Tag Archives: Business

The scholar’s vocation

A century ago, Weber both diagnosed the ills of the corporatized, modern university, and pointed out the path beyond it.
By Chad Wellmon – The university was a modern-day patronage system. Intellectuals had long relied on the powerful and wealthy to provide for their material needs. In return, intellectuals advised princes and kept bureaucracies running efficiently. With the rise of the modern research university in 19th-century Germany, they assumed an even greater social role as members of a community that created knowledge for society at large.

Leipzig University, where Eulenburg taught, was founded in 1409. It began with a few hundred students, and remained roughly that size for centuries. In the 1830s, enrollments began to increase dramatically. As the state started to invest significant financial resources, a modern scholarly infrastructure and a division of intellectual labor emerged. In 1909, Eulenburg noted that although Leipzig University was 500 years old, it had become an ‘industrial operation’ in just the past 50.

The university’s evolution, he added, was a ‘microcosm’ of how life had changed in just a few decades. Modernity showed itself not just in urbanization, industrialization and steam-engine train travel, but also in the remaking of intellectual life. The transformation of the German university had far-reaching effects on the production of trustworthy knowledge. The conditions of intellectual life matter, and at the beginning of the 20th century many of the German cultural elite, especially younger people, felt like they were breaking down.

Weber began with a blunt account of the material conditions of the university. He enumerated the structural problems: terrible teaching, workplace discrimination, the exploitation of the labor force, an arbitrary hiring process, and a businesslike and, thus, uninspired understanding of the scholar’s vocation. The universitas litterarum (the ideal of the university as a corporation of scholars devoted to learning), he concluded, had become a ‘fiction’.

The transformation of the university into a capital-intensive, bureaucratically organised enterprise was not simply an effect of academic specialization. More than a century earlier, Adam Smith and Immanuel Kant had observed how some universities had begun to function as factories and organize themselves around the division of intellectual labor. Weber considered what he called the ‘Americanization’ of German universities – their saturation by the ‘spirit’ of American capitalism – more consequential than specialization. They now required largescale funding. They separated the academic ‘worker from the means of [scholarly] production’ – libraries accumulated unprecedented numbers of books, research institutes stockpiled instruments, and state-appointed bureaucrats controlled access to both. Universities had become ‘state capitalist enterprises’. more>

Updates from McKinsey

How payments can adjust to the coronavirus pandemic—and help the world adapt
The challenges are immediate, with long-term implications for global, regional, and local economies—and for the payments industry itself. Here’s what to expect.
By Philip Bruno, Reet Chaudhuri, Olivier Denecker, Tobias Lundberg, and Marc Niederkorn – As the catastrophic human costs of the coronavirus come into clearer focus, so too do the consequences for people’s well-being beyond the immediate imperative to safeguard lives. Taking care of our families and friends, our neighbors and communities, our employees and coworkers comes first. For that reason, companies across industries and geographies have scrambled to establish remote-working conditions—and continue to improve them as the health crisis continues. Those that can, including most banks and financial-services companies, have taken swift action to protect both their customers and their employees.

The next focus of all the professionals involved with the transactions infrastructure must be the stability of systems, for both payments and securities. At this writing, despite the scale of the emergency measures underway, no major outages of core infrastructure have been reported. Payments systems have proved resilient and reliable, as they have in earlier crises. Payments systems and providers, which enable companies and their customers to transfer funds in return for goods and services, continue to enjoy a high level of trust from the general public.

At the same time, we all realize that the economic disruption will be profound and the short-term drop in activity for economies under lockdown will be severe. Quarterly GDP in the second quarter of 2020 could decline by as much as 35 to 40 percent—and the payments industry’s financial outlook reflects that uncertainty in the short term. But the industry’s stability will play an invaluable role in rebooting the global economy, and the potential for innovation can support functioning economies as a “new normal” emerges. Below, we observe how the payments industry can adapt now—and suggest ten fundamental changes to the payments ecosystem that will help all of us find a new normal.

How will the coronavirus crisis affect payments economics?
There is no definitive answer. Much depends on the complex interplay between economic activity, the interest-rate landscape and associated liquidity patterns, and the evolution of individual and collective behavior. Taking these factors into account, we expect revenue growth in global payments to turn negative.

Instead of growing by 6 percent, as projected by our 2019 global payments report, activity could drop by as much as 8 to 10 percent of total revenues, or a reduction of $165 billion to $210 billion—comparable to the 10 to 11 percent revenue reduction in the wake of the global financial crisis in 2008–09. more>

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The rule of law is under duress everywhere

By Ted Piccone – Anyone paying attention to major events of the day in the United States and around the world would know that the basic social fabric is fraying from a toxic mix of ills — inequality, dislocation, polarization, environmental distress, scarce resources, and more. Signs abound that after decades of uneven but steady human progress, we are digging a deeper and muddier hole for ourselves. The principal reason for this pessimism is not the material facts of decline — we have lived through worse times before — but the crumbling consensus around how to overcome such crises. The outbreak of the COVID-19 pandemic is fast becoming the latest stress test for whether the social contract can hold.

The roadmap for climbing out of the trough should begin with the understanding that the rule of law is the sine qua non of more successful societies. Societies with strong rule of law have built-in mechanisms for mediating conflicts through open and inclusive debate, in which all voices are treated equally, and outcomes are perceived as fair and reasonable.

Unfortunately, as documented by the latest findings of the World Justice Project’s Rule of Law Index, the rule of law is declining around the world for the third year in a row. The trends are widespread and persistent: The majority of countries that declined in the 2020 rule of law scores also deteriorated in the previous year, and weaker or stagnating performance occurred in the majority of countries in every region and across every income group.

Of particular concern is that countries experienced the biggest declines over the past year in the areas of fundamental rights (54 countries declined, 29 improved), constraints on government powers (52 declined, 28 improved), and absence of corruption (51 declined, 26 improved). These three factors of the World Justice Project (WJP) Index saw the worst performance globally over a five-year time period as well.

In short, the key rule of law elements that undergird accountable governance, and relatedly, citizens’ trust in their leaders, are in retreat, in both established democracies like the United States, and in entrenched autocracies, from Russia to China to Venezuela. In this context, the rise of populist anger and social protests should come as little surprise. more>

Project and system

There are two ways of seeing order in the world: as a spontaneous system or as an intentional project. Which way lies freedom?
By Paul Kahn – Once we are alert to the distinction of ‘project’ and ‘system’, we see that it is by no means unique to law. These two pictures dominate our accounts of order. Traditionally, those accounts extended into the natural order: is nature God’s project or a spontaneous system? Today, the duck/rabbit problem of ‘project’ and ‘system’ presents itself whenever we give an account of the human world, from the individual to the society. Do we make ourselves according to an idea or do we realize an inner truth of ourselves?

The social sciences approach society as system; the regulatory state imagines it as project.

The picture of a project offers the simplest explanation of the origin of order. Projects can extend from an individual artisan to a creator god; they can involve objects in the world (eg, a house) or social structures (eg, a corporation).

A legislature has law-creation as its project; a people can take up the project of creating a constitution. A project has a beginning in the action of a free subject. That subject explains his project by referring to his intentions. Those intentions can reflect a well-thought-out theory or simply the agent’s interests.

Projects are the way in which a free agent occupies the world. An animal will look for food, but it will not plan its dinner. A bird might build a nest, but that is not a project because the bird could not have decided to experiment with a new design. It could not have been other than it is. That ‘might have been’ is critical to projects and thus to freedom.

In a world of projects, we are always thinking of what we might do, what we might have done, and what we might do better. Projects are successful when they meet their goals; they are redesigned when they fail. Projects then, whether of law or anything else, put at stake not just an idea of order, but also an idea of freedom. Freedom ends where projects end.

Systems have the capacity for maintenance and some ability of repair. An injured organism can heal itself; a market in disequilibrium can return to equilibrium. Of course, some systemic disturbances are beyond these capacities: systems do die.

Projects, though, ordinarily have no such capacities of repair. When a watch breaks, we take it to the watchmaker for repair. When legislation fails, we go back to the legislature for a new plan. Today, artificial intelligence is challenging that distinction precisely to the degree that we can teach machines to learn and to respond. more>

Updates from Adobe

Seeing Music with Amelie Satzger
By Brendan Seibel – For German photographer Amelie Satzger, music has always intertwined with the creative impulse.

As a youth, she performed in a band with a good friend. When that partnership split, her imagination found refuge behind the lens of a camera. “I was searching for another medium I could put my creativity into,” says Satzger. “I would ride around on my bike searching for cool locations to shoot. I was just imaging something in there that could maybe look good and then putting my camera on a tripod and trying it out. I didn’t really care if the picture came out well or not. I just tried everything.”

But even as her artistic focus changed, the music was there inspiring the visual narratives she created. While studying photography in Munich, she began translating lyrics that moved her into a series of richly colored, evocative self-portraits.

Then a thought struck her: Why not have the musicians themselves star in the scenes their songs inspired?

“I want to visualize lyrics from musicians into my own colorful world and I want the musician to be a part of the picture,” says Satzger. more>

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‘American Factory’: It’s Not the Culture, It’s the Current

By Sunny Wang – Telling the story of a factory in Dayton, Ohio, that a Chinese manufacturer has invested in, the documentary “American Factory” has been gaining tons of attention in China. It’s currently #3 on the trending chart of documentaries on Tencent Video — a Chinese video streaming website with over 900 million monthly active users — as the only foreign documentary in top 10 of the chart.

The film offers clear views from both the Chinese and the Americans in the story, bringing out the unsettling conflict to the viewers – it’s not just about the differences between two cultures; it’s more about the conflict that comes with primitive accumulation of capital, the one that comes along with the changes taking place in the manufacturing industry.

I think this is a great metaphor describing how the Chinese workers are positioning themselves. The society is always moving forward; anyone standing still — not improving or educating themselves, or working extra hard constantly — can easily be left behind. Our current situation is even crueler than before, because we’re in the age of A.I. and automation, which would only accelerate the changes, or the “current” in this metaphor. The Chinese factory workers found their place in this “current” by being cost-efficient laborers in the manufacturing process — they chose to work harder to ensure high efficiency. But the conflict sets in on the other side of the ocean where automation outperforms labor at a lower cost.

As seen in the film, the working environment was dangerous, pay was low, and working shifts were long at FGA, yet the workers in the Dayton plant chose to stay and complain instead of leaving for better jobs that are safe, easy, and with better pay. Could it be because they didn’t have a choice? more>

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Violence, fabricated news, and responsible media

By Egemen Bağış – In history no medium of any kind has evolved as the way media has. From radio broadcasting to large box-sets, to today’s social media networks and online viewing capabilities.

In 1946, Darryl F. Zanuck, a powerful Hollywood producer at 20th Century Fox, said that television wouldn’t last because “people will soon get tired of staring at a plywood box every night.” Today we can only smile with amazement at the sheer inaccuracy of this prediction.

Another prediction by British journalist, publisher, and politician C.P. Scott was slightly truer when he proclaimed, “Television? The word is half Latin and half Greek. No good can come of it.” While it is not true that no good comes of media, it wouldn’t be a far-fetched call to assert that modern day mass media exposes society to violence, degradation, and vulgarity.

The effect of media is profound and far-reaching. It influences our values, our daily routines and even our thinking with our deep-seeded ideologies and beliefs. Also today media is much more accessible. Media is in our homes and our mobile phones.

It is through TV and internet that our communities are introduced with extreme visions of violence. Social media brings forth a steady stream of live atrocities at the touch of a finger. Video games teach our young how to handle weapons they would otherwise never even heard of. We must, therefore, take extra precautions to ensure that our families and communities do not get contaminated from this toxic fallout. more>

The economics of bubbles

By Brent Goldfarb and David Kirsch – The space between fiction and reality is where economic bubbles take shape. Froth fills that space.

As the Dutch Tulipmania of the 17th century and the South Sea Bubble of the 18th century attest, speculative bubbles have been with us since the early days of corporations and market capitalism. Instant mass communication, in the form of the radio, was an amazing invention of the 1920s. Almost 700 new radio stations – the United States’ entire current AM broadcast infrastructure – were established in 1922. But nobody had identified a successful business model for radio broadcast.

Often the opportunity for a bubble arrives on the back of a new technology. And some technologies make for fantastic stories – indeed, sci-fi is a whole fictional genre based on this premise. Bubbles form whenever a new story is not only told, but can also be sold. However, not every new story leads to a bubble. Sometimes stories can be told, but not sold.

These cases highlight two important necessary conditions for the formation of a bubble: first, bubbles need narratives. Every startup begins as a story about an imagined future. Every venture, every investment, is a statement about the future, an attempt to create a future that conforms to the imagined vision of the promoter. Teams are formed, resources acquired, alliances entered, products and services developed, all in furtherance of that story and that future.

Every startup story will have some common elements – a protagonist (sometimes, but not necessarily a technology), a plotline in which the protagonist struggles against a challenge from dark forces (incumbents, or the current way of doing things), and a happy ending where the sun shines and human progress is advanced. Ever incomplete, these stories provide the mental scaffolding for individuals and institutions to invest in new ventures. Good stories sell, and the more uncertain the outcome, the more leeway for entrepreneurs to fabulate.

Bubbles inflate as the distance between fiction and reality increases. Contexts – such as investor liquidity, regulatory frameworks and cultural and macro-economic factors – establish boundaries on how far our stories can depart from reality. But entrepreneurs are also creatures of context, and some are better than others at ‘entrepreneuring’, stretching the limits of plausibility and maximizing time for their imagined realities to catch up to their promises.

Sometimes, we don’t observe a bubble not because the stories aren’t sticky or because the technology isn’t narratible, but because the narrative comes to fruition and the technology or entrepreneur delivers. more>

Updates from Chicago Booth

A.I. is only human
By Jeff Cockrell – If you applied for a mortgage, would you be comfortable with a computer using a collection of data about you to assess how likely you are to default on the loan?

If you applied for a job, would you be comfortable with the company’s human-resources department running your information through software that will determine how likely it is that you will, say, steal from the company, or leave the job within two years?

If you were arrested for a crime, would you be comfortable with the court plugging your personal data into an algorithm-based tool, which will then advise your judge on whether you should await trial in jail or at home? If you were convicted, would you be comfortable with the same tool weighing in on your sentencing?

Much of the hand-wringing about advances in artificial intelligence has been concerned with AI’s effects on the labor market. “AI will gradually invade almost all employment sectors, requiring a shift away from human labor that computers are able to take over,” reads a report of the 2015 study panel of Stanford’s One Hundred Year Study on Artificial Intelligence. But whether AI ultimately creates massive unemployment or inspires new, as-yet-unknown professional fields, its perils and promises extend beyond the job market. By replacing human decision-making with automated processes, we can make businesses and public institutions more effective and efficient—or further entrench systemic biases, institutionalize discrimination, and exacerbate inequalities.

It’s an axiom of computing that results are dependent on inputs: garbage in, garbage out.

What if companies’ machine-learning projects come up with analyses that, while logical and algorithmically based, are premised on faulty assumptions or mismeasured data?

What if these analyses lead to bad or ethically questionable decisions—either among business leaders or among policy makers and public authorities? more>

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The Surveillance Threat Is Not What Orwell Imagined

By Shoshana Zuboff – George Orwell repeatedly delayed crucial medical care to complete 1984, the book still synonymous with our worst fears of a totalitarian future — published 70 years ago this month.

Since 1984’s publication, we have assumed with Orwell that the dangers of mass surveillance and social control could only originate in the state. We were wrong. This error has left us unprotected from an equally pernicious but profoundly different threat to freedom and democracy.

For 19 years, private companies practicing an unprecedented economic logic that I call surveillance capitalism have hijacked the Internet and its digital technologies. Invented at Google beginning in 2000, this new economics covertly claims private human experience as free raw material for translation into behavioral data. Some data are used to improve services, but the rest are turned into computational products that predict your behavior.

These predictions are traded in a new futures market, where surveillance capitalists sell certainty to businesses determined to know what we will do next. This logic was first applied to finding which ads online will attract our interest, but similar practices now reside in nearly every sector — insurance, retail, health, education, finance and more — where personal experience is secretly captured and computed for behavioral predictions. By now it is no exaggeration to say that the Internet is owned and operated by private surveillance capital.

In the competition for certainty, surveillance capitalists learned that the most predictive data come not just from monitoring but also from modifying and directing behavior. more>