The supposed advantages of the digital economy have not decreased the pre-existing inequality, but rather deepened it.
By Javier Tolcachier
As is well known, capitalism is going through an accelerated phase of technological reconversion, the main element of which is digitalisation. The use of large amounts of data, artificial intelligence, the multiplication of platforms in all areas of human activity, teleworking, digital commerce, cloud computing, online entertainment, the massive application of robotics in production and the internet of things are some of the visible factors of this new industrial revolution.
Although internet connectivity, which is the basic support for these transformations, does not yet reach the entire population, growth is slow. For example, in Latin America and the Caribbean, a large region that lags behind the United States, Europe, Asia-Pacific and Eurasia in terms of telecommunications infrastructure, the number of people connected to the network has doubled between 2010 and 2019, reaching 67%. 4G coverage and connection speeds have also grown. Most companies are already connected to the internet, a high number use e-banking, use the internet in the supply chain and many have started to deploy virtual sales channels.
This tells us of an irreversible trend: we are in the midst of a digital age.1
All this accelerated in the course of the pandemic. Business presence on the internet, e-commerce, the use of education platforms, telecommuting grew strongly.
The concentrated power of digital corporations increased with it. For example, in the second quarter of 2021 and in year-on-year terms, Apple sold 50% more iPhones, Amazon and Microsoft increased their profits by a similar percentage, Facebook doubled its profits and Alphabet (owner of Google) tripled its profits. Far from being confined to their original businesses, these US-headquartered corporations have strongly diversified their interests, encompassing film production, space travel, autonomous cars and augmented reality, among many others.
Of great concern, in addition to economic concentration, is the central position of such companies in the dominant narrative, controlling the main channels of communication on the internet.
On the other hand, extreme poverty, which had declined globally by around 1% per year between 1990 and 2015, and which had already been slowing its decline, is once again deepening. One in ten people on the planet suffers from hunger and millions of people are thrown into unemployment and job insecurity.
In Latin America, employment in the information and communication technologies sector, which promised to compensate for the loss of jobs through automation, is proportionally low and represents only 1.6% of male employment. In the case of women, once again discriminated against, this share is much lower and corresponds to only 0.9%. The difference between population strata conditions the right to education and deepens socio-economic inequalities.
In short, the supposed advantages of the digital economy have not lessened the pre-existing inequality, but rather deepened it.
Who are the beneficiaries?
Despite the fact that familiar faces are often majority shareholders in each of the digital emporiums, these companies have major investment funds, i.e., speculative banking, as major shareholders. To illustrate, more than 80% of Facebook shares are held by institutional investors, including the major investment funds (Vanguard Group, Black Rock, FMR, Price (T. Rowe) Associates, State Street Corp. etc.).
In the case of Alphabet, the institutional shareholding is 67%, similar to Amazon’s package (around 60%), which is made up of the same speculative players.
The capitalist economic context
The speculative economy, far from having diminished after the bursting of the bubble in 2007-2008, is now, although difficult to estimate, about 20 times the world’s GDP. The over-accumulation of capital, the continued issuance of unbacked currencies such as the dollar, low interest rates and, as a counterpart, the accumulation of private and public debt, fuel the speculative business.
Productive reinvestment continued to decline, reducing the supply of formal employment for the vast majority. It is estimated that in just two years (2017-2019) foreign direct investment fell by half (2.7 to 1.4 trillion).
In this context of financial parasitism, the digital economy offers itself as a possible investment, seeking a way out of the crisis of profitability in which industrial capitalism has been immersed for several decades. This profitability of the digital sphere can be explained by convergent reasons: among them, the low amount of taxes assumed by companies (formally located in tax havens, in addition to the tax avoidance of the national states where they operate), the lack of trade union representation in the digital sphere, the absorption of intellectual and financial resources from public research, the use of personal data as free raw material, the destruction of competition or the de facto deregulation of the virtual environment.
Physical limitations of capitalist expansion
On the other hand, capitalism, in its quest for unlimited growth, has reached indisputable physical limits, producing strong imbalances in vital ecosystems. Thus, digitalisation and the extractivism of non-tangible goods such as data falsely appear as part of a new cycle of “green” reconversion of the economy. Falsely, because consumerism and the accumulation that goes with it continue to be based on the planet’s finite natural resources.
Business is global, misery is local
After the neoliberal installation cycle of globalisation, with the consequent destruction of public systems and the weakening of national states, the commercial map has been extended to the entire planet, promoting global scales for business. In this way, corporations exploit the potential of a planetary market with their usual social irresponsibility, leaving states to manage the problems they leave in their wake.
The global panopticon
The other fundamental resource of digital capitalism is information. In this way, transnational corporations have established a globalised surveillance and intelligence system, which takes advantage of the intrusion of digital platforms into personal lives, obviously with the aim of keeping the majorities occupied and controlled, an objective which, in spite of everything, they do not achieve.
Dependence on the South
Another purpose in the development of digitalised capitalism is to maintain and deepen the technological gaps between the global centre and the global peripheries and consequently the dependence of the global South. However, the digital NATO led by the United States, with its junior partners Europe and Japan, has today its counterpart in a digital Chinese Wall, which, like several of its Asian neighbours, has managed to partially overcome the previously prevailing situation of technological underdevelopment.
Even so, huge inequalities continue to persist. According to ECLAC, while the rate of development of digital industries (composed of mixed factors2) in the United States is 43%, in Western Europe 36%, in Latin America and the Caribbean, Africa and Asia Pacific it is 18%.
On the other hand, infrastructure continues to have the imperial trappings of its beginnings. Four of the internet’s 13 root servers (DNS) remain on US soil and 10 of them are controlled by US companies, universities or military or state institutions. Moreover, English continues to be the language used for its protocols, programming languages and every constituent part of the internet.
In this way, digital capitalism is the new face of neo-colonialism, perfectly fulfilling imperialism’s function of not only economic, but also cultural and military penetration.
The corporate capture of the system of international relations
For some time now, corporations and a large number of NGOs have been intervening in multilateral bodies and organisations in areas theoretically reserved for states and their governments. This is particularly true in the digital domain, where governance is in the hands of a multi-sectoral, or “multi-stakeholder” system. Those involved are the technical community, the private sector made up of business, governments, academia, and so-called civil society organisations (or non-governmental organisations), in some cases partly or wholly funded by the transnationals themselves to operate publicly in favour of their discourse.
Private influence, which lacks any democratic legitimation, threatens to co-opt the political system of international relations through a strategy that responds precisely to the guidelines of the World Economic Forum (Davos). Under the cloak of the term “digital cooperation”, this initiative could open the way to binding policy-making, through the conversion of a multi-stakeholder consultative body into one of “multi-stakeholder governance”.
Such a high-level body is being promoted through a process launched by the UN Secretary General’s Office itself, which builds on the recommendations of a High-Level Panel on Digital Cooperation constituted under the same multi-stakeholder system as above, with Melinda Gates of the eponymous Foundation and Jack Ma, founder of the Chinese corporation Ali Baba, as vice-chairs.
It is clear that if corporations gain decisive influence over the norms and rules governing digital spaces, little can be done to regulate them in the interests of the people.
Moreover, as digitalisation advances further in every area of human activity, corporate influence will be projected onto them, as is already happening today in the areas of food, digital commerce or environmental conflict, to name but a few examples.
Corollary
As digitalisation and corporate power advance, state institutions and social movements are relatively slow to react to these new realities, failing to anticipate future scenarios. What is clear is that the power of one part over the whole will not solve any of the problems of the great majority.
In this way, it is essential to install the digital issue as a banner of struggle for the people, to raise awareness of its impacts, to clarify collective political positions in the movements in order to give it a territorial anchorage and to demand new rights in public policies in accordance with the new scenario, while developing sovereign and free alternatives.
The issue has gone far beyond the sphere of digital activism. It is essential that citizens take action. It is about the common future.
- https://www.cepal.org/sites/default/files/publication/files/46766/S2000991_es.pdf
- The digital industries development index is composed of: 1) the economic weight of digital industries (measured in terms of the sum of gross sales of digital and telecommunications industries and the economy’s spending on software) in relation to gross domestic product; 2) the penetration of Internet of Things connections (understood as an indicator of the deployment of vertical applications); 3) the level of exports of high-tech products and services; and 4) the local production of content.
