Free Markets In Action

Even when it isn’t election season in the United States, there’s a lot of noise made about “the free market” and “entrepreneurialism.”  Government, goes the refrain, simply needs to stand back to let the alchemy of capitalism proceed.  Already, the new year has disclosed two small but revealing news items that clarify the actual – contrary – reality.

The first concerns driverless cars.  Much ballyhooed, the major story has been whether the transition to software-powered vehicles will be shepherded by the big automakers – or by Silicon Valley.  The news peg, as we all have learned, is “disruption”: the competitive market in action.

Not so fast.  Consider recent disclosures that the U.S. Government will “expedite regulatory guidelines for autonomous vehicles and invest in research to help bring them to market.” The Obama Administration, it turns out, has pledged no less than $4 billion in its proposed budget for the next fiscal year, “to fund research projects and infrastructure improvements tied to driverless cars.”[i]  The relationship between government regulators and corporate carmakers is aptly described as “cooperative” – including with regard to vehicle safety as the National Highway Traffic Safety Administration (NHTSA) is ready to exempt carmakers from safety standards.[ii] Are driverless cars the answer to the environmental despoliation caused by automobiles?  An open-ended and inclusive public deliberation could give us the answer.  We won’t get it.  The objective of the Obama budget item is already taken for granted:  “to accelerate the acceptance of driverless cars on U.S. roads.”[iii]

Four billion dollars isn’t what it was; still, it’s a sum that would suffice to fund a lot of college scholarships for students from poor families – 49 million people are struggling to have enough food to eat in the US according to a report from the U.S. Department of Agriculture.[iv] But the government trough remains full, instead, for the big units of corporate capital – the ones whose executives so often pontificate about free markets and the evils of big-government.

Here’s another tidbit that imparts a comparable lesson.  It turns out that billionaire Michael Dell – of the eponymous PC company – has drawn on his investment fund to purchase a dozen or so mostly small U.S. television stations since 2011. Is Dell’s purpose to enter the broadcast market, and to innovate in ways that lead to further profitable success?  Not exactly.  His investment is based on his knowledge that the airwaves – the electromagnetic frequencies – used by these small broadcasters are going to be auctioned by the U.S. Federal Communications Commission later this year – bought, and then resold to big wireless operators like AT&T.

Dell acquired this whole lot of TV station frequencies for $80 million; he might be able to resell them to the government for as much as several billion dollars.  The several stations he acquired in Pittsburgh, for example, might garner as much as $1.47 billion; the $8 million he spent on KTLN in San Rafael California might win him as much as $370.5 million from the FCC.  And, the Wall Street Journal imparts, Dell “isn’t the only spectrum speculator.”  As might be predicted, likeminded predators hail from what is euphemistically referred to as the investor community: Fortress Investment Group and the infamous Blackstone Group in particular.[v]

Why couldn’t the airwaves simply be reclaimed by the government – what we so often term “our” government?  After all, despite storms of popular protest, they were preferentially allocated to commercial broadcasters without charge.[vi]  A fair reimbursement would be Dell’s purchase price for each station. This option, however, is not deemed worthy of discussion in mainstream policy discourse. Also off-limits is that the natural resource on which broadcasting, mobile telecommunications, and satellites each depend, the electromagnetic spectrum, is being transformed into a proprietary good rather than a public resource.  Is this its best use?

Often, inequality is characterized as a condition that is inexorable.  Some are rich, some are poor:  it’s always been so.  In fact, inequality is continually extended and enlarged via routine political-economic mechanisms.  The state plays an essential role in this larger process.  In communications and information, the state endows companies with franchises and rights of way, allocates spectrum, makes supportive R&D expenditures, and contracts for services with private providers.  Boondoggling and corruption of course are regular features.  This, however, should not obscure the fundamental structural reality:  Capital needs the state, no matter how often individual capitalists may protest its supposed incursions.  That’s the lesson of these two stories – the beat goes on.

[i] Bill Vlasic, “Administration Proposes Effort on Driverless Cars,” New York Times, January 15, 2016

[ii] Allisa Walker, “Everything You Need to Know About Obama’s Autonomous Car Plan,” Gizmodo, January 21, 2016..

[iii] Mike Spector and Mike Ramsey, “U.S. Wants to Steer More Driverless Cars,” Wall Street Journal, January 15,  2016.

[iv] US Department of Agriculture Economic Services, “Food Security Status of U.S. Households in 2014.

[v] Thomas Gryta and Kate Linebaugh, “Computer Mogul Michael Dell Stand to reap Billions from FCC Auction ,” Wall Street Journal, January 19, 2016.

[vi] Robert W. McChesney, Telecommunications, Mass Media, and Democracy: The Battle for the Control of U.S. Broadcasting, 1928-1935.  New York: Oxford University Press, 1993.

Low-Wage Workers & the Internet Industry

What are the overall impacts of tech companies on occupational structures, employment patterns, and labor practices? This question is large, complicated, and vital.[1]

To engage it, a meaningful starting-point pertains to low-wage workers. As well-compensated engineers and entrepreneurs have been raised up as the Internet industry’s public face, low-wage workers have become a mere afterthought. The very terms that analysts use to characterize this category of workers suffer from ambiguity and imprecision: “flexible,” “independent,” “temporary,” “contingent,” “freelance,” “casual,” “precarious.”  The International Labor Organization (ILO) states, simply, that such workers fall within a “non-standard form” of employment.[2] Two facts, however, are certain. First, low-waged workers are crucial to the business models that are being advanced by Internet companies.  Second, low-wage workers in the “new economy” are increasingly pursuing “old-economy”-type job struggles and demands.[3]

To press ahead from here, a conception of the labor process is essential.

The Labor Process

Identified and explicated forty years ago by Harry Braverman,[4] and further clarified by historians and political economists, the labor process provides an irreplaceable analytical fulcrum. Both to cheapen costs and to augment control,[5] capital has continually attacked the labor process as it exists, with the aim of altering and even reconstituting everything from the content and sequencing of specific job-tasks, to the technical division of labor within companies and industries, to the location of production processes. Beginning during the 1970s, a new and expanded cycle of innovations around networks and other ICT tools permitted capital to intervene in the labor process across an unprecedented range, which encompassed an increasing number of information-processing jobs.[6] Making explicit, aggregating and codifying what had been workers’ tacit knowledge, and/or generating and collecting new categories of data, corporate suppliers and corporate users of networks worked to standardize more tasks and to quantify more outputs. Managers, as Huws explains, gained new freedom to disaggregate and reorganize work, and to relocate or contract it out in line with their varied corporate strategies.[7]

Prominent recent examples of this much wider trend include Uber and its rival, Lyft, alongside rental platform Airbnb, labor outsourcer TaskRabbit, the Instacart grocery delivery service, and the dry cleaning service Washio. Such companies invade existing industries by deploying network resources to compile, codify, rearrange and contract out existing labor processes. In the process they extract data from, and push costs onto, workers and users alike.

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CANTV Venezuela: What’s at Stake?

Available in Spanish. Kindly translated by Daniel Urbina

Since the election of Hugo Chavez in 1998, his passing of a package of 49 laws meant to implement a process of fundamental social and political transition[1] and, especially, since a failed coup attempt in 2002,[2] the Bolivarian Revolution has carried on. It has faced both foreign and domestic enemies, and it has not been free of internal problem such as mismanagement, opportunism and corruption. Yet, by launching both land- and oil industry reform, it has also driven forward policies of economic support for workers, the poor, and indigenous people; and it has established new mechanisms for popular participation. Challenging neoliberalism, the Bolivarian Revolution has produced some real gains for the Venezuelan majority.

Communications have been unusually important in this wider program of transformation. Emboldened somewhat by Chavez’s 2007 call for an “explosion of communal power,” local community media have possessed an uncomfortable status: at once reliant on the central state and needfully independent of it.[3] These media reform efforts have also occurred within the context of a media political economy that was structured predominantly around the interests of capital. Venevision is a commercial broadcast service with a 67% share of the audience and is owned by Gustavo Cisneros, whose net worth in 2013 was estimated at $4.4 billion.[4] Similarly, meanwhile, “The New Television Station of the South” Telesur – a pan-Latin American network headquartered in Caracas but a collaborative effort between Venezuela (51%), Argentina (20%), Cuba (14%), Uruguay (10%), and Bolivia (5%)[5] – had to square off against the well-funded CNN and other largely hostile international media. Many participants in the Bolivarian Revolution understood that, by mobilizing in this strategic field, they were mounting a challenge to an inequitable and deeply rooted existing order in communications.

President Chavez in fact broke sharply with the neoliberalism that, during the 1990s, succeeded in privatizing national telecommunications operators in dozens of less-developed countries; opening the companies that resulted to foreign investment; laying off many of their workers and outsourcing work to still other private companies. With the price of oil high and oil revenue pumping dollars into the state, and with the Right still momentarily off-balance following the failed 2002 coup attempt, Chavez renationalized CANTV – Venezuela’s major telecommunications company, and the second largest enterprise in the country after the state oil company, PDVSA.[6] Fifteen years after CANTV had been privatized, in order to complete the process of taking back control of national telecommunications, the Bolivarian Revolution had to find $572 million to pay the US telecom giant Verizon for the 28.5% stake it had acquired in CANTV.[7]

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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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Transborder Data Flows

Available in Spanish. Kindly translated by Daniel Urbina

Early in October, Europe’s highest court invalidated the 15-year-old “safe harbor” – an international agreement that the European Union had negotiated with the United States to loosen the EU’s Data Protection Directive of 1995[1] so that it would allow companies to transfer personal information in digital form from the European Union to the United States.[2]  Is the European Court’s judgment a fundamental change in networking policy – a full stop – or merely a comma?

This is actually a longstanding structural conflict that has reignited. Its beginnings go back nearly half a century – when transborder flows of computer data [TDF] threatened to become a point of sharp conflict between the US, Europe, and often newly independent countries of the then-Third World.

By the mid-1970s, TDF was simultaneously controversial and – for U.S. big business and military agencies – irreplaceable. In 1981, Herbert I. Schiller showed, a few thousand large corporations possessing foreign direct investments outside the United States and (two-thirds of them, anyway) headquartered within the U.S. – relied on “a continuously swelling volume of data flows circulating inside [their] corporate business structures across national boundaries.”[3] Based in all economic sectors, these companies used early computer communications networks to transmit data concerning such things as “raw material stocks, production schedules, quality control, personnel records, tax and legal information, currency transactions, profit repatriation, and investment decisions.” As Schiller underlined, TDF helped to enable the largest corporations both “to transact their global business and further integrate the internationalization of capital.”[4]

A second source of TDF was the U.S. military and its allies. “The ability of American companies to operate on a global scale and enjoy the benefits of worldwide resource and market exploitation,” Schiller explained, “would be unimaginable without the full backup of a concentrated military power, ready for instantaneous deployment and intervention.”[5] Military and intelligence agencies depended on networked TDF to operate bases around the world; to implement attacks; and to conduct increasingly widespread surveillance.

There existed no definitive inventory of TDF; even partial views were highly inexact, for  the data that streamed across jurisdictions remained shielded. How much data was being sent over the private telecommunications circuits that carried most of it?  What portion of TDF was made up of operational and administrative business data? What part of the total was comprised of personally identifiable information?  What were the companies doing with all of “their” data? States did not deign to find out. The absence of meaningful public documentation bespoke an underlying power imbalance. Big companies successfully insisted that policymakers should not peer too closely at TDF, out of concern that such investigation might lead to calls for greater accountability – which in turn might constrain the operations of their profit-projects.

TDF not only conferred power on corporate capital but also, paradoxically, established a new point of vulnerability for it.  Interruptions and oversight requirements both endangered the political economy that was being reconstructed around computer-communications. Physical threats emerged when an earthquake or even the drag of a ship’s anchor engendered a break in the submarine cables over which data coursed; however, far more menacing for big business were political threats, emerging in initiatives that aimed to restrict the content of TDF, or charge according to the volume of data sent, or oversee TDF in the interests of self-government. Read more

Uncharted Territory: Cuba’s information sovereignty & US digital capital

Cubans repeatedly rebelled against the mono-culture of sugar that an empire of capital forced on both land and people[1]; only the Cuban Revolution of 1959 finally succeeded in overcoming this bondage.[2] However, even before attending to a new agrarian law, needed to put an end to the plantation system and to redistribute foreign landholdings, Cuba gave an immediate demonstration of its newly won sovereignty. Just two months after Fidel Castro marched into Havana, in March 1959, telephone workers tore down a telephone advertising billboard, placed it in a coffin, and marched it down a boulevard before tossing it into the sea.[3] The ad was an icon of foreign domination. The Cuban Telephone Company, owned by the International Telephone and Telegraph Corporation, controlled and profited from the country’s thoroughly inadequate telecommunications. Cuba’s revolutionary government now took over management of this company; to the cheers of the Cuban people, formal expropriation followed.[4] In the ensuing years, what had been an unbalanced, Havana-centric telecommunications system was extended substantially into Cuba’s countryside. Meanwhile, other companies, based not only in the US but also in Western European countries, were also nationalized.[5] Every government apart from that of the United States duly accepted the legality of nationalization under existing international law, and negotiated financial settlements with the Cuban state.

The U.S. Government neither forgave nor forgot. It imposed a punishing economic embargo, which has lasted for more than half a century. Successive U.S. Administrations made repeated attempts, overt and covert, to overthrow the Cuban Government; since the 1980s, the US government has doled out more than $1 billion (under the pretense of “democracy” and the “free flow of information”[6]) to stir unrest against Cuba’s government. The 1992 Torricelli Act and the 1996 Helms-Burton Act turned the embargo into an even more devastating blockade, by adding further extraterritorial sanctions. Helms-Burton enabled the original owners of nationalized Cuban assets who afterward became U.S. citizens to use US courts to prosecute foreign companies that took over these properties.[7] Such provisions violated international law; but they were still deployed against a Mexican telecommunications corporation for making use of IT&T’s onetime Cuban telephone property.[8] Year after year, for twenty years, the United Nations General Assembly has resolved by overwhelming majorities that the U.S. embargo should be ended. The blockage continues; but real changes are afoot.

If Cuba’s entanglement in the circuits of capitalism had long revolved around sugar, information and communication have now become pivots of the country’s reintegration into a newly digital capitalism. In the run-up to President Obama’s 2014 announcement that the US was negotiating with Cuba to restore diplomatic relations, the U.S. Agency for International Development (USAID) was funding a Cuban version of Twitter – “ZuneZuneo” – through the Cuban-American youth group called Roots of Hope,[9] and was infiltrating the underground Hip Hop scene by sending a Serbian music producer to recruit Cuban rappers to provoke fans to spark a youth movement against the Cuban state.[10] As the U.S. shifted its foreign policy strategy – the two countries re-established formal diplomatic relations in July 2015 – it also moved networks systems and applications into the foreground.

The previous June, Google Chairman and former CEO Eric Schmidt had visited Cuba, with a team of Google executives including former State Department advisor Jared Cohen, and accompanied by the usual noise about a “free and open internet.”[11] Expressly criticizing the embargo, Schmidt geared his visit to scoping out future business opportunities. Soon after, Google released its Chrome browser and free versions of Google Play and Analytics in Cuba.[12] This was possible because, while the US trade embargo still remains intact to this day and can only be lifted by an act of the US Congress, Google tactfully offered free services – which fell between the cracks of the embargo – to test the waters in Cuba. As Google anticipated, the Obama Administration eased regulations in a few strategic fields including telecommunications.[13] To “initiate new efforts to increase Cubans’ access to communications and their ability to communicate freely,” the U.S. relaxed its controls to allow U.S. companies to sell telecommunications equipment and services, software, and Internet services in Cuba.[14]

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