The impunity enjoyed by capitalism’s winners
Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no ifferent. It is a portal, a gateway between one world and the next. We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us. Or we can walk through it lightly, ready to imagine another world. And ready to fight for it.” — Arundhati Roy
The pandemic is laying bare deep flaws in our economy. We cannot help but observe the vast chasm that exists between global capitalism’s winners and the rest of us. This is exemplified by the story of Christian Smalls, a former employee at Amazon’s Staten Island warehouse, who led a walkout of staff at the facility. He and his colleagues were demanding the sterilisation of the site after a worker tested positive, and paid sick leave for all workers (not just those diagnosed).
Amazon’s response? Smalls was fired. Amazon claimed he “violated social distancing guidelines”.
Following this, the most senior people in the company, including the General Counsel David Zapolsky and CEO Jeff Bezos (also richest person on the planet), mounted an anti-union smear campaign against Smalls. Meanwhile Amazon, and Jeff Bezos, continue to profit off the crisis, even hiring 175,000 new staff to cope with demand.
These staggeringly exploitative power relations are typical of those that underpin the capitalism system. How did the winners of capitalism come to have such concentrated and unfettered power?
Arundhati Roy’s quote above highlights the urgency to act — to fight for a new world that is more just. To do this we must take time to understand the system and more precisely diagnose its problems. Systems thinking is an approach that favours looking at the economic system in its entirety, in order to observe patterns of behaviour. This approach surfaces problematic patterns of behaviour, and allows for the consideration of new and alternative patterns of behaviour that lead to different outcomes.
In the last article, titled ‘Structural re-organisation of the economy is happening: patterns that are established now matter’, we looked at how change happens in cycles. There are four phases: ‘breakdown/release’, ‘reorganisation’, ‘growth’, and ‘conservation’.
Looking at the history of capitalism can assist with observing cycles of change (refer to the timeline at the end of this post) and patterns that recur following each industrial revolution. Below are some patterns to consider, as well as their relationship to COVID-19:
1. Each phase of capitalism has distinct winners — monopolistic corporations and their owners.
The railroad companies of the 18th and 19th century have something in common with today’s tech giants — they privately own the infrastructure through which commerce and communication takes place. This private ownership over the means of production, sets the conditions for corporations to become monopolies.
Monopolistic extraction and capital accumulation relies on the large scale exploitation of externalities. The term ‘externalities’ describes the shifting of costs or benefits outside of the market. For example, when a company pollutes the atmosphere with carbon dioxide (e.g. Standard Oil), it is the environment and communities of people who experience the impacts of climate change. The company pays nothing for the free use of the atmosphere.
Multinational corporations and their owners are implicated in the most pressing social and environmental problems we face — human rights abuses associated with products and services, labour exploitation in supply chains, business models that depend on environmental destruction and many others. These externalities may be capitalism’s biggest and most fundamental flaw, and yet the companies (and their owners) continue to enjoy impunity.
Another key feature of the anglophone model of corporations is ‘limited liability’. Limited liability enables companies to attract capital from investors who will not be actively involved in management and are not at risk if the company fails. Hence owners can amass wealth and power with little accountability for externalities.
A set of further consistent behaviours and patterns seems to emerge when researching Cornelius Vanderbilt (key figure of the US railroad empire), John D. Rockefeller, Bill Gates, Jeff Bezos and their companies. These patterns include: lobbying to minimise state regulation of industry (via the revolving door), being the target of antitrust legal action, and, of course, the avoidance of corporate tax.
2. The winners of capitalism re-position themselves as reformers or change agents.
The undeniable pattern of Rockefeller, Gates and Bezos dominating the global economy, and then becoming the world’s top philanthropists is no coincidence.
Together, multinational corporations and philanthropy act as mechanisms to concentrate wealth and power. The role of philanthropy in the economy, and in bringing about societal change needs to be understood within this context. The reality is that corporate entities and their owners are implicated in the social and environmental challenges they purport to address. It is not accurate to say they are heavily invested in the status quo — they are the status quo.
This phenomena has been widely discussed and documented (for example, by academics such as Rob Reich). Writer Anand Giridharadas in his recent book Winner Takes All: The Elite Charade of Changing the World) explains how philanthropic plutocrats use their wealth and influence to preserve systems that concentrate wealth at the expense of societal progress. He describes how they want to save the world through social impact investing, entrepreneurship, philanthro-capitalism, artificial intelligence, and other market-driven solutions that do not challenge inequality.
There are a plethora of ways multinational corporations and philanthropy (including corporate philanthropy and CSR) work hand in hand to perpetuate the status quo (this not an exhaustive list):
- Political influence via wealth accumulation (e.g. Trump and Bloomberg): hinders efforts to manage negative externalities through state regulation, due to the revolving door and policies that favour the private sector.
- Brand washing: marketable and superficial activities that distract from negative externalities (e.g. human rights abuses or worker exploitation) associated with core business operations.
- Focus on ‘positive impact’: actors focus on doing more good, rather than doing less bad — on value creation rather than risk management.
- Promotion of technosolutionism and market-driven approaches to social change: robs space resources from initiatives that actually challenge power and socioeconomic order, such as worker organising, reparations, race equity work, and self-determination.
- Upholding the hegemony of a particular worldview: based on western individualism, and elite cishet white male perspectives.
3. COVID-19 is further solidifying tech giant hegemony; we need more mechanisms for accountability, and alternatives to Big Tech.
The current winners of capitalism (post fourth industrial revolution) are US tech giants such as Apple, Microsoft, Amazon, Alphabet, and Facebook. They are not just winners in terms of their market value, but also because they enjoy unprecedented levels of corporate power and impunity. These companies are markedly different to monopolies of the past due to their ability to use vast amounts of data to dictate our purchasing behaviour (as described in Surveillance Capitalism by Shoshana Zuboff), and undermine democracy (as demonstrated by the scandals such as Cambridge Analytica).
COVID-19 has further solidified Big Tech’s hegemony in many ways. Our reliance on digital platforms and services during this time of social distancing and lock down means they operate even more like a public utility. Furthermore, governments have been adopting emergency powers to surveil and police their populations (including in Australia, read this and this), sometimes in partnership with Big Tech. We have been warned that emergency powers may outlive the pandemic and that data collected could be unjustly re-purposed (e.g. border policing, health insurance providers etc.).
Despite being more addicted to our phones than ever, perhaps this is the moment we need to organise against Big Tech. Thus far, attempts at regulation have failed due to complexity of cross-border and multilateral arrangements. The proliferation of ethical technology frameworks have got us nowhere.
We need to seriously consider breaking up tech monopolies, decentralising data ownership, and engaging in building community-based and worker/consumer owned alternatives. We need to be more critical of philanthropy and push for corporate tax reform. If the core pattern of behaviour is the concentration and centralisation of power, then we need interventions focused on decentralisation. More detail on this in the next article!
Timeline of capitalism’s winners
1784
First industrial revolution based on mechanical production began (via solar and hydro-power). Major corporations of this time were railroad companies.
1870
Second industrial revolution began, based on mass production (through the advent of the assembly line) and electrical power.
1890
Antitrust legislation emerged in the US in response to railroad monopolies making it illegal to try to restrain trade or to form a monopoly (beginning with the Sherman Antitrust Act).
1911
Established by John D. Rockefeller and Henry Flagler, Standard Oil dominated the oil products market, controlling 91 percent of oil production in the US. The US Supreme Court ruled it an illegal monopoly, necessitating its dissolution into 34 smaller companies.
1913
Launch of Rockefeller Foundation by John D. Rockefeller which still exists as high profile foundation today.
1969
The third industrial revolution based on automated production, electronics and computers began. Technology monopolies Apple and Microsoft were founded during this time.
2000
Launch of Bill and Melinda Gates Foundation, the largest private foundation in the world holding $46.8 billion in assets. Microsoft founder, Bill Gates is the second richest person in the world (current net worth — over 100 billion).
United States v. Microsoft Corporation case in which the U.S. government accused Microsoft of illegally maintaining its monopoly position in the PC market through the restrictions it put on PC manufacturers and users to uninstall Internet Explorer and use other browsers.
2010s
A fourth industrial revolution has begun based on artificial intelligence (AI), big data, and robotics.
2018
Jeff Bezos overtakes Bill and Melinda Gates’ as top donor, based on $ spent.
2017–19
Google, Facebook, Amazon, and Apple subject to numerous antitrust reviews and investigations.
2020
Jeff Bezos, CEO and President of Amazon (a major player in AI) is the richest human on the planet with a net worth of approximately $143 billion. He commits $10 billion to address climate change.
