As of late, I have engaged less in commentary aimed at a wide audience and more on deep thought, research and writing, and the cultivation of friendships. It is a subtle realisation that at the end of the day no amount of commentary can replace action to change a single life. This is the principle of the adjacent possible. Outside of your immediate action in your immediate circle, all else is noise. Find your circles of excellence and raise each other up.
This month, we dive into a new set of signals about the future of our political and economic systems, social change and upheaval, and technological stagnation. I have opted to summarise only four articles this month as opposed to the usual half a dozen or so because they offer an almost-perfect synthesis of ideas and much for us to chew on regarding the coming decade.
This newsletter contains two original essays by me, and four article summaries on essays from Craig Zabala and David Luria (for American Affairs), Nicolas D. Villareal (for Palladium Magazine), Anirudh Pai (for Conversion Capital), and Morgan Housel.
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The China Model’s Challenge to Democratic Capitalism
By Craig Zabala & Daniel Luria
This essay opens with a provocative declaration: America is not a democratic-capitalist society, but ‘a dilapidated, neo-feudalist social order characterized by oligarchic corruption and dwindling purpose’, an order that has created a divergence in thought between its desire to preserve its wealth and to invest in future growth. The oligarchical elite (the 0.1%) have claimed the lion’s share of whatever meagre growth America has seen over the past several decades. Therefore, it may be more accurate to claim that the real conflict in America is between the 0.1% and the 1%, as opposed to the 1% and the 99%. Much of this wealth is no longer being invested into the economy but is locked up an ever-increasing complex rent-seeking web of big finance (Wall Street), family offices, lobbying organisations, think tanks, and “NGOs”, all with the aim of defending particular oligarchic interests.
The centrally-planned Chinese model is proving more optimal for economic growth and could therefore beat America. While previous socialist states had to make do with 19th and 20th century technologies to try and plan economies (and failed miserably, often at the cost of tens of millions of lives), 21st century technologies may provide the amount of data needed to more effectively plan and execute at the highest levels. China has proven its ability to achieve breakthroughs in energy extraction and generation, solar and aerospace engineering, and vast infrastructure construction projects, through its hybrid state-and-private sector strategy. America enjoys no such thing, with an atomising population, a hamstrung government, and a rent-seeking private sector. This has interesting ramifications, although I am wary of any such claims owing to the fact that “big data” has not solved many of our core governance and political economy issues but also risks autistification (for more on this phenomenon, refer to my previous newsletter’s Technology entry on Autistification and Its Discontents).
What is to be done? The essay concludes with vague suggestions about a higher minimum wage and increased taxation. More interestingly, it suggests something akin to an American Sovereign Wealth Fund (although it does not mention it by name) that would use taxpayer money to purchase equity in large companies which would then be used to finance a broad social safety net. This last suggestion seems the most likely to return genuine results, although America’s traditional reluctance towards state ownership make the establishment of an American ‘SWF’ an uphill battle.
The Republic of Big Technology
By Anirudh Pai
Pai sees a future in which technology companies are not just corporations but ‘digital nation-states’ in their own right. Many technology companies are now richer than most states and often have larger user bases than their populations. Even in America, FAANG corporations essentially colonise cities where they centre their headquarters in owing to their legion of employees and economic clout vis-à-vis the rest of the city and its population. Facebook is looking into international currency settlement and Amazon continues its forays into vertical and horizontal integration across critical supply chains necessary for everyday life. Apple’s legion of lobbyists and its refusal to share data with the FBI concerning the San Bernardino shootings shows how integral playing politics is becoming to these corporations and raises the Schmittian question: if sovereign is he who decides the exception, who are our new sovereigns today? The line is no longer clear, but it seems that corporations have the upper hand – for now.
The coronavirus has only accelerated this trend towards corporate governance. The sheer incompetence of state responses to the coronavirus has left a deep and permanent wound in public trust towards public authority; as governments fumbled, corporations quickly moved in to provide critical services. There are two interesting observations here: first, corporation-states (a label I think is smoother) are going to take over many of the core functions of the 20thcentury nation-state (something I write about here); second, the nature of communities and quasi-political organisations will not be along the lines of the territorially-bound state of the 20th century but be non-territorial organisations enabled by software technology’s advances – primarily in communications and economic production that gives people independence from atoms via bits.
How Capitalist Giants Use Socialist Cybernetic Planning
Villareal takes us through the history of Project Cybersyn, an early attempt by the Chilean government under President Allende to create a centrally planned economy using computers. To build this, the British management consultant Stafford Beer was hired. As a specialist in cybernetics – the science of automatic feedback and control mechanisms – he was well placed to help build one of the modern world’s first attempts at computer-based central planning of an economy. A project well before its time, Allende’s removal and death in a coup by Pinochet saw Chile transformed into a laissez-faire playground and Cybersyn was destroyed and forgotten.
Or was it? Villareal contends that the original impulse of Cybersyn – centrally planned computer coordination among suppliers and the management of distribution – has lived on and seen massive success in some of America’s biggest corporations. American capitalism has now perfected central planning and coordination using technology. As opposed to either market signals or quota demands, data can now harvest and sort data at the speed of light and make the required changes in the supply chain. Walmart and Amazon are some of the familiar success stories. China has naturally taken with ease to this form of planning.
Problems with cybernetics remain – mainly the human element. Ultimately, humans control all inputs and outputs and this means that the final success of any such system rests upon social organization. The aforementioned corporations have been unable to solve this problem, resulting in alienation and resentment from labourers to managers. In China, state-of-the-art cybernetic systems were put in place to avoid something like COVID-19; instead, local officials did not want to be held responsible for the disaster so they fumbled with the data to pretend everything was fine.
Villareal offers a solution drawn from the Marxist theorists Paul Cockshott and Allin Cottrell: direct worker control and management of cybernetic systems. Instead of relying on centrally managed, top-down organization, control of these systems should be distributed to workers, and these systems should be streamlined and simplified to the point that anyone in society can be put in the driver’s seat to use them. Although it is a vague vision, it seems preferable to the heavy-handed totalitarianism of the Chinese system or the decaying 20th century paradigm of the American order. Whether it is achievable is another question and one of political will.
Three Big Things: The Most Important Forces Shaping the World
In my article on Tawjih, I discuss the idea of the ‘adjacent possible’, which was originally created as an explanation of the evolutionary chain of causation not as a process of engineering but of tinkering. Housel suggests that such a chain of causation has led to our world today. Three key trends have their birth in WWII, the ultimate progenitor of all events: the demographic shift in age and gender, rising wealth inequality that will soon reach a breaking point, and access to information through the internet.
In America, the share of young workers is declining vs. a rise in the older workforce, compounded by a surge in retirement. Modern economies heavily rely on having a young workforce and so this threatens the dynamism of the American economy. The share of the immigrant population will also increase vis-à-vis the native population which threatens to deepen political polarisation, as migrants tend to be more ‘entrepreneurial’ and ‘better-educated’.
This isn’t the first time an oligarchic elite rose in America. During the Gilded Age, populist politicians rose to power on the promise to tax and distribute the vast wealth created by billionaires during the heydays of America’s economic expansion. Within three decades, income tax rates for the oligarchs went from near-0% to 94%. Whether this can happen a century later in the 2020s is a question of whether there is will among America’s political leadership to go down this path.
For Housel, the creation of the internet is the biggest of these events. It has greatly increased polarisation as hitherto separated political tribes are now forced into the same arena to be exposed to the full range of each other’s views all day, every day. Additionally, distrust in public institutions has skyrocketed as access to information has decimated credentialism and exposed industries like academia and journalism as being untrustworthy and little better than the talent that can now be found among millions of people freely crowdsourcing and sharing information online.
Ultimately, the post-war order sowed the seeds of its own demise. The events occurring today are, at least to Housel, not the product of randomness but the logical conclusion of several trends set into motion after WWII. In a way, it's replacing itself.
The four essays I have summarised are on a broad range of topics but all lead to a fundamental idea: the old means of production and distribution are passing away and a new paradigm is being born. Housel’s three big ideas suggest that we are living in the death pangs of this 20th century paradigm, evidenced by youth and productivity decline, oligarchic rent-seeking, and the social changes spurred by the internet.
We don’t really have a label for it, but technology and its ability to harvest cosmic amounts of data and process it into rational information are playing the crucial role in the transition to a new economic model. It seems clear that at this point that it will look nothing like how either capitalist or socialist partisans assume it could be, but rather a hybrid of both ideologies and systems with further unforeseen aspects. The essays by Villareal and Zabala and Luria are dismissive of the liberal capitalist model and each attempt to offer ways forward, to varying strengths.
Will it be nation-states or corporation-states that preside over this transition and control the future of political organisation? Pai sees trends in favour of the latter, though the former is yet to unleash its full arsenal against what is a growing threat to its sovereignty. China lies outside this conflict, firmly in control of a communist party-state that broaches no rival. The question may then be what benefits the West the most in its new competition with this competitor for hegemony? The final answer to that may decide this conflict.
It will be interesting to see what role technologies like crypto will play in Villareal’s vision of a democratized cybernetic economy. Some visions see it as the primary route towards the survival of capitalism and escape from decline. This vision of the West’s future – decentralized communities, technologies, and control over the means of production - makes for an interesting contrast with the ’China model’ and totalitarian intervention. However, this can only ever be an ersatz attempt at imitating the role that human connection, customs and norms play in the regulation of society (I talk about this contrast here). A decentralised future will require significant political will to negate the worst of Big Tech's instincts towards totalitarian control via technology, imitating China in some of its worst excesses. It will be a delicate balancing act, and the outcome is uncertain.
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