Indentured servitude in a new key

These reflections on virtual organization are about the meaning and social significance of computers as mediators and brokers. Computers mediate between individuals by providing channels of communication in the form of messaging systems; they act as brokers in matching buyers and sellers, employees and employers, resources and work processes, etc. The explosive growth of electronic commerce on the Internet has made such functions commonplace. Computer-based mediation and brokerage lie at the heart of virtual organization, a powerful and flexible mode of organization founded on a separation of requirements from the ways in which requirements are met. Separating these elements allows managers to switch easily from one way of meeting a requirement (e.g., for an employee, a supplier, partner, etc.) to another. Used systematically, switching brings huge increases in productivity provided transaction costs are held in check. The price of this increased efficiency is that, practiced regularly, switching weakens personal and political loyalties. Absent a sense of loyalty to persons or places, virtual organizations distance themselves from the regions and countries in which they operate. Virtual organization is undermining the nation state. Government as we know it today cannot control virtual organizations and will have to cede its responsibilities and powers to them. A new feudal system is in the making.

The first reflection (to appear soon) will focus on a symptom of the drift into virtual feudalism, namely, the resurrection of indentured servitude. A college degree has long been the ticket to a stable job assuring at the very least a middle or upper middle class life style. However, the cost of the ticket has increased to the point where relatively few families can afford to absorb all of it. As a result, students incur substantial debt in the course of obtaining a college degree. Being saddled with $30,000 to $50,000 or more in debt obligations upon graduation limits a student’s options. For the lucky few whose ambition in life is to make a lot of money, and are able to do it, the obligation can be discharged fairly quickly. Those with other ambitions may not be so fortunate because the debt burden will of necessity influence their career choices. A low paying public service job, for example, is not a realistic option. Nor is it possible to explore the world a little before putting one’s nose to the grindstone.

The increasing cost of higher education can be traced in large measure to declining sources of governmental support. I will make the case that this trend is a consequence of applications of virtual organization that support and encourage shifts in power and resources from the public to the private sector.