More on this book
Community
Kindle Notes & Highlights
Read between
October 13 - October 18, 2024
was an extreme example of how, until fairly recently, our relationship with our identity was mediated and controlled by the state, which held a monopoly on the powerful tokens that legitimise us as rights-holding citizens: passports, birth certificates, your faded ID card. Today,
And yet, astoundingly, our digital identity belongs neither to us nor to the state. Strewn across countless privately owned digital realms, it has many owners, none of whom is us: a private bank owns your ID codes and your entire purchasing record. Facebook is intimately familiar with whom – and what – you like. Twitter remembers every little thought that caught your attention, every opinion that you agreed with, that made you furious, that you lingered over idly before scrolling on. Apple and Google know better than you do what you watch, read, buy, whom you meet, when and where. Spotify owns
...more
As was the sinister decision that you and I should not have any means of establishing, or proving, our online identity – another political decision by the US government, except this time clearly aimed at boosting Big Tech’s power over us.
Instead of rejoicing that they can now borrow more cheaply, they think: ‘Sure, it is a good thing that I can borrow for next to nothing. But for the central bank to allow interest rates to drop so much, things must be looking grim! I won’t invest even if they hand me the money.’ That’s the reason investment refused to recover, even after central bankers cut money’s official price to almost zero. And that was only half of their post-2008 nightmare.
By boosting magnificently the supply of monies that Big Business refused to invest,[8] socialism for financiers pushed the interest rate deeper and deeper towards negative territory.
Once we recognise money’s second nature, everything makes a lot more sense, for it was this collective ability that was broken. Poisoned money flowed in torrents but not into serious investments, good-quality jobs, or anything capable of reanimating capitalism’s lost animal spirits. Instead shareholders and executives bought land, empty warehouses, art, Swiss chalets, whole villages in Italy and even islands in Greece, the Caribbean and the Pacific. They collected football clubs, superyachts and, at some point, began to buy digital assets like Bitcoin or something called NFTs that they neither
...more
So I asked you: ‘What is the right, exactly?’ After your usual journey through the mists of history – describing how in the National Assembly spawned by the French Revolution in 1789, hardened revolutionaries wanting to topple the King and his regime sat on the left-hand side of the assembly, while the King’s supporters took the seats on the right; how later, once capitalism had been established, the right came to be identified with the interests of capitalists and a fervent opposition to organised labour or state intervention
Later, I appreciated your definition better when exposed to the writings of Adam Smith, the eighteenth-century Scottish economist who is something like the patron saint of free-marketeers. Yes, factory owners driving fourteen-year-old workers into an early grave were brutish. But Smith argued that the needs of society – more and cheaper clothes, shelter, food; the stuff of prosperity – could not be met with moralisers or do-gooders. Only the capitalists’ passion for profit could provide these. Why? Because to profit, it was not enough to squeeze the living daylights out of their workers. After
...more
By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.
financialised capitalism, having printed all that money to save it; or continue to pump money into the system, hoping for a miracle to intervene but, in reality, facilitating the replacement of profit as capitalism’s motivating power and lubricant. Unsurprisingly, they chose the latter.
The central banks’ anguish was the cloudalists’ delight. It was in this period that intrepid and talented entrepreneurs like Jeff Bezos and Elon Musk were able to build up their super-expensive, ultra-powerful cloud capital without needing to do any of the three things that capitalists traditionally had to do to expand: borrow money from some bank, sell large portions of their business to others, or generate large profits to pay for new capital stock.
To be clear, the free central bank money did not go directly to the cloudalists. It simply followed the path of least resistance. First,
In the ensuing cacophony, terrestrial capitalists – traditional car companies, oil corporations, steel producers and the like – were happy to sit on their growing paper wealth, transforming it into real estate or other traditional assets. By contrast, cloudalists like Jeff Bezos and Elon Musk acted quickly to turn their paper wealth, before it vanished, into a far greater value extractor: cloud capital. Both knew that profit was irrelevant. What mattered was seizing the opportunity to establish total market dominance.
2021 Goldman Sachs, one of Wall Street’s least likeable banks, stunned the financial world by publishing a ‘Non-Profitable Technology Index’, which perfectly demonstrates capitalism’s emancipation from profits: between 2017 and the beginning of the pandemic, loss-making cloudalist companies saw their share value rise by 200 per cent.
Using their appreciating shares as collateral, the cloudalists mopped up many of the billions sloshing around within the financial system. With them, they paid for server farms, fibre optic cables, artificial intelligence laboratories, gargantuan warehouses, software developers, top-notch engineers, promising start-ups and all the rest. In an environment where profit had become optional, the cloudalists seized upon the central bank money to build a new empire.
Looters, who have created no new value, have simply ransacked a pre-existing care provider. To use the language of early economists like Adam Smith, it is a classic case of feudal rent defeating capitalist profit; of wealth extraction by those who already have it triumphing over the creation of new wealth by entrepreneurs.
Before 2008, when capitalism still relied on profit as its motive power, it would not have been possible for such a scheme to be generalised – if it were and too many of the various PropComs went on sale at the same time, their value would fall. This is what gave Adam Smith his optimism about capitalism: his faith that capitalist profit would continue to triumph over feudal rent. In reality, since Smith wrote his famous lines in the 1770s, rent has survived and even prospered under capitalism. Cartels, consumer gouging, the technostructure’s successful manufacturing of desires for things we do
...more
Most people have not heard of them but they have heard of the companies the Big Three own, which include America’s major airlines (American, Delta, United Continental), much of Wall Street (JPMorgan Chase, Wells Fargo, Bank of America, Citigroup) and car makers such as Ford and General Motors. Together, the Big Three
I can almost hear Smith’s voice, which I imagine with a tinge of a Scottish accent, lamenting that after 2008, and in the name of saving capitalism, central banks snuffed out capitalism’s dynamism and advantage. I can imagine his dismay that harmful, quasi-feudal rent got a chance to exact a historic revenge on fruitful capitalist profit, with profit-seeking consigned to the aspirant petty bourgeois while the truly rich gleefully whisper to one another that profit is for losers.
Assuming, wrongly, that capitalism’s only serious threat was the rise of organised labour, I missed completely the epic transformation of our times: how the privatisation of the internet commons, aided by the 2008 crisis that led central banks to open the floodgates of state money, would beget a new, super-powerful type of capital. How this cloud capital would spawn a new ruling class.
Remarkably, as with all historic transformations, no one planned it. No capitalist imagined becoming a cloudalist. No central bankers aimed at funding the cloudalists. No politicians saw the damage cloud capital would inflict upon democratic politics. In the same way that capitalism came about against the will of everyone, including the kings and bishops as well as the peasants, the rise of the cloudalists happened out of sight and behind the back of the vast majority, including the most powerful of historical agents.
W]hen a word is properly defined,’ Simone Weil wrote in 1937, it helps ‘us to grasp some concrete reality or concrete objective, or method of activity.
is, whatever the word we use to describe it. Tempting perhaps, but quite wrong. Reserving the word ‘fascist’ for regimes that genuinely fall into that category and refraining from using it to describe regimes that, however nasty are not fascist, matters hugely. Calling a viral outbreak a pandemic can prove vital in mobilising against it. Similarly with the global system we live in today: the word we use to describe it can influence profoundly whether we are more likely to perpetuate and reproduce it or whether we might challenge or even overthrow it.
In the 1770s, and for at least another century, wherever one looked one saw feudalism. Feudal lords dominated rural areas, owned the freehold titles of most city blocks, commanded armies and navies, and presided over parliamentary committees and government bodies.
Land ownership remained the main source of political authority and rent continued to be more powerful than profit, especially in the aftermath of the Napoleonic Wars when landlords regained the upper hand over capitalists by banning grain imports with their Corn Laws.[2]
On 15 May 2019, President Donald Trump issued a decree which, in effect, banned Google from allowing use of its Android operating system on smartphones made by Huawei, the Chinese telecommunications conglomerate. Trump was effectively evicting Huawei from Google’s global cloud fief. Washington also told European governments to suspend their plan to involve Huawei in the roll-out of 5G mobile networks across Europe.
When Joe Biden moved into the White House, the New Cold War with China that Trump had kick-started moved up a gear – especially in October 2022 when, according to the New York Times, ‘The White House issued sweeping restrictions on selling semiconductors and chip-making equipment to China, an attempt to curb the country’s access to critical technologies.’ In essence, Biden told Beijing: the United States will crush your dreams of building a technologically advanced economy.[1]
Recall how until the Nixon Shock of 1971, any non-American with large quantities of dollars could exchange them at will for gold owned by the US government at a fixed price of $35 per ounce. For as long as America sold more stuff to Europe and Asia than it imported from them, as it did between the war’s end and 1965, this trade surplus meant that every time America sold a jet or refrigerator in France or Japan, the foreign-held dollars that paid for them would be repatriated and America’s gold reserves would remain untouched. However, by the mid-sixties the United States had turned into a
...more
To prevent losing it all, on 15 August 1971, Nixon told the world that they would no longer exchange foreign-held dollars for gold at that fixed price. In other words: no more gold for you from our vaults. Our dollars are now your problem. Non-American central banks suddenly had no alternative than to use dollars instead of gold as reserves to back the value of their currency. The dollar began to resemble an…IOU. After the so-called Nixon Shock, the global financial system was, effectively, backed by IOUs issued by a hegemon who could decide what the foreign IOU-holders could do with their
...more
America was now a deficit country but was nothing like any other deficit country. ‘Normal’ deficit countries, such as France, Greece or India, had to borrow dollars to shore up their currency and to raise interest rates domestically to stop money outflows. America did not need to do any of that. It had, in other words, found the magic formula every empire had hitherto only dreamed of: how to persuade wealthy foreigners, and foreign central banks, voluntarily to finance simultaneously its government and its imports!
So how does this relate to the New Cold War between America and China? From 1971 onwards, any non-American capitalist with massive dollar wealth faced the same problem: what to do with dollars in a country where they could not spend dollars?
Britain, Greece or Spain, rich foreigners could buy whatever they pleased. In no uncertain terms, Washington made it clear to German, Japanese, and (later) Chinese capitalists: in our country, the United States of America, you can buy real estate. You can buy our government debt. You can buy small, insignificant companies, bankrupted factories in our rust belts and, of course, Wall Street’s labyrinthine derivatives. But keep your grubby hands off our Boeing, our General Electric, our Big Tech, our Big Pharma and, of course, our banks.
The underlying logic of these prohibitions was a straightforward extension of the same thinking, adapted to the circumstances of a post-2008 technofeudal world: with cloud capital dominating terrestrial capital, the maintenance of US hegemony requires more than preventing foreign capitalists from buying up US capitalist conglomerates, like Boeing and General Electric. In a world where cloud capital is borderless, global, capable of siphoning cloud rents from anywhere, the maintenance of US hegemony demands a direct confrontation with the only cloudalist class to have emerged as a threat to
...more
At its heart was an implicit offer by America’s ruling class to China’s ruling class – an offer directly equivalent to that of the Minotaur: we shall keep demand for your products high using our trade deficit. We shall also shift our industrial production to your factories. In return, you will voluntarily invest your profits in our finance, insurance and real estate sectors – known affectionately as FIRE.
Japanese electronics, Chinese clothes and Korean television sets flooded Walmart while the profits netted by Japan’s, China’s and Korea’s capitalists bought them US Treasuries, golf courses, skyscrapers and Wall Street’s derivatives.
Why call it a Dark Deal? Because in the small print of this pact between America’s and East Asia’s ruling classes was written misery for workers on both sides of the Pacific. American workers faced the exploitation and immiseration that resulted from underinvestment and its industrial heartlands being hollowed out by manufacturing in Asia and the underdeveloped Global South. Meanwhile, in China’s fast-industrialising coastal cities, workers suffered the frenzied exploitation associated with overinvestment
That was the East-meets-West aspect of globalisation. Then there was, of course, the Global South – deficit countries in Asia, Africa and Latin America with weak economies constantly agonising over a shortage of dollars which they had to borrow from Wall Street to import medicines, energy and the raw materials necessary to produce their own exports, which they needed to earn the requisite dollars to repay Wall Street. Inevitably, every now and then, they ran out. At that point, the West would send in the bailiffs – the International Monetary Fund – which would lend the missing dollars on
...more
Then came the crash of 2008. This had two main effects that, together, underpin today’s New Cold War: it strengthened China’s position in the global surplus recycling mechanism, and it turbocharged the build-up of cloud capital both in the United States and in China.
As mentioned at the start of the chapter, when the bottom fell out of Wall Street, China stabilised global capitalism by cranking up domestic investment to more than half of China’s national income.
Specifically, investment rose on the back of loans using as collateral land that China’s local authorities made available to developers. Thus, the post-2008 investment drive went hand in hand with the inflation of house and land prices across China.)
With this great leap into financial services, China’s cloudalists acquired a 360-degree view of their users’ social and financial life. If cloud capital is a produced means of behaviour modification, Chinese cloudalists have accumulated cloud capital beyond the wildest dreams of their Silicon Valley competitors who, by comparison, enjoy far less power per capita to accumulate cloud rent. American Big Tech has been doing what it can to catch up.[5] But it is becoming worryingly apparent to America’s rulers that China’s cloudalists have already acquired a power that US cloudalists are struggling
...more
the dollar’s reign has suited most countries, including China, just fine. It has allowed countries with large trade surpluses, like China and Germany, to convert their excess production – their net exports – into property and rents in the United States: real estate, US government bonds, and any companies that Washington allowed them to own.
While the US dollar may create an exorbitant privilege for certain American constituencies, this status creates an exorbitant burden for the US economy overall, especially for the vast majority of Americans who must pay for the corresponding trade deficits either with higher unemployment, more household debt, or greater fiscal deficits.[6]
It is a fallacy, therefore, to think that the dollar’s only defender is the US. Anyone who tried to end the dollar’s reign would be equally resisted by German industrialists, Saudi sheikhs and European bankers.
The only governments who have ever truly desired the dollar’s demise are those directly threatened by Washington’s attempts at regime change.[7] As for the people, the one population who stand to gain the most from the abolition of the dollar’s global role are working- and middle-class Americans.
To produce an additional ton of Chinese aluminium for export to America, Chinese capitalists need an American customer to be willing to pay a sum of dollars that will cover the cost of the necessary energy and bauxite plus a profit.
Compared to the original Cold War, the New Cold War has little politics behind it. Just naked technofeudal class interests. Still, the Dark Deal was not in immediate peril as long as the dollar remained the world’s indispensable IOU allowing wealthy non-Americans access to US property and rents.
Their dependence on access to US markets gave the Trump administration confidence that the Chinese would accept, without much pushback, restrictions on their cloud capital’s power and reach.
a way, Trump was trying to do to China what Reagan had done to Japan in 1985 under the so-called Plaza Accord, which forced it to devalue the yen massively and, thus, to limit the capacity of Japanese exporters to profit from American sales and, more broadly, from the US trade deficit. The Japanese government’s acquiescence had been swift and silent, leading Japanese capitalism into a permanent slump from which it never truly recovered.[9] Would China react differently?
As Trump was to find out, China was no Japan. Being outside of America’s defence umbrella, its soil free of giant US army bases like the one in Okinawa, Beijing felt none of the need to defer to Washington that Tokyo revealed in 1985.
