Dan Schiller – Digital Capitalism : Stagnation and Contention?

We begin with a video of a lecture by Dan Schiller, telecommunications historian, recorded around 2015. Click on the link to materials above to see information about his latest book published in 2023 (800 pages).

The political economy has morphed throughout recent decades into a digitally-structured capitalism. The lecture locates some primary features of this historical process in patterns of corporate capital investment in ICTs. It goes on to sketch the development of the politics of digitization, between the 1970s and today. A foremost conclusion is that, in contrast to the unabashed triumphalism that greeted the rise of the Internet as a pole of growth during the 1990s, today we are living amid both persistent economic stagnation and escalating political contention over the structure and control of the world’s information infrastructure. Dan Schiller, Professor Emeritus of Library & Information Science and of Communication at the University of Illinois at Urbana-Champaign, is an historian of information and communications in the context of the five-hundred year development of the capitalist political economy. He has held Chairs at UCSD , UCLA and Temple Universities and is the author of several books including Digital Capitalism: networking the global market system (MIT Press, 1999) and, most recently, Digital Depression: Information Technology and Economic Crisis (University of Illinois Press, 2014). He writes about the Internet and other communications systems for Le Monde Diplomatique. Presently, he is conducting archival research for a longstanding project on the history of US telecommunications and is visiting the Technology and Democracy project in CRASSH .

Transcript from video:
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right well ladies and gentlemen for those who have been here thank you for
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staying the course for those of you welcome and it’s my pleasure to
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introduce our keynote speaker who is Dan Schiller I met Dan first many years ago
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in 1999 when we both wound up at a meeting of an organization called the
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internet political economy forum and in those days I was a techno utopian and
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Dan was the it was a meeting of broadly speaking techno utopians other people
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there were John Perry Barlow then Cerf Craig Mundy and a number of others who
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had drank the technological kool-aid and Dan was disturbing figure for me because
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he was the first non technological utopian I’d ever met and because he was
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he was locating the the development of the Internet in what seemed to us to be
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an extremely sordid background namely that of the telecommunications business but over the years I’m now recovering
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utopian and I’ve seen the I’ve seen the error of my ways and more appreciated
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Dan’s perspective the longer I’ve gone on so it’s a great pleasure to have you here dan thank you for coming in terms
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of his biography he he’s professor emeritus of Library and Information science and of communications at the
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University of Illinois at urbana-champaign he’s a historian of information communication technologies
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in the context of 500 developments of the capitalist economy so it’s good to have him here he’s had chairs at UCSD
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UCLA and temple universities and is the author of several books including one on one with the title digital capitalism
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and the new book is called digital depression he writes about the internet and other communications technologies
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for le monde diplomatique and he’s presently doing archival research for a
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long-standing project of his on the history of US telecommunications and he’s also
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a visiting visitor at our research project on technology and democracy Dan
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it’s a great pleasure to be here thank you for coming thank you very much I’m
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assured that I’m going to be picked up on this microphone even if I don’t hunch but the temptation is great because as I
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know some of you will know from experience when you tall you hunch so if I start to hunch just correctly don’t
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correct me about anything intellectual no no of course not John thank you so much for inviting me
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and David for inviting me to this event the whole day has been exciting and
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educated for me and I can only applaud those of you who are willing to take
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another hour hour and a half out of your lives to endure still more but I’ll try
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to be relatively energetic and the rest
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is up to you so my theme is digital capitalism stagnation and contention
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with a question mark great changes are occurring around digital networks at the
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same time abiding political economic processes carry forward I’ve developed
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the concept of digital capitalism for this reason a phase change is occurring
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within capitalism digital capitalism one might say is emerging out of industrial
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capitalism before turning to consider some of the structural problems that
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confront digital capitalism today namely contention and stagnation I’ll elaborate
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on four points pertaining to its industrial profiles unevenly across
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decades and centuries the Industrial Revolution gripped not only
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manufacturing but also it’s important that we remember agriculture trade and
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indeed information I mean Fife has characterized 19th
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century British publishing as quote steam power knowledge which is a good way to
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shorthand that so today the importance of digital network stretches beyond any
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discrete information sector and this was a theme that we were talking about some in our discussions earlier digital
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systems and services have been and I can’t resist saying this bolted to all parts of the political economy this
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carries ramifications one is that it is short-sighted I think to equate the
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digital merely with familiar consumer markets as for search engines smartphones and social networks and I’m
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not saying this in order to discount their importance I’m merely saying it’s not correct to equate digitization or
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digital capitalism only with this sector consumer expenditures on digital goods
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and services account for an estimated 30 percent of the worldwide total which one
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would never imagine from the extent of our surrounded nasai them nor is it
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sufficient to try to grasp the digital merely by focusing only on vendors whether it’s IBM and AT&T in the 1970’s
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and those were the two titans of that time the French were worried enough about them to Commission a report to the
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president which basically isolated them as the Scylla and Charybdis of
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contemporary information provision or Microsoft and Intel a decade or two
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later or Google and Amazon and Facebook and Apple today digital capitalism has
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been constructed and reconstructed not only by suppliers but also by corporate
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users on the demand side the likes of Walmart and General Motors and Exxon and
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Monsanto and JPMorgan Chase later I’ll try to suggest that government also has
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been crucial and that these business users importance has not least been political as well as economic a second
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point of my for in this first section pertains to the chronology and character
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of capital investment in what the US Census Bureau now–he numerate sunder the category of information processing
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equipment and software so that’s the name they now give to what had been
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several more discrete categories that were not connected in an earlier
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enumeration u.s. capital investment in networks of course began long ago and
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long before the digital private line
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Telegraph’s lines devoted dedicated to traffic sent
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and received by a single business user who leased them from Western Union on a monthly basis saw a widening use by big
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banks meat packers and by the Standard Oil Company by the 1880s to the 1910s
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industrial radio services as they used to be called proceeded to apply wireless
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technology to the operations of railroads power transmission systems
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department stores airplane operating companies and newspapers by 1947 at the
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cusp of the movement to what we would identify as digital US oil companies had
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built 500 radio stations and obtained licenses to 49 radio frequencies in their search for oil deposits which is
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an interesting set of statistics because that’s not really an order of magnitude different than the number of stations or
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frequencies allocated to the commercial broadcast sector of radio they began to
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use microwave radio the oil companies did in order to send data produced by the new offshore drilling rigs that they
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were putting together to geologists and engineers located at their headquarters
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as far back as the 1950s and it’s arguable that you couldn’t have had offshore drilling without that data
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transmission capability so I’m trying to build an argument here from the get-go that says digitization is not something
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that happens now only in the last few years but something that’s been layered in repeatedly per
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aggressively successively in iterations as the previously industrial system
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began to morph towards something else the political scientist Marie Adelman
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some of you may know of him and the economist Dallas Smythe sought to place
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these neglected analog network services on the academic agenda as far back as the 1950s there are books by each of
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those guys capital investment in information processing equipment and
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software however undeniably accelerated sharply after the recession of the early
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1970s by which time the applications had
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been expanding of digital systems for 20 years in addition to specialized
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equipment permitting the national telecommunications network to function as a mechanism for data transfer
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dedicated private circuits and public packet switch networks were commercially available this is all before the thing
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we take to be the integrate internet was on stream for most people expenditures
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on high tech including computing accounting office machines communication equipment and instruments quickly began
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to surpass other categories to become the largest single category of capital
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investment in equipment and a key driver of economic growth in their own right
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and this has been true now for some decades they’re the largest category of capital spending on equipment big
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businesses commitment to data communications took several forms as companies and individual departments
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were locked in by competing vendors proprietary strategies so some of you
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will remember we had system network architecture from IBM for example or we had different services from other
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computer vendors and they were incompatible and no small part of the Internet’s magic is attributed to its
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ability to overcome those proprietary systems James Cortana cites an internal
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IBM estimate and he works for IBM so I think that gives me a little more trust that ICT investment escalated from
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38 to 55% of all equipment spending between 1990 just before the internet
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took off and 2001 so it gives you some sense of the significance sectoral
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variation was and remains considerable forestry fishing and agricultural
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services account for a small proportion of the total capital investment but not a negligible one I mean we’re talking
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the most recent statistics in the u.s. context are about two years old and so
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for 2013 which is the most recent data it was only released in the spring of
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2015 forestry fishing and agricultural services took about 153 million dollars
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in capital investment which is in absolute terms a fair amount of money but put that next to what’s spent in
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other sectors and you get a greater kind of accumulating sense of what’s involved
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for the economy as a whole professional scientific and technical services thirty billion dollars of
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investment manufacturing 37 billion
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dollars so that’s a sector that’s widely said to be dead in the United States and
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it’s not it’s it’s it’s not 37 billion dollars of investment as a considerable
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amount the second top category is finance and insurance with about sixty
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billion dollars of capital investment each year there’s a prodigious amount and the largest spender is the
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information industry itself which is defined to include everybody from publishers to computer services
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companies and its collective outlay is about 86 billion dollars a year so that
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gives you and there many other categories but that gives you a loose sense of of the spending in this area my
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third point is that digital networks did not free capitalism from its crisis
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tendencies but became embedded in them became embedded in them in fairly
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complicated ways by the early tooth thousands financial intermediaries and
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we heard a great deal of very illuminating discussion about them this morning had been spearheading the
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development of digital assist and this afternoon had been spearheading the development of digital systems for
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decades the largest US financial companies spend billions of dollars a year individually on ICTs and boast IT
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and software staffs numbering upwards of 5,000 people I mean you can JPMorgan
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Chase has I think 8,000 people in that category it’s an enormous number of people it’s much more I mean it’s a
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greater number than you’d see in companies that are supposedly information companies or you know media
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companies it’s a very large number the Titanic buildup of networked finance
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grew over the last several decades as banks pushed debt on every institution
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and packaged it in a staggering variety of instruments banks institutionalized
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fee based products own account trades and off-the-books investment vehicles
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even as they continually increased their own leverage and of course I’m only speaking here of US banks I know this
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would never happen here but they continually increase their own leverage
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which means their risk this opaque complex and as it turned out
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rickety system crashed when some US residential mortgage holders ceased to
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make payments which nobody imagined could crash or come close to the global financial system leveraged or debt was
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the fuel that stoked this fire and networked finance had spread that
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leverage everywhere so it’s a complex causal chain that I’m trying to invoke I
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mean it’s not the digitisation separate from the leverage it’s that the
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digitisation animates the leverage under contemporary circumstances in the
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aftermath of the crisis that again from a u.s. perspective Network finance has
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carried forward it has not ceased and so some
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we’ll worry about that the networks were bearers of crisis or excuse me that
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networks were bearers of crisis again became apparent as the crisis cascaded into the wider economy because as you
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know it didn’t contain itself to the financial world it moved beyond it
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manufacturers had deployed digital networks to automate and to outsource production and to disperse their
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operations in order to improve market access and or to cheapen the cost of
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labor this great buildup of manufacturing networks again occurred over decades and it’s important to
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recognize that it provided no guarantee of corporate profitability in any given
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case GM spent tens of billions of dollars on networks over a period of
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time between 1979 and 1980 three or four alone it spent an estimated 30 billion
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dollars on ICTs there’s a colossal amount of money but that didn’t prevent
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the biggest US automaker from having to be rescued by the US government in the
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financial and economic crisis that began to unravel things in 2007-2008 the
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underlying problem was that manufacturers networks had been folded into a sweeping crisis tendency as I see
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it as international competition had engendered growing over capacity in the
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auto industry as it had done in many other fields as well more plants and
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factories were being built than were needed to supply the global market at least in ways that were profitable to
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the suppliers so the reorganization of manufacturing production contributed to what David Harvey is called wage
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repression through working-class communities in the wealthy countries as automakers responded to competition by
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cutting high wage union employees which you’d expect I mean it’s exactly what you’d expect if they were politically
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and able to do so which is what was new in that period reciprocal hits to demand
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were predictable the average age of vehicles on the road the United States hit an all-time high
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this year this has been attributed naturally to quality improvements people
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are hanging onto their cars longer because they’re better now I’m not to say that they may not be better in some
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respects but it seems fairly certain to me that hard times have been a decisive
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factor as well by 2015 both new and used car owners in the United States were
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holding on to their vehicles for two full years longer than what had been the
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average in 2006 it’s hard to imagine that’s attributable only to quality improvements over a period of seven
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years although I have to say I just bought a new car and the only thing that
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the salesperson wanted to tell me about was the electronics I mean there was no
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kicking of tires there was no discussion of the engine there was nothing or anything except let
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me show the electronics and before I knew it he had basically downloaded my iphone onto the car and so I said well
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what’s the system and he says it’s the car you know it’s the car that’s doing it so I mean we don’t really need to
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have just you know a software enabled car driverless cars were already there in sense that much of a car is software
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structured and this is the the selling point already so I was bitter from that
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experience and I’m letting you know about it it should be noted that once again the underlying syndrome or a
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problem of over capacity has not abated the big car makers as part of their
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efforts to salvage themselves all stampeded into China over the period of the last 15 years or so through joint
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ventures and they’ve come to depend on average on Chinese buyers for around a
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third of their global sales the big global car makers that’s a lot a third
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over a pretty short period of time as China’s economy has slowed during just
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this last year the automaker’s there have turned to reduce capacity for the first time at
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the dozens of joint venture plants that they operate that’s a good indication of the thing I’m trying to tell you that
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the problem of over capacity in which the networks are embedded is the culprit one fourth and final point for decades
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beginning well before the Internet’s take up political leaders recognized
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that the u.s. information industry was a spectacular poll of growth within the
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capitalist world economy heads of state notably made a point of paying homage to
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the then reigning US corporate tech titans dong Xiao ping came over to
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Seattle in 1979 Zhang’s amine in 1973
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who Jintao in 2006 all of them made a point of visiting with tech companies
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France just to show that it’s broader Frances Jacques Chirac you’ll remember
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President Chirac he led an entourage to Silicon Valley in 1996 and nearly 20
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years later meaning just this last few months Brazil’s Dilma Rousseff and just
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last last couple days India’s Narendra Modi have followed suit in most cases
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they want to know how has the u.s. worked its digital magic can it be
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replicated failing that as the McKinsey consultancy put it only last week in a
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message that they send out a really select group of millions that I happen
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to be in and I can’t seem to do anything about it but they put it they put this
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in a message last week quote how should you tap into Silicon Valley and that’s
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sort of a shorthand way of saying into the internet tech that the US industry
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continues to dominate globally these questions have garnered high-level
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government attention and for this reason I’m now going to consider Digital capitalism’s political dimension
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somewhat more explicitly in 2010 overall
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u.s. expenditures on ICT s exceeded those of China Japan the UK and Russia
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combined the u.s. accounted for more than half of global ICT research and
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development spending the payoff was huge report to the Council on Foreign
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Relations underlined in 2013 that quote the u.s. captures more than 30 percent
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of global Internet revenues and more than 40% of net income US companies have
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claimed and kept a commanding lead over nearly all global internet markets and
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one that you know I can’t but mention which I could walk away from this but I
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can’t walk away no you can hear me but oh okay yeah so I guess it’s this that’s
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doing it so I can walk away but what was my point the the question is that the
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that the smartphone yes the smartphone I mean you have to remember that it was not that long ago that Nokia was the big
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game for mobile phones right and now the US has has blown it away or Apple has
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blown it away now I’m not going to make the argument that Apple is thoroughly unassailable it’s more rata it’s more
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sort of helpful to think of it in terms of it being a constant need of demonstration effect for Apple to see
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each quarter that it has done what it did before but on the evidence so far on the 6s and we don’t even need to say
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what we’re talking about because everybody knows it looks like the signs
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are promising you know Tim Cook can be pleased so my point is that US companies
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have kept a a lead over time now going
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on some decades and that political mobilization has been essential in this
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success or if you prefer this lopsided disparity
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much of the world would see it that way by the mid-60s and forgive me I’m a
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telecommunications historian so this stuff is the stuff that excites me this start talking about the 1960s if I see
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you glazing over you know I will try to modify my my position but my first line
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of activity is to see if I can bring it off by the mid-1960s business users of
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networks had been lobbying and obscure US agency the Federal Communications Commission for years to obtain
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specialized networking equipment and services convened by the Democratic
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administration of u.s. President Lyndon Johnson in 1967 a high-level Task Force
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on communications was formed to evaluate the significant changes that were already roiling the technology of
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telecommunications and business demand for networked systems what policies to
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be liberalized should market entry be opened within the emerging zones of data
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network functionality how my growth be stimulated in what was already a field
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of hot stocks in the 60s could liberalisation be folded in to LBJ’s
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Great Society projects research at archives and Special Collections reveals
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that the task force’s deliberations engendered intense conflict while
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business users pressed for market openings AT&T did everything in its power to resist such an outcome
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meanwhile against the backdrop of the Vietnam War and of President Johnson’s unexpected decision in March of 1968 not
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to run for re-election the proceeding drew covert interventions from a presidential confidant who was also a
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leading Washington political wire puller and in this instance although I don’t
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have a smoking gun I am certain that he was representing AT&T by the spring of
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1968 the President had lost the ability and perhaps the will to try to set
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telecommunications liberalisation within the wider content of his cherished Great Society programs
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it’s work stymied taskforce Chairman Under Secretary of State Eugene Rostow
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implored LBJ during the final weeks of his administration not to disband the
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group or to squelch its revisionary policy findings which called for limited
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liberalization of network markets in data communications and some other
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related areas the president complied not without some anguish and handed off the
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task force’s final report to his successor unpublished and without comment after months of deliberation
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midway through 1969 the incoming Nixon administration reached decisions about
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networking policy that were as momentous in my view as Nixon’s nearly concurrent
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decision to pursue rapo small with China and Nixon is in this way in my sense of
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it the critical US figure for the second half of the 20th century as Bob Dole
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eulogized him after his death at his service and I’m I detest Richard Nixon
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but to give him credit for what he accomplished here needs to be done
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breaking with ingrained Republican habits of deference to existing units of
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capital I mean up until this time in the Republican sort of knee-jerk position with respect to things like this was
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well if AT&T wants it we should do it or if any big unit of enterprise wanted it
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we should try to defer breaking with that the Nixon group in its executive
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Bant branch began to rip out the public service moorings that had constrained
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AT&T since World War one beginning at the edges of the existing system with
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satellites and cable television high officials in the Nixon White House coordinated the politics of a systematic
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liberalisation campaign with Nixon’s FCC Chairman the powerful right winger Dean
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birch and it’s interesting Dean it was the like vice chairman of the Republican Party and a Goldwater ID in
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the 1964 presidential contest Dean birch was a high-level guy and to put someone
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like that at the FCC is itself a significant act because the FCC is
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basically staffed not by such people but by lower-level people it’s a relatively
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small agency and it hasn’t been given some would say since the formation of
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the agency in the 1930s the resources that it has needed to do an effective job with the brief that it has been
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handed so they stripped the liberalization campaign of any social
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welfare features and this I’m trying to argue was a watershed I’m not saying
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that Johnson would have succeeded that’s not possible to say he never did it but
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there was at least some effort to push it in that direction an antitrust case against AT&T was prepared during the
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Nixon years brought to court by the US Justice Department under his successor Gerald Ford and settled by the breakup
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of the world’s largest company under Republican Ronald Reagan I’m not suggesting that liberalisation should be
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credited to Republicans I mean it originated with Democrats it then was carried forward by Republicans I’m only
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trying to point out that they did participate actively and they helped to redefine somewhat its social flavor
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backed by a burgeoning lobby of business user trade groups and independent
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suppliers and would-be suppliers of specialized equipment the liberalization trend must be accorded a bipartisan
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political cast it’s been engaged in um you know Al Gore was the father of the
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Internet right so there is Democrats as well as Republicans in it and there have
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been conflicts throughout I’m not trying to wash those away but I’m saying in its essentials it’s been bipartisan to
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reduce a complicated and technical process to its essentials business users of networks and independent meaning
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80 suppliers of equipment and services were granted expansive freedom to pursue
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specialized networking initiatives as a proprietary matter pyramiding increases
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in capital investment in information processing equipment and software were predicated on this radical policy shift
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and it’s not an accident that the dates work pretty well it’s not only because
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of the recession of the early mid 70s but also the liberalisation trend that became decisively accelerated at that
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time that we see this on the other hand it needs to be at least mentioned that
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mostly unionized telecommunications workers came into the crosshairs of the market opening trend and their numbers
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began to drop and they’ve dropped ever since this time a one-time president of
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the internet society some of you may know his name Anthony rutkowski who’s I’ll just go ahead with it Anthony
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Rutkowski aptly summed up the process writing that data communications quote
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developed in a kind of golden nest special policies were crafted that not
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only insulated this entire sector from virtually every kind of public process
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or control but also provided it with substantial public benefits there’s a
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quote from someone who was an insider first at the Federal Communications Commission and then at the Internet
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Society to the unfolding process it wasn’t a straight line trend and there
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was no master blueprint as the world’s largest single or single largest national market though the u.s.
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political commitment to network liberalisation and the profit projects that rested on it radiated out
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powerfully during the 1980s and early 1990s some of you may remember the US
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Trade Representative pushed Brazil to relax its import substitution policies
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for what it used to call informatics and
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using newly augmented powers to do that the u.s. state and commerce departments battled against European
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initiatives to monitor and restrict corporate trans-border data flows an issue that’s come back under more recent
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conditions on another front under Reagan and Thatcher the US and Britain together
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mounted a successful attack on the non-aligned movement drive for what they
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called a new international information order some of you may remember this
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which had tried to insist that economic redistribution rather than profit
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maximization should drive policy stringent intellectual property laws to
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suppress some of the radical potential of networks says Brian Winston might put
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it some of you might know his name he has what he calls using sort of mechanistic terminology of the 19th
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century with respect to media the law of the suppression of radical potential and
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I’m citing that in this that became still another key objective of economic
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diplomacy coalitions of business users tech vendors multilateral agencies and
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the executive branch pressed to institutionalize policies to widen the
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scope of digital profit projects worldwide and their achievement was breathtaking between 1988 when Chile
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privatized it’s incumbent telecommunications operator and 2005 more than 80 less developed countries
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underwent Network privatization it’s hard to imagine a larger movement of
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infrastructural change in world business history than that additional market
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opening policies became enshrined via the International Telecommunication Union in 1988 and through a 1997 World
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Trade Organization treaty called the basic telecommunications agreement there were significant national variations but
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political a priority was accorded to business users and independent equipment suppliers everywhere foreign investment
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policies interconnection rule and policies governing use of networks all were relaxed why am I making a point
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of this I’m making a point of it because it was on this foundation that the internet was erected this is what the
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Internet is as a historical product of policy change or of I’m mindful that
35:45
there’s a distinction between policy and politics of a different political consensus and then the internet altered
35:54
the center of gravity of networking monopolies national telecom systems
36:00
operated by government ministries were supplanted or at least overlaid by
36:05
decentralized autonomous systems and they’re called in the internet nomenclature autonomous system numbers
36:12
that’s the way you identify a cooperating coordinated Internet network
36:17
an inter operating internet network and these were operated and interconnected
36:24
by transnational companies at the same time flouting the expectations of most
36:30
leftists network access began to expand beyond all precedent far beyond the
36:38
wealthy countries foreign direct investment flowing into the less developed countries telecommunications
36:44
systems increased tenfold during the decade after 1990 which one might say if
36:50
you brought it back to the debate over the new international information order only confirmed the demands of advocates
36:58
of a new international information order that were there only to be political will it was possible almost overnight to
37:03
wire the world it finally happened though ravaging disparities did not
37:10
disappear I’m in touch with one of my doctoral students who’s in Tanzania at the moment and he’s telling me about
37:17
some of the conditions when you go even a little bit outside of Dar es Salaam for access in that country and I know
37:24
it’s not a unique situation so disparities of course remain but nevertheless networks drew more
37:31
investment in poor world countries we’re talking about hundreds of billions of dollars than any other industry and this
37:38
expand has continued as greenfield projects replaced privatizations as the major
37:44
growth Nexus this spectacular enlargement of network access may have
37:51
helped blunt awareness that the Internet in fact does possess a political
37:57
economic control structure so everybody is so gleeful that after a century of
38:04
inadequate access desperately inadequate access that that somehow is enough to
38:12
make up for the fact that there is still a political economic control structure or even just to turn a blind eye to it
38:19
so we tend even now not to credit it during its formative years the internet
38:25
had been managed by the US Department of Defense throughout the 80s and 90s the
38:31
cerned arrangement underwent a series of transitions and he still had been little studied using any kind of primary
38:36
sources I mean there’s a lot to be done universities became widely involved in
38:43
Internet access for a time but as a larger commercial market began to
38:48
materialize by around the late 1980s 1994 pert providers began to crowd
38:55
universities out of Internet access on a fairly significant scale during the 90s
39:03
u.s. authorities moved to institutionalized management of the Internet by a non-profit California
39:10
corporation called ICANN which I’m sure most of you know Internet Corporation for Assigned Names and numbers which was
39:17
vested with responsibility for the internet system of unique identifiers and participated in its technical
39:24
development Verisign a shadowy corporation headquartered in spook
39:29
issuer jigna was a court at a crucial operational role while I can was legally
39:36
bound to report to the US Commerce Department in practice these arrangements confirmed power on high
39:43
tech companies and corporate trademark owners and on the US executive branch they are notable for downgrading the
39:51
jurisdiction or I might say the Democratic remit of the US Federal Communications Commission
39:57
which ostensibly regulates civilian telecommunications it has nothing to do with the internet except to chortle that
40:03
it’s allowed it to emerge by not doing anything its role has been really
40:09
insignificant and they signify that US
40:14
negotiators have managed to get the international community by and large to acquiesce to a us-centric
40:21
extraterritorial internet from the outset there was disagreement but the u.s. prevailed this after all was the
40:28
unipolar moment that followed the collapse of the Soviet Union and the restoration of capitalism in China some
40:35
of us will remember it an unabashed triumphalism set in hailed for
40:42
disrupting industries the Internet’s overriding function was to extend an
40:48
enlarged capitalism even the puncturing of the internet bubble between 1999 and
40:53
2001 did not curtail enthusiasm about this rejuvenating prospect and now I
41:00
have about almost three pages left are
41:06
you up for it okay I’d like to be able to finish but I am aware that it’s been
41:13
a long day it’s turned out that neither the capitalist political economy nor the
41:20
internet that now operated as one of its leading growth poles was stable the
41:25
global economic slump that commenced in 2007-2008 and the rising geopolitical
41:31
economic conflicts that have accompanied it instead assured in a period of open-ended uncertainty and I think we
41:38
are in that period over capacity and low investment high unemployment and high
41:44
indebtedness now have been coupled to a gathering deflationary impulse eight
41:51
years on we remain mired in stagnation and I have given to that process the
42:00
term digital depression in a book that I wrote fairly recently for that reason
42:05
in part it is likely that deep structural changes will be needed for
42:12
any true upswing to occur I’ve called
42:17
this condition of digital depression because networks were embedded ubiquitously in the political economy
42:25
that generated the slump and because resolution of the don’t down term is
42:30
likely to depend on network systems to kick-start the profit projects that will
42:37
be required to develop further sources of growth on a meaningful scale
42:43
statistics compiled by the US Census Bureau provide a benchmark in 2007 on
42:49
the verge of the financial crisis US capital expenditures on information processing equipment and software
42:55
overall so not talking about sectoral variation but as a gross figure we’re
43:01
about 264 billion dollars in 2013 they came to 331 billion dollars this is a
43:09
nominal increase of around 25 percent spread over an interval in which inflation increased by about 15 percent
43:17
even amid the worst slump since the 1930s I would argue the dynamism of
43:23
information investment as a focus of business spending is unmistakable global
43:30
submarine network construction reflects this the 65 terabits per second of new
43:36
capacity added worldwide in 2014 equates to almost the entire amount of bandwidth
43:42
and service in 2011 the cost of Internet transit have continued to drop over the
43:49
last four years 2012 to 2015 by a global average of 14 percent annually so these
43:57
are measures of something much more robust than what much of the rest of the
44:03
political economy is experiencing as I’ve underlined the scale and scope of
44:10
digitization renders it of actual or prospective significance for virtually every industry the largest sectoral
44:19
contributor – ICT investment is the information industry which is using it to lead a
44:25
recomposition of the greater political economy the seemingly boundless
44:30
elasticity of digital system applications enables them to participate in innumerable commodification projects
44:38
now commodification project sounds like something nasty and evil and that’s okay I sort of feel that way but it’s also
44:45
important to understand that that’s what’s needed to kick-start the political economy from slump so what you
44:53
think of it is up to you I mean that’s not for me to say I’m the present commercialization of human interaction
45:00
via search engines social networks ecommerce and smartphones is perhaps the
45:06
most visible expression of this wider trend and we heard quite a bit about this unjustifiably so in our conference
45:13
deliberations but huge R&D spending and back-end investments in data centers
45:19
internet exchange facilities and in the case of content providers such as Google transoceanic and Metropolitan
45:26
fiber-optic networks typically grant to the big purveyors of consumer internet
45:32
services an impressive capacity for diversification Amazon has seized the
45:38
lead in marketing specialized cloud computing services to industrial and governmental users Facebook is rolling
45:45
out a private variant of its service called Facebook at work to challenge enterprise software companies by trying
45:52
to win revenues from corporate subscriptions rather than only advertising professional services like
45:59
accounting are being beset by digital interlopers outsiders network systems
46:05
and applications are threatening the turf of banks and other financial intermediaries another point that we
46:10
discussed at the meeting today driverless or software intensive cars
46:16
from Google and Apple are forcing the world’s autonomy automakers onto defense I mean Volkswagen I can only you know
46:23
wonder how horrific it must seem to that good-looking guy from Porsche who’s now
46:29
running the company because some he’s got to deal with not only the crisis or
46:34
I should say the what was the scandal of of this you know emissions-rigging but
46:43
also he’s got to deal with a bigger structural threat which is that he’s got companies that are gonna eat his lunch
46:48
and they don’t want to be put in the position of becoming the outsourcers to
46:54
Google and that’s how they see it the world’s auto industry or to Apple
47:00
sensors IP addresses technical standards to enable machine-to-machine interoperability are helping the
47:07
information industry to scale the walls of existing industries of other kinds as
47:13
they attempt to synthesize what such Titans of that earlier structure is General Electric IBM Cisco and other
47:21
companies call the industrial internet sometimes it’s called the Internet of Things but the industrial internet
47:27
so-called smart cities and online education constitute still other vectors
47:33
of commodification we’re nowhere near the end of the line digital capitalism
47:39
remains a work in progress the the sort of big question here is whether as
47:45
commodification initiatives encroach on new and existing areas of practice and
47:54
move into domains that previously were free of commodification or relatively so
48:01
like education or museums or even government services whether as this
48:07
occurs there will be sufficient momentum generated to kick-start the overall
48:14
political economy and I don’t think there’s any way to foretell that because I think this in the deepest sense is
48:19
going to depend on politics not policy but politics it’s going to depend on people’s willingness to say economic
48:27
growth is so significant that we will worship at its shrine instead of
48:33
anything else and I hope that they don’t do that I mean just to be clear on my own views I
48:38
I am I would be aghast to see that but I do think it’s the big political choice
48:43
that this crisis which I would say is a crisis continues to throw at us and we
48:50
need to add one other point to this which in a way is implicit in what I’ve already told you companies the US
48:57
companies are in the forefront of this global movement there’s no question of that but it should not be reduced to a
49:04
u.s. power projection because the still rapidly expanding scope of digitization
49:09
has reached a point that market opportunities are rife I mean there are
49:15
many and many of them are smaller and some of them are bigger and some of them we don’t have any idea what they are but
49:20
they AR they are rife and so company is based all over the world and not even
49:26
companies but dreams of people with capital to to get into things or
49:32
proliferating and we see this presented in the most favorable sorts of ways in
49:38
the press as if this is the thing we should all get in on as if it’s ever been demonstrated by capitalism that we
49:45
all will that is simply not on it’s not going to happen I mean there may be a
49:51
different set to some extent but that there will be not only disparities but
49:57
forms of exploitation and even beyond that issues that are a potentially
50:02
calamitous of an environmental character issues that not only Naomi Klein but
50:08
also Paul Mason has recently flagged in in their books and these are the
50:14
questions that need to be addressed by one estimate earlier this year and it’s
50:20
significant that it’s earlier this year for reasons that will become evident six of the 20 most valuable internet
50:26
companies are based in China that’s relevant that it’s early this year because this is before the stock market
50:32
crash in China so I’m not certain that you would still find that to be true this is only six months ago but it’s
50:40
also true that the world’s most valuable carrier China Mobile and a globally
50:46
ascendant equipment vendor Huawei our Chinese companies and they are doing
50:52
something seemingly more successfully than European units of capital have
50:58
managed to do for 50 years which is to break in on the US information industry
51:04
they’re using the Chinese market as the key carrot in doing this and so you know
51:11
I would argue that the people who see the issue the division shall we say that
51:17
separates the US and China only in political terms you know they’re a bunch of evil authoritarians and we’re the
51:22
good guys I don’t like them any more than the next person for their political
51:28
system but it’s not just about that it’s about who gets access to the Chinese
51:34
market because the other pole of growth besides the Internet is China has been
51:39
China now China is slowing down but slowing down in China leave them with a growth rate double of what we’ve got so
51:46
it still looks like something that needs to be thought about and that’s really an
51:52
important issue I’ll come to it in a minute but it’s propelling geopolitical
51:57
economic struggles across a lengthening front who which companies headquartered
52:03
in which countries will appropriate the fruits of the digitization process who
52:09
will capture the new sites of profit earlier this year the Financial Times put it well quote talk of protectionism
52:17
once meant bemoaning barriers being erected in far-off lands for off cuts of
52:23
beef or steel rods but in Washington these days the protectionism fears have
52:30
gone digital unquote and I think that’s a very nice way to put it u.s. President Obama has offered strong
52:37
support to US capitals Digital expansionism attacking the European
52:43
Union’s antitrust inquiries which are ongoing now Obama declared earlier this
52:50
year quote I’m not sure if this quote has traveled here and if it has tell me Obama said for the record we have owned
52:58
the Internet our companies have created it expanded it
53:03
perfected it European companies who you know can’t compete with ours
53:09
or essentially trying to set up some roadblocks that’s pretty strong language
53:15
for a president to use you know it’s really pretty strong language and the
53:20
you you then hit back and I think that’s the interesting fact because there was a time when that would have been harder to
53:26
do and so I’m trying to make the point that the growing friction is part of the
53:33
syndrome that we now find ourselves in antitrust investigations and a potentially encompassing digital
53:39
platforms inquiry might make greater room for European units of capital in
53:44
their home market in public of course the Europeans deny that any redesign of
53:51
their regulatory framework will discriminate against us providers but who’s going to say yeah it’s going to
53:56
discriminate against us providers you know I mean it’s not on you can’t really say something like that German interests
54:04
in particular both media companies such as Springer and big manufacturers and
54:09
engineering companies such as Bush have become quite pushy in this area and the
54:15
reason is because they know it’s not just about a limited set of industries
54:21
it’s about the whole political economy so Google Facebook and the rest have
54:27
bulked up their lobbying teams in Brussels and it may not be enough we’ll
54:32
see geopolitical economic fights over digitization are proliferating beyond
54:37
Europe a year or two ago Brazil in India briefly lent support to a wider demand
54:43
to reorganize the u.s. centric Internet control structure this crucial issue is
54:49
still simmering though both Brazil and India appear to have bailed on their
54:54
opposition Google is now being accused of abusing its dominance and online
55:00
search by India’s Competition Commission in the Indian market Russian antitrust
55:05
authorities have ruled that Google broke that country’s competition rules the
55:11
most open-ended and potentially severe conflict pits the u.s. against a country
55:16
that has also become a primary economic partner China an influential segment of elite US
55:23
opinion about China has recently begun to harden economic issues pertaining to
55:30
the tech industry are high on the list of concerns US officials have repeatedly
55:36
charged that China’s domestic regulations for networks and ICTs are about protectionism and favoring Chinese
55:43
companies that’s a quote from the US Trade Representative earlier this year the US is alarmed not only because of
55:50
the very limited reach of big US Internet companies in China Apple and Microsoft are perhaps the most
55:57
high-profile exceptions but also because recent Chinese policies continue to aim
56:03
as they see it quote keeping US businesses out on a related front the
56:08
u.s. is trying to combat China’s continuing effort to pull Internet management out of its us Orbitz quote
56:15
the overall accountability mechanism a Chinese internet agency charged directly
56:21
before the US Department of Commerce so this is a quote from a Chinese internet regulator that has actually gone and
56:30
filed comments at the US Department of Commerce just this month
56:35
it says these should not be subject only to the US legal system but should resolve all issues under the
56:41
international legal system accepted by all parties and the use of the word international in that formulation though
56:48
it seems innocuous is significant because it means they’re talking about States rather than the multi-stakeholder
56:55
forum that the US prefers to be the oversight body by no means does the
57:03
international community merely line up behind the United States especially
57:08
after Edward Snowden’s disclosures eroded much of the moral high ground
57:14
that the US has historically taken it’s difficult from the point of view of much
57:19
of the world to see the u.s. as qualitatively different from China to put them
57:25
in its harshest possible when with respect to human rights after the
57:31
Snowden disclosures and it has a direct economic significance I’m argument us-china conflict over
57:39
digitization was evident in the state visit to the United States last week by President Xi Jinping a visit that
57:46
contrasted sharply with those of Xi’s three predecessors in the run-up to his
57:52
arrival President Obama publicly declared to the Business Roundtable the top business lobby that his
57:57
administration is preparing tough measures to counter Chinese cyber espionage corporate cyber espionage the
58:06
u.s. is primary economic policy question for China cuts however toward improved
58:12
market access for US companies as former US Treasury secretary Hank Paulson phrased it recently quote is China
58:19
looking to open things up just for the private sector in China or is it for
58:25
multinationals as well unquote that cuts to the nub of us internet companies in
58:31
particular want to participate more extensively in China’s huge and still
58:36
rapidly growing digital markets China has built up a substantial domestic
58:42
Internet industry of its own and to the consternation of US officials President Xi began his visit to the
58:49
United States by organizing a Technology Forum in Seattle to demonstrate what the
58:55
New York Times called China’s quote sway over the American tech industry so
59:00
unlike his previous presidents all of whom who had gone to pay homage she said
59:06
come to me and they all lined up behind him for the photo-op so you get a sense of the significance
59:13
and the changing balance that’s occurring US political leaders are
59:21
plainly pushing as forcefully as ever to assert US capitals economic interests in
59:27
cyberspace there is no guarantee that they will succeed although at the moment
59:32
odds are the some like they’ve got a good likelihood
59:40
but I’d like to conclude by saying that the record shows that capitalism is
59:48
already undergone beyond depressions
59:53
financial panics and disjunctive moments of great depth shocking kinds of depth
1:00:02
it’s not a new phenomenon it’s not unique to a digital era quote the
1:00:09
machine was not an impersonal achievement to those living through the Industrial Revolution rights historian
1:00:16
Maxine Berg quote it was an issue the machinery question in early 19th century
1:00:22
Britain was the question of the sources of technical progress and the impact of
1:00:27
the introduction of the new technology of the period on the total economy and society and that’s a beautiful statement
1:00:35
captures what I think we need to know massive discontinuities and episodes of
1:00:42
precipitous crisis and in many many tens of thousands of families calamity have
1:00:49
been features of capitalism from the beginning digital capitalism promises to
1:00:55
fall within this longer historical arc and on that very cheery note I conclude
1:01:11
I think if you were to look at the at the history of the network you could
1:01:18
divide it into two tranches of say 20 years for the first period from 73 to 93
1:01:27
cyberspace was a very strange and unusual place it had no corporations it it was
1:01:36
populated by people who probably speaking knew one another and it had no
1:01:42
spam and and and and no malware broadly speaking and all the rest of it so you
1:01:48
could say that in that period we had we had there was an area of parallel universes on the one hand that was
1:01:54
cyberspace which is very special and then there was what John Perry Barlow calls meatspace which was where the rest
1:01:59
of us lived and where governments existed and we’re was crying and all kinds of nasty stuff and then from 93
1:02:05
once that once the web made they internet intro or something mainstream
1:02:10
then a different process happened what happened in fact I think was that the
1:02:15
two universes imperceptibly began to merge to create the world we have now which is a blend of the two and the the
1:02:23
the problem with you were Europe super-realistic picture is that I’m
1:02:28
afraid you might be right so just want to thank you very much for coming thank you for the lecture and and
1:02:34
to say that we hope you come again thank you very much