormous bank. ("Stanford sometimes seems like one of the Silicon Valley companies.")

Much of the book looks at the way Internet technology threatens to destroy the middle class by first eroding employment and job security, along with various "levees" that give the economic middle stability. [...]

You talk early in "Who Owns the Future?" about Kodak -- about thousand of jobs being destroyed, and Instagram picking up the slack -- but with almost no jobs produced. So give us a sense of how that happens and what the result is. It seems like the seed of your book in a way.

Right. Well, I think what's been happening is a shift from the formal to the informal economy for most people. So that's to say if you use Instagram to show pictures to your friends and relatives, or whatever service it is, there are a couple of things that are still the same as they were in the times of Kodak. One is that the number of people who are contributing to the system to make it viable is probably the same. Instagram wouldn't work if there weren't many millions of people using it. And furthermore, many people kind of have to use social networks for them to be functional besides being valuable. People have to, there's a constant tending that's done on a volunteer basis so that people can find each other and whatnot.

So there's still a lot of human effort, but the difference is that whereas before when people made contributions to the system that they used, they received formal benefits, which means not only salary but pensions and certain kinds of social safety nets. Now, instead, they receive benefits on an informal basis. And what an informal economy is like is the economy in a developing country slum. It's reputation, it's barter, it's that kind of stuff.

So instead of somebody paying money to get their photo developed, and somebody getting a part of a job, a little fragment of a job, at least, and retirement and all the other things that we're accustomed to, it works informally now, and intangibly.

Yeah, and I remember there was this fascination with the idea of the informal economy about 10 years ago. Stewart Brand was talking about how brilliant it is that people get by in slums on an informal economy. He's a friend so I don't want to rag on him too much. But he was talking about how wonderful it is to live in an informal economy and how beautiful trust is and all that.

And you know, that's all kind of true when you're young and if you're not sick, but if you look at the infant mortality rate and the life expectancy and the education of the people who live in those slums, you really see what the benefit of the formal economy is if you're a person in the West, in the developed world. And then meanwhile this loss, or this shift in the line from what's formal to what's informal, doesn't mean that we're abandoning what's formal. I mean, if it was uniform, and we were all entering a socialist utopia or something, that would be one thing, but the formal benefits are accruing at this fantastic rate, at this global record rate to the people who own the biggest computer that's connecting all the people.

So Kodak has 140,000 really good middle-class employees, and Instagram has 13 employees, period. You have this intense concentration of the formal benefits, and that winner-take-all feeling is not just for the people who are on the computers but also from the people who are using them. So there's this tiny token number of people who will get by from using YouTube or Kickstarter, and everybody else lives on hope. There's not a middle-class hump. It's an all-or-nothing society.

Right, and also I think part of what you're saying too is that it's still in most ways a formal economy in that the person who lost his job at Kodak still has to pay rent with old-fashioned money he or she is no longer earning. He can't pay his rent with cultural capital that's replaced it.

Yeah, well, people will say you can find a place to crash. People who tour right now will find a couch to crash on. But, you know, this is the difference ... I'm not saying that there aren't ever benefits, like yeah, sometimes you can find a couch. But as I put it in the book, you have to sing for your supper for every meal. The informal way of getting by doesn't tide you over when you're sick and it doesn't let you raise kids and it doesn't let you grow old. It's not biologically real.

Actually, can we stick with photography for a second? If we go back to the 19th century, photography was kind of born as a labor-saving device, although we don't think of it that way. One of my favorite stories, which might be apocryphal -- I can't tell you for sure that this is so, although photographers traded this story for many years. But the way the piece of folklore goes is that during the Civil War era, and a little after, the very earliest photographers would go around with a collection of photographs of people who matched a certain archetype. So they would find the photograph that most closely matched your loved one and you'd buy that because at least there would be representation a little like the person, even if it was the wrong person. And that sounds just incredibly weird to us.

And then, you know, along a similar vein at that time early audio recordings, which today would sound horrible to us, were indistinguishable between real music to people who did double blind tests and whatnot. So the thing is, why not just paint the real person, because painting was really a lot of work. It takes a long time to paint a portrait. And you have to carry around all the paints and all that, and you could just create a stack of photos and sell them. So in the beginning photography was kind of a labor saving device. And whenever you have a technological advance that's less hassle than the previous thing, there's still a choice to make. And the choice is, do you still get paid for doing the thing that's easier?

People often say, well, in Rochester, N.Y. -- which is a town that kind of lived on the photography business -- they had a buggy whip factory that closed down with the advent of the automobile. The thing is, it's a lot easier to deal with a car than to deal with horses. I love horses, but you know, you have to feed them, and they poop a lot, and you have to deal with their hooves. It's a whole thing. And so you could make the argument that a transition to cars should create a world where drivers don't get paid, because, after all, it's fun to drive. And it is. And they're magical.

And so there could really easily be, somebody could easily have asserted that photography is so much easier than painting and driving cars is so much easier than horses that the people who do those things -- or support it -shouldn't be paid. Working in a nice environment -- if you go to Sweden and you visit the Saab factory, it's really nice. Why should you even be paid to do anything?

We kind of made a bargain, a social contract, in the 20th century that even if jobs were pleasant people could still get paid for them. Because otherwise we would have had a massive unemployment. And so to my mind, the right question to ask is, why are we abandoning that bargain that worked so well?

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