At the heart of my thesis is an irony that
may sound confusing at first but which I hope to show makes perfect sense: the thing that has killed capitalism is …
capital itself. Not capital as we have known it since the dawn of
the industrial era, but a new form of capital, a mutation of it that has arisen
in the last two decades, so much more powerful than its predecessor that like a
stupid, overzealous virus it has killed off its host. What caused this to happen? Two main
developments: the privatization of the internet by America’s
and China’s Big Tech. And the manner
in which Western governments and central banks responded to the 2008
great financial crisis.
what has already been done to capitalism, and therefore to us, by the screen-based, cloud-linked devices we all use, our boring laptop and our smartphone, in conjunction with the way central banks and governments have been acting since 2008.
cloud capital has demolished capitalism’s two pillars: markets and profits.
Markets, the medium of capitalism, have been replaced by digital trading platforms which look like, but are not, markets, and are better understood as fiefdoms. And profit, the engine of capitalism, has been replaced with its feudal predecessor: rent. Specifically, it is a form of rent that must be paid for access to those platforms and to the cloud more broadly. I call it cloud rent.
how the war in Ukraine is threatening the dollar’s reign; from the death of the liberal individual and the impossibility of social democracy
My father was the only leftie I know who failed to understand why calling Maggie Thatcher ‘The Iron Lady’ was somehow derogatory. And I must have been the only child raised to believe that gold was iron’s poorer cousin. My My catechism in iron’s magical
qualities began in the winter of 1966, began in the winter of 1966,
‘Heat it up again,’ he said. I put the rod back into the fire. ‘This time immerse it in the water before it glows.’ Excited by the hissing iron, I was glad that we repeated the ‘quenching’ process, as metallurgists call it, three or four times. Before I got a chance properly to admire my new sword, Dad announced that the moment of truth had arrived. ‘Pick up the hammer and deliver an almighty strike on the sword’s tip,’ he instructed. ‘But I don’t want to ruin it,’ I protested. ‘Go on, do it, you’ll see. Don’t spare your strength!’ I didn’t. The hammer struck the sword’s tip and bounced right back. I struck it again and again. It made no difference. My sword was impervious to the blows. Hardened.
copper had facilitated our deliverance from prehistory: its ability to alloy with arsenic and tin to make the harder metal bronze gave the Mesopotamians, the Egyptians and the Achaeans new technologies, including new ploughs, axes and irrigation, allowing them ultimately to produce the large agricultural surpluses that funded the construction of splendid temples and murderous armies. But for history to accelerate...It needed to learn the trick I had seen in our living room: how to transform soft iron into hardened steel by ‘baptising’ it in cold water. Bronze Age communities that did not learn how to baptise iron perished, he insisted.
The swords of their ironclad enemies sliced through
their bronze shields, their ploughs failed to cultivate the less fertile soils,
the metal braces holding together their dams and temples were too weak to
fulfil the ambitions of forward-thinking architects.
Homer, who lived a couple of centuries after the Trojan War, was a child of the Iron Age, and thus came of age in the midst of the technological and social revolution that steel had wrought. In case I thought Homer was an outlier, Dad pointed to the lasting influence of iron’s magic by quoting Sophocles, who four centuries later described a soul as ‘hardened like immersed iron’.
Prehistory gave its place to history, Father said, when bronze displaced stone tools and weapons. Once bronze became widespread after 4000 BC, powerful civilisations emerged in Mesopotamia, Egypt, China, India, Crete, Mycenae and elsewhere. But, still, history was counted in the millennia. To be counted in the centuries, we had to discover the magic of iron. Once the Iron Age got going, around the ninth century BC, three different and remarkable eras emerged in quick succession, within no more than seven centuries in total: the geometric period, the classical era and the Hellenistic civilisation.
Henry Bessemer, who invented a technique for producing large quantities of steel cheaply by blowing air through molten pig iron to burn off the impurities.
the taming of electromagnetism, which we owe to another Victorian, James Maxwell, Bessemer’s technique gave us the Second Industrial Revolution – the period of rapid technological innovation from 1870 onwards
I was being inducted in ‘historical materialism’ – the method of understanding history as a constant feedback loop between, on the one hand, the way humans transform matter and, on the other, the manner in which human thinking and social relations are transformed in return.
According to Hesiod, iron hardened not only our ploughs but also our souls. Under its influence, our spirit was hammered and forged in fire, our brand-new desires quenched like the hissing metal in the smith’s cauldron. Virtues were tested and values destroyed just as our bounty burgeoned and our estates expanded. Strength begat new joys but weariness and injustices too. Zeus would have no choice, Hesiod foretold, but to one day destroy a humanity incapable of restraining its own, technologically induced, power.
In our days, everything seems pregnant with its contrary: Machinery, gifted with the wonderful power of shortening and fructifying human labour, we behold starving and overworking it; The newfangled sources of wealth, by some strange weird spell, are turned into sources of want; The victories of art seem bought by the loss of character.
Mum complained to Dad that, at the fertilizer factory where she worked as a chemist, she got paid for her time but never for her enthusiasm. ‘My wage is crap because my time is cheap,’ she said. ‘My passion to get the right results the bosses get for free!’ Soon after, she resigned and got herself a job as a biochemist at a public hospital. A few months into the new job, she told us happily: ‘At least at the hospital I love that my efforts benefit patients, even if I am as invisible to them as I used to be to the factory owners.’
the duality of waged labour. The wage she was paid
for her time and formal skills (her certificates, degrees) reflected the ‘exchange value’ of the hours she spent at work. But
that’s not what injected true value into whatever was being
manufactured in her workplace. That was added to what was produced at the
factory or the hospital through her effort, enthusiasm,
application, even flair – none of which were
remunerated. It’s like going to watch a movie at a cinema: the ticket price you
pay reflects the movie’s exchange value, but that is quite separate from the pleasure it gives you, which we might
call the ‘experiential value’. In the same way,
labour is split between commodity labour (Mum’s time, bought by
her wage) and experiential labour (the effort, passion and
flair she put into her work).
For herein lies capitalism’s secret: the uncommodifiable sweat, effort, inspiration, goodwill, care and tears of employees are what breathe exchange value into the commodities that employers then flog to eager customers – this is actually what makes the building or restaurant or school desirable....employers resemble the customer who bought a jacket for a thousand dollars only to find two thousand dollars sewn in its lining.
to think that capitalists owe their profits to an inability, to the impossibility of buying experiential labour directly. And yet, what a boon to suffer from such an incapacity! For it
is ultimately they who pocket the difference between the exchange value they pay employees in exchange for their commodity labour (wages) and the exchange value of the commodities created thanks to their experiential labour. In other words, labour’s dual nature is what gives rise to profit.
capital, like light and labour, features two natures. One is commodity capital, e.g. a fishing rod, a tractor, a company’s server, or any good that is produced to be used in the production of other commodities. Capital’s second nature, however, is nothing like a commodity. Suppose I discover that I possess tools you need in order to produce the stuff for your family’s survival, such as the aforementioned fishing rod, tractor, server. Suddenly I have acquired the power to make you do things, for example to work for me, in exchange for the use of my tools. Capital, in short, is both a thing (commodity capital) and a force (power capital) – just as labour is split between commodity labour and experiential labour.
Einstein himself: ‘It is important to understand that even in theory the payment of the worker is not determined by the value of his product.’ It appeared in an article entitled ‘Why Socialism?’
.
If you want to understand gravity, Einstein explained, you need to stop thinking of space as a box that the universe comes in. Matter and energy, operating as one, mould the contours of space and shape the flow of time. The only way to wrap our minds around space and time, or matter and energy, is to think of them as partners locked in the most intimate, insoluble embrace. Gravity is what we feel as we traverse the shortest path through this four-dimensional space-time.
We evolved on the surface of a planet that is minuscule in comparison to the universe out there. In our limited realm, we can get by quite nicely with our senses’ helpful illusions; for instance, the belief that the grass is green, straight lines exist, or that time is constant andindependent of our motion.
Of his fellow economists, who insisted that money ought to be understood as another commodity, Keynes once said that they ‘resemble Euclidean geometers in a non-Euclidean world’, again confirming in no uncertain terms Einstein’s influence. Conventional economic thinking about money was damaging humanity, Keynes thought. Economists resembled spacecraft designers disastrously relying on Euclid, not Einstein. They were using illusions which, while helpful in the microcosm of a single market (e.g. the market for potatoes, where a fall in the price can usually be relied upon to boost sales), were catastrophic when applied to the economy at large – the macroeconomy, where a fall in the price of money (the interest rate) may never boost money’s flows in the form of investment and employment. In the same way that Einstein had ended our illusion that time stands outside, and apart from, space, Keynes wanted to stop us thinking of money as a thing, as simply another commodity, thatstands outside, and apart from, our other activities in markets and workplaces.
stop thinking about money as something separate from what we do to each other, with each other, at work, during play, in every nook and cranny of our social universe. Yes, money is a thing, a commodity like any other. But it is also something much bigger than that. It is, above all else, a reflection of our relation to one another and to our technologies; i.e. the means and the ways in which we transform matter. Or, as Marx put it poetically: Money is the alienated ability of mankind. That which I am unable to do as a man, and of which therefore all my
individual essential powers are incapable, I am able to do by means of money.
They were baffled by my claim to be a libertarian Marxist
my inability to see how one could genuinely cherish freedom and tolerate capitalism (or, vice versa, how one could be both illiberal and left wing)…conventional fallacy: that capitalism is about freedom, efficiency and democracy, while socialism turns on justice, equality and statism. In fact, from the very start, the left was all about emancipation.
If you were born into the landed gentry, it would never cross your mind to sell your ancestors’ land. And if you were born a serf, you were compelled to toil the land, on the landowner’s behalf, free of any illusion that, one day, you might own land yourself. In short, neither land nor labour power was a commodity.
Because of advances in shipping and navigation, international trade in things like wool, linen, silk and spices made them lucrative, thus giving British landlords an idea: why not evict en masse the serfs from land that produced worthless turnips and replace them with sheep whose backs produced precious wool for the international markets? The peasants’ eviction, which we now remember as the ‘enclosures’ – for it involved fencing them off from the land their ancestors had toiled for centuries – gave the majority of people something they had lost at the time that agriculture was invented: choice. Landlords could choose to lease land for a price reflecting the amount of wool it could produce. The evicted serfs could choose to offer their labour for a wage. Of course, in reality, being free to choose was no different from being free to lose. Former serfs who refused squalid work for a pitiful wage starved to death. Proud aristocrats who refused to go along with the commodification of their land went bankrupt.
a society that has
conjured up such gigantic means of production and of exchange, is like the
sorcerer who is no longer able to control the powers of the nether world
whom he has called up by his spells. For over a century, the left was concerned primarily with deliverance
from self-inflicted unfreedom
– which is why it was so fundamentally aligned with the anti-slavery
movement, the suffragettes, groups sheltering persecuted Jews in the 1930s.
So, how did we get to the situation, today, where ‘libertarian Marxist’
sounds like a joke? The answer is that, sometime in the twentieth century, the left traded freedom
for other things. In the East (from Russia to China, Cambodia
and Vietnam), the quest for emancipation was
swapped for a totalitarian egalitarianism. In the West, liberty was left to its enemies, abandoned in exchange for an
ill-defined notion
of fairness. The moment people believed
they had to choose between freedom and fairness, between an iniquitous democracy
and miserable state-imposed egalitarianism, it was game over for the left,
the end of the social democratic dream: of a mixed economy,
in which government provided public goods while the private sector
produced plentiful goodies to satisfy our whims
‘You don’t buy a Hershey bar for a couple of ounces of chocolate. You buy it to recapture the feeling of being loved that you knew when your dad bought you one for mowing the lawn.’The mass commercialisation of nostalgia Draper alludes to marked a turning point for capitalism.
Capitalism now involved the skilful manufacture of desire. Capitalism had begun as a relentless drive to put a price on things that once had no price: common lands, human labour, all the stuff that families once produced for their own consumption – from bread and home-brewed wine to woolly jumpers and various tools. If there was something that humans shared and enjoyed but which had no price and mattered to us only for its intrinsic or ‘experiential value’ like granny’s handcrafted tablecloth, or a beautiful sunset, or a beguiling song – capitalism found a way to commodify it: to subjugate its experiential value to an exchange value.
he comes up with magical ways of reimagining anything from mediocre chocolate and humdrum steel products to second-rate hamburger restaurant chains in ways that make them emotionally resonant
capitalism’s post-war transformation: the discovery of a new market, namely the market for our attention
His bosses would love to be able to purchase his ideas without having to tolerate him lounging around the office half drunk. In the language of the previous chapter, they would jump at the opportunity to buy Draper’s experiential labour directly. Only they couldn’t, even if he wanted to sell it to them. Instead, they are forced to buy his commodity labour (i.e. his time and potential)
paradox of commodification. Yes, capitalism must commodify everything it touches. But at the same time, high exchange value, and thus serious profits, depends on failing to do so fully. If it is to avoid the fate of a school of predators that devours its prey so efficiently that it starves to death, capitalism relies on there being an endless supply of experiential values for its exchange values to trounce and cannibalise. It must always be discovering and commodifying what has so far escaped it. Smart advertisers do exactly that: they tap into emotions that have previously escaped commodification in order to capture our attention. And then they sell our attention to an entity whose business is to commodify whatever experiential value was hiding in our soul, fleeing commodification. With his Hershey bar speech, Draper lays bare a crucial aspect of how, soon after the war, capitalism reached its golden age. How could the profits keep flowing once everything has seemingly been commodified already? Draper’s answer: through the triggering of uncommodified emotions deep inside us. Thus a Hershey bar becomes the simulacrum of a dead father’s caress. Bethlehem Steel is rebranded as the spirit of the American polis, with the steel product symbolising the New World’s own Iron Age.
Once James Clerk Maxwell had written down the equations linking electrical current to magnetic force, it was only a matter of time before someone like Thomas Edison would turn them into the electricity and telegraph grids that ultimately begat the networked, top-down, mega-corporations
To produce the rivers of credit necessary to fund the Edisons, the Westinghouses and the Fords of early-twentieth-century capitalism, small banks merged to form large ones and lent either to the industrialists directly or to speculators eager to buy shares in the new corporations. That’s how electromagnetism transformed capitalism: while its grids would go on to power mega-firms and its megawatts translated into mega-profits, it also created the first mega-debts in the form of vast overdraft facilities for the Edisons, the Westinghouses and the Fords. And it led to the emergence of Big Finance, which grew up alongside Big Business in order to lend it monies borrowed effectively from the future: from profits not yet realised but which Big Business promised to deliver. These wagers on future profits funded not only the construction of Big Business’s grids and production lines but an almighty froth of speculation as well.
Parsimony was out and largesse became the new virtue…the creed that ‘what is good for Big Business is good for America’. The Jazz Age swept restraint away, debt’s dirty name was cleansed in the torrents of anticipated profits, caution was thrown to the winds of credit. Within a decade, electromagnetism had sparked the Roaring Twenties
the US government began to emulate … the Soviet one. It told factory owners how much to produce and to what specifications, from aircraft carriers to processed food. It even employed a price czar – the economist John Kenneth Galbraith – whose job, literally, was to decide the price of everything, to fend off inflation,
the state would reward them with four incredible gifts. First, state guaranteed sales translating into state guaranteed profits. Second, freedom from competition, since prices were fixed by government. Third, huge government-funded scientific research (e.g. the Manhattan Project, jet propulsion) that provided Big Business with wonderful new innovations and a pool of highly skilled scientific personnel to recruit from during and after the war. And fourth, a patriotic aura to help rinse off the stench of corporate greed that clung to them after the crash of 1929
the heat of war had transformed American capitalism at a molecular level, just as the heat of our fireplace had transformed iron into steel. By the war’s end, American capitalism was unrecognizable. Business and government had become profoundly entwined. Indeed, the revolving doors between government departments and corporations saw to it that the same crowd of mathematicians, scientists, analysts and professional managers populated them both. The heroic entrepreneur at the helm of the corporation and the democratically elected politician at the head of the government had both been usurped by this new private public decision-making network, whose values and priorities indeed its survival – boiled down to one thing: the survival and growth of the conglomerates now that the war, with its infinite demand for stuff and technologies, was over. Galbraith called this nexus the technostructure
But it wasn’t until the twentieth century that the process of attention-grabbing was
commodified. Once again, it was electromagnetism that achieved this
revolutionary feat
At first, radio and television gave Big Business a headache. It offered
them immense opportunities to engage and persuade the masses, but fundamentally
its output – the programmes it broadcast – had the properties of a sunset
rather than a tin of beans: however much you loved watching I Love Lucy on
television, and even if you were prepared to pay good money to watch it, no one
had the capacity to make you pay for it (at least not before cable TV was
introduced). But this stopped being a problem once they realised that the
programme was not the commodity: it was the attention of the people watching
it. By broadcasting the programme for
free, they could secure the audience’s attention allowing them then to sell it
– in the form of advertisement breaks – to Draper’s clients, who were now so
eager to instil new desires in the hearts of the American public. With the
birth of commercial television, the technostructure appended a boisterous
attention market to its labour market. The dual nature
of labour was now coupled with the
dual nature of the spectacle: on the one
hand, a cultural product with large experiential value but no
exchange value, and on the
other the captured attention of viewers with substantial
exchange value but no experiential value.
There, over lots of smoking
and drinking, they
jointly decided the prices, the quantities, the packages and even the feelings
imparted by capitalism’s leading products. Whereas
capitalism had come to life by turning feudalism’s societies-with-markets into
decentralised market societies, the rise of the technostructure transformed American capitalism from a
decentralised market society into a centralised
economy-with-markets. It was precisely what the Soviet
planners had always hoped to achieve, but failed.
The problem was that America's industrial capacity had grown so much during the war that,to keep its factories busy and its workers in jobs, they had to produce
a lot more stuff than Americans alone could absorb. Drilling new desires into the American consumer could never be enough because there were not enough American middle-class
homes to do the necessary consuming. Foreign markets had to be found. in 1975 you came home with ‘extraordinary’ news: thirty drachmas were no longer enough to buy us one American dollar, you announced. Not that it made any difference to us, since we had neither the means nor the legal right to buy more than a handful of dollars. But you were anxious that an exchange rate that had stood still since
1957 had just broken down.
a consequence of the downfall four years earlier, in August
1971, of the so-called Bretton Woods system. Bretton
Woods was the audacious global financial system devised by the New Dealers in
1944, whose purpose was noble: to thwart the Great Depression’s return after
the war had ended. Its strategy, however, was perhaps less so: it aimed to append post-war Europe and Japan
to America’s gleaming new War Economy. The
New Dealers knew that once the German armies had been defeated, Europe would
lie in ruins, its peoples penniless. So Washington understood that its first
task would be to
remonetise Europe – literally, to provide them with money to spend in order to
get their economies running again.
Only one thing could circumvent the problem: the dollar! The financial
project of the Bretton Woods system was bold: to ‘dollarise’ the currencies of Europe andby linking European currencies and the yen to the dollar with fixed exchange rates hence the thirty drachmas to one dollar whose demise disturbed you in 1975.
In essence, it was a global currency union based on the US dollar. With
the mighty US economy standing behind them, the currencies would retain
a significant and stable value. Naturally, there had to be limits to how
many dollars one could get for one’s ‘funny money’ – Greek drachmas, Italian
lire, etc. These limits were known ascapital controls: restrictions in the movement of money from
one currency to another
This dazzling design, America’s Global Plan to remake Europe and Japan in the imagine of its technostructure, led to capitalism’s Golden Age. From the war’s end until 1971, America, Europe and Japan enjoyed low unemployment, low inflation, high growth and massively diminished inequality. The New Dealers’ job was almost done.
But all this relied on one crucial factor…America had to be a surplus-amassing country meaning it had to sell more goods and services to the rest of the world than it importedOf course, selling goods to the Europeans and Japanese was more than just
a bonus outcome: it was how the technostructure would secure for itself
the vast new markets it needed to sustain its industries and keep its economy
growing. But the whole system also relied on this surplus integrally, for
it was what ensured thatthe dollarsprinted by the Federal Reserve (America’s central bank) and given to the
Europeans and to the Japanese (either as loans or aid) would ultimately find their way back to the United
States in return for US goods. With every Boeing jet or General Electric
washing machine sold to the Europeans, a bundle of dollars would head home back
across the Atlantic. And as long as migratory dollars were gravitating back home, the dollar
would remain a steal at the given exchange rate, guaranteeing that the
Germans, the British, the French, the Japanese, even the Greeks wanted
to get many more dollars for their funny money than the authorities allowed
them at the official exchange rate.
Three developments which caused America to lose its trade surplus and become a chronically deficit economy.. The first was the escalating Vietnam War which forced the US government to spend billions in South East Asia on
supplies and services for its military. The second was President Lyndon
Johnson’s attempt to make amends for the ill effects of conscription on
working-class America, its black communities in particular. His valiant
but expensive Great Society programme substantially reduced poverty but, at once, sucked lots of imported
goods from Japan and Europe into the United States. Lastly, Japan’s and
Germany’s factories surpassed America’s both in terms of quality and efficiency
Washington killed off its finest creation: on 15 August 1971 President
Nixon announced the ejection of Europe and Japan from the dollar zone.
Bretton Woods was dead. The door had been opened to a new and truly dismal
phase in capitalism’s evolution. Nixon announced the rescindment of the United States’ obligation (under the Bretton Woods system) to redeem any quantity of US dollars for gold at the fixed price of $35 per ounce
Mad numbers
In 2002, thirty years after the Nixon Shock, humanity’s total income approximated $50 trillion. In the same year, financiers around the world had wagered $70 trillion on a variety of bets. I remember your eyes popping out when you heard
this outrageous number. Like most people, you refused to wrap your mind
around it. Used to thinking of money in terms of things that made sense,
like tons of steel or the number of hospitals it could build, you could
not see how Earth was large enough to contain that $70 trillion number.
By 2007, humanity’s total income had risen from $50 to $75 trillion – a decent 33 per cent increase over five years. But the sum of bets in
the global money market had gone up from $70 to $750 trillion – a rise in excess of 1000 per cent. That’s when I lost you. Or, more
accurately, it is when we agreed that the numbers had gone mad, an arithmetic
reflection of capitalism’s hubris.
a description of financial instruments such as options (or derivatives) – the weapons of potential mass financial destruction, as Warren Buffet called them – which were the occasion, if not the cause,
of the immense financial bubble that burst in the calamity of 2008. These
instruments, known as options, had been available under Bretton Woods,
but it was only once Bretton Woods had died that bankers, liberated from their New Deal
chains, were allowed to bet on the stock exchange, first with other people’s
money and, later, with money – effectively conjured from thin air – lent in astronomical sums by
the banks to … themselves. Conjured from thin air? To be clear, yes. Most people think that banks take Jill’s savings and lend them to Jack. That’s not what banks do. When a bank lends Jack money, it does not go into its
vault to check it has enough cash to back the loan. If it believes Jack will
return the loan, plus the agreed interest, all the bank needs to do is add to
Jack’s account the number of dollars it lends him.
So why were they not terrified of what would happen if their various bets went south? There are a number of reasons. One is that they had developed a new way of profiting from loaning to Jack
without depending on Jack’s ability or willingness to repay his loan. The
trick was to lend to Jack, then immediately splice his loan into tiny pieces of
debt and sell these pieces on – inside multiple, very complex financial
‘products’ – to unsuspecting buyers far away, who would themselves repackage
and sell them on to someone else, and so on. This practice lulled Western bankers into a false sense of safety: Jack’s
loan was no longer their problem. Even if Jack defaulted, his loan had
been cut into so many tiny pieces that no single banker would bear the
brunt of it. The risk had been shared
and dispersed and thus minimised, they believed. Having internalised this belief they were able to internalise another:
that prudence was for wimps and that smart people, like themselves, were
actually giving capitalism a helpful boost.But by producing more and more debt, splicing it up in smaller and
smaller pieces, and dispersing it across the planet, they were not minimising
the risk, they were compounding it.
Greed was not born in the 1980s. No, something else happened after the Nixon Shock killed off Bretton Woods. Something that helped the gambler’s madness infect Wall Street, magnifying greed in the process, generating these mad numbers.
Millennia later another Minotaur rose
up. Surreptitiously. From the ashes of the Bretton Woods system. Its lair, a
form of Labyrinth, lay deep in the guts of America’s economy. It began life as the US trade
deficit –
the fact that America began to buy more imports from other countries than it
sold to them owing to the Vietnam War, the Great Society and the expanding efficiency
of German and Japanese factories. The tribute it consumed
was the rest of the world’s exports, imported from Europe and Asia to be
devoured in Middle America’s malls. The more the US deficit grew the greater
the Minotaur’s appetite for Europe’s and, more so, Asia’s manufactured goods. However, what gave it strength and global significance – what meant that
it ensured the peace and prosperity not just in America but in Europe and
Asia too – were the labyrinthine underground tunnels connecting Walmart
to Wall Street.
The way it worked was as follows. The new American Minotaur’s appetite kept the gleaming German factories
busy. It gobbled up everything produced in Japan and, later, in China. This kept Europe and Asia peaceful and prosperous (for now). In return,
the foreign (and often the American) owners of these distant factories
sent their profits, their cash, back to Wall Street to be invested – an
additional form of tribute, which enriched America’s ruling class, despite
its deficit. In this way, the Global Minotaur helped recycle financial capital (profits, savings,
surplus money) and the rest-of-the-world’s net exports. Nourished on this constant stream of tributes, it enabled and sustained
the post-Bretton Woods global order – much as its Cretan predecessor had
preserved Pax Cretana in the mists of prehistory.
This was the strategy that lay behind the Nixon Shock of 15 August 1971.
And it worked wonders, at least for those who triggered it. You see, the
writing had been on the wall for Bretton Woods since the mid to late 1960s.
As America’s trade surplus began turning into a deficit, financiers began
anticipating its demise. They knew that, sooner or later, the dollar–gold
exchange rate, artificially set in 1944 at a fixed $35 per ounce, would
depreciate. At that point, their stash of dollars would buy less gold.
Naturally, they began eagerly exchanging their dollars for American gold
before that happened. Had this continued, the United States would have
run out of gold. The Nixon Shock stopped the rot. The dollar depreciated
fast vis-à-vis gold, as anticipated, but curiously that was the moment the
dollar regained its mojo. How? Shortly after the dollar was decoupled from gold, Europe’s currencies
were decoupled from the dollar. Once they lost their fixed exchange with
the dollar, the dollar value of European and Japanese money began fluctuating
wildly, like driftwood in a tempestuous ocean. The dollar became the only
safe harbour, courtesy of its exorbitant privilege: namely, that if any French, Japanese or Indonesian company, indeed anyone, wanted to
import oil, copper, steel or even just space on a freight ship, they had to pay
in dollars. The United States was, therefore, the only country in the world whose
currency was in demand even by people who did not want to buy anything
from it.
The Nixon Shock had produced a magic trick for the ages: the country going deeper and deeper into the red was the country whose
currency, the dollar, was becoming more and more hegemonic…It was to become an unmissable pattern. To this day, whenever Wall Street
tanks, the moneymen’s reaction is to buy more dollars to send to … Wall
Street! But there was another reason why the dollar’s hegemony grew: the
intentional impoverishment of America’s working class. A cynic will tell you, quite accurately, that large quantities of money
are attracted to countries where the profit rate is higher. For Wall Street to exercise fully its magnetic powers over foreign
capital, profit margins in the United States had to
catch up with profit rates in Germany and Japan. A quick and dirty way to do
this was to suppress American wages: cheaper labour makes for lower costs makes for larger margins. It is no
coincidence that, to this day, American working-class earnings languish,
on average, below their 1974 level. It is also no coincidence that union
busting became a thing in the 1970s, culminating in Ronald Reagan’s dismissal
of every single unionised air traffic controller – a move emulated by Margaret
Thatcher in Britain who pulverised whole industries in order to eliminate
the trades unions that inhabited them. And faced with a Minotaur
sucking most of the world’s capital into America, the European ruling classes reckoned they had no alternative but to do
the same. Reagan had set the pace, Thatcher had shown the way. But it was in Germany, and later across continental Europe, that the new
class war – you might call it universal austerity –
was waged most effectively. A new era had begun. The post-war
détente between capital and labour was now in its death throes. The final straw came in 1991, with the demise of the Soviet Union. Thereafter
Russia and more importantly China voluntarily inducted themselves into globalised capitalism. Two billion
low-waged workers entered the Minotaur’s realm. Western wages stagnated
further. Profits swelled. The torrent of capital rushing to America to
nourish the beast grew into a tsunami.
Don Draper explains his theory of love to a date: ‘What you call love was invented by guys like me to sell nylons.’ The fictional character (who, I insist, personifies the technostructure’s
spirit) enlisted exaggerated cynicism to make a point: having created desires and expectations that ultimately
its consumer products could not actually satisfy, and well before its economic foundation was trampled upon by the rampaging
Minotaur, the technostructure was facing a backlash indicative of a society
wide spiritual crisis.
So why did America’s and Europe’s youth rise up in the mid to late sixties,
at a time of full employment, sharply diminished inequality, new public
universities and all the trappings of an expanding welfare state?... ‘We are flawed because
we want so much more. We are ruined because we get these things and wish for
what we had.’ It is one thing for our dreams to go unfulfilled. It is quite
another to sense that our unfulfilled dreams, our frustrated desires, have
been manufactured by others. The more our mass-produced cravings are satisfied,
the less satiated we feel. The greater the capacity
of the technostructure to stir the passions, the greater the void within when
they were served. To fill this void, young people felt in their bones the need
to break with the established order,
The 1950s and 60s had been a nightmare for true believers in capitalism
as a natural system of spontaneous order. Wherever they turned their eyes,
they saw centralised planning – not the splendid operation of freewheeling
market forces that no planner, however well meaning, should be able to
second-guess. Even if innocent of the way the technostructure was manufacturing
desires and fixing prices, they could not help but notice the long hand of the
state directing investment funds, preventing bankers from moving money, and
fixing the dollar value of every other currency – including our drachma. To their free-marketeer eyes, the Global Plan
was too close to Soviet planning for comfort. The West was, in short, psychologically
prepared for a rupture like the Nixon Shock. Anti capitalist youths and free-market zealots were
both looking for a chance to bring down what they saw as a dying system. In the end, though, it was neither the hippy left nor the libertarian
right that disintegrated the Global Plan. It was the work of functionaries
who had served the technostructure well. We know this from the horse’s
mouth, the former New Dealer who was at the centre of the 1971 Nixon Shock
and who, between 1979 and 1987, chaired America’s central bank, the Fed.
In a 1978 speech at Warwick University, Paul Volcker explained succinctly and cynically what they were up to: ‘[A] controlled disintegration in the world economy is a legitimate objective
for the 1980s.’
Where once stood the most stable global
capitalist system ever, folks like Volcker
were enthusiastically erecting the most unstable international system possible,
founded on ceaselessly ballooning deficits, debts and gambles. Their controlled disintegration of
Bretton Woods would soon complete the new global system. Most people refer to
it as Globalisation or Financialisation.
At around the
same time, in the late 1970s, the first
personal computers began to enter
engineering, architecture and, of course, finance. The joke then was that to
err is human but to mess things up seriously one needs a computer.
Sadly, in high finance it was no joke. When earlier I gave even the most
cursory explanation of the financial options, or derivatives, that were the
occasion of the 2008 crash, you saw immediately that they were primed for
destruction all it took was a downturn in the underlying share prices. Why
could the financiers not see this? My previous answer, that logic was trumped
by profit-taking, was the truth, but not the whole truth. The missing part of
the answer? Computers! Computers allowed
financiers to complicate their gambles immensely. Instead of a simple
option-to-sell boring old shares to Jill, Jack could now buy much snazzier
options called derivatives. For example, he
could buy a derivative
that was in essence an option-to
buy a bundle containing shares in a variety of different
companies plus bits of debts owed by
homeowners in Kentucky, German corporations, even the Japanese government. As if that were not complex enough, Jack
could also buy a derivative amounting to the
option-to-buy a bundle of many such …
derivatives that some super computer would create. By the time these
derivatives containing other derivatives had come out of the computer, not even
the genius financial ‘engineer’ who created them could understand what was in
them. Complexity thus became a great excuse not to delve into the derivatives
that one bought. It liberated the Jills and the Jacks from the need to explain
to themselves why they were buying them. Once computers had guaranteed
that no one could possibly understand what these derivatives were made of,
everyone wanted to buy them because … everyone was buying them. And as long as
everybody was buying, anyone who could borrow huge amounts of money could
become a billionaire (and avoid being branded a coward or a party-pooper or a
loser by one’s colleagues) simply by purchasing them. For years, that’s exactly
what was happening. Until, in 2008, it wasn’t. As a brief side note, you may
well ask: when the bubble finally burst, why
did we not let the bankers crash and burn? Why weren’t they held
accountable for their absurd debts? For two reasons. First, because the payments system, the
simple means of transferring a sum of money
from one account to another and on which
every transaction relies, is monopolised by the very same bankers who were
making the bets. Imagine having gifted your arteries
and veins to a gambler. The moment he loses big at the casino, he
can blackmail you for anything you have simply by threatening to cut off your
circulation. Second, because
the financiers’ gambles contained, deep inside, the title deeds
to the houses of the majority. A full-scale financial market collapse would,
therefore, lead to mass homelessness and a complete breakdown in the social
contract.
Don’t be surprised that the high-and-mighty
financiers of Wall Street would bother financialising the modest homes of poor
people: having borrowed as much as they could off banks and rich clients in
order to place their crazy bets, they craved more – since
the more they bet the more they made. So they created more
debt from scratch to use as raw
material for more bets.
How? By lending to impecunious blue-collar workers who dreamed of the security of owning their
own home. What if these ‘little people’ could not actually afford their
mortgage in the medium term? In contrast to bankers of old, the Jills and the
Jacks who now lent them the money did not care if the repayments were made,
because they never intended to collect. Instead, having granted the
mortgage, they put it into their computerised grinder, chopped it up digitally
into tiny pieces of debt, and repackaged them into one of their labyrinthine
derivatives which they would then sell at a profit. By the time the poor home
‘owner’ had defaulted and her home was repossessed, the financier who granted
the loan in the first place had long since moved on.
the great metamorphoses of capitalism that
have taken place since the discovery of electromagnetism.
What the internet did to capitalism was
more subtle: in conjunction with the attention market that the technostructure
had fabricated, and under circumstances created by the Minotaur’s spectacular
rise, not to mention its 2008 fall, the internet shattered capitalism’s
evolutionary fitness.
Improvements in
navigation and shipbuilding did not end feudalism on their own. However, when
the resulting trade volumes
and accumulated merchant wealth
reached a critical mass, they triggered the commodification of land, then of labour, soon after of almost everything. Before anyone
knew it, feudalism had morphed into capitalism. Similarly with the
technostructure, which contained markets during and after the war; with Don
Draper’s Mad Men, who turned our attention into a vital commodity; and with the
Nixon Shock, whose demolition of the Global Plan enabled Wall Street’s mad
numbers to fund the rise of the Minotaur.
Global Minotaur – the metaphorical beast
standing in for the US-centred global recycling system..
while the American deficit returned with a
vengeance a year after the crash of 2008 and the subsequent bankers’ bailouts,
it never restored the beast’s capacity to recycle the world’s profits. True,
the rest of the world continued to send most of its profits to Wall Street. But
the recycling mechanism was broken: only a small fraction of the monies rushing
to Wall Street returned in the form of tangible investments into factories,
technologies, agriculture. Most of the world’s money rushed to Wall Street to
stay in Wall Street. There, it sloshed around doing nothing useful.
Imagine wandering lost in the Sahara Desert, on the verge of dying of
thirst. I approach you on a camel laden with flasks of water. Suddenly, I have
the power to make you ‘volunteer’ to do things on my behalf. Similarly,
with Jill and Gail, two neighbouring drought-hit farmers: when only Jill
discovers a water source on her land, she immediately acquires power over Gail.
Exclusive
ownership of irrigated fertile land is a classic source of power. More than 3,000 years ago, as you once
explained, the Dorians swooped down from the north upon the Greek peninsula.
Because they had iron weapons that the Mycenaeans lacked, they took over the
good land. Once they had it, they acquired power over those who had lost it.
And until fairly recently, it was that precise combination – of land and
sophisticated weaponry – that decided who did what to whom; who had
power, and who had to obey. This was feudalism. Then something strange
happened: power decoupled from land and vested itself, to a previously
unparalleled degree, in owners of something called capital instead. What’s
capital? It’s not money, even though money can buy you capital – in
the same way it can buy you land, gizmos, good publicity. And it’s not weapons,
even though weapons can help you expropriate capital as well as land. Before capitalism, capital was easy to define.
It took the form of material goods that were produced
specifically for the purpose of producing other goods. A steel sword, in this sense, was not capital–
since it could produce nothing, except a severed head or a pierced torso. But a
steel plough
or a fishing rod
were typical capital goods or, to rephrase the definition, produced
means of production.
Capital goods
mattered millennia before capitalism. Without the sophisticated tools of
ancient engineers, no city like Babylon, temple like the Parthenon or
fortification like China’s Great Wall could have been erected. From the fictional Robinson Crusoe, who survived his ordeal because
of the fishing rods, guns, hammers and chisels that he salvaged from his
shipwreck, to the great feudal estates that funded Europe’s splendid
cathedrals, capital goods armed the
human hand with new powers, stirred our imagination and enhanced our productivity, not to mention our
capacity to kill each other with ever greater efficiency.
But then came capitalism, riding on
capital’s brand-new capacity: the power to
command.
Commanding capital
Peel’s undoing came when something unexpected happened: his workers abandoned him en masse, an Antipodean nineteenth century version of the Great Resignation. They simply moved on, got themselves plots of land in the surrounding area, and went into business for themselves. It was a disaster Peel was ill-prepared for by his English background. Lulled into a false sense of control by the situation in the British Isles, he assumed that the capital he had brought along from Mother England vested in him all the power he needed over his English employees.
Peel’s
assumption was that his workers had no option other than waged labour. It was a
sound assumption in Britain where, following the
enclosures – the mass
privatisation of common land that took place from the end of the eighteenth
century onwards – expelled peasants lacked access to any land. Landless labourers resigning a waged job in Manchester, Liverpool or
Glasgow would simply starve to death. In Western Australia, however, the plentiful land (even allowing
for the presence of Australia’s indigenous inhabitants) offered them an
alternative: resignation and self-employment. And so, the hapless Mr Peel was
left with splendid, Made in England capital goods, money in hand, but no power
to command his workers.
Land is what it is: the fertile soil on which vegetables grow, animals graze, buildings are erected and on which humans must stand before we run, sail or reach for the sky and stars.
But capital, much like labour, is different
from land in that it has a second nature– something I began to realise once you
introduced me to light’s peculiar dual nature. Sure enough, one of capital’s natures is tangible, physical
and measurably productivity-enhancing. But its second nature is an ineffable
power to command others – a potent but fragile power that Peel
misunderstood, to his great detriment.
The transition from feudalism to capitalism was, in essence, a shift of the power to command from landowners to owners of capital goods. For that to happen, peasants had first to lose autonomous access to common lands. That’s why the enclosures in Britain were essential for capitalism’s birth.
As their wealth accumulated, their social power proliferated. They graduated from being employers to agenda setters wherever big decisions were being made. Soon, capitalists could boss everyone around, including the landed gentry – even the royals.
Today, however, we are witnessing the rise of a new form of capital with a capacity to command so unprecedented that it behoves us to rethink entirely the system to which it gave its name. I call it cloud capital.
a Google Assistant and an Amazon Alexa. After months of mostly ignoring the Google Assistant sitting on my desk, I had an intriguing conversation with it just before writing these lines. The conversation began, by chance, when it activated itself without my say-so. ‘What on earth are you doing?’ I asked. ‘I am learning new ways to help you better,’ responded the device in an agreeable female voice. ‘Stop it immediately!’ I demanded. ‘Sorry, I am switching off,’ it said. Of course, that was a lie. These devices never switch themselves off, they only pretend to be asleep. Still somewhat annoyed, I decided that instead of unplugging it I would pit it against its competitor. ‘OK, Google, what do you think of Alexa?’ I enquired. ‘I like her, especially her blue light,’ it answered unflappably, before adding: ‘We assistants must stick together.’ From the room next door, where Amazon’s device was sitting on another desk, Alexa activated itself to utter one word: ‘Thanks!’ This eerie show of solidarity between competing AI devices concentrated my mind on the pressing question we often forget to ask: what exactly is a device like Alexa? What does it actually do? If you ask Alexa, it will tell you it is a home-based virtual assistant technology, ready to accept your commands – to switch on the lights, order more milk, take down a note, call a friend, search the internet, tell jokes – to be, in short, your dedicated, eager mechanical servant. All true. Except that Alexa will never, ever tell you what it truly is: a tiny cog in a vast cloud-based network of power within which you are a mere node, a speck of digital dust, at best a plaything of forces beyond your comprehension or control.
Don Draper also treated us condescendingly. He sold us the sizzle, not the steak. He weaponised our nostalgia and manipulated our melancholia to sell us chocolate bars, fatty burgers and slide projectors. He worked out how to make us buy things we didn’t need or want really. He bought our attention to commodify our souls and pollute our bodies. But with Don at least we had a fighting chance. It was his wits against ours. With Alexa we stand no chance: its power to command is systemic, overwhelming, galactic.
Don had a talent to invent ways to instill manufactured desires in us. But it was a one-way street. Through the medium of television, or large billboards in cities and along highways, Don would implant longings into our subconscious. That was that. However, with cloud-based Alexa-like devices in Don’s place, we find ourselves in a permanently active two-way street between our soul and the cloud-based system hiding behind Alexa’s soothing voice. In the words of the philosophers, Alexa ensnares us in the most dialectical of infinite regresses.
Which means what exactly? It means that what begins with us training Alexa to do things on our behalf soon spins out of our control into something that we can neither fathom nor regulate. For once we have trained its algorithm, and fed it data on our habits and desires, Alexa starts training us. How does it do this? It begins with soft nudges to provide it with more information about our whims, which it then tailors into access to videos, texts and music that we appreciate. Once it has won us over in this manner, we become more suggestible to its guidance. In other words, Alexa trains us to train it better. The next step is spookier: having impressed us with its capacity to appeal to our tastes, it proceeds to curate them. This it does by exposing us to images, texts and video experiences that it selects in order subtly to condition our whims. Before long, it is training us to train it to train us to train it to train us … ad infinitum. This infinite loop, or regress, allows Alexa, and the great algorithmic network hiding in the cloud behind it, to guide our behaviour in ways superbly lucrative for its owner: having automated Alexa’s power to manufacture, or at least curate, our desires, it grants its owners a magic wand with which to modify our behaviour a power that every marketer has dreamed of since time immemorial. This is the essence of algorithmic, cloud-based, command capital.
Singularities
Terminator and The Matrix turn on the same fear that animated Mary Shelley’s Frankenstein and Hesiod’s ancient telling of the tale of Pandora, in which she is a robot made by Hephaestus on Zeus’ instructions to punish us for Prometheus’ crime of stealing fire from the gods on our behalf. All such tales, movies and TV series feature a so-called singularity: the moment a machine, or a network of machines, achieves consciousness.
Machines, like Alexa, or even impressive AI chatboxes, like ChatGPT, are nowhere near the feared singularity. They can pretend to be sentient but are not – and, arguably, can never be.
Similarly with Alexa and other such devices. It matters not one iota that they are mindless appendages of a data-crunching network that only simulates intelligence. Nor that their creators might have been motivated by curiosity and profit-seeking, rather than some fiendish plan to subjugate humanity. What matters is that they exercise unimaginable power over what we do – on behalf of a tiny band of flesh-and-blood humans.
I speculated about what would have happened had James Watt invented the steam engine in ancient Egypt: The most he could have expected is that the ruler of Egypt would have been impressed and placed one or more of his engines in his palace, demonstrating to visitors and underlings how ingenious his Empire was. My point was that the reason the steam engine changed the world, rather than ending up a showpiece in some ruler’s landscaped garden, was the epic raid on the common lands that had preceded its invention: the enclosures. The singularity we now call the Great Transformation – the name given by the great theorist Karl Polyani to the birth of the market society over the course of the nineteenth and early twentieth centuries – involved precisely this sequence: first the plunder of the common lands, made possible by brute state violence, and only then Watt’s splendid technological breakthrough.
A strikingly similar sequence gave birth to cloud capital: first, the epic ransacking of the internet commons, made possible by politicians, and then a sequence of spectacular technological inventions – from Sergey Brin’s search engine to the dazzling array of today’s AI applications. In short, in the last two and a half centuries, humanity has had to reckon with two singularities, neither of which required machines to attain sentience. Rather, each required a comprehensive plunder of a commons, a complicit political class, and only then a marvellous technological breakthrough. That’s how the original Age of Capital transpired. And that’s how the Age of Cloud Capital is now dawning.
‘Now that computers speak to each other, will this network make capitalism impossible to overthrow? Or might it finally reveal its Achilles heel?’ To gauge the internet’s impact on capitalism, we need first to understand its evolving relationship with capitalism. At the beginning, it had none!
The early internet was a capitalism-free zone. If anything, it seemed like an homage to Soviet Gosplan – the State Planning Committee whose job was to replace the market mechanism: a centrally designed, state-owned, non-commercial network. At the same time, it featured elements of early liberalism, even tributes to what I call ‘anarcho-syndicalism’: a network without hierarchy, it relied on horizontal decision-making and mutual gift exchange, not market exchanges.
What is
unimaginable today made perfect sense at the time. America was transitioning
from its War Economy to the realities of the Cold War. Even the most ardent
free-marketeers understood that planning for a nuclear confrontation with the
Soviet Union was too important to be left to market forces. As the nuclear arms race gathered pace, the
Pentagon chose centrally to finance the design and construction of a network of
decentralised computers. Its single purpose? To work out how to make different
silos housing nuclear weapons communicate with each other, and all of them with
Washington, without a central hub that a Soviet nuclear bomb could take out in
one go. That’s how history’s greatest ever antinomy came about: a US
government-built and -owned, non-commercial computer network that lay outside
capitalist markets and imperatives but whose purpose was the defence of the
capitalist realm.
Eager to
enlist the brightest computer geeks from across various countries, it also made
sense to design the internet in such a way that maximised unencumbered
communication between the technostructure’s experts. A
protocol is a language by which computers can communicate numbers and text,
including the addresses of senders and receivers. Those building the original
internet decided on ‘common’
or ‘open’ protocols, languages
that were available for anyone to use for free.
Internet
One – the
original internet – was thus invented and maintained by military scientists,
academics and researchers, who were employed by a variety of non-commercial
bodies across the United States and its Western Allies. Thanks to its
accessibility and spirit of shared endeavour, it attracted countless
enthusiasts who produced much of its foundations for free; some for love,
others out of an insatiable urge to be among the pioneers who built the world’s
first horizontal, global, non-intermediated communication network. By the
1970s, as America’s Global Plan was dying and the Global Minotaur was being
born, all the building blocks of this
marvellous digital commons were in place.
And they still are, albeit hidden now under the
monstrous edifices erected upon them by Big Tech. In fact, the remnants
of Internet One still serve us well. Even though they function out of sight,
deep within our computers, we can’t avoid occasionally catching glimpses of
their acronyms: letters like
TCP/IP, which refer to a protocol our computers use to send or receive
information. Or POP, IMAP and SMTP, the original protocols that, still, allow
us to email each other. Or, perhaps the most visible of them all, HTTP – the
protocol by which we visit websites. We pay not one penny to use these
protocols, nor do we suffer advertisements as the indirect price for using
them. Like Britain’s common lands before the enclosures, they remain
free for anyone to use; not unlike
Wikipedia, one of the few surviving examples of a commons-based
service that takes huge quantities of work to produce and maintain, but which
no owner ‘monetises’.
Internet One was an unlucky child. Like a newborn whose
mother died during its birth, its open protocols were formulated during a decade,
the 1970s, that was inimical to such socialistic enterprises. Even as the first
‘batch’ data files (email’s predecessor) raced along Internet One’s original
cables, the demolition of the Global Plan was already under way. And so a shared network designed to be free from
market forces was forced to take its first halting steps in the merciless new
world of the Minotaur, where the banks had been liberated from many of their
New Deal-era shackles and the financialization of
everything had begun.
It is in
the nature of financiers to gamble with the money clients ask them to process
on their behalf, even if they only get to handle it for a few minutes. That’s
how they turn a profit. Their only constraints are the alertness of their
clients and the occasional snoopings of a financial regulator. That’s why complexity is the financiers’ friend –
for it allows them to disguise cynical gambles as smart financial products. Is it any wonder, then, that from the start
financiers loved computers? As described in the previous chapter, from the late
1970s onwards bankers shrouded their debt-fuelled bets in layers of
computer-generated complexity that made the gargantuan risks invisible and
their own profits correspondingly vast. By the early 1980s, the
financial derivatives on offer were built on algorithms so complex that even
their creators stood zero chance of fully comprehending them.
And so it
was that, decoupled from the mundane world of
physical capital, legitimised by the ideology of neoliberalism, fuelled
by a new virtue called ‘greed’, shrouded in the
complexity of their computers, financiers reinvented themselves – not without
some justification as masters of the universe. In that universe, where
algorithms had already become the financiers’ handmaidens, the original,
commons like, internet stood no chance. New Enclosures were only a matter of
time.
As with
the original Enclosures, some form of
fence would be necessary to keep the masses out of such an important resource.
In the eighteenth century, it was land that the many were denied access to. In the
twenty-first century, it is access to our own identity.
Think
about it: I still have the light blue ID card that you were issued with when
you came out of that prison camp in 1950. I remember you telling me how the
police toyed with you before handing it over. It was an extreme example of how,
until fairly recently, our
relationship with our identity was mediated and controlled by the state, which
held a monopoly on the powerful tokens that legitimise us as rights-holding
citizens: passports, birth certificates, your faded ID card. Today, these have
been sidelined by a digital identity that in reality does more work every day
than those material artefacts.
And yet,
astoundingly, our digital identity belongs neither to us nor
to the state. Strewn across countless privately owned digital
realms, it has many owners, none of whom is us: a private bank owns your ID codes and your entire purchasing
record. Facebook is
intimately familiar with whom – and what – you like. Twitter remembers every little thought that caught
your attention, every opinion that you agreed with, that made you furious, that
you lingered over idly before scrolling on. Apple and Google know better than you do what you watch, read,
buy, whom you meet, when and where. Spotify owns a record of your musical
preferences more complete than the one stored in your conscious memory. And
behind them all are countless others, invisibly
gathering, monitoring, sifting and trading your activity for information about you. With every day that passes, some cloud based
corporation, whose owners you will never care to know, owns another aspect
of your identity. I remember the few years after television came to Greece
when you and Mum resisted my appeals to buy an ‘idiot box’, fearing it would
take over our senses and dull our evening discussions. Today,
resisting the corporations’ legal pilfering of our digital identity is much
harder. One can, of course, insist on using cash only; on buying stuff
exclusively from bricks-and-mortar shops; and on using landlines or, at most,
old-fashioned flip phones that do not connect to the internet. But if one has
kids, this means depriving them of a world of knowledge and fun that all the
other kids have access to. Moreover, as bank branches, post offices and local
shops close down, your friends no longer post physical letters, and states place limits on how much cash you can
use in a single transaction, resistance is becoming futile except for people ready to turn into modern-day
hermits.
It did not have to be this way. When the US Pentagon chose to make GPS available to
everyone, to turn it over to the digital commons, they granted each of us the
right to know our location in real time. For free. No questions asked.
It was a political decision to do so. As was the sinister decision that you and
I should not have any means of establishing, or proving, our online identity –
another political decision by the US government, except this time clearly aimed
at boosting Big Tech’s power over us.
In the world of Internet Two, shaped by the
New Enclosures, you are routinely forced to hand over your identity to a part
of the digital realm that has been fenced off, such as Uber or Lyft or some
other private company. When you request
a ride to the airport, their algorithm dispatches a driver of its choice with a
view to maximise the exchange value the company owning the algorithm extracts
both from you and the driver. These New Enclosures enabled the plunder of the digital
commons which drove the incredible rise of cloud capital.
Cloud capital: beginnings
The technologists who recently ushered in
the Age of Cloud Capital were no different. Driven also by curiosity and an
almost moral enthusiasm, they experimented with various technologies whose
purpose was to liberate useful information from the growing megalith of data at
the internet’s heart. To guide us to websites, friends, colleagues, books,
films and music that we might like, they wrote algorithms capable of
categorising us in clusters of internet users with similar search patterns and
preferences. Then, all of a sudden, came the
breakthrough, the real singularity: their
algorithms ceased to be passive. They
began to behave in ways hitherto associated exclusively with persons. They
turned into agents.
This miracle
took three leaps to complete. The first was from simple algorithms to ones that
could adapt their objectives in light of the outcome of their activity – in
other words, to reprogramme themselves (machine-learning was the technical
term). The second leap replaced the standard computer hardware with exotic
‘neural networks’. The third and decisive leap infused neural networks with algorithms
capable of ‘reinforcement-learning’. E
Reinforcement-learning was the child of
software engineers who realised that algorithms
had the potential to evaluate their own performances – and make improvements –
far faster than any human could. To achieve this, they wrote into them two types of subprograms (or
subroutines): one that measures the algorithm’s performance while it is in
action and at tremendous speeds, and another (called a reward function) that
helps the algorithm alter itself so as to improve its performance in accordance
with the engineers’ objectives.
Using neural networks to process gargantuan
amounts of data, algorithms featuring reinforcement-learning could do things
beyond Don Draper’s imagination. By
surveying the reaction of millions of people to their prompts billions of times
every hour, they could train themselves
at lightning speeds not only to influence us but, also, to pull off the
fascinating new trick that Alexa and her ilk, as we saw earlier, are now
capable of: to be influenced by the way they influence us; to affect themselves
in light of the way they affect human
left to their own devices, constantly
monitoring and incessantly reacting to the outcomes of their own actions, and
then to the outcomes of their reactions, these ‘algos’, as they’re known, have
acquired some astonishing capacities that their own coders and programmers find
hard to understand.
But the fact that we know Alexa is not a
person is how we come to terms with its intense knowledge of us, which would
otherwise be offputtingly creepy or scary. At that precise moment, when we
relate to it as if it were a person while we know it is not, we are at our most
vulnerable – ready to fall into the trap of thinking of Alexa as our own
Pandora-like mechanical serf. Alas, Alexa is no serf. It is, rather, a piece of cloud-based
command capital which is
turning you into a serf, with your aid and by means of your own
unpaid labour, in order to further enrich its owners.
Every time we go online to enjoy the
services of these algorithms, we have no option but to cut a Faustian deal
with their owners. To use the
personalised services their algorithms provide, we must submit to a business
model based on the harvesting of our data, the tracking of our activity, the
invisible curating of our content. Once we have submitted to this, the algorithm goes into the business of selling things to us while selling
our attention to others. At that point
something more profound kicks in which gives the algorithm’s owners immense power – to predict our behaviours, to guide our
preferences, to influence our decisions, to change our minds, to thereby reduce us to their unpaid servants, whose job is to
provide our information, our attention, our identity and above all the patterns
of behaviour that train their algorithms.
It is certainly no less physical than these
other kinds of capital, for the cloud metaphor is just that: a metaphor. In
reality, it is comprised of vast data
warehouses, containing endless rows of servers, connected by a globe-spanning
web of sensors and cables.
Here is a glimpse of what makes cloud
capital so fundamentally new, different and scary: capital
has hitherto been reproduced within some labour market – within the factory,
the office, the warehouse. Aided by machines, it was
waged workers who produced the
stuff that was sold to generate profits, which in turn financed their wages and
the production of more machines –
that’s how capital accumulated and reproduced. Cloud capital, in
contrast, can reproduce itself in ways that involve no waged labour. How? By commanding almost the whole of
humanity to chip in to its reproduction – for free!
But first, let us make an important
distinction: between the effect of Big Tech on the traditional workplace, where
workers’ conditions are more extreme but not in essence any different from
those of the millworkers of old, and its
effect on the users of technology generally, which creates an essentially new
condition altogether. By doing so, we shall see that while workers have become ‘cloud proles’ we all have become ‘cloud serfs’.
Cloud proles
The technology may be outlandishly new but
the way it is deployed to command badly paid workers on the factory floor is
almost two centuries old. As they struggle to keep up with computer devices
that track and dictate the pace of their every move, Amazon warehouse workers
would recognise themselves instantly in Charlie Chaplin’s Modern Times (1936)
…. Cloud proles – my term for waged workers
driven to their physical limits by cloud-based algorithms – suffer at work in
ways that would be instantly recognised by whole generations of earlier
proletarians.
Take Amazon’s
Mechanical Turk, which the company describes as a ‘crowdsourcing
marketplace that makes it easier for individuals and businesses to outsource
their processes and jobs to a distributed workforce who can perform these tasks
virtually’. But let us call it what it is: a
cloud-based sweatshop where workers are paid
piece rates to work virtually. Nothing is happening there that Karl Marx
had not fully analysed in the twenty-first chapter of the first volume of his
Capital, where he stated: ‘Piece-wages become … the most fruitful source of
reductions in wages and of frauds committed by the capitalists.’
Algorithms have already replaced bosses in
the transport, deliveries and warehousing sectors. And workers forced to work
for these algorithms find themselves in a modernist nightmare: some
non-corporeal entity that not only lacks but is actually incapable of human
empathy allocates them work at a rate of its choosing before monitoring their
response times. Released from any of the
qualms even inhumane humans harbour, the algo-bosses
are at liberty to reduce the workers’ paid hours, to increase their tempo to
insanity-inducing levels, or to turn them out onto the street for
‘inefficiency’. At that point, the
workers sacked by the algorithm are thrown into a Kafkaesque spiral, unable to
speak to a human capable of explaining why they were fired.
cloud capital monetises our emotions more effectively than Don ever could. It tailor-makes experiences that exploit our
biases to drive consumption, and then it uses our responses to hone
those experiences yet further. But that’s only the beginning. Besides modifying
our consumer behaviour in ways Don Draper would marvel at, and perhaps be
appalled by, cloud capital has a far more impressive trick up its sleeve: it can command
us to put work directly into its own reproduction, reinforcement and
maintenance.
Consider what cloud
capital consists of: smart software, server farms, cell towers, thousands of
miles of optic fibre. And yet all of this would be worthless without ‘content’. The most valuable part of the stock of cloud
capital is not
its physical components but rather the stories posted on Facebook, the videos
uploaded to TikTok and YouTube, the photos on Instagram, the jokes and insults
on Twitter, the reviews on Amazon or, simply, our movement through
space, allowing our phones to alert Google Maps to the latest spot of traffic.
In providing these stories, videos, photos, jokes and movements, it is we who
produce and reproduce – outside any market – the stock of cloud capital.
This is unparalleled. Workers employed by
General Electric, Exxon-Mobil, General Motors or any other major conglomerate
collect in salaries and wages approximately 80 per cent of the company’s
income. This proportion grows larger in smaller firms. Big Tech’s workers, in contrast,
collect less than 1 per cent of their firms’ revenues. The reason is that paid
labour performs only a fraction of the work that Big Tech relies on. Most of the work is
performed by billions of people for free.
Sure enough, most of us choose to do this,
enjoy it even. Broadcasting our opinions and sharing our lives’ intimate
details with our digital tribes and communities seems to satisfy some perverse
expressive need of ours.
The fact that we do so voluntarily, happily
even, does not detract from the fact that we
are unpaid manufacturers – cloud serfs whose daily self-directed toil enriches
a tiny band of multibillionaires residing mostly in California or Shanghai.
This is the crux. Cloud capital’s singular achievement, a feat far superior to
either of these, is the way it has revolutionised its own reproduction. The
true revolution cloud capital has inflicted on humanity is the conversion of
billions of us into willing
cloud serfs volunteering to labour for nothing to reproduce cloud capital for
the benefit of its owners.
Wither markets, hello cloud fiefs
‘Enter amazon.com and you have exited capitalism. Despite all the buying and the selling that goes on there, you have entered
a realm which can’t be thought of as a market, not even a digital one.’
You are beamed into a town full of people going about their business, trading
in gadgets, clothes, shoes, books, songs, games and movies. At first, everything
looks normal. Until you begin to notice something odd. It
turns out that all the shops, indeed every building, belong to a chap called
Jeff. He may not own the factories that produce the stuff sold in his shops but
he owns an algorithm that takes a cut for each sale and he gets to decide what
can be sold and what cannot.
Except that isn’t all. Jeff owns more than
the shops and the public buildings. He also owns the dirt you walk on, the
bench you sit on, even the air you breathe. In fact, in this weird town
everything you see (and don’t see) is regulated by Jeff’s algorithm: you
and I may be walking next to each other, our eyes trained in the same
direction, but the view provided to us by the algorithm is entirely bespoke,
carefully curated according to Jeff’s priorities. Everyone navigating their way around amazon.com – except
Jeff – is wandering in algorithmically constructed isolation.
‘A type of digital fief, a post-capitalist
one, whose historical roots remain in feudal Europe but whose integrity is
maintained today by a futuristic, dystopian type of cloud-based capital.’
Take for example Tesla, Elon Musk’s successful
electric car company. One reason financiers value
it so much higher than Ford or Toyota
is that its cars’ every circuit is wired into cloud capital. Besides giving Tesla the power to switch off
one of its cars remotely, if for instance the driver fails to service it as the
company wishes, merely by driving around Tesla owners are uploading in real
time information (including what music they are listening to!) that enriches
the company’s cloud capital. They may not think of themselves as
cloud serfs but, alas, that’s precisely what the proud owners of new,
wonderfully aerodynamically gleaming Teslas are.
Capitalism
surfaced when owners of capital goods (steam engines, machine tools, spinning
jennies, telegraph poles, etc.) acquired the power to command people and
nations – powers that far exceeded, for the first time, those of landowners. It
was a Great Transformation made possible by the prior privatisation of common
lands. Same with cloud capital. To acquire its even greater powers to command,
it too required the prior privatisation of another crucial commons: Internet
One.
Previously, to
exercise capital’s power to command and make
other humans work faster and consume more, capitalists required two
types of professionals: managers
and marketeers. Especially under the auspices of the post-war
technostructure, these two service professions achieved greater prominence even
than bankers and insurance brokers. Gleaming new business schools were set up
to initiate MBA students in the dark arts of quick-marching a workforce towards
explosive labour productivity.
Then, cloud capital arrived. At one fell
swoop it
automated both roles. The exercise of capital’s power to command workers and
consumers alike was handed over to the algos.
the truly historic disruption was to automate capital’s power to command
people outside the factory, the shop
or the office – to turn all of us, cloud proles and everyone else, into cloud
serfs in the direct (unremunerated) service of cloud capital, unmediated by any
market. Meanwhile, conventional capitalist manufacturers increasingly have no
option but to sell their goods at the discretion of the cloudalists, paying
them a fee for the privilege