The Rights of Wonga

No not money itself, the company that loans it out.

Wonga.com have come in for a significant amount of flak for their business practices. I have to admit, I gawped as soon as I saw the interest rate of a whopping 4,214% typical APR. I initially shrugged it off as a business that would only appeal to the most desperate of people.

However, the creators of the business gave an interview to the UK edition of Wired this month and they have a lot of interesting points to make. None of which are likely to escape the techno-fanboy realm of Wired; and they certainly won't make it into the pages of the likes of the Guardian.


Wonga argue that they are disrupting what has fundamentally been a monolithic monopoly market by providing small, short term loans. Something that the current banking sector in the UK simply does not service. In the interview the creators claim that customers want three things from such a service: "Firstly, simplicity - the ability to borrow what they want, when they want. Secondly, speed - the transaction needs to happen fast. Thirdly, they want to know exactly and clearly what the loan is going to cost them whether they pay on time, pay early or even miss their deadline."

Banks, they argue, have no incentives to meet these needs. Internet technologies however make all three perfectly servicable.

Errol Damelin (one of Wonga's creator) even goes on to make the oft-made by libertarians, rarely-heard by others, corporatist point: "Banks love regulation. They have been better than anyone else at co-opting it to suit themselves. They love embedding themselves into the messy greyness of how policy is created. And that makes it harder for them to innovate. They're all wink-wink. They don't compete. When did you last hear of a bank competing to bring down the cost of CHAPS payments? When was the last time you saw an interesting new Barclays product? I don't think ever."

And looking at the figures Wonga no longer seems so bad or as exploitative as their detractors have made out. Despite the horrifying interest rate, in practice it would mean a loan of £400 repayable over 30 days would come to £525.48. I've occasionally been up the proverbial creek because an employer has screwed up my pay and my rent and bills are due the next day. I can certainly see occasions where Wonga's services could have been useful in the past and in today's increasingly hand-to-mouth economy I can see why other people might have cause to use them too.

The position is that they are not exploiting people, but providing a service to a generation that has had expectations of flexibility and speed for some time in this sector that simply are not met.

Damelin puts its utility this way in the interview: "We do small, short-term things, and the cost of delivering that service is high.....Catching a cab might be expensive, but it's convenient and nobody complains that being charged £15 for getting across London is immoral."

And the competition?

It gets more interesting: In order to provide an incredibly fast turnaround for their loans, Wonga have opted to have sameday loan applications processed solely by their algorithm. You read that right. No human input.

Their algorithm uses a bespoke method of credit scoring that learns from previous transactions. I, and many others it seems, supposed that the business must have a high default rate. Initially they used the same credit scoring methods as the rest of the finance industry, leading to a 50% default rate from the customers who were being granted loans. However as they moved away from this system and onto their own algorithm, the default rate dropped to single figures (they refuse to release the exact figure however they claim that it is industry leading). The typical default rate assumed by banks is 10%.

This means that despite being in the most high-risk financial sector Wonga are outperforming the high-street banks. They speculate that they could possibly do the same for consumer banking. It's an interesting thought that such an upstart could seriously challenge the retail banking monopolies isn't it?

Your virtual body of evidence

In amongst the innovations and the counterpoints to the bad press Wonga have got there is an important warning. One that our errant media has failed to note: Wonga's nearest competitor, U.S. based prosper.com process all of their applications manually and yet end up with a 40% default rate. Wonga's algorithm works on up to approximately 30 pieces of information initially supplied by the applicant and then finds a further "6,000 to 8,000 online data points that relate to the applicant".

Wonga won't say what those data points are, so one is immediately drawn to asking what they must be. Social media will definitely be a large factor (there exists a similar facility named Duedil that harvests social media such as LinkedIn to assess the soundness of companies for example...), which means an enormous amount of people are revealing patterns in their online data that they are probably not aware of themselves. This is a recurring theme in my own research - finding and helping people to expose such patterns, with the normative judgement that people should have access to their own data - and patterns - to enable them to be self-aware enough to avoid being manipulated by others who hold that knowledge. Wonga have mastered these techniques to the point of being able to create a multi-million pound turnover on the back of it, which means the data and the patterns hidden within are of significant value.....

Point someone to this blog entry next time someone questions you as to why you don't want the state gathering more information on you than you want it to....

Hacking Capitalism

I learned a new term this week - "hacker capitalist". Reading an article, via the Institute for Ethics and Emerging Technologies, by Edward Miller, 'Hackertopia and Piracy, Inc.' got me thinking on a more positive note for once.

Miller details the rise of the hacker / pirate ethic and the notion of freedom of information (including information based products of labour). He refers to the hope invested in the so-called 'Milennial' generation (of which I myself am part). There is despair on the other hand at the 'hipsters' - part of the Milennial generation - who appear to have developed serial ADD and enable cynical marketers to co-opt any new trend or idea, however anti-establishment, and sell it back to the 'youth'. I have known some activists (of various political persuasions) who have despaired at this masterstroke of the establishment - to commodify dissent, often very effectively.

However, Miller reminds us of the flipside to this, the adoption of certain technologies and lifestyle choices that fundamentally alter our relations not only with eachother, but the 'state' or establishment also. "[S]taggering amounts of time on the computer and mobile communication devices, surfing social networks and wikis, gaming, texting, filesharing, blogging, making youtube videos, and building the new participatory panopticon" has unleashed forces the state, and its snooper agents, simply will not be able to control.

My personal site, 'Upwingers', is inspired by Persian futurist F.M. Esfandiary. It's strapline is perhaps his most famous quote: "There is no government, no industrial-military complex, no economic system, no mass media that can ever reduce us to puppets and robots as thoroughly as the biological and environmental dictatorships have." I'm a big fan of working through the implications of Esfandiary's transhumanist/futurist philosopy in this regard: Many others like him and inspired by him (such as R.A. Wilson, Timothy Leary etc) pointed out systematically how centralised authorities can use basic knowledge of body and mind to trap, torture and brainwash us. What was sadly lost in the popular consciousness regarding Leary's drug focused philosophy and experiements was his claim that intelligent application of said drugs could undo any brainwashing. This was of course Leary's undoing, and probably the main motivation behind the establishment attempts to destroy him.


Leary, Wilson, Esfandiary and many others have pointed to a profound truth. Regaining control over "the biological and environmental dictatorships" might be our single best opportunity for wresting our lives back and fundamentally challenging the status quo. I recently said, in a discussion over at Anna Racoon's blog that the root of all evil is not money, or love thereof, or 'lax morals', but low self-esteem. Once you get past the most basic survival needs, (and *every* political philosophy, however noble, once reduced to talking about survival needs, becomes nothing more than lifeboat ethics and Hobbesian dilemmas*), the most crushing, most enervating, most life-destroying force is our own psychological and emotional binds. It's why the thought police are more powerful than the real police.

Back to the 'Millennials' - Miller makes a bold claim: "It is no wonder, then, why their entertainment choices include trolling, LOLcats, the Daily Show, South Park and ridulous sarcastic wikis [e.g. Encyclopedia Dramatica]. Yet, they are not nihilists. Beneath all this lies a belief in classical liberal ideals which is at least as sincere as that of previous generations, if not moreso."



I agree with Miller's assessment, even if for the large part this isn't a conscious adherence to classical liberal ideas; these values are rather embedded within the very technologies now spreading ineluctably like viruses, and in the new social relations they are forging. This also tends to be the point where I cross swords with social conservatives. The sign is often confused with the thing signified. The state is panicking in response. It can sense its impending doom, even if it is still a few generations away. People's behaviour is becoming increasingly chaotic - sometimes for the good, sometimes for ill. And while I welcome any restatement of the importance of personal responsibility, I'm suspicious of any that focus largely on the old hobbyhorses of sex, drugs and rock'n roll - sex in particular. While there is certainly an every growing, largely state supported, underclass - rightly lampooned by many social conservatives, there is also a corresponding - and in my assessment much larger - growth in increasingly aware, adaptive and responsible "youth". The curtain has started to rip and the man behind it is starting to slip into view:

For the 'Millennials', "[t]he problem is that for as long as they can remember, all the institutions which they were told to look up to have only given them reasons to be cynical. Instead of honest journalism, we have demagogues. Instead of corner grocers, we have sterile megastores. Elections aren't won, but stolen... not that it matters. Politics became a series of sex scandals. Religion too, only in a far more sinister sense. The economy is in crisis, but the Millenials are not surprised".

There is a new wave of classically liberal sentiment under the surface. The millenials are beginning to join their older fellows in rejection of the program. Look at almost every online outlet for public opinions, from the Guardians' Comment is Free through to LabourListing to Guido Fawkes' blog. Look at the failure of the MSM to adapt to the Daniel Hannan phenomenon. The consistent outpouring of sentiment is immense. The cracks are starting to show.

An idea I've frequently encountered at blogs such as Old Holborns' is that the state is increasingly seeking to put us in hock to it. The "bailout" having been its most spectacular recent success, saddling us all with an astronomical debt level (based on a completely fake economic system of valuation in the first place - the value of perception is now more important than actual supply and demand). Truly a masterstroke. Also a good reason to read the Wizard of Ozymandias if you have not done so already. The establishment is becoming increasingly brittle and vulnerable. It has to put us in hock to survive like this. And it is no coincidence that committed collectivists such as ZanuLab should be at the helm when such a bold attempt to ruin us is enacted. The "state", "society", and now "shared values" (in the horribly scary form of 'Contest 2') are bigger and more important than us individuals you see. They have a life of their own, they really do - thanks to our Lords and Masters. It's the fundamental aspect of collectivist thinking that is so inimical to human life - as Stirner put it, "because they serve Man, they cut off the heads of men."


We're starting - ineluctably - to reclaim our own spaces, bodies and minds. It is starting in the realm of information. The "cost" of information is dwindling to almost nothing. Our means of gathering and distributing it are being similarly demolished. This is where we get back to that new (or at least new to me) term -'Hacker Capitalist'. Miller refers to the likes of Mark Shuttleworth (creator of Ubuntu) and Jimmy Wales (creator of Wikipedia) as great examples of the new breed of successful capitalist - the 'Hacker Capitalist'. These gentlemen provided open source innovations that they were able to both share and profit from. This is an oxymoron to some.

Something I've always noted with amusement is the wholesale endorsement of Open Source technologies and philosophies by collectivist-leftists. I wonder what they make of the likes of Shuttleworth and Wales. I've found consistently that whenever individuals who are actual innovators in the Open Source community put pen to paper they are, almost always, of a Libertarian persuasion. And even those who are more left-leaning, tend to be in one of the groups not incompatible with libertarian or anarcho-capitalist sentiments (the mutualists for example).

The time of the authoritarian statists and the dogmatic collectivists is coming to an end - ineluctably. They will go down like mad dogs though and even if the wittering of the collectivists (especially the left-anarchists (as opposed to their innovative and steadily prospering brethren - the market or anarcho-capitalists)), seems pathetic, their ideology is still pervasive and infectious. They chomp and moan because, apart from many other things, one of their defining characteristics have been taken away from them. There were two invasions of parliament by activists in recent memory - one by Fathers for Justice and another by the Countryside Alliance. Not an anarchist in sight. And at the last Anarchist Bookfair I attended in London,(at which, incidentally, us Libertarians and Anarcho-Capitalists are NOT welcome) the most innovative idea they could come up with was to camp outside parliament until the Prime Minister resigns. Outstanding.

Our aims now should be to really - literally - capitalise on these opportunities and technologies. The great danger is that in their death throes they might take us with them. What they fear most is that we, individually, become more powerful, capable people. We don't need them anymore, but they need us. As Miller put it: "Now is a superb time for all you hackers, tinkerers, hobbyists, and DIYers to kick it into full gear. The political and economic cards are in our favor. Let's make the most of it!".

Indeed. There has never before been a time like this of such rapid technological change. So many new questions, dilemmas and possibilities open up before us now on a daily basis. States and collectivists are pathologically and literally unable to deal with this. Only individuals can respond and innovate in a timely fashion. It's a chaotic time, but it might yet prove to have been the best time and place to have been alive thus far. It's a time for heroes and heroines of all stripes to step forward. Get to it.

*A great shame this is not more commonly recognised. Many people - scholars among them - interpret Hobbes' nightmare scenario of the 'all against all' society as being the baseline for all political philosophy. It isn't. It is, instead its nullification. All political philosophy (except perhaps the most lunatic and misanthropic interpretations of collectivist-primitivist anarchism) is based upon some kind of surplus. As soon as a social configuration produces a surplus, multiple political philosophies are then on the table. Discussion of this surplus is what political philosophy is. Societies throughout recorded history have had a surplus, however meagre.

Sidenote: After a diasterous attempt to upgrade software, resulting in the loss of my database, I decided to rebuild my 'upwingers' site (again!) - and I think I've finally settled on a configuration to my liking, though it will take me some time to repopulate it with content (especially on my research into A.Q.Khan, Sibel Edmonds, MI5/6 etc). It's going well so far and I'm very pleased with the new collated news feeds - I'm finally making good on the site's philosophy; focusing on positive uplifting (and often - action orientated) aspects and subjects as much as negative. There's still plenty of work left to be done, however by all means, have a look.