Leverage Is Not a Multiplier Borrowed From Finance

Introduction: The Other Meaning of the Same Word

Search for leverage and most of what returns explains borrowing ratios and margin trading. What this article takes up is the other meaning of the same word.

Leverage is a device that holds down the effort put in while amplifying the result non-linearly. Finance is one kind of it. And which kind you are using decides something crucial: whether you need anyone’s permission to use it.

Here is the conclusion first. Of the four kinds of leverage, only two require no permission. And those two have been opened to individuals for the first time in history.

Leverage Comes in Four Kinds

Historically, leverage sorts into four kinds.

1. Labour leverage — employing others to work. The oldest form. Hiring, developing and coordinating are costly, and complexity rises with headcount
2. Capital leverage — using money to acquire equipment or assets. The effect is large, but a stake is required, and where investors are involved, freedom of operation is constrained
3. Code leverage — writing programs to build mechanisms. Built once, it can be supplied widely at nearly zero additional cost
4. Media leverage — making articles, videos, books. Made once, it continues to be read while its maker sleeps

Leverage as discussed in finance is only the second of these. That the remaining three, and especially the third and fourth, drop out of view is what narrows the understanding of the word.

The practical use of all four is treated in the four leverages and the permissionless ones.

The Decisive Difference Is Whether Permission Is Required

Here sits the most important fact. Of the four, only code and media are permissionless leverage.

• Using labour requires the other party’s agreement
• Moving capital requires a stake, or investors
• But making content requires no one’s permission

Write one piece today that puts a worldview into words, and it may reach someone, somewhere. No publisher’s review, no distributor’s approval, no sign-off from above.

Recall that a skilled artisan of the industrial period needed enormous capital to own a machine. There has never been a period in which holding means of production cost this little.

What the Gatekeepers Used to Decide

The weight of no permission required stands out against what came before.

Anyone trying to put their expression into the world once had to pass through someone’s approval. Publishing writing required a publisher’s review. Releasing music required a contract with a label. Putting goods on a shelf required a distributor’s sign-off.

These gatekeepers held the authority to decide whose voice reached the world. However good what an individual held, if the gatekeeper did not choose it, it reached the world by not one millimetre.

I was inside that structure myself, in music. A composition contest is, in the end, a venue for competing over whether a commissioner — a gatekeeper — will let your sound through. However far the quality was raised, if the selection did not pass it, my sound reached no one. The final decision over whether it was delivered always sat outside me.

Code and media leverage being open to individuals means the gatekeeper is no longer required.

The Real Value Is Not Cost but Initiative

What that shift carries is far larger than it looks.

In the era of gatekeepers, an individual’s share depended on being chosen. You made work that would pass the selection; you adjusted yourself to secure the contract. While the initiative over delivery sat outside, the origin of action had to sit outside as well.

The gatekeeper disappearing means that origin can be brought back to your side. What to send, to whom, and when — decided by you, for the first time.

The real value of leverage opening to individuals lies less in costs falling than in this: the location of the initiative changed.

What “One Unit of Labour, N Units of Output” Looks Like

Concretely.

Something made in an hour by one person keeps functioning from that moment. An article written today reaches a reader three years from now. A sequence designed today functions for someone who arrives next year. Something made once costs almost nothing extra whether one person reads it or ten thousand.

That is the fundamental difference from skilled labour, where income arises only while you are moving.

And generative AI has sharply lowered the cost of building this structure. Producing substantial material once took a great deal of time, and that time was the barrier to entry. The barrier is now lower.

To avoid misreading: this is not the claim that AI makes the content for you. The thought to be delivered, the first-hand material, the worldview — these are held by people. Just as the printing press did not generate something to say on behalf of those with nothing to say.

As Volume Rises, Direct Relationships Gain Value

Here is the paradox.

As production costs fall, the volume circulating in the market rises. As volume rises, scarcity as a trustworthy source increases.

Which means that the further this spreads, the more the value rises of existing in direct connection with readers, without passing through an intermediary. In a market where everything reaches equally, the advantage of distinctiveness is small. In a market where do you hold a structure that delivers becomes the visible difference, that difference is decisive.

In an era of production at volume, an individual with a particular way of seeing and a structure that delivers it directly becomes more valuable, not less.

Small Is Not a Compromise

An individual who holds their own worldview and their own means of production, economically autonomous without dependence on a large foundation, is what I call a micro capitalist. This is a coinage of the author’s, not an established term in economics.

The intent behind micro is worth making explicit. The aim is not to produce a few enormous successes. It affirms smallness itself.

There is no need to build something beyond what one person can hold. Autonomy is fully achieved at the scale on which the relationship between you and the readers you care about can stand. Being small is not a compromise in this way of thinking; it is a design principle.

Where power concentrates at a single point, the remaining majority are pushed into a position of moving inside rules set by someone else. Numerous small autonomies distributed are, structurally, stronger than one enormous autonomy.

Conclusion: Not the Multiple, but How Many Times It Arrives

That the word leverage circulates only as a financial multiple is itself a narrowing of view.

The question is not how many times can I multiply this but how many times does something made once arrive? And two of these devices can be used without anyone’s permission.

In the industrial period, holding a machine required capital. Code and media, as means of production, are now in individual hands without a stake. If there is a reason they go unused, it is not a shortage of capital but that these two are not counted as leverage at all.

The whole picture is gathered in why generative AI fluency does not settle next month; the historical background in the industrial revolution took tools, not skill; the design of keeping delivery running in automating the work does not give you the path.

References

Books

• Rifkin, J. The Zero Marginal Cost Society (2014) Palgrave Macmillan