SB Nation and the Failure of Capitalism

SB Nation and the Failure of Capitalism

We were having a conversation about Vox Media in the comments and someone sent me a very interesting article, How SB Nation Profits Off an Army of Exploited Workers. It’s long and deeply reported. I recommend checking it out. But I wanted to discuss it in a general sense: how companies manage to exploit free labor.

Rewards Don’t Follow Contribution

One of my main interests in economics is how rewards don’t go to those who do the best or most important work. Instead, rewards go to those who just happen to make a contribution at the right time. Any major innovation is the result of countless people working over variable time scales. But if you are unlucky enough to add to the innovation at a point when it can’t be monetized, you are largely out of luck.

What is going on with many internet companies is similar to this. Since most people weren’t on the internet in the 1980s, let me explain what it was like. Because it was something of a small community made up of relatively affluent people, there was great altruism. (It’s easier to be altruistic if you aren’t worried about making the rent.) People created software and just gave it away, for example.

Now, this is still true of the internet. The difference is that there are so many people trying to make a profit off all this free work. And note: it wasn’t just software. I remember in the early 90s, there was this guy on rec.arts.startrek.tng who each week wrote a narrative summary of the new Star Trek: The Next Generation episode in addition to a surprisingly deep analysis of it. He did it for no reason other than that he was a fan and wanted to share it. He got lots of positive feedback as well, of course.

SB Nation Steals From Creators

And that’s kind of how SB Nation works. It started with sports fan blogs. Tyler Bleszinski and Markos Moulitsas looked at this and said: light bulb! Just as DailyKos had been very successful that leveraging people’s natural tendency to want to share their political beliefs, SB Nation would leverage the same thing for sports. And it’s amazing how successful a company can be when all it does is sell work that people do for free.

If we lived in a rational society that hadn’t been fed capitalist propaganda from before living memory, we would see this for what it is: stealing. But trust me: I know what the capitalist apologist will say, “But these people had the brilliant idea of leveraging all this free work. Besides, no one is forcing these people to write for SB Nation!”

You can say the same thing for stealing, “But I had the idea of stealing that car you never use. Besides, it’s not like you need it!” The idea of economic systems is that they are supposed to distribute resources. Capitalism does a really bad job of this. It rewards the very worst aspects of human behavior.

And note: I’m not saying that distribution is valueless. It’s like banking. Bankers should make money for distributing capital to where it ought to go. But when you find that 40 percent of your economy is tied up in finance (as it was before the crash of 2008), then you know that something is wrong. And in the case of SB Nation, something is clearly wrong: their outlay for all their fan sites is in the low single digits of millions of dollars for a billion dollar company.

The Failure of Capitalism

My concern isn’t about SB Nation particularly. It is rather that we all accept the idea that those who are rewarded in our economy are not those who really create things. We accept, without thinking, that there is nothing wrong with the SB Nation model.

All of this brings us back to the “gig economy.” It is the polar opposite of the union economy. Businesses love it because they not only don’t have to deal with the combined power of labor, they don’t even have to worry that any union will be created. Those people at SB Nation who do get paid (extremely poorly — like $600/month for a site editor, which is a full-time position) are independent contractors.

Every time I bring these kinds of issues up, I get push-back from people. First they point out that the Soviet Union failed. Well first, I’m not proposing the Soviet Union as a system. But let’s assume I was. The truth is that people did much better under the Soviet Union than they did under the tsars. And I can’t say that they have done better since. So this idea that the Soviet Union was a failure is mostly just western dogma that few people take the time to think about. They just know.

Then they talk about all the great things capitalism has brought us. This I find bizarre. People get blinded by shiny objects. As Ha-Joon Chang pointed out in 23 Things They Don’t Tell You About Capitalism, the washing machine had a far more profound effect on our lives than the computer. So it’s ridiculous to think that unless we have people starving in the streets we won’t have iPhones.

Demand a Better System

So we could have a better economic system. We could have a system that more closely matches reward with contribution. (Note: I am not calling for a meritocratic economic system; I’m just noting that it would be better than what we have.) But such a system would never have the kind of economic inequality that the power elites now believe is their right. And the rest of us will never call for it as long as we are blinded by the idea our weird form of capitalism is an unquestioned good.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

5 thoughts on “SB Nation and the Failure of Capitalism

  1. Thanks for a great article. You were WAY more calm and level-headed about this than I would be on the subject (but then again, you usually are).

    Lord, our times. That Deadspin article actually qualified as the least depressing thing I’ve read all week. And it was very depressing.

    • The Deadspin article was really good. I would have liked it more if it had dealt with the fact that what SB Nation does is what every company does as much as it can. In fact, I’d like to write more about it. But I haven’t been feeling as clear-headed as I normally do, so deep dives into economics are out of the question for the time being.

      • Hope you feel better before too long.

        Where I would have gone off the rails is on this Kos fellow. I expect for-profit companies to be evil; that’s what they do. It astonishes me that people who consider themselves liberals can participate in and profit from this. Nor is Kos by any means the sole or worst example. My “boss” at SB Nation tells me her higher-ups vent about Trump all the time. Vox’s political writers are assuredly liberal (or anti-conservative, at least). At my last job, the corporate people who quickly fucked me over for getting injured at work all enjoyed joking about how dumb conservatives were.

        These are what Howard Zinn used to call the prison guards; the people who are doing reasonably well by our system and fulfill their assigned role of keeping the rabble in their place. The minute anything threatens their owners’ profits, they’ll be discarded like the rest of us. And yet they actually enjoy clinging to income/status inequality; it gives them a reason for living, I suppose.

        What a sad thing to cling to. And every single young adult I grew up with in the early 90s clung to it for dear life.

  2. ” I remember in the early 90s, there was this guy on rec.arts.startrek.tng who each week wrote a narrative summary of the new Star Trek: The Next Generation episode in addition to a surprisingly deep analysis of it. He did it for no reason other than that he was a fan and wanted to share it. He got lots of positive feedback as well, of course.”

    People think they are winning arguments by saying “That’s just Econ 101.” Trouble is, standard economics and its bastard child, Propertarianism, are notorious for just ignoring all sorts of real world factors, for instance non-monetary social rewards or externalized costs.

    Entre (between) + Preneur (taker)
    i.e. middleman, toll collector, or skimmer. This is our modern exemplar.

    Yes, that’s simplistic and unfair but I always apply Necessary/Sufficient rules to such cases.
    Are hard work and innovation Necessary for economic success?
    Well no, not in all cases.
    Are hard work and/or innovation Sufficient to guarantee success?
    Well no, there’s no guarantee.
    Then Is there some other factor that is both Necessary and Suffiicient?
    Yes. We call it Luck, or Chance.

    Ever heard of “Railroad Time”? No, not the standardized time zones that enabled railway timetables. I mean the idea that when social and technological conditions are right, some innovations will appear regardless of the efforts of particular individuals. History yields many examples of almost simultaneous invention, as with the telephone or the automobile. It’s often a toss-up as to who gets the credit for being “first”. Likewise, there are many examples of inventions that failed to catch on when they were initially introduced, only to be wildly popular or significant when rediscovered at a later time. This happens with social and business innovations as well as technology.

    • A funny example I like to think of is Enron. They were engaged in massive fraud, and the executives did deserve prison sentences, no doubt about it. But one of the future goals they were recording as current profits was streaming video. Now, they had no idea how to do it, and were clearly cheating shareholders by pretending they did. Were they wrong about the future of video? Absolutely not.

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