There is a strange way to describe the modern economy. Most of us spend our lives doing two things. First, we sell our labor to a company. Then, with the money the company gives us, we buy things from other companies.
Company → worker → company.
Repeat approximately 45 years, periodically interrupted by weekends and existential dread.
Douglas Rushkoff thinks there is something fundamentally wrong with this arrangement. Not necessarily because companies exist. Not even because some companies become enormous.
His criticism is deeper: capitalism increasingly concentrates the ability to produce, own, and sell in relatively few institutions, while everybody else becomes primarily an employee and a consumer.
Rushkoff has argued that corporations are excellent at accumulating capital but much worse at deploying it. In one particularly memorable passage, he describes corporations as effectively “vacuuming the money off the playing field”, weakening the very workers and customers they ultimately depend on.
His alternative sounds deceptively simple.
What if more people could sell things to each other?
Not necessarily companies. Not startups chasing Series B funding. Just people creating something useful, exchanging it with somebody else, and keeping economic activity moving.
It sounds almost romantic. It also turns out to have considerably more economics behind it than you might expect.
Money Is More Useful When It Moves
Imagine there is only $100 in our tiny economy. You pay Bob $100 to fix your computer. Bob spends the $100 buying food from Carol. Carol pays David $100 to design her website. David eventually gives you $100 for something you sell.
Only $100 exists. Yet that money has supported $400 worth of transactions.
Economists have a concept related to this called the velocity of money: roughly, how frequently money changes hands while purchasing goods and services.
Rushkoff explicitly invokes this idea. Instead of optimizing the economy purely around capital accumulation, he argues that businesses should care more about the velocity and volume of transactions happening throughout the system.
There is also the familiar multiplier effect. Your spending becomes somebody else’s income. They spend some of that income. That becomes somebody else’s income. And the process continues.
This doesn’t mean spending magically manufactures wealth out of thin air. Unfortunately, economics has yet to unlock the infinite-money glitch. But it explains why distribution matters.
People do not all respond to additional income in the same way.
Federal Reserve researchers, for example, found large differences in how wealth changes affect spending. In their estimates, an additional dollar of wealth among the top 20% of households was associated with roughly 0.8 cents of additional spending. For the bottom 80%, it was around 7.5 cents.
The exact numbers depend on methodology and circumstances, but the underlying pattern is well established.
Give another $1,000 to someone who is struggling to pay rent, and there is a good chance it gets spent. Give another $1,000 to someone who already owns six houses, and house number seven probably wasn’t waiting on that last thousand bucks.
This gives Rushkoff’s argument some economic teeth.
An economy where income flows broadly between participants can generate different spending patterns from one where an increasing portion of wealth accumulates among entities that have relatively little immediate reason to spend it.
But this is also where Rushkoff’s argument can become misleading.
Money Doesn’t Disappear When a Corporation Gets It
Imagine Apple earns another billion dollars. That money has not been removed from existence and stored inside a vault in Cupertino guarded by Tim Cook and three extremely expensive dragons.
Companies can spend accumulated capital on factories, employees, suppliers, acquisitions, research, infrastructure, dividends, or investments. Even money that is saved can be intermediated through financial markets into loans and productive investment elsewhere.
So there are really at least two useful kinds of economic circulation.
One looks like: Income → Consumption → Someone else’s income → Consumption
The other looks like: Income → Savings → Investment → Productive capacity → Future income
A healthy economy needs both. If everyone spends everything immediately, there is less capital available for long-term investment. If everyone saves everything forever, businesses eventually discover the minor inconvenience that nobody is buying anything.
The real problem, then, isn’t accumulation. It’s what happens to the accumulated capital afterward.
And interestingly, Rushkoff himself sometimes gets closer to this stronger argument. He doesn’t merely complain that corporations accumulate capital. He says they are bad at deploying it.
That changes the question completely. Is capital being used to create new technology, factories, infrastructure, products, and productive capacity? Or is increasing economic power primarily being used to capture an even greater share of existing transactions?
The second problem is much more serious. Because now we are no longer talking about money. We are talking about market power.
Maybe Big Companies Exist for a Reason
There is, however, a rather inconvenient problem with the dream of everyone independently buying and selling things from everyone else. It sounds exhausting.
In 1937, economist Ronald Coase asked what initially seems like an almost silly question: If markets are so good at organizing economic activity, why do companies exist at all?
Why have Ford? Why couldn’t thousands of independent workers simply negotiate with thousands of suppliers every time a car needed to be built?
Because every transaction has costs. You have to find a seller. Discover the price. Negotiate the agreement. Write the contract. Check the work. Do all of that again tomorrow.
In his famous paper The Nature of the Firm, Coase argued that using markets itself has costs. Sometimes it is cheaper to bring those transactions inside an organization. Instead of renegotiating with a programmer every morning, you hire one. Instead of finding a different factory every Tuesday, you own the factory.
Instead of 5,000 people coordinating through 5,000 separate contracts, a company creates a hierarchy capable of coordinating all of them. Suddenly MegaCorp doesn’t look quite so stupid.
Large companies can also exploit economies of scale, share infrastructure, fund enormous R&D projects, coordinate international supply chains, and specialize labor far beyond what an individual business could realistically achieve.
Your neighborhood semiconductor cooperative probably isn’t building a 2nm fabrication plant anytime soon.
So the ideal economy cannot simply be: Everyone becomes an independent seller. Sometimes organizations genuinely create enormous value by coordinating people. The interesting question is what happens after those organizations become extraordinarily successful.
When Efficiency Becomes Power
Markets reward good companies. That’s the point.
A company creates a better product, becomes more productive, lowers its costs, and takes customers from competitors. Nothing particularly sinister has happened. But repeatedly winning can eventually change the structure of the market itself.
Economists have documented the rise of what researchers David Autor and colleagues call “superstar firms”: highly productive companies capturing increasingly large shares of their industries.
Their research found that industries experiencing larger increases in sales concentration also tended to experience larger declines in labor’s share of income.
That doesn’t prove Big Company = Evil. It does reveal an uncomfortable feedback loop. Success creates scale. Scale creates efficiency. Efficiency creates more success. But scale can eventually create bargaining power over suppliers, workers, competitors, and customers.
At that point, a company isn’t merely participating in a market. It may partially control the conditions under which everyone else is allowed to participate. And nowhere is this contradiction clearer than on the internet.
The Internet Actually Made Everyone a Seller
For a moment, Rushkoff’s dream seemed to be coming true. The internet demolished transaction costs. A musician no longer necessarily needed a record company to reach listeners. A writer could reach readers directly. A designer in Indonesia could work for somebody in Germany.
Someone with a spare room could rent it. Someone with a car could sell transportation. Anyone could open an online store.
The infrastructure required to become a producer collapsed from warehouses, distribution networks, advertising budgets, and sales teams…to an email address and a suspicious amount of confidence.
Millions of people suddenly became sellers. Then we built platforms connecting all of them. And those platforms became some of the largest companies on Earth.
Now the structure often looks less like: Seller ↔ Buyer
and more like: Seller → Platform ← Buyer
The platform is useful precisely because everybody is there. More sellers attract more buyers. More buyers attract more sellers. That network effect makes the platform increasingly valuable—and increasingly difficult to avoid.
Eventually we arrive at a fascinating version of decentralized capitalism:
- Millions of independent creators.
- Millions of independent merchants.
- Millions of independent drivers.
- Millions of independent developers.
All independently paying the same middleman. We successfully gave everyone a shop. Then somebody bought the mall.
Perhaps the Problem Isn’t Big vs. Small
This is where Rushkoff’s argument becomes more interesting than the usual “support small businesses” slogan. Large organizations are not inherently economic parasites.
Sometimes coordinating thousands of people inside one organization is vastly more efficient than forcing them to continuously negotiate with one another.
Capital accumulation isn’t inherently harmful either. Today’s accumulated capital can become tomorrow’s factory, research laboratory, power plant, game studio, or highly questionable AI startup.
The danger appears when productive success turns into control over participation itself.
When companies make money because they produce better things, capitalism is doing approximately what it says on the box. When companies increasingly make money because everyone else must pass through infrastructure they control, we have moved into something slightly different.
The distinction is not really: Big business vs. small business. It is closer to: creation vs. extraction. Or perhaps: participation vs. dependency.
The healthiest capitalist economy may therefore not be one where everyone owns exactly the same amount or where large corporations somehow disappear. It may simply be one where as many people as possible retain meaningful ways to create, own, invest, produce, and sell.
Because capitalism becomes a very different system when only a few participants own the factories, platforms, marketplaces, intellectual property, distribution networks, and algorithms, while everyone else gets to choose between working for them and buying from them.
Rushkoff’s dream of an economy where people exchange value directly may be too simple. Coase showed us why firms exist. Modern technology showed us how powerful scale can become. And the internet gave us the strangest conclusion of all.
We finally built the technology that allowed almost everyone to become a seller. We just forgot to ask who would own the market.
