Category: Digital Capitalism

Betting The Farm

Condescension toward farmers has been a bedrock historical fixture of urban middle-class understanding (In the United States, “clod-hoppers” is one of the more polite disparagements).  After World War II, U.S. social scientists incorporated this prejudice into what they termed “modernization theory,” which they developed as a rationale for compelling indigenous peoples to abandon “traditional” village life.[1] Walt Rostow’s formulation of the “stages of economic growth” became ubiquitous.[2]  In this conception, “development” took the form of a repeated sequence:  out of agriculture, into industrial manufacturing, and then on to the production of services.  In this scheme, the U.S. – conveniently – constituted a paragon of developed modernity.  Modernization theory was far from being merely an academic daydream.  The U.S. Government packaged its foreign policy toward the then Third World under the motto of “development” – and used it, among other things, to sell what was called the “Green Revolution.”  The Green Revolution pushed to increase agricultural productivity via “technology transfers.”  Fertilizers and pesticides and high-yield seeds from the U.S., alongside intrusive management practices, were the standard package.

Capitalist agriculture was thereby given a giant push. And the ratchet continues to turn:  capital has continued to transform agriculture. It comes as no surprise, therefore, that farming should increasingly exhibit some of digital capitalism’s trademark features.

Alongside the Green Revolution, industrial capitalist agriculture brought about massive land grabs, widespread destruction of biodiversity, climate change, environmental pollution, and unsustainable use of water resources. Heralding that the same social forces that caused the problems now will fix them, corporate capital is calling for a “digital revolution” and a shift to more information-intensive farming practices.

Drones, driverless tractors, sensors, robotics, mobile apps, global positioning system satellites, and cloud-based data storage are sweeping across the agricultural sector, as well as below and above, the landscape.[3] Farming is being digitized and data codified throughout the agricultural lifecycle – from the cultivation of soil, to plant breeding, to planting schedules, to pest control, to irrigation, to crop monitoring, to harvesting, to food production and distribution, all the way to ultimate consumption. Companies including Monsanto, John Deere, Cargill, and DuPont are at the forefront of this process. The public relations industry has been hard at work creating happy-talk names for what they’re doing: “maximizing crop yields,” “sustainability” farming, and so on. Broader social and economic ramifications are ignored, as is the fact that this initiative stems not from social-justice activism, or even from good-Samaritanism, but from a familiar drive for profit.

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Billionaires who owe their wealth to information

Bloomberg has recently released a list of the world’s 200 wealthiest people based on their net worth. From Boomberg’s list, IO collated the billionaires who have accumulated their wealth from information and communication – “Telecommunications, Media and Technology,” or “TMT,” as this sector is called in the world of finance of which it’s such a big part. The TMT industries supply a hefty proportion of billionaires.

In the listing, individuals whose wealth stems from companies based in TMT accounted for no less than 46 of the top 200 – including numbers 1, 4, 5, 8, 10, 11, 12 and 15 on the list.  The one percent is top-heavy with TMT, as we might expect in our era of rampaging digital capitalism.

Technology outstrips both Media and Telecommunications. Not only are 31 of the 46 members of this elite ranking from Tech; but Tech also accounts for a greater share of overall TMT wealth: some $600 billion out of an estimated total of around $765 billion.  We know some of these men – there are only three women on the list – by the fawning publicity that they are routinely accorded: Bill Gates, Jeff Bezos, Mark Zuckerberg, Larry Page. In an afternoon, they may lose or gain hundreds of millions of dollars in net worth, exceptionally even more.[1]  Extending a trend first clarified by Leo Lowenthal in 1944, these men are accorded the status of heroes – idols.[2]

It’s also significant that nearly three-quarters of the reigning titans of information and communications are domiciled in two countries.  More than half – 25 of the 46 (if we count both Elon Musk and Rupert Murdoch as Americans) – are US inhabitants.  Another nine are from China.  After this, a limited diversity presents itself: Three are from Japan; two from India; two from France; and one each from Mexico, the Republic of Korea, Germany, Canada, and Italy.

Wherever they may live, these are the capitalists who occupy the citadels of power.  For this reason, it’s worth knowing their names.  After all, we know the names of the eighteen countries whose Gross Domestic Product exceeds the $765 billion possessed by these 46 billionaires.[3]

[1] Tom Metcalf, “Bezos Tops Slim With a $6 Billion Gain on Amazon Results,” Bloomberg, April 29, 2016.

[2] Leo Lowenthal, “The Triumph of Mass Idols,” Literature, Popular Culture, and Society (New York: Prentice-Hall, 1961).

[3] List of countries by GDP (nominal)

Name Net Worth (Billion) Sector Rank
Bill Gates $84.20 Technology 1
Jeff Bezos $58.10 Technology 4
Carlos Slim $55.50 Telecom 5
Mark Zuckerberg $50.80 Technology 8
Larry Ellison $42.70 Technology 10
Larry Page $36.90 Technology 11
Seregey Brin $36.20 Technology 12
Jack Ma $33.10 Technology 15
Steve Ballmer $22.00 Technology 30
Pony Ma $19.80 Technology 35
Michael Dell $17.60 Technology 41
Paul Allen $17.60 Technology 42
Laurene Powell Jobs $17.50 Media 43
Charlie Ergen $15.10 Media 54
Azim Premji $14.60 Technology 57
Robin LI $14.10 Technology 63
Rupert Murdoch $12.00 Media 76
KunHee Lee $12.00 Technology 78
Dustin Moskovitz $11.50 Technology 86
Shiv Nadar $10.80 Technology 97
Masayoshi Son $10.70 Telecom 99
Elon R Musk $10.60 Technology 101
Phil Anschutz $10.50 Telecom 103
Si Newhouse $10.50 Media 105
Hasso Plattne $9.90 Technology 114
Eric Schmidt $9.90 Technology 115
Takemitsu Takizak $9.80 Technology 116
Donald Newhouse $9.50 Media 119
Jan Kou $9.30 Technology 123
Yeung Kin-Man $8.80 Technology 130
Jim Goodnight $8.80 Technology 131
William Ding $8.40 Technology 140
John Malone $8.10 Media 145
Blair Parry-Okeden $8.10 Media 146
Jim Kennedy $8.10 Media 147
Patrick Drahi $8.00 Telecom 149
Xavier Niel $7.60 Technology 161
Silvio Berlusconi $7.50 Media 167
Richard Liu $7.40 Technology 168
Lei Jun $7.20 Technology 174
Pierre Omidyar $7.10 Technology 177
Zhang Zhidong $7.10 Technology 181
Sherry Brydson $7.00 Telecom 182
Hiroshi Mikitani $6.60 Technology 192
Zhou Qunfei $6.60 Technology 195
David Geffen $6.50 Media 198

Source: Bloomberg

 

 

 

 

Geopolitics and Economic Power in Today’s Digital Capitalism

Presentation to the Hans Crescent Seminar, London[i]
13 December 2015
Dan Schiller

During the second half of the 20th century, U.S. power was notably deployed in order to generalize capitalist imperatives in and around world communications. The technological revolution that was underway – the digitization of information processing – thus developed within a sharply altering political economy. Its very triumph, however, opened digital capitalism[1] to new geopolitical conflicts.

Digital Capitalism

Aggregate U.S. corporate investment in “Information Processing Equipment and Software” began to accelerate after the recession of the early 1970s.  It is the largest category of capital equipment spending overall and, amounting to $331 billion in 2013, it totals more than the GDPs of all but around 35 countries.[2] Collectively, the largest sectoral investor in information processing equipment and software is the information industry itself – a point I’ll come back to.[3] Network systems and services, however, lace through all sectors of the capitalist political economy: they are the predicate of big capital’s operations and profit projects across the world.  To comprehend this development it must be situated theoretically and historically.

If, as Ellen Wood has explained, the capitalist mode of production is distinctive for separating economic and political power then, paradoxically, this selfsame separation means that capital must depend fundamentally on the state – both to guarantee existing commodity relations, and to impose these relations in new fields to enable capital’s further expansion. [4]  Sweeping political intervention by the U.S. state was the demonstrable prerequisite of escalating corporate investments in information processing and software.

Corporate demands to liberalize and modernize proprietary networks developed domestically during the 1950s and 1960s, and the U.S. Government repeatedly acceded to these demands.[5]  A U.S. push to liberalize and upgrade networks soon also radiated outward. First of all, the U.S. intervened to preempt or to deflect political counter-movements.  U.S. state-directed attacks were waged against import-substitution policies for computerization [“informatics”], notably in Brazil; against European initiatives to restrict corporate trans-border data flows; against what were deemed lax intellectual property laws worldwide; and against the Non-Aligned Movement’s drive for a New International Information Order, which expressly prioritized economic redistribution rather than profit maximization in international communications.[6]

A fundamental feature of this U.S. state offensive – this new imperialism – was to plant capitalist imperatives and -property relations throughout global communications[7] even as it forcefully generalized a U.S.-centric data communications system, the Internet.[8] These, not coincidentally, were the years of the “hyper-power” that saw the collapse of the Soviet Union and the restoration of capitalism in China. Some nations opposed (Brazil) or tried to sidestep (France) the Internet’s U.S.-centric control structure; however, they gave way as the U.S. successfully established a worldwide data infrastructure for capital.

The Internet is often heralded as a democratizing force, however, its overriding function has been to deepen and renovate capitalism.  The Internet provides an unprecedentedly wide platform for driving capitalist imperatives into new industries, and restructuring existing industries.  This process is, however, neither democratic nor contradiction-free.

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Digital Capitalism: Stagnation and Contention?

An earlier version of this article was presented to the Technology and Democracy project at CRASSH, Cambridge University, 29 September 2015.  A version without full footnotes was published at openDemocracy.

The International Monetary Fund warned last week that, nearly eight years after the global financial crisis, still-sluggish economic growth might combine with a new financial shock to tip the world back into recession.[1] Meanwhile, however, investment in information and communications technologies – long venerated as a growth dynamo – remains high.  How may we clarify this apparent contradiction?

The concept of “digital capitalism” [2] may help.  Great changes are ramifying around digital networks; at the same time, abiding political economic processes carry forward.  I developed the idea of digital capitalism for this reason: a phase-change is occurring within capitalism.

Before turning to consider the problems that confront digital capitalism today, I will trace four features of its industrial profile and give an account of its political development.

The Structural Profile of Digital Capitalism

Unevenly, across many decades, the industrial revolution gripped not only manufacturing but also agriculture, trade and, indeed, information.[3]  Aileen Fyfe captures this change in characterizing 19th-century British publishing as “steam-powered knowledge.”[4]  Similarly, the applications of digital networks today stretch beyond a discrete information sector.  Digital systems and services have been bolted to all parts of the political economy.

This carries ramifications.  One is that it is shortsighted to equate the digital merely with familiar consumer markets, as for search engines, smart phones and social networks.  Consumer expenditures on digital goods and services account for an estimated 30 percent of the worldwide total.[5]  Nor is it sufficient to try to grasp the digital merely by focusing only on vendors – whether IBM and AT&T in the 1970s; or Microsoft and Intel a decade or two later; or Google, Amazon, Facebook and Apple today.  Digital capitalism has been constructed, and reconstructed, not only by suppliers but also by corporate users on the demand side:  the likes of Wal-Mart and GM and Exxon-Mobil and Monsanto and JP Morgan Chase.  Later, we’ll see that these business users’ importance has been political as well as economic.

A second point pertains to the chronology and character of capital investment in what the Census Bureau now enumerates under the category of “Information Processing Equipment and Software.” U.S. capital investment in networks of course began to escalate long ago – well before the postwar period favored by most conceptions of the information society, and well before the arrival of microelectronics.[6]  Private line telegraphs – lines entirely dedicated to traffic sent and received by a single business user, which leased them from a carrier on a monthly basis – saw widening use, especially by large banks, meat packers, and by the Standard Oil Company, between the 1880s and the 1910s.  So-called “industrial radio services” thereupon proceeded to apply new wireless technology to the operations of railroads, power transmission systems, department store chains, airplane operating companies and newspapers.  By 1947, for example, U.S. oil companies, had built 500 radio stations and obtained licenses to 49 radio frequencies in their search for oil deposits; they began to use microwave radio in order to send data produced by their new offshore drilling rigs to geologists and engineers located at their headquarters by the 1950s.[7] The political scientist Murray Edelman and the economist Dallas Smythe sought to place these neglected network services on the academic agenda during the 1950s.[8]

Capital investment in information processing equipment and software, however, accelerated sharply after the recession of the early 1970s.  Expenditures on computing and accounting equipment, office machines, communication equipment, and instruments soon became the largest single category of capital investment in equipment – and a key driver of economic growth in their own right.[9] Data carriage took several forms:  by adding specialized equipment the national voice telecommunications infrastructure could be adapted to enable limited data transfer; and big organizational users also could lease dedicated private circuits and contract for commercial packet switched service. Data networking was fractured, however, as companies and even individual corporate departments became locked in by competing vendors’ proprietary products.  With the growth of the Internet after the mid-1980s, this fragmentation diminished somewhat, and businesses again increased their outlays.  James Cortada cites an internal IBM estimate that ICT investment escalated from 38 to 55 percent of all equipment spending between 1990 and 2001.[10]

Sectoral variation was, and remains, considerable.  Forestry, fishing and agricultural services account for a small portion of the 2013 U.S. total ($153 million in 2013).  Manufacturing claims a much larger share ($37 billion).  Professional, scientific and technical services also are very considerable ($30 billion in 2013).  The second-top category is finance and insurance ($60 billion).  The largest spender is the information industry itself, inclusive of everything from publishing to computer services: its collective outlay has spiraled to $86 billion.[11]

Digital networks did not free capitalism from its crisis tendencies, but became embedded in them: this is my third point.

By the early 2000s, financial intermediaries had been spearheading the development of digital systems and services for decades.  The largest U.S. financial companies – such as JP Morgan Chase – spent billions of dollars each year on ICTs, and boasted IT and software staffs numbering in the thousands.  This titanic build-up of networked finance occurred as banks pushed debt on every institution and packaged it in a staggering variety of instruments.[12]  Banks institutionalized fee-based products, own-account trades, and off-the-books investment vehicles, even as they also continually increased their own leverage – and, with it, risk.  This opaque, complex, and rickety system crashed, when some U.S. residential mortgage holders ceased to make payments. Leverage – debt – was the fuel that stoked this fire, and networked finance had spread debt literally everywhere.  In the aftermath of the crisis, menacingly, networked finance and the volatility that accompanies it have carried forward.

That networks were bearers of crisis again became apparent as the crisis cascaded into the wider economy.  Manufacturers had deployed digital networks to automate and to outsource production tasks[13]; and to disperse their operations in order to improve market access and/or to cheapen the cost of labor.[14]  This great buildup of manufacturing networks provided no guarantee of corporate profitability.  GM spent tens of billions of dollars on ICTs between 1970 and 2007, but after the crisis erupted the biggest U.S. automaker still had to be rescued by the U.S. Government. The underlying problem was that manufacturers’ networks had been folded into another sweeping crisis tendency as international competition engendered overcapacity – that is, more plants and factories than were needed to supply the global market.

This reorganization of manufacturing production contributed to what David Harvey calls “wage repression”[15] throughout working-class communities in the wealthy countries, as automakers responded by cutting high-wage union jobs. Reciprocal hits to demand were predictable. The average age of vehicles on the road in the United States hit an all-time high this year: 11.5 years.  This has been attributed to quality improvements; but for many consumers, it seems certain that hard times were the decisive factor: by 2015 both new and used car owners were holding onto their vehicles for more than two full years beyond what had been the average in 2006.[16]

And again, the underlying problem of overcapacity has not abated.  The big carmakers stampeded into China, and have come to depend on Chinese buyers for around one-third of their global sales.  As China’s economy has slowed during the year just past, however, they have now also turned to reduce capacity at their dozens of joint-venture Chinese plants.[17]

A fourth and final point: For decades – again, beginning well before the Internet’s take-up – political leaders recognized that the U.S. information industry was a spectacular pole of growth within the capitalist world economy.  Heads of state made a point of paying homage to leading U.S. tech executives.  Notably, China’s Deng Xiaoping in 1979, Jiang Zemin in 1993, and Hu Jintao in 2006 each made high-profile visits to U.S. tech companies.  France’s Jacques Chirac led a presidential entourage to Silicon Valley in 1996 and, nearly twenty years on, Brazil’s Dilma Rousseff and India’s Narendra Modi followed suit.  How has the U.S. worked its digital magic?  Can it be replicated?  Failing that, as the McKinsey consultancy puts it, “How should you tap into Silicon Valley?”[18] Because it is patent that these questions command the attention of governments, I turn next to consider digital capitalism’s political dimension.

 

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