The Invisible Economy: Basic Income

Part 4 of 12

By Beatriz Ramos and Yehudit Mam

Part 3: Incentive Framework

Pop Art

The Invisible Economy rewards people with a guaranteed basic income that provides them with the minimum safety net they need to follow their inner desires and make art without any pressure to produce. This system does not reward output or inherent advantages such as wealth, gender, or even talent. People are rewarded based on their effort. This recognizes the different contributions that each person adds to the system as a whole, resulting in a more equitable distribution of rewards for all members of the community.

Today, only less than 1% of all artists can subsist from their work as artists. Meritocracy is a fallacy. In an extremely unequal society, those with inherited advantages have a greater chance to develop their talents and out-compete everyone else who, by no fault of their own, don’t have the same access and opportunities. Superstars are not a product of merit but the result of a star system, also called a winner-take-all market, that produces a few top performers and a long tail of low performers.

Art curator Jason Bailey asks, “We have greater than 15 times the world population than we had during the Renaissance. Modern medicine has extended our lifespans, and technology and innovation have introduced leisure to a much larger group of people. So why do we not have at least 10 times the Michelangelos and Raphaels and Da Vincis?”

In this paper, we argue that it is a problem of economics.

In the past, artists were trained by guilds and supported by patrons: wealthy aristocrats, royals, or the Catholic church. During the Romantic era, the notion of the artist changed from artisan to solitary genius. As capitalist society advanced, the artist, this creature in touch with divinity, epitomized the resistance to selling out. But in The Death of the Artist and the Birth of the Creative Entrepreneur, William Deresiewicz argues that the idealized notion of the artist as a genius, still so prevalent in our collective imagination, has been obsolete for more than half a century. “As art was institutionalized, so, inevitably, was the artist. The genius became the professional. Now you didn’t go off to Paris and hole up in a garret to produce your masterpiece and wait for the world to catch up with you. Like a doctor or lawyer, you went to graduate school and then tried to find a position.” Professional artists became part of the system and advanced their careers accumulating credentials, collecting prizes, and building résumés.

“In the information era, we have entered a transition marked by the final triumph of the market and its values”.

Deresiewicz continues, “The professional [artist] is giving way to the entrepreneur.” Although it would seem that being part of the entrepreneurial class would give artists more control over their work, Deresiewicz explains that institutions, agents and galleries at least used to serve as a buffer between the artists and the market but today “the institutions that have undergirded the existing system are contracting or disintegrating… Employees are becoming independent contractors (or unpaid interns). Everyone is in a budget squeeze: downsizing, outsourcing, merging, or collapsing. Now we’re all supposed to be our own boss, our own business: our own agent; our own label; our own marketing, production, and accounting departments. Entrepreneurialism is being sold to us as an opportunity. It is, by and large, a necessity. Everybody understands by now that nobody can count on a job.”

In free-market economies, labor markets are viewed as perfectly competitive meritocracies in which people are paid according to what they are able to produce based on a combination of talent and effort. But in a global art market worth 67.4 billion dollars, galleries working solely on the primary market reported that 63% of their sales were by their top three artists, with one single artist accounting for 42% of that value. Jeff Koons was recently declared the most expensive living artist after his piece Rabbit sold for $91.07 million at Christie’s. According to the meritocratic view, he is the most talented and hardworking artist in the world.

But Jeff Koons is a white male from a middle-class background, whose career hails from New York City, an economic and creative hub. The same opportunities he has been afforded are not given to many equally or more talented artists who don’t have his advantages, regardless of their hard work. The study The Paradox of Meritocracy found that in organizations that promoted meritocracy “overall, salary increases were significantly lower for women, ethnic minorities, and non-U.S.-born employees when compared with white men with the same performance evaluation scores, in the same job and work unit, with the same supervisor, and the same human capital”. Hence, not merit but prejudice and lack of access are responsible for the fact that 87.4% of the works in the collections of all major US museums belong to men, and 85.4% are by white artists. Asian artists total at 9%; Latinxs constitute only 2.8%, and African-American artists have the lowest share with just 1.2% of the works.

Free-market meritocracy was an answer to the lack of mobility in aristocratic societies in which privilege was earned at birth. But as Yale professor Daniel Markovits argues in his book The Meritocracy Trap: “Meritocracy has become precisely what it was invented to combat: a mechanism for the dynastic transmission of wealth and privilege across generations”. The more important merit is to success, the more influence is wielded by inherited advantages.

Research shows that low-income children with the top scores in math are less likely to graduate from college than wealthy children with the lowest scores. Many elite American universities take more students from the top 1% than from the bottom 60%. “The unprecedented investments that elite parents today make in educating their children effectively exclude children from non-elite families from the universities, and eventually the jobs that confer elite incomes and status in today’s economic and social order”, writes Markovits.

Superstars like Jeff Koons are not a product of merit, defined as a combination of talent, skills, and effort, but the result of a star system.

In winner-take-all markets, only a few people win but those who do reap most of the rewards. People on the second tier earn substantially less, even when they are equally talented and hardworking, and there are no perceived differences between their work and the work of those at the top.

As art critic Jerry Saltz says in his article How To Be An Artist, “Even though all we see of the art world these days are astronomical prices, glitz, glamour, and junkie-like behavior, remember that only one percent of one percent of one percent of all artists become rich off their artwork”.

In Success and Luck: Good Fortune and the Myth of Meritocracy, Robert Frank, professor of economics at Cornell, explains: “There is a self-perpetuating nature to winner-take-all markets: success often results from positive feedback loops that amplify tiny initial variations into enormous differences in final outcomes.” In such star systems, inherited advantages disproportionately benefit some people over others. If you are lucky to be a wealthy white man living in New York, you have a head start in the race and the markets will amplify your advantage exponentially, making it technically impossible for other talented people to catch up. According to Frank’s model simulations, winners on star systems are rarely the most talented but are always among the luckiest.

In Who Owns the Future, tech innovator Jaron Lanier says that to rely fundamentally on a star system is not just an ethical mistake, but also a mathematical one because “noise” — what we know as luck — gets amplified. “Yes, the winner of a singing contest is good enough to be the winner, but even the slightest flickering of fate might have changed circumstances to make someone else the winner. And yet the rewards of winning or losing are vastly different.”

Star systems produce a concentration of wealth by a few lucky at the top, amplified by what society values.

Lawyers are more valued than artists, therefore they get a bigger piece of the income pie. “We need to recognize that people are born with different talents,” says Peter Singer, professor of bioethics at Princeton: “Talented people may work hard to make the most of their abilities, but without the abilities that our society rewards, you won’t rise to the top, no matter how hard you work.“

Today, attending art school at the Rhode Island School of Design costs almost as much as going to Yale law school, yet the return on investment is vastly different. An entry-level salary for Yale law graduates is $102,000; that is, twice the average annual salary for a RISD graduate which is only $51,000, ten years after graduation. “Low pay is a key feature of early careers in the creative sector, and unpaid work is becoming a prerequisite for career entry in a more competitive market. Graduates often take on a number of short-term, unpaid, speculative, low-paid, or freelance opportunities”, states a report by the Arts Council.

It’s no wonder that most art major students quit after graduation. The artists who don’t quit art altogether become part of a precarious cultural labor force. Many artists pursue commercial careers in creative industries, such as entertainment and advertising, giving up their intellectual rights and capturing a fraction of the value they help create for these multibillion-dollar industries. Wage labor reduces the value of ideas, aesthetics, individual expression, and cultural significance to an hourly rate.

Crowdfunding platforms like Kickstarter and Patreon are meant to offer a solution, but their business models clash with their stated missions and their own bottom line. Kickstarter’s most funded project raised 20 million dollars but it was launched by a Silicon Valley startup that had previously raised over 25 million dollars. Not surprisingly, these winners-take-all systems end up benefiting participants with big marketing budgets and large fan bases, ignoring the little independent projects that truly need support.

Crowdsourcing platforms feed into the narrative that artists need to be supported through donations, as opposed to through their work as artists. Accepting charitable transactions creates symbolic debt and reconfirms the artist’s failure to earn a living from their work. People may be tempted to conclude that most artists are not productive members of society.

The global economy has consistently expanded over the last decades, but only 1% of the earners have captured most of the gains.

Meanwhile, everybody else works harder for longer hours. As it is now evident from the devastating economic consequences of the coronavirus pandemic, most people lack a basic safety net. Millions of workers are self-employed, freelancers, or work in the informal economy and thus lack basic benefits. In the US, even those who are employed full-time have their health insurance tied to jobs that can disappear abruptly, leaving them vulnerable from one day to the next.

Philosopher Judith Butler points out, “neo-liberalism works through producing dispensable populations; it exposes populations to precarity; it establishes modes of work that presume that labor will always be temporary; it decimates long-standing institutions of social democracy, withdraws social services from those who are most radically unprotected — the poor, the homeless, the undocumented — because the value of social services or economic rights to basic provisions like shelter and food has been replaced by an economic calculus that values only the entrepreneurial capacities of individuals and moralizes against all those who are unable to fend for themselves or make capitalism work for them.”

The concept of a universal basic income has been gaining traction recently as a corrective to our present growing inequalities and has been championed by people from different ends of the ideological spectrum, from tech titans to social democrats.

The Invisible Economy rewards people with a guaranteed basic income that provides them with a minimum safety net.

As Daniel Pink says, “if someone’s baseline rewards are inadequate or inequitable her focus will be on the unfairness of the situation or the anxiety of her circumstances. You’ll get little motivation at all”. It’s hard for artists to realize their full potential if they constantly worry about putting food on the table.

We are modeling our allocation of rewards on ParEcon, which aims to give everyone equal opportunity regardless of identity. Whereas free-markets’ rewards are based on private property, bargaining power, output, and inherited advantages, including intelligence and talent, in ParEcon, rewards are based on individual effort. Rewarding artists based on effort allows them to freely follow their curiosity, play, and experiment without any constraints or pressure to produce specific outcomes.

Anyone anywhere in the world with access to a device and the internet can participate in DADA. There are no vetting processes, membership fees, or prerequisites of any kind. No skill level, resumés, or qualifications are required. In a world where billions of people live on less than $5.50 a day, even a modest basic income on DADA could have an impact on hundreds of thousands of people who lack access to markets.

Star systems come about when a single attribute (good, or popular) is sorted among many participants. For example, leaderboards that present top artists based on sales will inevitably exponentially amplify their sales through positive feedback loops. Those appearing on the top of a list have the most visibility and benefit from social proof; that is, people are more inclined to buy their art since other people are already doing it. The more people buy their art, the longer they’ll be at the top, the more people will buy their art, to the exclusion of others who are equally deserving.

Different design principles applied to the same system will get different outcomes. Jaron Lanier explains that “a star system is just a way of packaging a bell curve”. The same data can be sorted by many different attributes and it can be designed to produce a bell curve; that is, an average of people who add value to the system in many different ways, and a high and low tail determined by the degree in which people spend more or less effort.

Rewards distribution

We define effort as a combination of time spent on site, the relative value of the activities people contribute to, and the degree of their commitment based on how frequently they participate and how long they’ve been part of the community. This is measured and implemented through incentives embedded in the system using cooperative game theory and a gamified layer on top of the protocol. Value creation and basic income can be determined based on the gamified level system.

On DADA, value takes many forms.

It doesn’t hinge exclusively on talent, popularity, or productivity. A very talented artist who takes their time to produce artworks that take our breath away gives us a sublime art experience. A passionate amateur who makes many drawings every day keeps the community alive. A person who constantly comments on other people’s work provides valuable validation, and someone who spontaneously answers questions in the chat is helping to build community. Collectors who champion artists also contribute to the overall value of the community. There are many ways to contribute and earn rewards.

But our system does not reward unfair advantages. It doesn’t matter if you use a state of the art tablet or if you borrow an old PC and draw with your fingers on the trackpad. Nor does it matter if you’re in New York with a fast internet connection or in Caracas with slow wifi. You can have 30 years of experience as an artist or just be starting out. It doesn’t make a difference if you have extraordinary talents or you are not good at drawing but really enjoy the experience and the community. You will earn rewards for your effort to create value.

A common criticism of rewarding effort over talent is the assumption that talented artists would not want to participate in such a system. But art is not about the outcome, it’s about the process. A passage in the book Art and Fear illustrates this point. A ceramic teacher divided her class into two groups: one needed to produce as many pots as they could, and the second group needed to produce one perfect pot. When the deadline came, “The works of highest quality were all produced by the group being graded for quantity. It seems that while the “quantity” group was busily churning out piles of work-and learning from their mistakes, the “quality” group had sat theorizing about perfection, and in the end had little more to show for their efforts than grandiose theories and a pile of dead clay.”

Thus, a system that rewards the process incentivizes everyone to make more art while recognizing the different contributions that each person adds to the entire system. This results in a more equitable distribution of rewards for the members of the community.

Ultimately, a guaranteed basic income based on effort is a radical answer to an egregious star system that disproportionately rewards a few lucky winners and leaves everyone else empty-handed.

Part 5: Validation



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