Crowdfunding as the antithesis of electoral politics

20 May 2015 by in Business and finance, Current events, Nine visions of capitalism

We have just had to endure another stomach-turning electoral contest in which fear, venom, character assassination, unfunded promises and unproven assertions wrestled with each other and which those we collectively abhorred the least eventually won. Thank God we endure it for only six weeks in five years, yet it does us immense damage and sours the public mood. Rarely, if ever, has politics been so bereft of ideas, so sterile in its jousting, so destructive in its name-calling, so locked into rival ideologies that its partisans can no longer think, much less create.

Yet there is another movement afoot, one that is growing at astonishing speed, faster even than the digital revolution. Computer power has been credited with doubling in size every eighteen months but crowdfunding, sometimes called peer-to-peer lending is doubling every three months. But are we comparing like with like? Surely crowdfunding is just one additional way of getting investment funds, a way suited to smaller, maverick projects and can not even lay claim to political significance. We hope to show that it could change capitalism profoundly; it may not be overtly political but it has social and political repercussions of a very meaningful kind.

Crowdfunding is for the moment confined to the Internet. It uses various platforms, such as Kickstarter and Crowd Cube, to put ideas before a ‘crowd’ of on-line investors. A project is described and a request for enough capital is communicated. The crowd either meets the minimum capital needed to launch the project or it does not (money for under-subscribed projects is never collected). About one third of all projects are fully funded and go forward. Those receiving insufficient backing may have failed in any case and it is better for everyone that little loss was incurred at this early stage. However, a project may be relaunched in the future with a revised prospectus. We believe it is a matter of time before this development is picked up by mass media with millions of viewers and becomes a variety of Reality TV with totals raised broadcast during the programme, and with the whole culture celebrating innovation as a way of life. Commercial TV could find a new source of revenue by taking 5% of the total raised.

So let us compare the ‘democracy’ of our electoral process with the democratic potentials of crowdfunding. How do these contrast?

Electoral process Crowdfunding process
The first-past-the-post system gives big advantages to the majority parties at the expense of all minority interests, e.g. it takes 3.9 million UKIP voters to elect one solitary MP. Most funds go to small minorities, enabling them to nurture new ideas that go viral on the Internet, with the potential to change everything through daring novelties and life-changing creativity.
One party wins and another loses nearly everything in a zero-sum game wherein gains and losses cancel each other out and power is wrested away from opponents in life-shattering ways. All parties win where the project succeeds, entrepreneurs, investors employees, customers and the community. Ideas have been transformed into new realities beneficial to their instigators and the crowd of enthusiastic supporters and cheerleaders.
The game is to achieve power over people, get the electorate to buy your promises, attack and rubbish your opponents and consign them to opposition benches. The game is to achieve power through people, use their funds to keep your promises and realize the ideals in your prospectus with their money and their moral support. You seek to convert all those involved to your viewpoint.
The system is fiercely and relentlessly adversarial. We are right and our opponents wrong, foolish, dangerous and destructive. The least feared and hated party wins. The Devil vies with the Deep Blue Sea. The system is cooperative and co-creative with investors as midwives of procreation and with only projects that are truly needed receiving funds. Investors are seeking to improve their society, and where they succeed they profit.
The system requires millions of pounds to operate large organizations. This puts the electoral systems at the mercy of rich donors who buy access and expect a return for their money. The system operates by funding thousands of good ideas and small organizations. Funding goes not to power but to potential, to the idea whose time has come, to those with dreams to realize.
Large amounts of money from very few people buys continued dominance and conformity to what rich people demand. Small amount of money from a wide variety of people, fund a very diverse range of new ideas, which change us radically.
Large investment portfolios tend to the lowest risk possible and to markets where prices can be administered by market domination. Small investment portfolios can afford to stake less but risk much more on changing society for the better. Dramatic success is possible.
The viewpoint in almost entirely quantitative. Everyone wants just one thing and the answer is more. The viewpoint is almost entirely qualitative. Everyone wants to help their society but in different ways.
The attitude to minorities is that now they have been beaten, they should yield to majority control. They are losers and should be marginalized. The attitude to minorities is that they are a potentially creative resource and come up with ideas the majority would never hazard. Diversity is infinitely precious.
The whole purpose of politics is to realize your own economic self-interest and asserting these aggressively is enough to win. The whole purpose of crowdfunding is to realize meaningful ideals by offering these to the public for sharing with you.
Ideological politics is sterile because everything within one polarized extreme has been tried and one is not allowed to borrow from the rival viewpoint. It is off limits. Crowdfunding is an industry espousing radical ideas and hence borrows the vehicle, private enterprise, from the Right while the ideals are largely from the Left. Any new political idea is a hybrid of Right and Left.
The argument is about redistribution and the power of government. Can it confiscate what others have made? What will this do to enterprise and motivation? The argument is about pre-distribution. Might companies who promise their crowds to be fair, to promote women, to pay good wages, train their people, and be sustainable, gain better access to crowdfunding?
Competition is the life-blood of both politics and business. We we all want more and some of this must be taken from our weaker brethren. Diversity is the life-blood of both politics and business. Where we are sufficiently different invidious distinctions vanish and nearly all can succeed on their own terms.

What is unique about crowdfunding is that it starts even before a product or service has been made or any unit of currency spent. It is an idea, an abstraction and a value in our mind’s eye. We can share it with others, discuss within the ‘crowd’ what sort of world we want, producing any number of wealth development and satisfactions. It is a potential rebirth of the Puritan ethic insofar as it begins with the reason for our being and what we should do on earth and whom we should serve with the one life we have. It is the potential sheet anchor of the Innovative Society. Members of parliament have powers to help redesign capitalism as a beneficial force in our nation and insist that it builds industries which engage and develop us all. Where every organization performs before an appreciative crowd the world is changed.

Charles Hampden-Turner and Fons Trompenaars are the authors of Nine visions of capitalism (with Tom Cummings). It will be published on 7th September 2015. To preorder, please email info@infideas.com.

To find out more about Charles Hampden-Turner and Fons Tromenaars, and their company, please click here.

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