by
Nick Srnicek
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In 1998, as the East Asian crisis gathered pace, the US boom began to stumble as well. The bust was staved off through a series of rapid interest rate reductions made by the US Federal Reserve; and these reductions marked the beginning of a lengthy period of ultra-easy monetary policy. Implicitly the goal was to let equity markets continue to rise despite their 'irrational exuberance', in an effort to increase the nominal wealth of companies and households and hence their propensity to invest and consume. In a world where the US government was trying to reduce its deficits, fiscal stimulus was out of the question. This 'asset-price Keynesianism' offered an alternative way to get the economy growing in the absence of deficit spending and competitive manufacturing. And it worked for a time [...]
and then we had the dot-com crash, then lower interest rates after 9/11 that resulted in the housing boom and thus financial crisis
[...] At one end, tax evasion and cash hoarding have left US companies--particularly tech companies--with a vast amount of money to invest. This glut of corporate savings has--both directly and indirectly--combined with a loose monetary policy to strengthen the pursuit of riskier investments for the sake of a decent return. And at the other end, tax evasion is, by definition, a drain on government revenues and therefore has exacerbated austerity. The vast amount of tax money that goes missing in tax havens must be made up elsewhere. The result in further limitations on fiscal stimulus and a greater need for unorthodox monetary policies. Tax evasion, austerity, and extraordinary monetary policies are all mutually reinforcing.
one could argue that this tax evasion/avoidance isn't really that serious since the amount of tax to be paid is arbitrary anyway, and if it's all legal, then why does it matter? the response to that is less moral (for which the answer is obvious: corporations benefit from government infrastructure and thus should attempt to pay the set tax rate in good faith) and more about long-term efficiency ... a corporation operating in a state that has lower tax revenues will 1) have shittier infrastructure and 2) put the average person through more hardship, meaning that not only are they less likely to be able to afford to buy products, they are (hopefully) more likely to rise up and demand change, potentially at a disastrous cost for the corporation
The conjuncture today is therefore a product of long-term trends and cyclical movements. We continue to live in a capitalist society where competition and profit seeking provide the general parameters of our world. But the 1970s created a major shift within these general conditions, away from secure employment and unwieldy industrial behemoths and towards flexible labour and lean business models. During the 1990s a technological revoution was laid out when finance drove a bubble in the new internet industry that led to massive investment in the built environment. This phenomenon also heralded a turn towards a new model of growth: America was definitely giving up on its manufacturing base and turning towards asset-price Keynesianism as the best viable option. This new model of growth led to the housing bubble of the early twenty-first century and has driven the response to the 2008 crisis. Plagued by global concerns over public debt, governments have turned to monetary policy in order to ease economic conditions. This, combined with increases in corporate savings and with the expansion of tax havens, has let loose a vast glut of cash, which has been seeking out decent rates of investments in a low-interest rate world. Finally, workers have suffered immensely in the wake of the crisis and have been highly vulnerable to exploitative working conditions as a result of their need to earn an income. All this sets the scene for today's economy.
[...] the important element is that the capitalist class owns the platform, not necessarily that it produces a physical product [...]
- ad platforms (Google, FB) that analyse user data to sell ad space
- cloud platforms (AWS, Salesforce) that own the hardware and software and charge subscription fees based on usage
- industrial platforms (GE, Siemens), for making manufacturing more internet-connected and thus more efficient (and cheaper)
- product platforms (Rolls Royce, Spotify) turning traditional goods into service, collecting rents/subscription fees
- lean platforms (Uber, Airbnb) that don't own any assets
(Amazon fits basically all of the categories, with its different products)
[...] if our online interactions are free labour, then these companies must be a significant boon to capitalism overall--a whole new landscape of exploited labour has been opened up. On the other hand, if this is not free labour, then these firms are parasitical on other value-producing industries and global capitalism is in a more dire state. A quick glance at the stagnating global economy suggests that the latter is more likely.
Rather than exploiting free labour, the position taken here is that advertising platforms appropriate data as a raw material. [...]
on whether user activity counts as labour (whose definition is: activity that generates a surplus within a market and production process oriented toward exchange)
so these ad platforms are making money based on an inefficiency in the market and don't actually create any value except insofar as they subsidize the parts of the corporations that do (e.g., google maps?)
[...] In one test factory from BASF SE [...] the assembly line is capable of individually customising every unit that comes down the line: individual soap bottles can have different fragrances, colours, labels, and soaps, all being automatically produced once a customer places an order. [...]
this is the world capitalism has wrought
[...] While subscription models have been around for centuries, for example in newspapers, what is novel today is their expansion to new realms [...] Part of what has enabled these product platforms to flourish in recent years is the stagnation in wages and the decline in savings [...] seemingly cheaper upfront fees appear more enticing. [...]
on product platforms, esp music
I don't fully agree with this analysis - I think the ability to rent only when you need something vs. buy & have it sit idle most of the time is great, and I think consumers recognise that and the flourishing of these platforms is primarily a result of their advantage. though ofc i think things like Spotify, Netflix, etc should be free because anything with zero marginal cost should be free (at least eventually) but that's a whole other line of reasoning
[...] It would seem that these are asset-less companies; we might call them virtual platforms. Yet the key is that they do own the most important asset: the platform of software and data analytics. Lean platforms operate through a hyper-outsourced model, whereby workers are outsourced, fixed capital is outsourced, maintenance costs are outsourced, and training is outsourced. All that remains is a bare extractive minimum--control over the platform that enables a monopoly rent to be gained.
another asset is of course reputation. look at what's been happening to Uber lately
[...] the traditional labour market that most closely approximates the lean platform model is an old and low-tech one: the market of day labourers--agricultural workers, dock workers, or other low-wage workers--who would show up at a site in the morning in the hope of finding a job for the day. [...] The gig economy simply moves these sites online and adds a layer of pervasive surveillance. A tool of survival is being marketed by Silicon Valley as a tool of liberation.
so good
[...] Where is the money coming from? Broadly speaking, it is surplus capital seeking higher rates of return in a low interest rate environment. The low interest rates have depressed the returns on traditional financial investments, forcing investors to seek out new avenues for yield. Rather than a finance boom or a housing boom, surplus capital today appears to be building a technology boom. [...] Just like the earlier dot-com boom, growth in the lean platform sector is premised on expectations of future profits rather than on actual profits. The hope is that the low margin business of taxis will eventually pay off once Uber has gained a monopoly position. Until these firms reach monopoly status (and possibly even then), their profitability appears to be generated solely by the removal of costs and the lowering of wages and not by anything substantial.
instead of a "vanguard destined to revive capitalism" (p91), lean platforms are just the latest outlet for all this surplus capital ... this, too, shall pass