alt-econ

[alt-econ]

Loretta Napoleoni, Technocapitalism

One sentence summary:

This is what the blurb on the back of this book says:

"At the dawn of the digital revolution, the Internet promised to be the great equalizer, a global democratic force. Instead, Wall Street ended up funding a new breed of serial capitalists, the Techtitans, who jacked up their own profits by mining new frontiers and stripping their workers of rights. ... Napoleoni offers us the real story of how we got here and what it will take to redirect our collective will toward the common good."

That was more than enough to get me to pick up this book, and once I picked it up, I couldn't stop. Do you know how the 2008 financial crisis is tied to the rise of Silicon Valley and the privatization of space exploration? I didn't, but after this book, I did.

The story begins with the 2008 financial crisis. How exactly did the U.S. government bail out the financial sector? Through quantitative easing: the Treasury materialized trillions of dollars out of thin air by pressing a few keys on their keyboard. This money was used to buy bonds and securities from banks and financial institutions in order to stabilize them. The financial sector got trillions in cash.

So what did the financial sector do with this money? They invested in Silicon Valley. In the post-financial crisis era of near-zero interest rates, the tech industry was one of the few places that offered high returns on investment. As a result, it wasn't just private investors and venture capitalists that made their way to Silicon Valley, but also institutional investors: pension fund managers, insurance companies, hedge funds, and even banks.

So, that's the story of how Silicon Valley got rich. But there is also another important side to this story, which is the fact that the speed of innovations outpaces regulations: "The time gap between innovations the tech companies implement and the laws that would regulate them has also played a major role in the global growth of companies like Airbnb, Google, and Uber. It creates a gray area, unreachable by the law, where tech companies operate freely, redesigning labor protocols and privacy instruments and payment protocols to their own advantage."

The example she raises is how Uber pioneered the gig economy model. By presenting themselves as a digital platform / broker, they are able to categorize their drivers as freelance / self-employed workers, which means they do not have to provide them with benefits or other protections--despite the fact that drivers are functionally employees. All this, under the guise of the "sharing economy."

As a result? "Far from encouraging an equitable distribution of wealth, the tech industry compounded inequalities. And it did this intentionally, because to a certain degree, the greed that had characterized the financial sector leading into the financial crisis did not die; rather, it emerged, scarred, and produced a cross-pollination between Wall Street and Silicon Valley."

Meanwhile, Techtitans like Google grew rapidly by buying and absorbing new innovations and startups. As Napoleoni describes: "While serial entrepreneurs produce a constant stream of new ideas, the big Techtitans are permanently on the lookout to buy the best ones, secondarily to improve their own businesses, but primarily to prevent any competition." Google Maps was developed by buying up all the startups that provided digital map services. When Google learned that Facebook and Apple wanted to buy Waze, it stepped in and outbid them by nearly a billion dollars. It was clearly a monopolistic move.

[Napoleoni doesn't talk about this but, her book is literally called The Rise of the New Robber Barons. Remember the original robber barons? Vanderbilt, Carnegie, Rockefeller--these guys are the reason why the U.S. has antitrust laws today. No wonder SIlicon Valley spends so much time and money on antitrust cases.]

Now, the Techtitans have set their eyes on space. Why? Part of it, Napoleoni argues, has to do with the model of infinite economic growth. The human race is outgrowing the planet, so the next frontier is space. Jeff Bezos believes in a future with space settlements, Elon Musk wants to colonize Mars. But more practically, and immediately, the lower Earth orbit promises major business opportunities. The development of nano satellites has made it significantly more affordable to launch satellites. Right now, they're being used to provide satellite internet, e.g. Starlink, or Project Kuiper. Goldman Sachs thinks mining asteroids is a near future possibility. All while leaving behind a trail of space debris.

What makes all of this especially nebulous and hard to fight back against is that so much of this technological innovation is hard to understand. Napoleoni illustrates this point best with stories of fraudulent bitcoins and NFT schemes, but it goes beyond that. Most of us don't understand the wider societal significance of blockchain, let alone the technical mechanism. In the same way, many of us didn't understand the significance of the end of the gold standard or the rise of financial engineering. And now, as the Techtitans seek to transform themselves into Space Barons, we don't understand the significance of the corporatization of the lower Earth orbit or the development of relaunchable rockets.

And when we don't understand these technological innovations and its broader significance, not only do we struggle to foresee how these things will make inequality worse, we also fail to see the beneficial opportunities these technologies, if managed more wisely, could offer humanity. Blockchain could be used to improve food security, facilitate product recalls, to trace the origins of the products we buy. It could allow for secure management of personal data. Bitcoin was originally envisioned by its creator as a way to democratize money, and has already shown its usefulness in situations like wars where ordinary people can get money even when traditional banks are unreliable, without fear of surveillance. In space, satellites could be carrying solar panels (space-based solar power), providing clean and continuous energy for our use.

Napoleoni doesn't explicitly address how we get there, but it is implicit that the first step is education and understanding. And reading this book is a great way to get started.

[alt-econ]

"Far from democratizing the world, the technological revolution gave birth to a new, extremely profitable sector of capitalism in the form of a global oligopoly."

Loretta Napoleoni, Technocapitalism

[alt-econ]

"Technology, the product of the age of the Anthropocene, can help us reach higher ground, providing we learn how to control and use it correctly, for the common good. Technology left alone in the hands of the Techtitans will, on the contrary, harm us and the planet."

Loretta Napoleoni, Technocapitalism

[alt-econ]

The 'corporatization of America' during the past century has been an attack on democracy--and on markets, part of the shift from something resembling 'capitalism' to the highly administered markets of the modern state/corporate era. A current variant is called 'minimizing the state,' that is, transferring decision-making power from the public arena to somewhere else: 'to the people,' in the rhetoric of power; to private tyrannies, in the real world.

Noam Chomsky, The Ultimate Weapon (Profit Over People)

[alt-econ]

[alt-econ]

[alt-econ]

We already know how to lower crime. Invest in communities, pay a decent wage, provide universal health care, and so on, like developed countries with low crime rates do. But American politicians LOVE high crime rates, because all they have to do is promise to spend more money on police, and US voters think that means they're going to lessen crime--when in fact they are knowingly and intentionally increasing it in order to expand the pool of prison slave labor for the corporations (including tax-suppported for-profit prisons that are guaranteed minimim incarceration rates by the state) who own our politicians. And also so that voters will think they're "tough on crime."

[alt-econ]

[alt-econ]

Ever notice it's always, "these workers striking will hurt the economy," not, "these corporations (which are making record profits) are hurting the economy by exploiting and abusing their workers until the workers refuse to take it anymore."

It's always, "giving raises and benefits and time off to workers will cause inflation," not "CEOs and top execs getting millions in yearly raises and bonuses, and large corporations price-gouging to line shareholder pockets is causing inflation."

As Malcolm X said, "If you're not careful, the newspapers will have you hating the people who are being oppressed, and loving the people who are doing the oppressing."

[alt-econ]

If you tell the average person "Yeah, back in the 80s the CIA was funneling cocaine into the US and helping spread crack into Black neighborhoods in order to raise money for fascist militias in South America, and then a journalist broke the story & he 'committed suicide' by shooting himself twice in the back of the head," they're gonna look at you like you're rambling about chemtrails and space aliens, but that's just like...a thing that happened. They made a movie & everything.

[alt-econ]

There are many factors driving global society towards a low-wage, low-growth, high-profit future, with increasing polarization and social disintegration. Another consequence is the fading of meaningful democratic processes as decision making is vested in private institutions and the quasi-governmental structures that are coalescing around them, what the Financial Times calls a 'de facto world government' that operates in secret and without accountability.

Noam Chomsky, The Zapatista Uprising (Profit Over People)

[alt-econ]

The real meaning of the doctrine of "consent of the governed"

“The people must submit to their rulers, and it is enough if they give consent without consent. Within a tyrannical state or in foreign domains, force can be used. When the resources of violence are limited, the consent of the governed must be obtained by the devices called “manufacture of consent” by progressive and liberal opinion.”

- Noam Chomsky, Consent Without Consent (Profit Over People)

[alt-econ]

It is precisely in its oppression of nonmarket forces that we see how neoliberalism operates not only as an economic system, but as a political and cultural system as well. Neoliberalism works best when there is formal electoral democracy, but when the population is diverted from the information, access, and public forum necessary for meaningful participation in decision making. The neoliberal system therefore has an important and necessary byproduct--a depoliticized citizenry marked by apathy and cynicism.

Robert W. McChesney

[alt-econ]

Noam Chomsky, Profit Over People

One-sentence summary: Neoliberalism, or the free market economy, is really just a cover story for a system that allows the rich to plunder the poor.

This is it. This is THE book to read to understand how exactly the rich and elite have successfully conned the world into believing that free markets are the magical solution to all the world’s problems. That’s a lie. Free markets don’t work. Or, rather: they do, but not in the way you they want you to think.

Free markets don’t work as a tool for economic development. Free markets don’t raise standards of living. 

Countries that are prosperous today - such as the United States, Britain, and Japan - have all relied on (and still rely on) significant government intervention, in the form of subsidies and protectionist policies, for economic growth. In other words: Rich countries didn’t get rich by subscribing to neoliberalism. They got rich by breaking the rules of neoliberalism.

So why do these countries try to impose free markets on the rest of the world?

Because free markets work very, very well to protect Western business interests. Free markets allow the rich to plunder the poor, and keeps the current global economic order locked in place. On a level playing field, those who are already strong will always win, while the rest will always lose.

Under the current economic order, developing countries have one of two roles to play: 

Provide cheap labor to Western businesses for corporate profit

Provide a market for highly protected Western businesses to sell their goods

The first beneficiaries of these countries’ resources are to be Western investors, not the actual people of those countries.

To make sure that developing countries play their designated service roles, the West (and the United States in particular) has a wide arsenal of tools at their disposal:

Free Trade Agreements  Imposed through institutions such as the WTO and NAFTA, free trade agreements are the softer, more “diplomatic” (but still coercive) approach to getting a country to open its borders to foreign investment.

Economic warfare Sanctions and trade embargoes on countries that refuse to play their role. See: Cuba. 

The CIA Orchestration of military coups and other anti-democracy efforts to ensure that the “favorable” government (i.e. supports big businesses and foreign investment) takes / stays in power. See: almost any country in Latin America, Italy.

The Military-Industrial Complex Domestically, this is how the United States government funnels billions of dollars into corporate subsidies (while avoiding the democratizing effects of social spending) so that they can continue to stay ahead of the rest of the world.

The Propaganda Machine A Cold War relic. Why is anti-Communist fear still a thing today, when the USSR collapsed over 30 years ago? Because it’s a very useful way for the United States to justify all of the above.

With these tools, the neoliberal regime sets out to crush things that could actually help build wealth in the hands of the people, such as democracy, labor unions, populist movements, distributive policies, and social welfare. And unfortunately they’ve been pretty successful.

[alt-econ]

slavery exists today in commercial agriculture, with several cases just in Florida affecting 1200 people in the past 15 years

it’s important to acknowledge the domestic enslavement living through prisons and the police, but this system absolutely includes the borders and immigration laws, which exist to produce a slave class of workers who are quite literally non-citizens with no rights so that capitalists can exploit them and retaliate with deportation, often to homelands torn by war or poverty because of the U.S./the West.

there’s a book here, Fields of Resistance, that’s really informative. I’m in the middle of it but it’s been great so far

tldr: borders exist to enslave people

Abolish borders, abolish prisons, abolish ICE, abolish the police. They’re different machines of the same system

[alt-econ]

Yvon Chounaird just announced that Patagonia is “going purpose.”

Here’s how it works: 100% of the company’s voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values; and 100% of the nonvoting stock had been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. The funding will come from Patagonia: Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.

It’s only one company, but this sounds like a pretty ingenious way to systematically funnel the profits of capitalism to a good cause. It’s visionary, at the very least.

In his words: “Hopefully this will influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people.” (Quoted in the NYT)

What do you think? Any spicy takes out there?

[alt-econ]

More on the limits of capitalism: A fall 2022 reading list

Okay. It has been entirely too long since I began my winter 2020 reading list that I STILL haven’t finished two years later (I was much too ambitious), but in the meantime, here’s a few new additions to the list for your perusal. Enjoy!

Book summaries will come... eventually (I’m going to write out summaries for the books on the 2020 reading list first). Follow me for updates, I guess?

Kate Raworth, Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist

Danny Cane, How To Resist Amazon and Why

Mariana Mazzucato, Mission Economy: A Moonshot Guide to Changing Capitalism

Paul E. Knowlton, Better Capitalism: Jesus, Adam Smith, Ayn Rand, and MLK Jr. on Moving from Plantation to Partnership Economics

Noam Chomsky, On Anarchism

Christopher Marquis, Better Business: How the B Corp Movement Is Remaking Capitalism

Matthew Stewart, The 9.9 Percent: The New Aristocracy That Is Entrenching Inequality and Warping Our Culture

David Stebenne, Promised Land: How the Rise of the Middle Class Transformed America, 1929-1968

Of course, please absolutely feel free to send any additional book recommendations my way!