Julian Jones examines what the record gains of big tech companies during the COVID-19 pandemic mean for the Marxist understanding of capitalism, monopolisation and crisis in 2020.
“Crises of every kind – economic crises most frequently, but not only these – in their turn increase the tendency towards concentration and towards monopoly”, wrote Lenin in 1916. More than a century later those words ring particularly true in the times of COVID-19, an era in which a medical crisis has precipitated an economic crisis of proportions unseen since the Great Depression.
Much like the historical crises which Lenin had been analysing, the coronavirus-triggered crisis we are living through can be characterised by a distillation in the wealth of the largest companies. This accrual of wealth by the richest can be seen most starkly in recent figures by UBS Bank showing that there are now more than 2,189 billionaires, with a record collective wealth of $10.2 trillion.
Among this layer of uber-wealth, the ‘big five’ tech giants have been the biggest winners. Microsoft and Amazon now have valuations of comfortably over $1 trillion, while Google (known as Alphabet) comes close to the trillion-dollar figure, and Facebook is valued in the region of $700 billion. Apple has now become the first company to reach a $2 trillion valuation.
The ‘big five’ tech companies now make up more than 20% of the collective value of the S&P500 index, which lists the 500 largest public companies, highlighting the wealth divide even at the very top. Even accounting for the gross overvaluations of these companies, the disparities between tech companies and other sectors are nonetheless huge.
This trend towards concentration of wealth even among the billionaire class exposes one of the inherent contradictions of capitalism – that the proliferation of wealth by an increasingly small set of interests sows the seeds of destruction for much of its own class. As finance and business becomes increasingly monopolistic, the notion of free competition, championed by neoliberal ideologues, is revealed as a sham.
While many other businesses are languishing in the face of market collapse across various sectors, billionaire tech gurus and financiers remain impermeable to the damages wrought by coronavirus.
But what, if any, are the major differences between Lenin’s day and our tech-dominated economy? At first glance the new dominant companies do not harvest energy or significant resource for the purposes of production, unlike the wealth derived from industrial exploitation in previous centuries.
To a great extent, the principal commodity for the dominant tech companies is now data, with the harvesting of this commodity now carried out by everyone for free, whether by scrolling through social media, browsing the internet, commanding voice-activated speakers, ordering a cab, or even by streaming our favourite songs.
The most immediate benefit of this big data is advertising revenue: individual or collective data such as our browsing habits, whereabouts and interests may be monetised by tech companies by selling advertising rights. But data sets and consumer trends may also be harvested internally for future use. For instance, data harvested by an app or a speaker may not be monetised in the present, but may be lawfully used in the design of a new product or feature. More illicitly, Amazon has been accused by US lawmakers of utilising information about its third party sellers to snuff out competition or come up with rival Amazon-made products.
But what is so worrying about this project of mass data collection? Aside from the incursion into every aspect of our lives, our willingness to surrender data leads to an ever greater competitive advantage by these companies, in turn leading to further monopolisation and higher inequality.
Not since the ‘dot-com’ bubble of the late 20th century has technology held such sway over the fortunes of the world economy. Coronavirus has exacerbated this dominance, as we spend hours at home surrounded by internet devices and turn our consumer habits towards online shopping.
No longer can we assume that oil companies or banks wield the most significant corporate power. Investors now hold ever increasing equities in technology firms, alongside the traditional investments in energy and resources.
At this point, we must recognise that technology is not only reliant on data. Big tech needs the raw materials that make up the hardware for our devices: minerals and materials for batteries, chips, circuit boards, casings. All of which are extracted and assembled by cheap labour in the developing world, very much a traditional method for profiteering.
Yet the fact that so many dominant tech companies shun these resource-intensive processes serves only to the highlight the parasitic nature of tech companies. The likes of Facebook, for instance, does not involve itself in the manufacture of physical devices they rely upon, instead feeding off the free data produced by the public. Some of the largest companies in the world now barely involve themselves in the production of material stuffs that, even in a digital age, make up the basics of human life.
Meanwhile Amazon holds the unusual position of being heavily reliant on the sale of physical items without any significant involvement in the production process. At its core, Amazon is a colossal distribution network powered by a digital platform, with profits propped up by a precarious and un-unionised workforce. While its profits are comparably small in relation to its valuation and the size of its operations, its business model means that it can hold a massive inventory of products and move into the distribution of almost any product imaginable, physical or digital.
For those new tech companies which do succeed despite the competitive climate, the most likely prospect is takeover by a rival. The takeovers of WhatsApp and Instagram by Facebook, or Skype and LinkedIn by Microsoft, have been among the most publicised in recent years. But there are countless examples of aggressive tech acquisitions. The democratic view of the internet as a democratic place for innovation, held by the libertarian right, is torn apart by the rapidity with which monopolies engulf competitors.
Meanwhile, rivals from outside the US sphere of influence are neutralised by political methods, as shown in the persecution of Chinese companies such as Huawei or TikTok.
Yet even the US neoliberal class has experienced tensions with cyber barons. As Democratic congressman David Cicilline put it: “The practices used by these companies have harmful economic effects. They discourage entrepreneurship, destroy jobs, hike costs, and degrade quality… they have too much power.”
The trend towards monopolisation should come as no surprise to anybody on the left, but the methods deployed by digital tech barons represent novel ways of cementing their monopolies. Lenin knew that markets are incapable of operating in a fair way, but the way in which tech barons often exert more economic and political influence than entire nation states is undoubtedly a sinister development.
Though the trends of capitalism remain largely the same as in Lenin’s day, the scale of power held by a handful of Silicon Valley executives is disturbing. The new ruling class does not inhabit the wealthy clubs of New York or London, but rather the more bohemian surroundings of San Francisco. But the imperatives to halt their power have never been more urgent.