Category Archives: Labor

The Pandemic Is Accelerating Trends That Are Disrupting the Foundations of the Economy

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By Charles Hugh Smith

Source: Of Two Minds

The problem is the economy that’s left has no means of creating tens of millions of jobs to replace those lost as the 1959 economic model collapses.

Fundamentally, the economy of 2019 was not very different from the economy of 1959: people went shopping at retail stores, were educated at sprawling college campuses, went to work downtown, drove to the doctor’s office or hospital, caught a flight at the airport, and so on.

The daily routine of the vast majority of the workforce was no different from 1959. In 2019, the commutes were longer, white-collar workers stared at screens rather than typewriters, factory workers tended robots and so on, but the fundamentals of everyday life and the nature of work were pretty much the same.

Beneath the surface, the fundamental change in the economy was financialization, the commodification of everything into a financial asset or income stream that could then be leveraged, bundled and sold globally at an immense profit by Wall Street financiers.

This layer of speculative asset-income mining had no relation to the actual work being done; it existed in its own derealized realm.

For decades, these two realms—the structure of everyday life (to borrow Braudel’s apt term) and the abstract, derealized but oh so profitable realm of financialization–co-existed in an uneasy state of loosely bound systems.

If you squinted hard enough and repeated the mantras often enough, you could persuade yourself there was still some connection between the everyday-life economy and the realm of financialization.

The two realms have now disconnected, and the real-world economy has been ripped from its moorings, as patterns of work and every-day life that stretch back 70 years to the emergence of the postwar era unravel and dissolve.

The trends that are currently fatally disrupting retail, education, office work and healthcare have been in place for years. When I wrote my 2013 book about the digitized future of higher education in a low-cost union of high-touch and low-touch learning, The Nearly Free University, all these trends were already clearly visible to those willing to look beyond the models embedded in the economy for decades or even centuries.

Visionaries like Peter Drucker foresaw the complete disruption of the education and healthcare sectors as far back as 1994. Post-Capitalist Society.

The problem with this disruption is it eliminates tens of millions of jobs–not just the low-paying jobs in retail and dining-out, but high-paying jobs in university administration, healthcare, and other core service sectors.

The last real-world connection between everyday life and financialization was the over-supply of everything that could be financialized: the way to reap the big profits was expand whatever could be leveraged and sold. So retail and commercial space ballooned, colleges proliferated, cafes sprang up on every corner, etc.

Meanwhile, financialization’s unquenchable thirst for higher profits stripped everything of the redundancy and buffers required to stabilize the system in times of crisis. So hospitals no longer kept inventory because by the logic of financialization, all that mattered was maximizing the return on capital–nothing else could possibly matter in the derealized realm of speculative profiteering.

Now healthcare finds itself trapped between the pincers of financialization’s stripmining and the collapse of retail in-person demand–the financial foundation of the entire system. Under the relentless pressure of financialization’s stripmining and profteering, healthcare only survives if it can bill somebody somewhere a staggering amount for everything from office visits to procedures to hospital stays to medications.

Once that avalanche of billing dries up, the entire sector implodes: a sector that accounts for almost 20% of the U.S. economy.

Higher education is also imploding, and for the same reason: its output no longer justified its enormous cost structure. The same can be said of overbuilt retail and commercial space: the financial justification for sky-high rents have imploded and will never come back. The over-supply is so monumental and the collapse of demand so permanent, the gigantic pyramid of debt and speculative excess piled on all these excesses is collapsing.

A bailout by the Federal Reserve won’t change the fundamentals of the collapse of financialization; all the Fed can do is reserve scarce lifeboat seats for its billionaire banker-financier pals. (Warren, you know Bill, have you met Jamie, Jeff, Tim and the rest of the Zillionaire Rat-Pack?)

Despite the record highs in the stock market–the ultimate expression of financialization disconnected from the real-world economy–financialization is also imploding. Financialization still claimed a connection to the real world of income streams and the value of the collateral underlying all the speculative profiteering: the high rents paid by the restaurants on the ground floor and the businesses for office space above justified the high value of the collateral, the commercial building.

Foundational swaths of the real-world economy have been swept away, and so the collateral is largely worthless. Lots of people want their employer to start paying for business-class airline seats again so they can jet around the country on somebody else’s dime, staying in pricey hotels and attending conferences, but these activities no longer have any financial justification.

The economy of 1959 is finally expiring. The enormous time and money sinks of transporting humans hither and yon no longer have any financial justification.

The problem is the economy that’s left has no means of creating tens of millions of jobs to replace those lost as the 1959 economic model collapses. We all know that automation is replacing human labor, but the real change is the collapse of the financial justification for the enormously costly systems we now depend on to generate jobs: healthcare, retail, tourism, dining out, education, working downtown, and all the professions dependent on managing all this complexity.

While the elimination of low-skill jobs–a longstanding trend–is attracting attention, the implosion of the 1959 economic model and financialization will soon sweep away millions of high-paying professional jobs that no longer have any financial justification.

As the 1959 economy implodes, so does the tax system based on payroll taxes and property taxes. This article sketches out the perverse incentives for employers to invest in automation rather than hire workers: Covid-19 Is Dividing the American Worker (WSJ.com)

There are alternatives, but they require accepting the implosion of both the 1959 economic model and its evil offspring, financialization.

I sketched out an alternative way of organizing work, everyday life and finance in my book A Radically Beneficial World. There are alternative ways of organizing civilization other than the insanely wasteful and exploitive system we now inhabit.

A Debt Jubilee Is the Only Way to Avoid a Depression

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By Michael Hudson

Source: The Unz Review

Even before the coronavirus appeared, many American families were falling behind on student loans, auto loans, credit card balances and other payments. America’s debt overhead was pricing its labor and industry out of world markets. A debt crisis was inevitable eventually, but covid-19 has made it immediate.

Massive social distancing, with its accompanying job losses, stock dives, and huge bailouts to debt-strapped corporations, raises the threat of a depression. But it doesn’t have to be this way. History offers us another alternative in such situations: a debt jubilee. This slate-cleaning, balance-restoring step recognizes the fundamental truth that when debts grow too large to be paid without reducing debtors to poverty, the way to hold society together and restore balance is simply to cancel the bad debts.

The word Jubilee comes from the Hebrew word for trumpet — yobel. In Mosaic Law, it was blown every fifty years to signal the Year of the Lord, in which personal debts were to be cancelled. The alternative, the prophet Isaiah warned, was for smallholders to forfeit their lands to creditors: “Woe to you who add house to house and join field to field till no space is left and you live alone in the land.” When Jesus delivered his first sermon, the Gospel of Luke describes him as unrolling the scroll of Isaiah and announcing that he had come to proclaim the Year of the Lord, the Jubilee Year.

Until recently, historians doubted that such a debt jubilee would have been possible in practice, or that such proclamations could have been enforced. But Assyriologists have found that from the beginning of recorded history in the Near East, it was normal for new rulers to proclaim a debt amnesty upon taking the throne. Instead of blowing a trumpet, the ruler “raised the sacred torch” to signal the amnesty.

It is now understood that these rulers were not being utopian or idealistic in forgiving debts. The alternative would have been for debtors to fall into bondage. Kingdoms would have lost their labor force, since so many would be working off debts to their creditors. Many debtors would have run away (much as Greeks emigrated en masse after their recent debt crisis) and communities would have been prone to attack from without.

The parallels to the current moment are notable. The U.S. economy has polarized sharply since the 2008 financial crisis. For far too many, the debts in place leave little income available for spending on goods and services or in the national interest. In a crashing economy, any demand that newly massive debts be paid to a financial class that has already absorbed most of the wealth gained since 2008 can only further split our society.

This has happened before in modern times — after World War I, the burden of war debts and reparations bankrupted Germany, contributing to the global financial collapse of 1929-31. Most of Germany was insolvent, and its politics polarized between the Nazis and Communists. We all know how that ended.

America’s 2008 bank crash offered a great opportunity to write down the often-fraudulent junk mortgages that burdened many lower-income families, especially minorities. But this was not done, and millions of American families were evicted.

The way to restore normalcy today is a debt writedown. The debts in deepest arrears, and most likely to default, are student debts, medical debts, general consumer debts and purely speculative debts. They block spending on goods and services, shrinking the “real” economy. A debt writedown would be pragmatic, not merely a moral sympathy with the less affluent.

In fact, it could create what the Germans called an “Economic Miracle” — their own modern debt jubilee in 1948, the currency reform administered by the Allied Powers. When the Deutsch Mark was introduced, replacing the Reichsmark, 90 percent of government and private debt was wiped out. Germany emerged as an almost debt-free economy, with low costs of production that jump-started its modern economy.

In the past, the politically powerful financial sector has blocked a writedown. Until now, the basic ethic of most people has been that debts must be repaid. But it is time to recognize that most debts now cannot be paid — through no real fault of the debtors in the face of today’s economic disaster.

The coronavirus outbreak is serving as a mind-expansion exercise, making hitherto unthinkable solutions thinkable. Debts that can’t be paid, won’t be. A debt jubilee may be the best way out.

 

Michael Hudson, author of “… and forgive them their debts” and “Killing the Host,” is president of the Institute for the Study of Long-Term Economic Trends and is Distinguished Research Professor of Economics at the University of Missouri–Kansas City.

America’s Despair

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By Vladimir Odintsov

Source: New Eastern Outlook

More and more people in the United States are feeling let down by American capitalism, and the population is being plunged into depression. This was the alarming conclusion reached by two researchers from Princeton University, Anne Case and winner of the Nobel Prize in Economics Angus Deaton. Over the past fifty years, many have been left feeling disillusioned with the American economic model, hyped up extensively within the United States, which even affects life expectancy in America: it has been declining for three consecutive years, a very unusual trend for a developed country. There has been a marked increase in the mortality rate among the white population in particular since the beginning of the new millennium. The number of suicides, as well as deaths from drug and alcohol abuse has increased dramatically.

These are the bleak findings of the research on the situation in the USA conducted by well-known American economists Anne Case and Angus Deaton, who carried out a detailed analysis of the suicide and mortality epidemic that has engulfed America, noting that the United States has been experiencing a “deaths of despair” epidemic since the mid 1990s. The researchers point out that life expectancy for Americans declined for three consecutive years, from 2015 through 2017, something that had not happened since World War One, when the world was gripped by the Spanish influenza pandemic. Among the many different root causes leading to deaths of despair, the study highlights a significant fall in American wages in recent years and a dearth of good jobs, which is weakening core institutions of American life, such as marriage, faith and community. Social spending and housing-related expenses are an increasingly heavy burden for ordinary Americans.

This is despite the fact that the United States had once led the way as the number-one country in the world in terms of reducing mortality rates and increasing life expectancy in the 20th century, and many important discoveries and achievements in medicine have come from the United States.

However, the United States is now leading the way in the opposite direction.

Numerous US researchers believe that the Great Recession which began with the 2008 financial crisis is to blame for today’s greatest woes in America. However, the Great Recession was not what provoked the deaths of despair epidemic among ordinary Americans, although it did lead to the deterioration of living conditions for many people, which provoked anger and division in the United States. The deep-rooted causes of this epidemic can be traced back to a feeling of dissatisfaction with living conditions among Americans which has been there for a long time, and when inequality began to grow, young Americans began realizing that they would never be able to live the lives their parents could afford, while young people without highly professional skills have fallen even further behind.

America’s health care system which has been prescribing more and more opioids is also on the list of “culprits” responsible for the situation America has found itself in today. According to US research, one out of every two unemployed men in the US take painkillers on a daily basis, and these are usually addictive opioids. The national health-care crisis associated with substance abuse has plagued Americans for decades. The opioid epidemic in the United States is largely a failure of regulation and control. This is an area where pharmaceutical companies wield great political influence.

In recent years, there has been a sharp increase in the number of patients reporting pain, difficulties with communication, and depression. Pharmaceutical companies and distributors have taken advantage of people’s growing desperation, seeing an opportunity to promote and ramp up the sales of opioid pain medication such as OxyContin, a legal drug approved by the US Food and Drug Administration even though it is essentially no different to heroin. Between 1999 and 2018, more than 200,000 Americans died of opioid overdoses. Doctors are seeing the increasing amount of harm being caused by these drugs, and have begun prescribing them on a less frequent basis, but these opioids have opened the gateway to illegal drugs: heroin from Mexico, as well as fentanyl from China in more recent years, which is far deadlier. These drugs are causing a huge amount of damage and killing a lot of people. However, when ordinary Americans are faced with hardship and suffering, when there is social upheaval, and people begin to feel that their lives are meaningless, these drugs fill the void, and the number of deaths from drug overdoses goes up, adding to the number of suicides and alcohol-related deaths.

Alcohol-related deaths in American society today are simply ballooning out of control. According to a series of studies, “Alcohol-related deaths” have more than doubled in the last two decades. This is well ahead of the population growth rate over the same period. A study conducted over a twenty-year period found that alcohol had been the cause of more than one million deaths! Apart from people who simply drank themselves “to death”, half of the alcohol-related deaths were due to liver disease and drug overdoses from substances taken together with alcohol. Nine states — Maine, Indiana, Idaho, Montana, New Jersey, New York, North Dakota, Ohio and Virginia — have recorded a significant increase in the number of Americans binge drinking dangerous amounts of alcohol, which can lead to fatal car crashes and other fatal accidents, according to a report recently published by the CDC (The Centers for Disease Control and Prevention). Americans almost all over the country who are trying to “drown their sorrows in alcohol” are already addicted to these hard drinks, and have began drinking more heavily and more often, with a 12% increase seen in the last five years alone.

Historically, there have always been more “deaths of despair” among men than women. However, a study published in the journal Alcoholism: Clinical and Experimental Research, found that the largest annual increase in alcohol-related deaths in recent years was seen among non-Hispanic white women.

But these are not the only scourges of today’s American society. According to the January report published by the National Center for Homeless Education funded by the US Department of Education, over 1.5 million schoolchildren experienced homelessness in the 2017-2018 school year. 100,000 (7%) of these homeless schoolchildren spent the night in the open air and slept wherever they could, 7% slept in motels, 12% stayed in homeless shelters, and 74% stayed at a friend’s. And these are only the most modest estimates, but take figures from the American Institutes for Research, for example, which recorded that 2.5 million children had experienced homelessness in the year 2013. This could almost be considered some sort of historical “record”, with one in thirty American children experiencing homelessness! Criminal gangs, drug dealers, pimps and pedophiles are waiting for these children on the streets. In this context, does it really come as any surprise that crime is on the rise in the United States (especially juvenile crime)?

This grim situation in the US is hardly surprising if you look at the draft $4.8 trillion federal budget that US President Donald Trump is going to propose and use to pave the way for his re-election. After all, this budget is a continuation of a trend that has already been observed in federal budgets drafted in the United States, as we’ll see more big safety-net cuts and increased spending on defense, which even the Wall Street Journal has called out.

All of the Trump administration’s wall-to-wall “America First!” slogans cannot hide the glaringly ugly face of American reality we can see today.

Data governance and the new frontiers of resistance

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The 21st century corporation is using algorithmic-based intelligence to accumulate data on a massive scale. Social movements need to grasp this change quickly.

By Anita Gurumurthy and Nandini Chami

Source: ROAR

Four centuries after the East India Company set the trend for corporate resource extraction, most of the world is now in the grip of unbridled corporate power. But corporate power is on the cusp of achieving “quantum supremacy” and social movements in the digital age need to understand this in order to shift gears in their struggles. The quantum shift here comes from “network-data” power; the ingredients that make up capitalism’s digital age recipe.

Contemporary capitalism is characterized by the accumulation of data-as-capital. Big Tech, as digital companies are collectively known, use the “platform” business model. This model provides a framework for interactions in the marketplace by connecting its many “nodes” — consumers, advertisers, service providers, producers, suppliers and even objects — that comprise the platform ecosystem, constantly harvesting their data and using algorithms to optimize interactions among them as a means to maximize profit.

The platform model emerged as a business proposition in the early 2000s when internet companies offering digital communication services began extracting user data from networked social interactions to generate valuable information for targeted advertising. It is estimated that by 2025, over 30 percent of global economic activity will be mediated by platform companies, an indication of the growing “platformization” of the real economy. In every economic sector, from agriculture to predictive manufacturing, retail commerce and even paid care work, the platform model is now an essential infrastructural layer.

Control over data-based intelligence gives platform owners a unique vantage point — the power to shape the nature of interactions among member nodes. Practices such as Amazon’s segmenting and hyper-targeting of consumers through price manipulation, Uber’s panoptic disciplining of its partner drivers, and TripAdvisor’s popularity ranking algorithm of listed properties, restaurants and hotels are all examples of how such platforms mediate economic transactions. The accumulation of data that feeds algorithmic optimization enables more intensified data extraction, in a self-propelling cycle that culminates in the platform’s totalizing control of entire economic ecosystems.

Amazon for instance, is no longer an online book store, and was perhaps never intended to be. With intimate knowledge about how the market works, Amazon is a market leader in anticipatory logistics and business analytics, providing both fulfillment and on-demand cloud-based computing services to third parties. Not only has it displaced traditional container-freight stations in port cities, it has begun to look increasingly like a shipping company. The dynamics of an intelligence economy have led to large swathes of economic activity being controlled by a handful of platform monopolies.

Studies suggest that in a matter of a couple of decades, platform monopolies have overtaken oil, automobile and financial corporations in market capitalization. Today, platform-based business models account for seven of the world’s top eight companies ranked by market capitalization. The pan-global platform corporation, with its DNA of data-based intelligence, has replaced the trans-national industrial corporation as the Leviathan of our times.

Enter the intelligent corporation

As the dominant form of economic organization in the capitalist world order, the corporation has always wielded power, not just in the market but also in political and socio-cultural realms. The rise of the “intelligent corporation” defined by the political economy of data capital has produced qualitative shifts in the exercise of corporate power, including the following.

From dominating the market to becoming the market

Like its predecessor, the intelligent corporation also aims at complete market domination. In platform-based capitalism, local business models based on intimate contextual knowledge are completely displaced by the data-based intermediation of marketplace and social transactions. It is by eliminating these disparate pockets of capital accumulation that platform owners maximize their profits.

The intelligent corporation also goes a step further, moving beyond “dominating the market” to “becoming the market.” Integrating across business lines, these companies both operate a platform and promote their own goods and services on it. This places them in direct competition with the businesses that use their infrastructure, and creates a conflict of interest. For example, Amazon uses its product marketplace data to consolidate its private labels, launching high-demand products at prices that undercut third-party sellers.

In this new strategy for acquiring market power, long-term market monopolization is privileged over the ability to break-even in the short run. The ecosystem that a platform seeks to capture has room only for one winner with the wherewithal to forgo immediate profits and invest in business integration — through aggressive acquisition — and systematic data-layer development. Other competitors are destined to fall by the wayside.

From cheap labor to freedom from labor

In the capitalist economy, the key contradiction is between capital and labor. Capital is in a perennial quest for freedom from labor through labor-substituting technological advances and territories to shift production to reduce labor costs. In the intelligence economy, capital seems to have come very close to realizing its primordial pursuit.

Using 360° surveillance, the intelligent corporation creates a self-optimizing ecosystem, manipulating each node, expanding its captive network, accumulating data capital and entrenching its dominance. It is able to achieve a global operational footprint with few assets and a minuscule employee base. Think Uber. Uber drivers are not considered to be employees in most places where the company runs its business. With a god’s eye view of the city and its roads, the customers and the driver, Uber takes over city transport, often without owning a single taxi. Passing off the liability to the driver, who must take a high-interest loan to acquire a vehicle to become Uber’s coveted “partner,” the corporation extracts from the driver more than just labor time.

In traditional labor-intensive manufacturing and services sectors, data capital is slowly but surely affecting far-reaching transformation. Projections show that automation based on artificial intelligence (AI) will eventually displace labor. It is estimated that over 40 percent of the global workforce will lose their jobs in AI-led disruption of manufacturing over the next 15–25 years. A limited number of high-paying jobs may open up for individuals with advanced skills in the development of data and AI technologies. But most of the labor force will end up in low-paid, personalized service work.

For countries in the Global South, the challenge will be especially pernicious. As rising wages erode the comparative advantage of labor in these economies, the shift to AI technology is likely to trigger a re-shoring trend whereby factories are relocated to richer countries that offer more sophisticated infrastructural support for deployment of AI systems. According to the World Bank, over two-thirds of the workforce in developing countries are likely to lose jobs. It is not clear how these changes will shift gender-based segmentation and gender hierarchies in labor markets. However, going by current trends, women seem to be the first to lose their jobs in this transition, with a reversal of both pay and status gains.

Planetary-scale time-space enclosure

Capturing previously non-commodified time and place has always been a central strategy of capitalist expansion. In the intelligence economy, we are witnessing a new phase of such “primitive accumulation” – through “data dispossession.” The expropriation of data from everyday social exchanges through the platform business model is comparable to the expropriation of natural resources for capitalist production in a previous age. The pervasive data extraction by platform companies has transformed data-mined social interaction into a factor of production, just as invaluable a resource as land for the creation of goods and services. The centralization of wealth and power today, derives from an unprecedented quality and scale of dispossession.

The dynamic of data dispossession is self-propelling. It is now well understood that platforms aggressively pursue a strategy of locking-in users, offering instant gratification in exchange for data and making it costly for them to leave a platform. The Chinese “super-platforms” WeChat and Meituan-Dianping combine news, entertainment, restaurant reviews, food delivery and ride-hailing, along with cross-cutting applications such as payment systems and digital wallets, demonstrating a “stickiness” that is almost addictive.

When participation in the platform on the platform owner’s terms becomes de facto the only choice for economic actors, data extractivism is normalized. Similar to the predatory practices of historical colonialism, the platform tactics of the intelligent corporation function as a neo-colonial project. The difference is that this time around, rather than European companies, the US and Chinese platform companies are in the driving seat.

A profoundly unsustainable exploitation of the natural world accompanies the rapid inroads of the intelligent corporation. Take the case of the vast ecological footprint of the online food-delivery sector. According to a 2018 study published in the science journal Resources, Conservation and Recycling, door-to-door fast-food delivery in China accounted for a nearly eightfold jump in packaging waste between 2015 and 2017, from 0.2 to 1.5 million tonnes. This has coincided with the exponential growth of the sector in the country, where the number of customers using food-delivery platforms has gone up from zero in 2009 to 406 million by the end of 2018! The intelligence economy is a veritable resource guzzler whose network data devices are expected to be consuming about one-fifth of global electricity by 2030 just to keep going.

The loss of self-determination for individuals and communities in these new intelligence-based modes of production reflects an asymmetry in power that was previously impossible. This is the route through which the brand-new corporation colonizes bodies and nature, takes control of production and social reproduction, and intensifies accumulation on a global scale.

The “deep corporate” and the death of the social contract

It is no secret that in the digital era, the deep state has had a makeover. Edward Snowden’s revelations and witness testimonies from China’s Uighur-dominated Xinjiang have exposed the dark workings of the contemporary military–industrial complex, the unholy nexus between Big Tech and the state. Trade justice activists have constantly pointed to the “hidden hand” of Silicon Valley and Chinese corporations using their governments to bat for their interests, reducing policy decisions to executive fiats for entrenching their power.

But what is only recently coming to light is the rise of the “deep corporate” — the extension of the Kraken-like tentacles of intelligent corporations into the heart of public life. The subsuming of social life by platform capitalism has distorted the political space thanks to the echo chambers of the automated public sphere. The contagion of mispropaganda and informational warfare in political campaigning has become impossible to contain in a public sphere determined by algorithmic filters. In this scenario, deliberative democracy itself is under the threat of extinction.

The social credit system being developed by China in partnership with eight tech companies takes the “corporatization” of governance to a whole new level. Access to benefits and citizens’ guaranteed rights are now predicated on behavioral scoring on the basis of online purchase history, financial transactions and social media connections on the partnering platforms. With the archetypal “good consumer” becoming the deserving citizen, citizenship is thus dislocated from political claims. The “deep corporate” acquires the formal authority to mediate the social contract.

Living with the intelligent corporation

We are living through a phase in capitalism that is marked by extreme market concentration, unprecedented inequality in wealth and the declining share of labor in global income; a state of affairs that has led even the IMF to express caution. It is no coincidence that this period of intensified economic injustice has coincided with the rise of platform capitalism and its real-world vehicle, the intelligent corporation.

What does living with the intelligent corporation mean?

What is new about this phase of capitalism that has spawned the intelligence economy is a deeply qualitative shift. Datafication and data capital transform the way capitalist “accumulation by dispossession” happens. “Intelligencification” makes plausible a planetary-scale colonization and commodification of everyday life by the new corporation in ways previously impossible. Both nature and caring bodies are trapped in a planetary enclosure insofar as everything and everybody can be turned into data.

It also feeds off and emboldens the financialization apparatus that runs the neoliberal economy. Through the perverse confluence of data and finance, the intelligent corporation universalizes and naturalizes its authority, destroying the marketplace of things and ideas.

Through data extractivism, the intelligent corporation ravages sociality, taking the ideological project of neoliberalism all the way to the expropriation of the political. This is a deep take-over, an “ontological encroachment” of human subjectivity.

Where does all this leave us?

As UNCTAD has highlighted, the pace of concentration of market power is extremely worrying. Consider this: Amazon’s profits-to-sales ratio increased from 10 percent in 2005 to 23 percent in 2015, while that of Alibaba increased in just four years from 10 percent in 2011 to 32 percent in 2015.

Policymakers across the world are struggling to reform their legacy laws to rein in the intelligent corporation. Even the domestic governments of powerful US and Chinese platform corporations are struggling to contain their excesses. The US Federal Trade Commission (FTC) is currently investigating Amazon and Facebook for abuse of market dominance while the US Justice Department is probing Google. The state of California is facing massive resistance from Uber and Lyft to its new regulation for labor rights of “gig” workers, with the two companies currently leading a $60 billion ballot initiative to extricate themselves from employer’s liability. In November 2019, the state administration for market regulation in China had to hold a meeting with Alibaba and other online retail platforms about their strong-arming of third-party vendors, in violation of existing regulations to curb anti-competitive conduct.

The loopholes of pre-digital taxation laws based on a physical presence in a given country have been effectively exploited by platform companies to escape tax liability, through profit shifting to low-tax jurisdictions. Similarly, when faced with liability for unfair market practices in overseas markets, it is very easy for platform companies to shift liability to their parent company outside the jurisdiction. For instance, Uber in South Africa resorted to the defense that its partner drivers were employees of the parent company headquartered in the Netherlands and not the South African subsidiary, in order to evade its liabilities under existing labor laws. The lack of binding international regulations governing cross-border data flows has also aided rampant data extractivism,

More recently, in the wake of malpractice lawsuits brought against Big Tech by their own employees; exposes about founding CEOs who have enjoyed a godly status; and public disenchantment with multiple revelations of clandestine data mining and algorithmic gaming, the early sheen seems to be wearing off. Google’s parent company Alphabet can no longer use its “Do the right thing” motto without irony. Facebook has been forced to switch to the “too big to fail” defense from the “protector and defender of the freedoms of the global community” line. Alibaba may not be able to proclaim its commitment to the development of small and medium enterprises in Africa for much longer. The façade has crumbled. And this rupture in the discursive hegemony of the intelligent corporation in which we are currently situated is the right moment to mount a collective challenge.

So, resist we must, so that the wealth of data and of networks can be appropriated and used to create a just and humane society. This means taking the intelligent corporation by the horns, and forging a movement that is able to grapple with the ethical–political boundaries of digital intelligence.

Taming the Leviathan and reclaiming the planet

Given the enormous economic and political clout of the modern corporation in the age of data, unshackling people and the planet from corporate power is an urgent task. Struggles against the extreme unfairness of the global trade and intellectual property regime by transnational social movements have shown the necessary connection between the agenda for development justice and the dismantling of corporate power.

Building alliances among movements has become a vital strategy in halting TNCs’ inexorable plunder. The trade justice movement against corporate globalization, the environment movement’s quest for sustainable development, feminist struggles to reclaim the body and the sphere of social reproduction from capital and workers’ struggle against the intensified squeeze on labor and the dismantling of social protection in neoliberal globalization are inspiring examples in this regard. Transnational civil society has painstakingly built alliances and solidarities across these movements to expose corporate excess, bringing pressure on the UN for a global binding treaty on TNCs’ human rights obligations in the face of near-insurmountable odds.

In the digital age, as corporate power assumes indomitable proportions — with tech CEOs carving out data dominions that they rule over — current frameworks of power analysis and action may not go very far. A concerted and coherent strategy is urgently needed in order to enable a more equitable distribution of the gains of data-based intelligence. The Digital Justice Manifesto released in November 2019 by the Just Net Coalition — through a process of strategic and sustained dialogue between digital rights, trade justice, feminist, environmental, labor and human rights groups and activists — outlines such a roadmap. As the Manifesto underlines, we need immediate action along three broad fronts to reclaim digital power from the intelligent corporation:

(a) Wrestling back ownership of our personal and collective data and intelligence by instituting an economic rights framework for data resources.

(b) Governing critical platform infrastructures as public utilities.

(c) Enforcing a local-to-global governance model for digital and data infrastructure that supports local economies and democratic self-determination of collectivities, preventing the enclosure of entire market and social ecosystems by a centralized intelligence. In other words, the governance of tech infrastructure must enable the flourishing of disparate local economies and make room for multiple platform models to function — co-operatives, social enterprises, public etc. — challenging the totalizing impetus of global intelligence capitalism.

Neoliberal globalization and financialization have led to profoundly unequal societies. The impunity of the TNC has been central to this dynamic. Social movements have placed several creative proposals to counter this: mandating charter renewal every five years overturning the principle of corporations’ perpetual legal existence; taxing stock trade on the basis of the holding period to contain excessive financial speculation; placing a cap on the individual assets of founders/CEOs and so on.

“Intelligencification” demands a new frontier for resistance. The power of the intelligent corporation must be contained through tactics small and big in political and cultural realms. A new wisdom about the governance of data must be explored for a truly emancipatory future for all.

Omens, Portents, Karma and the Mandate of Heaven

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By Charles Hugh Smith

Source: Of Two Minds

The question of legitimacy isn’t limited to China.

what makes humans unique among social mammals? Some say humor, I would nominate superstition: regardless of how hard we promote our rationality and logic, humanity continues to sense portents and omens in events and feel the intangible tug of karma: the consequences of past actions that we arrogantly thought we’d escaped forever.

Michael Snyder recently compiled a list of peculiarities that are raising eyebrows around the globe: One, sure, two, not that unusual, three, well things happen in threes, but ten disturbances and we’re only six weeks into 2020? 10 ‘Plagues’ That Are Hitting Our Planet Simultaneously (Zero Hedge)

As the saying has it, Nature Bats Last, and maybe arrogant, destructive humanity’s war on Nature is about to get its comeuppance. Maybe overdosing hundreds of millions of chickens and pigs to knock down bacteria in overcrowded conditions has finally generated a karmic blowback via bird and swine viruses.

As for karma in human society: maybe the disruption of the supply chain in China is a karmic response to offshoring production to fatten Corporate America’s profits at the expense of all else in America’s society and economy.

Then there’s the celestial right to rule, a.k.a. The Mandate of Heaven, the concept rooted in Chinese culture that political leadership which fails the people invites divine retribution in the form of withdrawing the support of Heaven. This withdrawal of support manifests in the tangible world as natural disasters: earthquakes, floods, droughts, plagues, etc.

Though it’s not politically correct to discuss The Mandate of Heaven in any serious way, the reading of omens goes back in Chinese history to oracle bones, the process of heating bones until they crack and then interpreting the patterns as portents to the future.

With human and domestic animal epidemics devastating China in a novel cluster of natural disasters, The Mandate of Heaven is in play even if no one dares speak of it openly. The regime is well aware that these parallel plagues are understood as manifestations that question the legitimacy of the current regime.

The question of legitimacy isn’t limited to China. Soaring wealth inequality, the dependence on debt to fund “growth” and the political disenfranchisement of the masses are global manifestations of political-financial systems that invite divine retribution for their excesses of corruption, self-aggrandizement, and exploitation of the planet and its human workforce.

Costs Are Spiraling Out of Control

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By Charles Hugh Smith

Source: Of Two Minds

And how do we pay for these spiraling out of control costs? By borrowing more, of course.

If we had to choose one “big picture” reason why the vast majority of households are losing ground, it would be: the costs of essentials are spiraling out of control. I’ve often covered the dynamics of stagnating income for the bottom 90%, and real-world inflation, i.e. a decline in purchasing power.

But neither of these dynamics fully describes the relentless upward spiral of the cost basis of our economy, that is, the cost of big-ticket essentials: housing, education and healthcare.

The costs of education are spiraling out of control, stripping households of income as an entire generation is transformed into debt-serfs by student loan debt. The soaring costs of healthcare are a core driver of higher costs in the education complex (and government in general), and to cover these higher costs, counties raise property taxes, which add additional cost burdens to households and enterprises as rents rise.

Rising rents push the cost structure of almost every enterprise and agency higher.

Then there’s the asset inflation created by central bank ZIRP (zero interest rate policy) which has inflated a second echo-bubble in housing that has pushed home ownership out of reach of many, adding demand for rental housing that has pushed rents into the stratosphere in Left and Right Coast cities.

The increasing dominance of monopolies and cartels has eliminated competition in sector after sector. Monopolies and cartels skim immense profits even as the value, quality and quantity of their products and services decline: The U.S. Only Pretends to Have Free Markets From plane tickets to cellphone bills, monopoly power costs American consumers billions of dollars a year.

Thanks to their political influence, monopolies and cartels have legalized looting, raising prices and evading anti-trust regulations because they can pay whatever it takes in our pay-to-play political system.

Let’s look at a few charts that illustrate the relentless rise in costs:

Do you reckon these two charts are connected–soaring costs and ballooning administrative payrolls?

Student loan debt is soaring above $1.5 trillion, guaranteeing profits to lenders and debt-serfdom to the students exiting with degrees that are in over-supply, i.e. possessing little scarcity value in an over-credentialed economy:

The echo housing bubbles in many locales exceed the nosebleed valuations of the previous bubble:

And how do we pay for these spiraling out of control costs? By borrowing more, of course:

Even at low rates of interest, the cost of servicing skyrocketing debt increases, leaving less net income to support additional borrowing.

What will it take to radically reduce the cost basis of our economy? A fundamental re-ordering that breaks up all the cartels and monopolies that push prices higher even as they deliver lower quality goods and services would be a good start.

Get Ready For An Economic Wake-Up Call This Holiday Season

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By Brandon Smith

Source: Alt-Market.com

If we are to measure the concept of “economic recovery” in real terms, then we would have to look at the fundamentals (not stock markets) and whether or not they’re improving. Unfortunately, not all economic data is presented to the public honestly. Very often it is mired and obscured in a fog of disinformation and false standards.

I would point out, though, that there is relatively accurate information out there in certain areas of the global economy, and it tells us our economic structure is destabilizing. Beyond that, even the rigged numbers are moving into negative territory. But what does all this mean for the holiday retail season, one of the mainstream’s favorite gauges of US financial health? And, if 2019’s holiday profits sink, what does this tell us is going to happen in 2020?

First, let’s start with what we know…

Since we live in a “globalized” economy where everything is supposedly “interdependent”, it helps to examine international export numbers. The US doesn’t manufacture and export much of anything anymore beyond agricultural products, but global markets do expect us to consume the goods of other nations. A decline in exports indicates a failing global economy, but in particular a failing US consumer economy.

The obvious example would be China, which has seen plunging export data at least the past three months, though many will argue that this is merely due to tariffs and the trade war. However, it’s not just China that is showing signs of collapse.

South Korea, another major manufacturing and export hub in Asia (5th largest in the world) has seen declining exports for 11 consecutive months. South Korean shipping is crumbling in November and the media is blaming the trade war, as some SK companies would be “hit indirectly” because they sell intermediate goods to China are are linked to US companies in China. But this makes little sense. Tariffs are highly targeted to specific companies and specific goods, and so far the US has not directed major tariff attention at South Korea beyond the auto market.  Also, the new KORUS deal between Trump and SK is different only cosmetically to original trade agreements, yet, South Korean exports continue to fall.

The same situation can be seen in Japan, with Japanese exports witnessing a 9.2% year-over-year drop in October, the largest decline in 3 years. Japan has seen three consecutive months of declines in exports.

And what about Europe? While Germany, the manufacturing powerhouse of the EU, finally saw a jump in exports to the US this past month, overall the European Union has seen consistently poor export performance for the past year, and Germany itself is hovering on the edge of recession with 0.1% official GDP growth. Many economist already consider Germany to be in recession, as official GDP numbers are constantly manipulated by governments to the upside.

But let’s not forget about the US. Remember how Trump promised that the trade war would result in a renaissance for US manufacturing and that millions of industrial jobs would be returning to our shores? Well, as I’ve warned consistently for the past couple years, there is NO WAY corporations will be bringing manufacturing jobs and factories back to the US without ample incentives. Trump already gave companies tax cuts without demanding anything in return, and the cost/benefit ratio of building new factories and paying American workers top dollar versus keeping existing factories in Asia and dealing with 10%-25% tariffs just doesn’t add up to a new US rust belt renaissance.

While manufacturing jobs have increased, US manufacturing activity has declined.  Meaning, there simply isn’t enough demand for the goods being produced.  US manufacturing ISM index just sank this month and has been sinking for the past four month into negative territory. While US PMI manufacturing data jumped this month, it is still well below the 10 year average and is also very low compared to past holiday seasons, which almost always see a spike in manufacturing.  US manufacturing remains at a historic low of 11% of US GDP and production output has decline steadily since January of this year.

The question is, will the vast decline in global manufacturing translate to a crash in consumer demand?  We know that US credit dependency has skyrocketed in the past few years, but will more debt result in more profits for retailers?  This is highly unlikely, as US retail sales growth, for example, has been in decline at the same time that consumer debt has been rising.  Why?  Credit delinquencies have been relatively stable (so far) this year, so my theory is that people in the US are paying off previous debts by taking on new debt. They are kicking the can on their insolvency.

We have seen this kind of destructive credit death cycle before – Right before the crash of 2008.

So what does all this mean? And why is the media portraying the trade war with China as the cause of the global export and shipping crisis when clearly most of the world is not directly or even indirectly tied to the tariffs?

As noted above, the narrative that is being pushed is that we live in an “interdependent” and globalized world, and that nations cannot function economically without cooperation. The trade war, I believe, is a smokescreen designed by the globalist establishment to do two things specifically:

1) It is being created to hide a crash in the greater economy. Notice that almost no one in the mainstream is talking about a collapse in global production and multiple fundamentals due to DEMAND; instead they constantly talk about the trade war and exports. The trade war is becoming the scapegoat for the implosion of the market bubble engineered by globalists and central banks through a decade of stimulus measures.

The collapse of the economic bubble is being caused in part by massive debt and a lack of consumer demand due to lack of consumer savings and cash flow. The trade war has little to do with it, and I suspect we would be seeing sharp declines in the US economy in particular even without the trade war.

2) The trade war creates a false dichotomy in which many Americans will be lured into blaming China and other nations for their economic ills, and China and the rest of the world will be lured into blaming America. It also reasserts the globalist propaganda argument that when nations and economies “go rogue”, they hurt everyone; therefore, more global controls and centralization will have to be established in order to prevent nationalism from harming the rest of the world.

And what does this all have to do with the Christmas shopping season? Like the end of last year, I think we are in for another ugly holiday retail event – Perhaps far worse than before. All the manufacturing and export data indicates that this will be the case. If so, then the mainstream narrative of recovery, long perpetuated as fact by the media and the Federal Reserve for the past several years, will finally die.

The only thing that might elevate holiday numbers would be increased price inflation in goods, but I predict that even inflation misrepresented as “profits” will not save Christmas stats this year.  Some skeptics of the ongoing crash will argue that Black Friday numbers this year were the best since 2013, therefore the holiday season will be a good one.  These people don’t know their economic history.  In most cases, holiday seasons that start off with a high traffic Black Friday end with poor overall sales data, including 2013.  This is because consumers that are cash strapped are more likely to buy early during Black Friday sales and spend far less over the rest of the season.

In the mind of the average American consumer, holiday retail sales are a primary indicator of the health of the economy. A dramatic crash in Christmas retail will end the delusion of a stable US system and cause the public to start asking questions. Economics is 50% math and 50% psychology. The math in the US economy says we are in the middle of a crash. The psychological orientation of the public has been on the opposite end of spectrum, but is now slowly moving to meet with reality. When the psychological delusion ends, the game is over. And, for the globalists a new game begins.

Order out of chaos is their motto for a reason…

The global “reset” as they sometimes refer to it, has already been triggered. Going into 2020, the question is will the fantasy fall completely away to reveal the grotesque economic swamp our foundation has been built on top of? Or, will the delusion drag on for at least one more year? Given the current data, I suspect the party is over. But it is difficult to predict how the public will react to a financial crash. Sometimes people have no choice but to acknowledge the danger in front of them, but sometimes they simply bury their heads in the sand deeper and hope that by dragging out the inevitable the inevitable will become forgettable.

This holiday season, American workers have little to celebrate

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By Danny Haiphong

Source: Intrepid Report

Every year, much of the U.S. population celebrates Thanksgiving and Christmas to show appreciation for their families and friends. Thanksgiving normalizes the colonial origins of the United States and erases the brutality of the English settlers who massacred indigenous people to prepare the land for capitalist accumulation. Christmas is the annual holiday of big business. On no other day are workers more encouraged to spend their wages on the latest consumer product to gift to their loved ones. The holidays bring with them a deep pressure to be merry. Yet on this holiday season, workers have little to celebrate.

A new study by Brookings Institution provides a snapshot into the devastation wrought on the working class by American capitalism. Forty-four percent of all workers between the ages of 18-64 are employed in low-wage sectors and earn an average of $16 or less per hour. The study excluded workers who logged over 98 hours per week over the last year as well as certain sections of the college-educated population such as those living in dormitories and attending graduate school. Had these groups of workers been counted, the percentage of low-wage workers out of the total population would likely be even higher. This verifies prior datasets which proved that around half of the U.S. population makes less $30,000 per year.

The growing poverty of the American worker is a major contributor to the growth of toxic stress and mental illness. Half of all U.S. adults will develop a mental illness over the course of their life. Serious mental health conditions afflict nearly ten million people in the United States and over a quarter of these individuals live below the official poverty line. Suicide rates are at a thirty-year high. An obvious connection exists between rising poverty and the worsening mental health of the American worker.

Workers in the United States see no future under the current stage of capitalism. They struggle to afford rent in a nation where the federal minimum wage cannot pay for a two-bedroom apartment anywhere in the country. They indebt themselves in the trillions to attend college and obtain healthcare. They work in redundant, service sector jobs where hours are long and mistreatment, abuse, and injury are all too common. The American worker is increasingly alienated from themselves and each other. Union density rates in the U.S. have fallen to just ten percent of all workers since World War II.

The shrinking labor movement has followed a larger trend in U.S. society. Privatization has decimated the public sector. Workers have few places to socially convene independent of the machinations of consumer capitalism. Workers are competing for fewer jobs, most of which are not worth competing for at all. Homelessness, mass incarceration, and endless war remind workers that they can easily be turned into cannon fodder if they step out of line. In such an environment, addiction and self-destruction is encouraged while organizing for justice is discouraged.

Economic insecurity and alienation place more pressure on families to make up for stagnant wages and exorbitant amounts of debt. More young workers are living with their parents than at any other time in the last one hundred years. Older workers are not only forestalling retirement but also finding themselves without family or community support as siblings and adult children chase the highest paying jobs and the lowest rents and property values. Couples feel compelled to remain in toxic relationships for economic reasons. A strong link exists between domestic violence and poverty.

Contrary to the messages in Hallmark cards or the corporate media, the holidays are far from a time of celebration. Many workers view the holiday season as a harsh reminder of the loss, alienation, and despair that they’ve experienced over the course of their lives. Holidays place added pressure on workers to dismiss the ills of capitalism and the personal stressors associated with them. It should come as no surprise that most workers already struggling with mental health conditions report that the holidays only worsen their symptoms. Instead of embracing humanity, the holidays encourage workers to embrace rampant commercialism and the nuclear family.

To break from a culture steeped in the profit motive, workers will need to create their own traditions based upon solidarity and social transformation. Not everything about the holidays needs to be thrown out in the process. Spending time with family and friends during a day off from work can and should be rewarding to the psyche and to society. The conditions of capitalism prevent the holidays from serving a social purpose. Holidays under capitalism breed despair but brand themselves as moments of pure joy.

While workers may have little to celebrate this holiday season, there are reasons for the working class to be optimistic in the years to come. Teachers in cities such as Chicago and Los Angeles have won key gains in 2019 by using the most powerful weapon at the disposal of organized labor: the strike. At the beginning of the year, the Los Angeles Teachers won smaller class sizes and more support staff. The Chicago Teachers Union massively increased the number of nurses in the school district by forcing the city to hire nurses rather than continue the inefficient and harmful practice of hiring private contractors. The UAW’s strike of General Motors (GM) earlier this Fall made global headlines even if it was unable to win every demand that the workers put forth. These strikes reflect a growth of class consciousness in the United States. The continued growth of class consciousness will be critical toward building the kind of struggle capable of bringing about massive political and economic change for the working class.

Furthermore, workers around the world are leading the way in the struggle against class inequality and foreign-sponsored wars. Massive protests in Haiti, Chile, Honduras, and Algeria are just a few of many occurring around the globe. The protests have mainly targeted repressive U.S.-backed governments and their neoliberal economic agenda. China is leading the world in poverty reduction. Cuba is the most sustainably developed nation in the world. A vast majority of workers around the world want to see an end of the miseries imposed by global capital and are actively fighting to make their demands a reality.

The question is whether workers in the United States can decisively break from the despair, the racism, and the extreme alienation shaping their current condition. Being determines consciousness. At this moment, the neoliberal race to the bottom has rendered most workers too fearful, disorganized, and full of self-blame to fight back. However, millions of workers have rallied behind the political campaign of Bernie Sanders. Labor unrest is likely to continue as neither political party appears interested in implementing Bernie Sanders’ social democratic agenda. Workers in the United States are in desperate need of a revived labor movement to quench their thirst for a better life. Putting our energies into building this movement will go a long way toward shaking the Holiday Blues and giving workers something to really celebrate: a society run by workers, in the interests of workers.