Big Tech: Capitalism With Chinese Characteristics.

It is perfectly possible in the post-truth era for an institution to claim one set of principles, and to be perceived as adhering to them, when practicing an opposite set of principles.

The Chinese Communist Party (CCP) captures and implements this anomaly in the officially issued propaganda phrase Socialism With Chinese Characteristics. This stance permits the CCP to violate the most fundamental propositions of socialism and communism while asserting that their sole commitment is to advancing those fundamental propositions. 

The most notable of these is private property ownership. While the first principle of socialism, and especially its communism variant, is the abolition of private ownership of the means of production, because this is deemed exploitative, Socialism With Chinese Characteristics not only permits it but embraces it with enthusiasm.

The CCP recognizes that their 100-year rule has not enabled prosperity for the Chinese population. They also consider private ownership to be non-socialist. But

according to party theorists the existence and growth of private ownership does not necessarily undermine socialism and promote capitalism in China. 

Wikipedia: https://en.wikipedia.org/wiki/Socialism_with_Chinese_characteristics

In fact, if you really want to twist yourself in knots, Robert Tsu wrote:

Individual ownership is considered consistent with socialism since Marx wrote that post-capitalist society would entail the rebuilding of “associated social individual ownership”.

Robert Hsu Economic Theories In China CUP 1991

Socialism with Chinese Characteristics might actually be capitalism. Economist Zhang Weiying has written that entrepreneurship – a purely capitalist concept – drove Chinese economic growth.

The reason for China’s miracle has no fundamental difference from that of economic developments in Western developed countries……Once market forces are introduced and right incentives are set up for people to pursue wealth, the miracle of growth will follow soon or late.

What is the market economy? A simple formula is equal to free price plus entrepreneurship….Profit-pursuit and survival pressure drive entrepreneurs to organize enterprises efficiently, and to innovate new products, new production technologies, new business models and new organizations. 

The Reallocation Of Entrepreneurial Talents and Economic Development In China, Weiying Zhang, Peking University

The Chinese Characteristics Of Big Tech

The most Chinese-like characteristic of Big Tech is, of course, social credit. Wikipedia defines China’s social credit system as a digital system for monitoring, evaluating and sanctioning citizens, and a standardized assessment of citizens’ and businesses’ economic and social reputation, or “Social Credit”, with tracking and and evaluating for trustworthiness. People face punishment for violating social protocols, including blacklisting from employment.

The term social credit scoring can just as easily be used as a descriptor of Big Tech’s methodology for deciding who and how people can use their services. And, as Wikipedia notes in making the comparison on their Social Credit System page, “Silicon Valley’s rules are getting stricter”.

Big Tech’s social credit system bears the same characteristics as China’s. A central organization collects behavioral data using new digital technologies with ever-expanding data collection and interconnection capabilities. The data is transformed into an individual “score” or profile – today these include number of followers on Twitter, 5-star ratings on Amazon.com, energy usage scores on internet-connected thermometers, the number of steps we take on our fitness apps, where we travel on GPS systems, how we sleep, all of our financial transactions, and many more.

Big Tech already decides who can and can’t be allowed to communicate on Twitter, and what we can communicate on Facebook, and what we can sell on amazon. They profess personalization – that they collect our individual data in order to provide us with individualized service. But if course, the data ownership is socialized. We don’t own our data, Google, Amazon and Facebook do. It’s no stretch to imagine their business models extending to social control. We already receive energy usage warnings on our smart thermostats; how long will it be before these devices are centrally controlled and individual violators are held up as global warming deniers?

Even Wired magazine, well-compensated cheerleaders for Silicon Valley, worries about Big Tech Merging With Big Brother.

The magazine adds social credit scoring worries to the second Chinese characteristic of Big Tech’s version of capitalism: the integration of ostensibly private capital and government capital into a merged entity. The same Wired magazine article cites projects such as Amazon Web Services (AWS) Secret Region, wherein Amazon is the sole provider of cloud services to the CIA across “the full range of data classifications, including Unclassified, Sensitive, Secret and Top Secret”. The NSA has a similar classified cloud computing environment 

Microsoft has a secure version of its Azure Government cloud service tailored for the use of 17 US intelligence agencies. Google worked with the US intelligence and defense complex to integrate its AI capacities into drones and other weapons. The spy agencies guarantee the profits of Big Tech.

Wired Magazine’s conclusion:

It doesn’t take a particularly paranoid mind to imagine what future big-ticket collaborations between big-data companies and government surveillance agencies might look like, or to be frightened of where they might lead. “Our own information—from the everyday to the deeply personal—is being weaponized against us with military efficiency,” warned Apple chairman Tim Cook

https://www.wired.com/story/is-big-tech-merging-with-big-brother-kinda-looks-like-it/

Nike goes even further in the direction of Chinese characteristics; the CEO described Nike as a brand that is of China and for China.

Capitalism with American characteristics has raised the well-being of Americans and the citizens of the world to unprecedentedly high levels. We might not fare as well under capitalism with Chinese characteristics.

The Future Of Work? Individuals Mimicking Firms, With Appropriate Access To Capital, Technology And Favored Contractual Relationships.

There’s been a lot of discussion about “The Future Of Work” that worries about technology replacing workers and leaving them beached – unable to earn a wage or a salary because their job has been automated or replaced.

That’s very old-fashioned and out-of-date thinking. It’s so old, it’s what economists call neo-classical. It portrays the firm as a production function that assembles capital goods (technology) and labor and combines them to produce an output. In this equation, labor (jobs) can be substituted by technology.

But today, the neo-classical production function does not exist in many industries, where there are hybrids of digital and physical assets or fully digital industries that exist purely via the exchange and manipulation of data and information flows (think AirBnB and Uber).

Old fashioned economic thinking extends to what the neo-classicists call “the theory of the firm” – what is a firm and why does it exist. This thinking sees the firm as an actor in a market where it operates to maximize profits.

In reality, the firm itself is a market, a tangle of contracts with owners of labor, who might be employees or contractors or suppliers or even customers. The firm can also contract for technology – owning it, renting it, or consuming it in the form of services (utilizing the cloud technology of AWS, for example, or the services of a trucking company for delivery).

Why assume that the AI and bots and productive technologies of the future are a resource only for firms? Inside the firm or outside the firm, technology resources could be owned or controlled by individuals. In fact, it is often the case today that workers in firms own their own technologies in the form of smartphones and tablets. Why couldn’t they own a bot and bring it to work?

There is a tendency – left over from neo-classical times and neo-classical thinking – to privilege the firm as the owner of capital. But there is no need to maintain that privilege today. The boundary between firms as capital owners and workers as capital users is dissolving.

Professor Irene Ng points to the new pathway as workers mimicking firms. They might be set up as an owner-operated contractor, or an independent consulting firm or a start-up, often using digital platforms and benefitting from the lower co-ordination costs they bring.

Mimicking a firm gives a worker new privileges:

the ability to solicit capital, acquire technology and contract further labor or assistance – all resources that are set within a legal framework and an institutional structure that accord a multitude of benefits, but also encompass risks.

Mimicking Firms: Future Of Work And Theory Of The Firm In A Digital Age; Irene Ng; Journal Of Creating Value.

Workers can be entrepreneurs and contractors, with business contracts as well as contracts in wages, and should be able to choose the contract that best suits their preferences. They should be able to acquire capital, debt and technology as they improve and enhance their human capital and social capital. This “hybrid actor”, as Professor Ng terms it, can be both firm-like and labor-like, especially in acquiring the resources generated by technology. Corporations can contract with both the individuals and their technology.

Call it the gig economy, or call it new entrepreneurialism; in any case it is the opening for individuals to acquire the resources necessary to position themselves to benefit from technology, rather than be displaced by it in the pessimistic fear mongering of the neo-classical interpreters of the future of work.

The future focus is more on the ownership structure of the firm and the nested relationships of internal and external markets for labor and technology. The innovative thinking will emanate from individuals – the workers who transform themselves into technology owners and capitalists-for-hire – and not from economists.