Web 2.0 Expo: Are we finally leaving the Middle Ages?

SAN FRANCISCO--A conference about Silicon Valley innovation invariably will feature at least one talk about how the old order of American business is hopelessly broken and needs a tech-savvy recharge. At this year's Web 2.0 Expo here, it was author Douglas Rushkoff's "How the Web Ate The Economy, And Why This Is Good For Everyone."

It was a tantalizing title. But most of Rushkoff's talk wasn't about the Web or how it can help steer the world out of a global financial crisis. He focused instead on how the idea of "currency" as we know it, not to mention the notion of the "corporation," is profoundly archaic and that with the market meltdown, we have a golden opportunity to get rid of them altogether.

"We can make pretty much everything great," said Rushkoff, whose book "Life Inc." is coming out in early June, "and if we don't, they will recover and make us miserable for another few centuries."

Corporations and monetary systems, he said, are vestiges of the late Middle Ages when kings and aristocrats were struggling to exert some kind of authority over the fast-rising mercantile class and to rein in independent currencies before they became too powerful. "It was against the law to create value through one another. You had to do it through a corporation," Rushkoff explained. "That was what corporations were for. Centralized currency came up because most towns in late Middle Ages Europe had their own currencies...they had so much extra money they built cathedrals."

(Tip: if you want to make something sound really awful and backwards, talk about how it has roots in kings and feudalism.)

That system is still in place, he said, and it's about time it breathed its last. Corporations are run by CEOs who were hired because of their experience in being "corporate" rather than expertise in the industry in question. "Transparency" is a ubiquitous buzzword, but Rushkoff said that it's impossible when so many companies rely on so much outsourcing and contracting that it's unclear as to what the company itself actually is.

He offered an anecdote about how he was mugged outside his Brooklyn apartment last year and posted to a neighborhood message board about it only to learn that his neighbors were more concerned about what it might to do to property values rather than how they could fix things and help make the neighborhood safer.

"Banks have resorted to a Ponzi scheme and now they're dying," he said. "They were so stupid they actually bought shares in their own Ponzi schemes." That's what gives the digerati their opportunity, Rushkoff explained. When PayPal debuted amid the last boom in Web innovation, its proverbial hands were tied behind its back because of the influence that banks could wield over a potential new threat that could change the industry. That might not be the case now.

Still, Rushkoff's talk was heavy on the theory and lighter on the substance. The financial crisis is dire, but a complete overhaul of the monetary system is unlikely. That's why I wish Rushkoff had focused more on what the developers, entrepreneurs, and Web thinkers can learn in the short term, at a time when many of them are wondering what the heck to do about their lives and careers.

He offered one tip that I wish he'd expanded upon: suggesting that cashing out a start-up, many a Web 2.0 entrepreneur's dream, is actually the worst thing you can do. Rushkoff said that the aim should be to "make a living rather than cash out...Once you sell, you are working for the bank." Now that's interesting. Silicon Valley's elite like to think they're at the forefront of business, and yet so many of them are buying (literally) right into the old order, if Rushkoff is to be believed.

But if he'd said too much more, I guess, nobody in the audience would buy his book.