Presentation For Delivery to Digital Capitalism Communication Symposium

Üsküdar University

16 May 2023

Dan Schiller

Warm thanks to Rector Nazife Güngör for this invitation, and to Dean Süleyman İrvan for hosting us.[1]

1. Origins and Structure of Digital Capitalism

With the erection of a permanent war economy to support US global power during and after World War II,[2] new digital technologies were innovated and enlisted.

A digitally anchored political-economy gradually emerged.  It strengthened during the 1970s and 1980s, as computer networking expanded and the state authorized major privatization projects.  A massive phase-change was underway.[3] The form and location of production processes, the composition of capital investment, the commodities that generate high profits, the valued categories of labor, the profile of consumption: all were altering. At the same time, long-engraved imperatives of profit-maximization, cost efficiency, and labor control still carried forward. It was, and is, still capitalism – but with a digital character.[4]

New frontiers of commodification based on digital technologies continue to be explored.[5] The transnational companies that control 30% of global production and 80% of world trade are repeatedly rebuilding themselves around digital structures and dynamics; worldwide IT spending was forecast to increase to $4.6 trillion in 2023.[6]  In short, digital capitalism still has plenty of room in which to expand.   

The digital growth pole has been activated generally across every economic sector, not just the familiar consumer marketers – Google, Meta, Amazon, and Apple. Farm machinery manufacturer John Deere outfits tractors with software to collect soil data – in order to sell both tractors and these productivity-enhancing data to agribusiness.[7] The biggest US bank, JP Morgan Chase, boasts an IT staff of 57,000[8] and a tech budget of $14 billion; it also hosts roughly 6,000 apps.[9] Tesla is estimated to have gathered eight times more profit on each of its high-priced, software-saturated vehicles in late 2022 than Toyota.[10]    

Capitalism’s multifaceted crisis tendencies also persist; indeed, fifteen years after the crash of 2007-2008, it is arguable that this rolling catastrophe continues.[11]  In March 2023[12] a new bank panic began.[13] Gigantic black holes of unregulated activity constitute sources of unaddressed financial peril. More than fifty poor countries are facing severe debt crises[14]; and inflation has reached calamitous levels in a number of nations.  Local governments in China suffer from extreme indebtedness, and insolvent property developers there have fallen into managed bankruptcy,[15] while China’s party-state has recently reworked regulations to try to steady things.[16]  So the financial side of today’s digital capitalism is far from secure. 


It is ever-important to excavate and preserve the history of struggles for justice – not to be nostalgic, but to find sources of inspiration and tactical knowledge to fuel positive social change. This post is about that.

The Spanish Civil War was the immediate forerunner of World War Two, and the front line of the popular struggle against global fascism. A 1936 coup against the Spanish Republic was led by right-wing generals, with support from an outsized officer corps, a domestic fascist party – the Falange – and much of the Catholic church. Faced by fierce resistance from Spain’s politicized working class, the coup faltered.  Within weeks, however, Spain’s Army of Africa was airlifted by German planes from Spanish Morocco to Seville; and its generals gained financing from some of Spain’s wealthiest capitalists, as well as aircraft, armaments and soldiers from Nazi Germany and Fascist Italy. A failing military coup then transformed into a protracted civil war.

England, France, and the United States stood by, in the face of the Spanish Republic’s repeated pleas for support.  Indeed, the Ford Motor Company supplied a fleet of trucks to the rebels while Texaco sent them fuel, both on credit.[1] Appeasement – the official name for this policy was “nonintervention” – persisted until the Nazi invasion of Poland in September 1939.  By then, five months after the fall of Madrid, it was too late. 


In upcoming posts, we shall have things to say about informational aspects of the current world disorder. Likely the most urgent of these pertain to the ongoing war in Ukraine.

Why do US leaders deem it worthwhile to undertake the nuclear gamble they are making in Ukraine?  One reason has been publicly asserted: as US Secretary of Defense Lloyd Austin stated in April , 2022, the US is trying to weaken and destabilize Russia.[1] This goal has been more difficult to accomplish than the US projected; moreover, even partly realized, it has rendered Russia more dependent on America’s adversary, China – Russia’s largest trading partner.[2] Russia brings to its Chinese ally substantial assets: military technology; newly opened Arctic sea lanes for inter-Asian shipping; river passages from northern Russia to the Black Sea[3]; abundant endowments of oil, gas, water, and prospectively arable land; and a land corridor from the Baltic to the Pacific sporting a 2600 mile border with China itself.  In sum, it’s not clear that weakening Russia constitutes a rational objective for any but the obsessive neocons who dominate Washington’s foreign policy.  These cadres, Victoria Nuland, Antony Blinken, Jake Sullivan, and the like, are intent on completing the project of extending The North Atlantic Treaty Organization (NATO) to Russia’s doorstep – a project that Paul Wolfowitz and other forbears initiated during the 1990s.

A second reason for US support for the Ukraine war has, however, gone mostly unmentioned. US policy is motivated by an overarching concern to resubordinate Europe, by “cutting Russia off totally from Germany and the EU, cementing permanent U.S. control of Western Europe.”[4] So far the US has been very effective in actualizing this objective – although it also seems likely to strengthen the far right in European politics as living standards deteriorate.[5] German reliance on Russian energy has been reduced by the destruction of the Nord Stream pipeline and related decisions by the German government, removing much of Germany’s ability to waffle on its commitment to the war[6]; and NATO is being enlarged again, to include Finland and – almost certainly – Sweden – even if Europe’s military expenditures have not yet reached the level desired by US leaders. The European Left has meanwhile been fractured, so that a coherent mass peace movement has not arisen to challenge the war.   

The Ukrainian political economy is shot through with graft and corruption. Arms shipments are not exempt from these disabling practices; nor are they necessarily providing equipment most likely to be effective in repelling the Russians.[7] Within this wider matrix, however, the Ukrainians’ fighting strength has been augmented by their reliance on US communications and information technology. 

US targeting information was used by Ukraine less than four months after the start of Russia’s invasion to sink the Russian Navy’s Black Sea missile cruiser, the Moskva.[8] Satellite imagery, NATO aircraft overflight intelligence, and intercepts of Russian military communications were by then flowing to Ukraine’s military in “real time,” according to a Ukrainian official, becoming a “key enabler of the Ukrainian campaign.”[9]

US corporate enterprise also stepped forward to assist. Elon Musk’s privately owned SpaceX satellites have provided broadband communications for a variety of purposes to Ukraine’s military.  In February 2023, SpaceX’s president announced that the company had taken unnamed measures to prevent Ukraine from using its Starlink service to operate offensive drones in the region.[10]  How reliable this announcement was, and whether it came after the fact, are not known. 

The Ukrainians’ reliance on Lockheed-Martin’s HIMARS computer-guided rocket artillery also binds them to a larger information network that is under US control.[11]

In these three instances, US organizations are undeniably parties to the Ukraine war.  Yet it seems unthinkable that the mainstream media, let alone the US Congress – which alone possesses the power to declare war under Article I, Section 8, Clause 11 of the US Constitution – should demand to hold a formal debate over US participation in this grave and escalating conflict.

[1] Natasha Bertrand, Kylie Atwood, Keven Liptak and Alex Marquardt, “Austin’s assertion that US wants to ‘weaken’ Russia underlines Biden strategy shift,” CNN, April 26, 2022.

[2] Perhaps this is a reason why, by early in 2023, there began to be at least some quasi-official discussion of how to limit the length of the war.  Samuel Charap, Miranda Priebe, “Avoiding a Long War: U.S. Policy and the Trajectory of the Russia-Ukraine Conflict,” RAND National Security Research Division, PE-A2510-1, 2023. 

[3] Alastair Crooke, “The Most Egregious Mistake,” Strategic Culture Foundation January 23, 2023.

[4] Diana Johnstone, “Demonstrate Together,” Consortium News, February 14, 2023.

[5] Wolfgang Streeck, “Getting Closer,” Sidecar, November 7, 2022.

[6] Alexander Zevin and Seymour Hersh, “How to Blow Up a Pipeline,” Sidecar, February 15, 2023 ; Seymour Hersh, “How America Took Out The Nord Stream Pipeline,” Substack, February 8, 2023.

[7] Andrew Cockburn, “More Magic Weapons for Ukraine!,” Spolis of War, January 25, 2023.

[8] Helene Cooper, Eric Schmitt and Julian E. Barnes, “U.S. Intelligence Helped Ukraine Strike Russian Flagship, Officials Say,” New York Time, May 5, 2022.

[9] Shane Harris, Paul Sonne, Dan Lamothe and Michael Birnbaum, “U.S. provided intelligence that helped Ukraine sink Russian warship,” Washington Post, May 5, 2022.

[10] Joey Roulette, “SpaceX curbed Ukraine’s use of Starlink internet for drones – company president,” Reuters February 9, 2023.

[11] Christopher Caldwell, “Russia and Ukraine Have Incentives to Negotiate.  The U.S. Has Other Plans,” New York Times, February 7, 2023; HIMARS: Protecting our soldiers with combat proven reliability, Lockheed Martin.

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.