Last Tuesday morning I sat in my pyjamas, reading Clay Shirky’s essay, “The Collapse of Complex Business Models” while waiting for the kettle to boil. The essay struck me as interesting, the kettle whistled, I went to eat breakfast.
That evening I reread the essay more closely, and the closer I read it, the less I liked it. At sunrise the essay had been an entertaining set of anecdotes built around an intriguing core idea; by sunset it had wilted, revealed as an entertaining set of anecdotes pulled from all over the map in the vain hope that there might, somewhere, be a theme that would hold them together.
It’s not the first time I have had this reaction to a Clay Shirky essay, and as each essay he writes gets a lot of attention (published earlier this month, googling [Shirky “Collapse of Complex Business Models”] already returns over 150,000 hits) it might be worth sketching out why he, along with other influential speakers who use a similar style, consistently fail to provide substance even as they succeed in reaching and influencing a large audience. So here are the Four Rules of Big Ideas: techniques the masters use to make that keynote more stimulating, that essay more likely to catch fire, all without doing too much thinking.
The thesis of Shirky’s essay, in case you haven’t read it, is that the nature of bureaucracy is such that traditional media companies, faced with declining revenues, are unable to cut production expenses, and so are headed towards collapse. Despite his title, the stories he tells are not a problem of “complex business models” but of “expensive production”, and even though it is uncredited, many readers will recognize the core of the essay from that other Clay, Christensen’s The Innovator’s Dilemma.
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Everybody likes a story, and Clay Shirky tells a good one. Collecting stories is not difficult: if you think about a subject long enough, all kinds of tangential happenings remind you of it, so you’ll get a good selection to draw from before long. Sometimes these stories are only peripherally connected to the theme you are developing, but that doesn’t matter because their role is not to advance your argument in any material way. Their role is to contribute to the impression of a widely-read, eclectically educated piece of writing and to keep your audience off balance, not sure where you are going next.
In 1983 Nobel Prize winner Roald Hoffmann visited the chemistry department at McMaster University. As the audienced assembled, Professor Ed Hileman leaned over a chair and said to me and other graduate students: “You watch – he’ll give an interesting talk but there will be no questions”. And he was right. Hoffmann’s talk was an extension of his Nobel lecture, a fascinating exposi
tion of how the orbital symmetry rules he had developed could be extended to explain the structure of hundreds of organometallic complexes and clusters. But his talk answered all the questions it raised, and by answering them, sealed off avenues where questions could have been asked.
If you want to provoke discussion, logic and detail are not your friends. Instead, don’t worry about loose ends and half-expressed ideas – just keep the audience’s interest and provide colour, and let them fill in the gaps later. Make sure your audience is not sure what’s coming next, not sure if they quite understood what they just heard. That’s what makes for good entertainment. It’s the First Rule of Big Ideas: tell stories and think by analogy.
Here is the shortest of the stories in Clay Shirky’s essay:
Dr. Amy Smith is a professor in the Department of Mechanical Engineering at MIT, where she runs the Development Lab, or D-Lab, a lab organized around simple and cheap engineering solutions for the developing world.
Among the rules of thumb she offers for building in that environment is this: “If you want something to be 10 times cheaper, take out 90% of the materials.” Making media is like that now except, for “materials”, substitute “labor.”
The loose analogy with cheap engineering solutions tells us nothing new about the media and its problems. Why invoke it then? Well, it does suggest that successful engineering solutions for the developing world are evidence in favour of the thesis of the essay, although they are not, and it brings MIT on side with the argument, which can’t be bad. This is how stories and analogies work – they suggest connections between different fields, connect solutions to different problems.
But stories and analogies should be a starting point for thought, and not its terminus. They should be the spark that prompts more analytical, more rigorous investigation and introspection, testing out your idea to see where it fits reality and where it fails. In this essay, and in some of his others (see below) anecdotes are all there is, and that’s just not good enough.
Clay Shirky tells no fewer than five separate stories in his short essay. He explains how his title is taken from a book called The Collapse of Complex Societies; he tells a story about a consulting engagement he had at AT&T; he spins his short MIT story; he talks about a web video comedy called In the Motherhood and how ABC failed to turn the web video into a successful TV series; and he talks about Charlie biting his brother’s finger on YouTube. Charming, each and every one, but what you might not notice on a first casual reading is that there is little to hold them together or back them up. Switching from story to story keeps the reader off-balance and makes it seem plausible that there is, in fact, a coherent mechanism behind the anecdata if only we were quick enough to catch it as the stories f
ly by. But there isn’t. The resolution never appears. There is nothing behind the curtain.
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Aside: here is Clay Shirky writing about YouTube:
The most watched minute of video made in the last five years shows baby Charlie biting his brother’s finger. (Twice!)
which is, as of this date, no longer true. The most watched video made in the last five years shows Lady Gaga and a group of hired models dancing on an elaborate set in a video that embodies complex production methods, that is part of the Vevo channel (a joint venture between Google and major record labels) and that features product placements by Nemiroff Vodka, Parrot by Starck, Carerra sunglasses, and HP Envy [link]. Now there is a complex business model.
As a further aside, analysts Visible Measures add in all copies of a video together with spoofs and pastiches, and their list of the top fifteen videos is as follows.
- Soulja Boy: Crank Dat (music video: Universal) – 722,438,268
- Twilight Saga: New Moon (film: Summit Entertainment) – 639,966,996
- Beyonce: Single Ladies (music video: Sony) – 522,039,429
- Michael Jackson: Thriller (music video: Epic Records) – 443,535,722
- The Gummy Bear Song (music video: Gummibear International) – 394,327,606
- Lady Gaga: Poker Face (music video: Universal) – 374,606,128
- Lady Gaga: Bad Romance (music video: Universal) – 360,020,327
- TImbaland: Apologize (music video: Mosley Music Group) – 355,404,824
- Susan Boyle: Britain’s Got Talent (TV: Freemantle/ITV) – 347,670,927
- Twilight (film: Summit Entertainment) – 343,969,063
- Modern Warfare 2 (video game: Activision) – 339,913,412
- Jeff Dunham: Achmed the Dead Terrorist (TV) – 328,891,308
- Mariah Carey: Touch My Body (music video: Universal) – 324,057,568
- Charlie Bit My Finger Again (user generated) – 288,666,331
- Michael Jackson: Beat It (music video: Records) – 286,279,009
It seems that complexity has its place after all.
A natural response to this complaint would be that this one particular video is not “the point”; that I don’t “get it”, that it is not what the essay is really “about”. After all, Clay also writes this sentence:
In the future, at least some methods of producing video for the web will become as complex, with as many details to attend to, as television has today, and people will doubtless make pots of money on those forms of production.
And here is one benefit of building an essay on anecdata: you can always argue that a particular story is “not the point”. To take it one step further, here is the Second Rule of Big Ideas: make the point catchy, but make it ambiguous. As Thomas Friedman has said, “He who names an issue, owns it”, so a memorable name (”The Golden Arches Theory of Conflict Prevention”) counts far more than an accurate one, and an oracular title is the best of all. The title of Shirky’s essay is not up there with that of his next book “Cognitive Surplus”, which is an obvious attempt to coin a new phrase, but it does use the rule. The Collapse of Complex Business Models has a ring of down-to-earth pragmatism about it: if you are slave to an obsolete business model, then you get what you deserve. But a business model is a strategy for matching costs to revenues in such a way that you end up with a profit, and all he really writes about is one part of a business model: production costs. Why then not call it “The Collapse of Complex Production Methods”? My guess is that, consciously or not, Clay chose “business model” because it is a bigger, more abstract, and less concrete concept than “production costs” and using “business models” keeps the point of the essay ambitious, ambiguous and open to interpretation.
The rule extends beyond the title into the text itself. Clay has a reputation for being plain-spoken and jargon-free, but that’s not really accurate. He doesn’t load up his talks and essays with the jargon of the field he is talking about (culture), but he does sprinkle them with jargon from many places, leaning most heavily to economics and engineering. He borrows liberally from economics with his talk of “the marginal value of complexity”, Coasian transaction costs, and also the ”supply-and-demand curve” (really?). He switches to engineering when he refers to societal collapse as “sudden decoherence” and discussed negotiations that “took place in the grid of the television industry”, and to business lingo with his talk of “ecosystems” and supply curves going “parabolic”. The language is colourful, and it carries the reader along. It speaks to his natural audience of geeks and techno-enthusiasts, but the lack of precision keeps the audience on its toes while hinting, again, at deeper truths behind the anecdotes. But there appear to be no such truths; we are left with theoretical language without the theory.
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The five stories in Clay’s essay follow a practice attributed to The Economist, which is the Third Rule of Big Ideas: simplify and exaggerate. Take the one about network television’s failure to translate Web TV program In The Motherhood to the mainstream. Clay writes this:
Once the show moved to television, the Writers Guild of America got involved. They were OK with For and About Moms, but By Moms violated Guild rules. The producers tried to negotiate, to no avail, so the idea of audience engagement was canned (as was In the Motherhood itself some months later, after failing to engage viewers as the web version had).
The critical fact was that the negotiation took place in the grid of the television industry, between entities incorporated around a 20th century business logic, and entirely within invented constraints. At no point did the negotiation about audience involvement hinge on the question “Would this be an interesting thing to try?”
The message is clear: unions and media corporations are inflexible dinosaurs, unable to deal with the chaotic creativity of the digital 21st century.
He could have chosen other stories with other messages. Media corporations are not as inflexible as Shirky would have us believe. Rupert Murdoch, one of the media barons Clay quotes as a dinosaur, is an expert at reducing production costs and limiting union rights (Wapping, anyone?). And has Clay not noticed reality television? The networks have been hugely successful at cutting the cost of Writers’ Guild members from their balance sheets over the last ten years.
On the other side, the brave new world is not so different. For a small startup to be bought by a large company and ground down by the bureaucratic pressures of its new environment is not unique to the media business: it’s commonplace in the software industry too. And there are many “complex business models” in the digital world that Clay chooses to ignore: Google’s partnerships with major media companies, the licensing complexities of Facebook’s ever-changing privacy rules and third party APIs, Amazon’s outsourcing of warehousing through its complex partner programs – these business models are not just complex, they are positively byzantine, charting ever more circuitous and indirect routes between production and revenue. They just don’t appear in the stories he tells.
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Useful though they are, the rules of telling stories, keeping the core idea ambiguous, and following the “simplify and exaggerate” maxim can only go so far in bringing your audience on to your side. The Fourth and Final Rule of Big Ideas is to play on our natural identification with the underdog by casting the anecdotes and your overarching theme in a rebellious and revolutionary light. The stories Clay tells may be diverse in terms of their origin, but they share a common tone, which is that of the creative individual (hooray!) against the stuffy institution (boo!); the plucky and resourceful underdog (go Charlie!) versus the monolithic, massive but ultimately stupid corporation (down with ABC!).
Back to his Charlie story again:
Expensive bits of video made
in complex ways now compete with cheap bits made in simple ways. “Charlie Bit My Finger” was made by amateurs, in one take, with a lousy camera. No professionals were involved in selecting or editing or distributing it. Not one dime changed hands anywhere between creator, host, and viewers. A world where that is the kind of thing that just happens from time to time is a world where complexity is neither an absolute requirement nor an automatic advantage.
But Charlie didn’t “just happen” because Charlie is not the only story here. As YouTube became a phenomenon, those 174 million-and-counting views could only be delivered by acres of these:
housed in several of these:
Complexity is not going away. It’s just moving to a different spot in the production chain, and as it moves so does the balance of power.
Years ago companies like P&G, Coca Cola and the other manufacturers would dictate to the stores that sold their goods how to do so, mandating marketing campaigns and product positioning. But now the balance of power has now shifted closer to the customer – to Wal-Mart and the retailers, who send Coca Cola back to change the taste of their drink and who tell P&G to pay for the privilege of managing Wal-Mart’s shampoo shelves. Amazon and Google are trying to become the Wal-Mart of the cultural world, increasingly dictating terms to their suppliers. But while the stories of Amazon and Google are part of today’s reality, they are not stories Clay wants to tell because they don’t fit his agenda. He would rather stick with Charlie and the finger biting. And that populism is a problem, partly because for all his promotion of the underdog Clay ends up consistently on side of the free market and against collective efforts by working people to gain a respectable source of income.
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If the problems with The Collapse of Complex Business Models were restricted to that essay I would be more forgiving, but they show up elsewhere too. In a recent conversation with Evgeny Morozov on Digital Power and its Discontents Clay talks about the 1959 Krushchev-Nixon “kitchen debate”, jumps to Iran, then immediately to Singapore’s efforts at censorship, and on to Burma, to China, and to Belarus and to his favourite author Habermas. He covers a lot of ground, but never stops to look around or to reflect on what we can learn from one case – he’s on to the next before you can stop him.
And when Clay talks about “a public that can… self-synchronize”, asks “how much is the political sensitivity of the [Iranian] regime titrated to the price of oil?” and suggests that Iran is “acquiring a kind of technological auto-immune disease” it is impossible not to think that he is more concerned with the novelty of his images than with actual clarity or, in fact, meaning.
The same goes for the ambiguous title of his forthcoming book, “Cognitive Surplus”. In the lecture it has grown from (text version here) he talks about the role of gin in the industrial revolution, about Wikipedia’s article on Pluto, about a Wiki map of crime in Brazil, about Gilligan’s Island, and about a friend’s four-year-old daughter looking for a mouse. It’s entertaining but there is more cuteness than substance to the title. I look forward to reviewing it.
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Towards the end of his conversation with Evgeny Morozov, Clay observes that “This is one of the really interesting things about these questions, … you very quickly get a kind of philosophic vertigo. You think you’re asking a question about Twitter, and suddenly you realize you’re asking about, say, Hayek and markets.” I can only say: Clay, vertigo is not inevitable, it is a choice you have made, and maybe you should make a different one.
Great piece… and I have wondered about Shirky’s basic knowledge. I read him relating that a newspaper, not a giant one, had a considerable number of columnists, that it struck him as wasteful, unnecessary. Looking into it further, it was clear that as is the case with a lot of not-giant newspapers, they had a slew of people who wrote a column or two per week about things like local fishing, hiking, gardening, skiing, restaurants, etc. As per normal in the newspaper world, those were local people getting paid very little per article, who generally do it as a labor of love and/or for the cachet. (And that seems to do well to provide local, unique content at a low price.) Shirky described it as the paper being wasteful, having a small army of full-time columnists. Felt clear that Shirky had a woeful lack of knowledge or he was distorting what was really going on.
Great article. How does that Shirky guy dare to speak in favor of free markets…
Interesting analysis, as always.
And as to the story about AT&T missing the boat in web hosting, check out the company Gartner identifies as the current industry leader:
I think the history of hosting actually provides a good example of economic rewards moving away from simple production models and toward more complex ones. AT&T has done well by focusing on its traditional strengths.
Great article. I remember reading Seth Godin and one day just throwing my hands in the air and unsubscribing for exactly this reason. Dude was just making these grand gestures and statements and talking about this new world but literally every article was like that, and they were all effectively content free.
However, even though like you say Clay’s article is the same, there was a (perhaps obvious) lesson in it for me, and it may not even have been what he was really talking about: that sometimes the product you’re competing with doesn’t offer the sorts of things you would insist upon it offering if you were competing against it. I took that and went on my way, not really giving it a second thought. Specifically for the media, a lot of newspapers talk about journalistic integrity and fact checking, when their competition doesn’t provide anything like that. Whether that sort of thing is necessary or not is a different matter.
You mention briefly at the end Shirky’s tale of “a friend’s four-year-old daughter looking for a mouse”. This would have been a perfect example to expand on.
The tale, as Shirky tells it, is about a new generation that no longer understands non-interactive television and so while watching outmoded cartoons goes behind the TV set looking for the mouse, desperate for the interaction they feel should be inherent in a glowing video screen.
Unfortunately for this theory, the show the child was watching (Dora the Explorer) takes post-modern cues from computer interfaces and regularly features a floating mouse cursor which clicks on items on screen. Looking for the mouse is an entirely understandable action for a child in this case.
made me rethink the shirky piece… thanks!
This is a good article. It amuses me that I kept counting your stories as I read it… 🙂
Oh noes, Pinker vs Gladwell all over again.
How dare they use anecdotes? How dare they attempt to synthesise (which I will call ‘simplify’ because it fits in with my generally dismissive viewpoint more neatly)? Why can’t they construct a logical argument?
“. . .it is impossible not to think that he is more concerned with the novelty of his images than with actual clarity or, in fact, meaning.” And you say this as if this can *only* be a bad thing?
People like Clay Shirky (and Seth Godin and Malcolm Gladwell and other popularisers) deal in resonance and their (often recycled) ideas thrive in conversation, often characterised as idle pseudo-intellectual chit-chat as if that can *only* be a bad thing. (And you even identify the how of this with your where’s-he-going-with-this Hoffman anecdote.)
If you assume that their readers are stupid, unable to make up their own minds, somehow fooled by their terms of art then this bonnes-a-chitter-chatter is, indeed, a terrible thing. But phrases like ‘cognitive surplus’ are useful. The ideas involved in collapse of complex business models are useful. They’re not predictive or robust enough to withstand logical argument – there are meant to be questions is my parsimonious view.
Your final sentence:
“I can only say: Clay, vertigo is not inevitable, it is a choice you have made, and maybe you should make a different one.”
This parses as:
Generalist and synthetic viewpoints are not inevitable, it is a choice you have made. Perhaps you would care to take a similar viewpoint to mine?
The supply and the demand for “philosophical vertigo” may be closely linked. Perhaps likewise for critiques?
Thanks for the comments. Yes, Kynn, I am guilty as charged.
Simon Bostock – I actually like Gladwell a lot, and have no problem with stories per se. Gladwell often does the anecdotal thing the way it should be done: he makes it clear that his job is to synthesize and popularize ideas he has found elsewhere, and is generous with his references and credits (including the phrase “tipping point”). But I don’t see this essay as synthetic – at least, if it is he doesn’t reference things he’s synthesizing, which is a problem.
I did hear Gladwell speak at a BlackBerry conference a few years ago (just after Blink came out) and I asked a question about his take on “broken windows” and his seemingly contradictory praise for Freakonomics (also newly published), which attributed declining urban crime rates to other causes, most famously abortion rights. And MG responded that, first, the difference between the two was not as big as it seemed (fair enough) and second, that it didn’t really matter because the important thing is to start a conversation.
So here is a case where I do disagree with Gladwell and, I think, with you. It does matter. And the reason I write about Clay Shirky here is not because I think he’s stupid – I like some of his essays too – but because the message he’s giving out is, I think, wrong. There is a lot of Internet popularism talk, to which he contributes, that has had the effect of diverting idealistic young people to basically working for free for Silicon Valley venture capitalists. And I do have a problem with that. It’s not something I can address in this post, but at the end of the day that’s why I spent the time to write the post.
I don’t mind popularizing, but I do think it’s important to popularize ideas that make sense.
Generalist and synthetic is a technique, not a viewpoint. For some values of “job”, it gets the job done, but we aren’t talking about someone from a long line of generalists from generalistan here – the essay is written the way it is to get a specific reaction from the audience, and if it’s done by excluding important counterexamples, it’s being done wrong. In that case, naming the excluded counterexamples is a pretty appropriate response.
ps i like your blog
Great article. Very insightful. Offering up a silent prayer ‘please don’t read any of my blog pieces’ . Thanks in anticipation !
On Anecdote as Argument
An interesting (and critical) analysis of the shortcomings of the anecdote-based argument style used by Clay Shirky and others:But stories and analogies should be a starting point for thought, and not its terminus. They should be the spark that prompts…
Tom I think your critique of Shirky can be summarized by your one line explaining that “…Clay ends up consistently on side of the free market and against collective efforts by working people to gain a respectable source of income.
I’m glad you wrote your piece though because it made me re-read the Shirky piece which I really like. I like it precisely because my intuition is that his “complexity” thesis is wrong but I can’t quite put my finger on why.
In an excellent analysis, you made IMHO one slip: “Clay ends up consistently on side of the free market and against collective efforts by working people”, i.e. you succumbed, perhaps unintentionally, to calling the market, as an economic arrangement, “free”, when it relies crucially on the substantial narrowing of several freedoms. Enforcement of private physical and other property rights of certain collectives, like corporations, necessarily impinge freedoms of individuals. Land and buildings owned by these entities is off-limits to most people, enforced by government. Some ideas and facts cannot be expressed or used by most individuals, impinging on freedom of action (patents, insider trading laws) and expression (NDAs, copyrights); again, this is enforced by government courts. That is, markets rely crucially on a lot of routine government intervention and restrictions, and not just at times of crisis. I’m not debating whether these are useful restrictions on individual freedom; they may well be. I’d only like us to recognize that these are genuine restrictions on freedom, and I think we should just get rid of the phrase “free market” as wrong and extremely misleading.
I am waiting for someone to produce evidence to rebut Shirky’s intuition that phenomena like the financial crisis are not aberrations. I’ve seen a good discursive article describing the viral-like resilience of universities. You are having a go but you aren’t actually producing evidence or even specifying a test that would allow us to compare two different theses. So far, that’s all we have produced. Another possibility would be to show that his central proposition is not worth bothering about.
For what it is worth, I’ve noticed Shirky becoming more pessimistic – first of the internet’s ability to deliver renewal and now of our societal model.
The evidence to rebut his intuition that “things are about to fall apart” would be an alternative sense of the future. Cases matter little except to generate our sense of possibilities. Few of us are able to do that though. Why not? Why have we such an impoverished view of where we are going and why it is exciting?
Excellent, this will help me write my next book!
Bravo for having expended the energy – but when you pick it apart not much remains… Shirky is all parables and aphorisms – my own tetchy post on one of his former efforts is here: http://adrianmonck.com/2009/03/clay-shirky-wrong-newspapers/
Very unexciting, droll output from a pretentious moron.
I tend to agree with Bostock above: Shirky is a lot like Gladwell, and they’re both sort of amusing and sort of annoying. YMMV. I thought Shirky’s stuff sounded a lot fresher in 2002 than it does in 2010, but it’s still worth a read.
I agree completely with Tom on one (perhaps minor) point: the title of the essay was just wrong. He wasn’t talking about the collapse of “complex business models”, and he didn’t make any arguments in support of such a theory. He was, as Tom has said, talking about the collapse of expensive media production models. But this is old news. I had a good friend who worked for a well-known web media company, circa 2001, when they were being bought by Primedia. When I asked him how they made money, he said without hesitation: “We screw the content producers.” So ten years ago, content on the web was understood to be a business where you paid a couple of guys (like my friend) to write the code and keep the servers up, you paid a couple of guys to bring in advertisers, and you duped a bunch of writers into providing their work on your website for nothing (or close to it). So the main argument Shirky makes in his essay strikes me, like I said, as something that would have been a lot fresher eight years ago.
Doesn’t a large part of what you’re saying boil down to claim that existence of property rights is a narrowing of freedoms? Armed government agents will (hopefully 🙂 supress your freedom to come in to my home and eat everything in my pantry, take a dump in my linen closet or take my car and go to Las Vegas. What constitutes property (land? buildings? information?) is an important but orthogonal queston. Whether the building/donut/car is owned by me, or owned by a proxy owned by myself and many others, you don’t have freedom with respect to it. Under this criticism, I don’t know what system is correctly called “free” except for anarchy. So call it a “freer market”.
It would be good to distinguish between personal property and private property; I’m referring to private property, whereas the examples you give are of personal property.
The two are often confused. One discussion of the differences between the two is here: http://www.infoshop.org/page/AnarchistFAQSectionB3#secb31, and another recent one here: http://www.thefreemanonline.org/featured/common-versus-government-property/
You’re more correct than Shirky, but you’re like the nerd who keeps interrupting someone’s good story by injecting minor corrections in some obsessive-compulsive need for perfection.
Regardless of what libertarians like to believe, the truth does not win; we are humans, not robots.
That’s me: one long irritating whine.
“but you’re like the nerd who keeps interrupting someone’s good story by injecting minor corrections in some obsessive-compulsive need for perfection.”
this is a standard issue across many subjects; some folks give a reductionist picture, as in “all history is about eldest children with oedipal complexes”, and then others pick holes in it pointing out those key people who weren’t eldest children, or the lack of a proper measure of an oedipal complex. The first type get all the publicity, but the second sort are generally more correct.
Serious engagement with Habermas would require Shirky to grapple with the concept of the systemic colonization of the lifeworld–a phenomenon he seems far more likely to exemplify than to critically examine.