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A global police state? Digital capitalism and the rise of authoritarian leaders


William Robinson highlights some revealing statistics to expose what is really behind the rapid digitalization of global capitalism, the rise of authoritarian leaders and the creeping spread of the global police state. These, he says, are nothing but an insecure transnational capitalist elite’s attempt to insure themselves against rising inequality and a looming economic crisis.

William I. Robinson, Telesur TV

The transnational capitalist class is pouring billions of dollars into the rapid digitalization of global capitalism as the latest outlet for its surplus accumulated capital and hedging its bets on new investment opportunities in a global police state. But will these ballooning sectors of the global economy allow the world capitalist system to avoid another catastrophic crisis? Reports from international agencies and international economic data indicate a resounding “no.”

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Technocrats from the World Bank and the International Monetary Fund, even as they pointed to a projected increase in global growth this year from its post-crisis low in 2016, warned following their annual meeting in Washington D.C. this past Oct. 14-15 that “recovery is not complete” and that the world economy remains on fragile terrain.

There is good reason to believe that recovery will be ephemeral and that another crisis looms on the horizon. The underlying structural conditions that triggered the Great Depression of 2008 remain in place and a new round of restructuring in the global economy now underway is likely to further aggravate them. These conditions include unprecedented levels of inequality, public and private debt and financial speculation. A new crisis could be triggered by a bursting of the current stock market bubble, especially in the high-tech sector, by defaults in household or public debt, or by the outbreak of a new international military conflict.

Growth has plodded forward since 2008 through monetary instruments such as “quantitative easing” (essentially, printing money and making it available as credit) and bank and corporate bailouts, along with escalating consumer debt, a wave of speculative investment, especially in the high-tech sector, and ever increasing levels of financial speculation in the global casino. Now, however, central banks are running out of monetary instruments to promote growth.

In the United States, which has long been the “market of last resort” for the global economy, household debt is higher than it has been for almost all of postwar history. U.S. households owed in 2016 nearly US$13 trillion in student loans, credit card debt, auto loans and mortgages. In just about every OECD country the ratio of income to household debt remains historically high and has steadily deteriorated since 2008. The global bond market – an indicator of total government debt worldwide – has escalated since 2008 and now surpasses US$100 trillion.

Meanwhile, the gap between the productive economy and “fictitious capital” grows ever wider as financial speculation spirals out of control. Gross world product, or the total value of goods and services produced worldwide, stood at some US$75 trillion in 2015, whereas currency speculation alone amounted to US$5.3 trillion a day that year and the global derivatives market was estimated at a mind-boggling US$1.2 quadrillion.

The more farsighted among transnational elites have expressed growing concern over this fragility in the global economy and the specter of chronic long-term stagnation. Former World Bank and U.S. Treasury official Lawrence Summers warned last year of “secular stagnation” in the global economy, which has “entered unexplored, dangerous territory.” Yet these elites are not prepared to address the larger backdrops to global economic malaise, namely capitalism’s intractable problem of over-accumulation.

Overaccumulation: Capitalism’s Achilles Heel

The global economy remains plagued by the structural Achilles heel of capitalism – overaccumulation. The polarization of income and wealth is endemic to capitalism since the capitalist class owns the means of producing wealth and therefore appropriates as profits as much as possible of the wealth that society collectively produces. If capitalists cannot actually sell (or “unload”) the products of their plantations, factories, and offices then they cannot make profit. Left unchecked, expanding social polarization results in crisis – in stagnation, recessions, depressions, and social upheavals.

As capital went global from the 1970s and on the emerging transnational capitalist class, or TCC, was able to get around state intervention in the capitalist market and undermine the redistributive programs that had been established in the wake of the 1930s Great Depression. The TCC promoted vast neo-liberal restructuring, trade liberalization, and integration of the world economy. Public policy has been reconfigured through austerity, bailouts, corporate subsidies, government debt and the global bond market as governments transfer wealth directly and indirectly from working people to the TCC.

The result has been unprecedented global inequalities that, far from diminishing, have escalated at an astonishing rate since the 2008 Great Recession. According to the development agency Oxfam, just one percent of humanity owned over half of the world’s wealth in 2016 and the top 20 percent owned 94.5 of that wealth, while the remaining 80 percent had to make do with just 4.5 percent. Given such extreme polarization of income and wealth, the global market cannot absorb the output of the global economy. The Great Recession marked the onset of a new structural crisis of overaccumulation. Corporations are now awash in cash but they do not have opportunities to profitably invest this cash. Corporate profits surged after the 2008 crisis and have reached near record highs at the same time that corporate investment has declined.

As this uninvested capital accumulates, enormous pressures build up to find outlets for unloading the surplus. Trumpism in the United States reflects a far-right response to the crisis worldwide that involves authoritarian neo-liberalism alongside a neo-fascist mobilization of the disaffected, often nativist, sectors of the working class. Yet this repressive neo-liberalism ends up further restricting the market and therefore aggravating the underlying crisis of overaccumulation.

The TCC has turned to two outlets to unload surplus. One is militarized accumulation. The wars on drugs and terrorism, the construction of border walls, the expansion of prison-industrial complexes, deportation regimes, police, the military, and other security apparatuses, are major sources of state-organized profit making. The Pentagon budget increased 91 percent in real terms between 1998 and 2011 while defense industry profits nearly quadrupled during this period. Here there is a convergence around global capitalism’s political need for social control and repression and its economic need to perpetuate accumulation in the face of stagnation. Putting aside the escalating rhetoric of Trump’s war mongering, there is a built in war drive to current course of capitalist globalization. Historically wars have pulled the capitalist system out of crisis while they have also served to deflect attention from political tensions and problems of legitimacy.

The Digitalization of Global Capitalism

The other outlet has been a new wave of financial speculation in recent years, and especially in the over-valued tech sector. The tech sector is now at the cutting edge of capitalist globalization and is driving the digitalization of the entire global economy. Karl Marx famously declared in The Communist Manifesto that “all that is solid melts into air” under the dizzying pace of chance wrought by capitalism. Now the world economy stands at the brink of another period of massive restructuring. At the heart of this restructuring is the digital economy based on more advanced information technology, on the collection, processing, and analysis of data, and on the application of digitalization to every aspect of global society, including war and repression.

Computer and information technology first introduced in the 1980s provided the original technological basis for globalization. The first generation of capitalist globalization from the that decade and on involved the creation of a globally integrated production and financial system whereas more recently digitalization and the rise of “platforms” have facilitated a very rapid transnationalization of services, which by 2017 accounted for some 70 percent of the total gross world product. Platforms refer to digital infrastructures that enable two or more groups to interact. As the dependence of economic activity on platforms spreads the tech sector becomes ever more strategic to global capitalism. Digitalization and the transnationalization of services have moved to the center of the global capitalist agenda.

In recent years there has been another wave of technological development that has brought us to the verge of the “4th industrial revolution,” based on robotics, 3-D printing, the Internet of Things, artificial intelligence (AI) and machine learning, bio- and nanotechnology, quantum and cloud computing, new forms of energy storage, and autonomous vehicles. While the tech sector that drives forward this new revolution constitutes only a small portion of the gross world product, digitalization encompasses the entire global economy, from manufacturing and finance to services, and in both the formal and informal sectors. It is central to all of the processes associated with the global economy, from controlling and outsourcing workers, the flexibility of production processes, global financial flows, the coordination of global chains of supply, subcontracting and outsourcing, record keeping, marketing and sales.

In his study Platform Capitalism, political scientist Nick Srnicek shows how institutional investors, especially speculative hedge and mutual funds, poured billions of dollars into the tech sector since the 2008 Great Recession. This tech sector became a major new outlet for uninvested capital in the face of stagnation. Investment in it jumped from US$17 billion in 1970, to US$65 billion in 1980, then to US$175 billion in 1990, US$496 billion in 2000, and US$654 billion in 2016. A handful of U.S.-based tech companies have absorbed enormous amounts of cash from financiers desperate for new investment opportunities. In 2017 Apple held $262 billion in reserves, Microsoft held US$133 billion, Alphabet (Google’s parent company) held US$95 billion, Cisco held US$58 billion, Oracle held US$66 billion, and so on.

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Apologists for the current ruling order claim that the digital economy will bring high-skilled, high-paid jobs and resolve problems of social polarization and stagnation. But everything indicates quite the opposite: the digital economy will accelerate the trend towards ever more mass un- and underemployment along with precarious and casualized forms of employment. We are poised to see the digital decimation of major sectors of the global economy. Anything can be digitalized, and this is increasingly almost everything. Automation is now spreading from industry and finance to all branches of services, even to fast food and agriculture as members of the TCC seeks to lower wages and outcompete one another. It is even expected to replace much professional work such as lawyers, financial analysts, doctors, journalists, accountants, insurance underwriters and librarians.

In the United States the net increase in jobs since 2005 has been almost exclusively in unstable and usually low paid work arrangements. In the Philippines, an army of 100,000 outsourced workers earn a few hundred dollars a month searching through the content on social media such as Google and Facebook and in cloud storage to remove offensive images. Yet they too stand to be replaced by digital technology, as do millions of call center, data entry and software workers around the world, along with their counterparts in manufacturing and in other service sector jobs.

Digital Warfare and Global Police State

Digitalization makes possible the creation of a global police state. As it brings about a concentration of capital and heightened polarization, dominant groups turn to applying the new technologies to mass social control in the face of resistance among the precariatized and the marginalized. The dual functions of accumulation and social control are played out in the militarization of civil society and the crossover between the military and the civilian application of advanced weapons, tracking, security and surveillance systems. The result is permanent low-intensity warfare against communities in rebellion as theaters of conflict spread from active war zones to urban and rural localities around the world.

The new systems of warfare and repression made possible by more advanced digitalization include AI powered automated weaponry such as unmanned attack and transportation vehicles, robot soldiers, a new generation of “superdrones,” microwave guns that immobilize, cyber attack and info-warfare, biometric identification, state data mining, and global electronic surveillance that allows for the tracking and control of every movement. Militarized accumulation and accumulation by repression – already a centerpiece of global capitalism – may become ever more important as it fuses with new fourth industrial revolution technologies, not just as means of maintaining control but as expanding outlets for accumulated surplus that stave off economic collapse.

In this context, the rise of the digital economy appears to fuse three fractions of capital around a combined process of financial speculation and militarized accumulation into which the TCC is unloading billions of dollars in surplus accumulated capital as it hedges its bets on investment opportunities in a global police state.

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Financial capital supplies the credit for investment in the tech sector and in the technologies of the global police state. Tech firms develop and provide the new digital technologies that are now of central importance to the global economy. Ever since NSA whistleblower Edward Snowden came forward in 2013 there has been a torrent of revelations on the collusion of the giant tech firms with the United States and other governments in the construction of a global police state. And the military-industrial-security complex applies this technology as it becomes an outlet for unloading surplus and making profit through the control and repression of rebellious populations.

The structural crisis of capitalism in the 1970s launched the world on the path of neo-liberal globalization. The bursting of the dot-com bubble in 2000 then threw the world into recession. The bursting of the housing bubble in 2008 triggered the worst crisis since the 1930s. Everything indicates that the current tech boom is generating a new bubble that could bring another crisis when it bursts, perhaps in conjunction with debt defaults. The next Great Recession is likely to cement this fusion of digital economy and global police state, absent a change of course forced on the system by mass mobilization and popular struggle from below.

William I. Robinson is a Professor of Sociology, University of California at Santa Barbara.

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