The Information Superhighway to Serfdom

In the 1940's an Austrian academic wrote a book with the provocative title The Road to Serfdom. His bogeyman was not concentrated private wealth, but the government. He argued that if the government took too much control of the economy from private actors, people would be reduced to dependency on the state, and thus be reduced to "serfs."  This philosophy, elaborated by others and codified in the "Austrian School" holds that individual actors, absent the government, will lead to an ideal economy where concentrations of wealth power are impossible. This philosophy has been used throughout the past forty years as a justification to dismantle the state's role in economic affairs and reduce taxes on businesses and capital in general, far beyond the intentions of the book's author.

A lot of people  are waking up and noticing that we seem to be traveling down the road to serfdom, but it's not at all the scenario outlined by the Austrian School of an all-powerful communist government.  There doesn't seem to be much in the way of central planning, or any planning at all, in our current economic arrangement. Indeed, the government in the United States cannot even guarantee affordable health care or decent education to its citizens (although it will lock them up for long periods for minor infractions). Rather, the private sector seems to have decided that it just doesn't need most of us anymore. Private wealth has concentrated to an extent never seen before, even surpassing civilizations such as ancient Rome and the Medieval period.

In this powerful post, Ian Welsh points out that capitalism is based on dependency, whether on the state or private corporations. In clear, simple language, he spells out what we are not supposed to think about - the logic of the unregulated capitalist market (do go and read the whole thing):

Capitalism is based on dependency—on wage laborers needing to work for someone else, or their lives are miserable or short.  (Marx’s “whip of hunger”.)  It is voluntary only in the sense that you can offer your labor to anyone willing to pay, not in the sense that you can opt out of the system and have anything approaching a decent life. 

Today, if you lose your job and you’re an ordinary person, you can’t support yourself. If the government, friends or family don’t give you what you need, you have to beg for it.  If you don’t get it, you die. ...Absent a job, or charity, you will probably wind up dead... 

Our forebears in the 19th century understood this. It’s why they called jobs “wage slavery.”  You do what you’re told by your boss, where you’re told to do it, when you’re told to do it, how you’re told to do it, and if you don’t, feel free to try and find another job...Whether you can find another job is often unrelated to your personal attributes and has little to do with anything approaching virtue...Those who came out of the Great Depression understood this because they had seen many people, through no fault of their own, reduced to poverty, unable to find any work....What they didn’t do was overthrow capitalism...As a result, many men stayed in positions of vast private power and wealth...and were eventually able to use that money to overthrow the liberal state...  

What is on offer, then, is not neo-feudalism, with neo-serfs, but aristocrats and their slaves–slaves towards whom the aristocrats feel less and less an obligation to even feed (see all the cuts to food stamps). In some ways it’s superior to even slavery for the master-class: Surplus labor beyond what is needed to keep wages down is now completely disposable and doesn’t have to be paid for, after all. 

So understand this: What is being offered you, increasingly, is a chance to scramble for pennies from your masters and when considered superfluous to their needs, to suffer and quite probably die before your time. 

Serfdom?  You should be so lucky.

Serfdom Is Better Than What the West is Heading For (Ian Welsh)

The words serfdom and feudalism have come up an awful lot lately, and almost always with reference to the new economy powered by automation that is currently being developed by Silicon Valley.

Master and servant. Cornucopian wealth for a few tech oligarchs plus relatively steady but relatively low-paying work for their lucky retainers. No middle class, unless the top 5 percent U.S. income bracket counts as middle class. Silicon Valley is a tableau vivant of what many economists and professional futurologists say is the coming fate of America itself, a fate to which Americans, if they can’t embrace it as some futurologists hope, should at least resign themselves. 

The increasing ability of computers to perform ordinary tasks will inexorably transform America into an income oligarchy in which the top 15 percent of people—with skills “that are a complement to the computer”—will enjoy “cheery” labor-market prospects and soaring incomes, while the bottom 85 percent, that is to say, 267 million out of America’s 315 million people, will be lucky to find Walmart-level jobs or scrape together marginal “freelance” livings running $25-a-pop errands for their betters via TaskRabbit (say, picking up and delivering a pair of designer shoes). 

“There are many other historical periods, including medieval times, where inequality is high, upward mobility is fairly low, and the social order is fairly stable, even if we as moderns find some aspects of that order objectionable,” Cowen writes in his new book.
In other words, what is coming is the “new feudalism,” a phrase coined by Chapman University urban studies professor Joel Kotkin, a prolific media presence whose New Geography website is an outlet for the trend’s most vocal critics. “It’s a weird Upstairs, Downstairs world in which there’s the gentry, and the role for everybody else is to be their servants,” Kotkin said in a telephone interview. “The agenda of the gentry is to force the working class to live in apartments for the rest of their lives and be serfs. But there’s a weird cognitive dissonance. Everyone who says people ought to be living in apartments actually lives in gigantic houses or has multiple houses.” 

The big names in tech might be awash in capital and might have made their founders billionaires (New Economy founders typically retain large blocks of their own stock), but they employ surprisingly small numbers of U.S. workers. Google, the valley’s largest employer, has 46,000 people on its payroll. Facebook employs only 4,600, and Twitter, in San Francisco, fewer than 2,000. 

Apple claims 400,000 people putting together components and creating apps and other extras for its iPhones, iPads, iPods, MacBooks, and desktop computers. Yet only 16,000 of those are on the payroll in Cupertino. Another 31,000 work at Apple operations in Texas and other states, but the vast bulk of manufacturing is outsourced abroad via contractors to China and other cheap-labor purgatories. Yet those 16,000 in Cupertino make Apple the second-largest employer in the valley. The New Economy generates prosperity all right, prosperity that mostly flows to those in the upper echelons.

Silicon Chasm (The Weekly Standard)

Why? Why do we hate the new tech boom?

The answer has two parts. First, there is unsettling realization that the middle is losing economic ground while Silicon Valley execs babble on about “changing the world” for the better. Income inequality is growing ever worse, and it is increasingly clear that one of the forces fueling this trend is the technological innovation flowing out of the Bay Area. Second: The very fact that this boom is not a bubble, and will not suddenly vanish, means we can’t ignore it, or laugh it away. This is the new normal, and for those not lucky enough to have catered foodie gourmet lunches in brand-new downtown office complexes, the new normal sucks. Back in 1999-2000, the ridiculousness of what was happening was so obvious that it was hard to take it seriously. Everyone knew an economy boom built on online pet product company IPOs was doomed. Sooner or later, the bubble would pop and sanity would be restored and all those annoying dot-commers crowding your favorite bar or restaurant would go back to where they came from. The traffic would finally ease up.

But that’s not going to happen this time. The current boom isn’t a flash in the pan, doomed to disappoint arriviste gold miners. It’s here to stay. A mature Internet economy is generating huge riches, and it is remaking the face of San Francisco and the larger Bay Area in the process. But unless you really, truly want a job chauffeuring the new rich around town, or delivering their same-day groceries, or pouring their flights of craft beers — jobs that, incidentally, won’t pay enough to afford you an apartment anywhere in San Francisco — this new boom may not seem worth cheering about. Might as well root for it to fail.

All over the Bay Area, according to Joint Venture Silicon Valley, average incomes are rising, while median household incomes are falling — a strong sign that the wealth created by the thriving tech economy is not getting evenly distributed.

Unemployment is obviously and thankfully down — but serious questions remain as to the distribution of the new jobs. It’s a familiar story nationwide: The last couple of decades have seen the middle class get squeezed, and new technological innovations that have resulted in the automation or outsourcing of jobs are a big part of that narrative. The rising antagonisms directed at the tech economy’s nouveau riche are a direct consequence of a couple of decades of seeing “Star Trek”-like technological advances accompanied by a measurable fall in individual living standards.

Why we hate the new tech boom (Salon)

But wait — won't the digital economy eventually lead to better jobs? After a period of adjustment, won't things get better? Unfortunately that's not the path we're on. One of the biggest misconceptions about the digital economy is that for every middle-class job rendered obsolete by technology, there's a new, equally good (or better) job created by Silicon Valley. 

But exactly the opposite is happening. The digital economy is vaporizing the good jobs and replacing them with two kinds of jobs: minimum wage jobs (think Amazon warehouse employees) and so-called "sharing-economy jobs" (think Uber drivers).
The sharing-economy jobs are even worse than minimum wage jobs because they offer no stability or protections for workers. Sharing economy jobs aren't really jobs at all; they're freelance gigs. 

Sure, Silicon Valley doesn't owe America jobs. But something is wrong with the picture of a handful of tech billionaires overseeing a kingdom of falling wages, decreased worker protection and zero job security.  

This "winner-take-all" digital economy is not sustainable. People on both sides of the political spectrum are worried. Liberal luminary Robert Reich, a professor at the University of California at Berkeley and former secretary of labor under Bill Clinton, calls the sharing economy the "share-the-scraps" economy. Speaking of tech companies that utilize on-demand labor, such as Uber, Instacart and Taskrabbit, he says, "The big money goes to the corporations that own the software. The scraps go to the on-demand workers." 

Meanwhile, conservative columnist Ross Douthat fears a dystopian future in which "a rich, technologically proficient society will no longer offer meaningful occupation to many people of ordinary talents." 

Put simply, Silicon Valley's utopia is the rest of America's dystopia. And those who are punished more than anyone else are recent college graduates, whose lifetime earning potential has already suffered an irreversible setback. 

And if you think your own job is safe, think again. New research predicts that nearly half of all jobs are susceptible to automation over the next two decades. This is a giant leap backward, but it's deceptively described as technological "progress." As anyone who's talked to an automated system on the phone lately can attest, "automated" usually means "worse." 

What can be done? How can we fight this slide back toward the Middle Ages? If we take no action, we're headed toward a kind of digital world feudalism where there are a handful of kings, a lot of peasants and no middle class.

Silicon Valley to millennials: Drop dead (CNN)

Digital overlords with harems of women presiding over a workforce of on-demand, precarious, overworked, impoverished servants who are unable to even afford a family, is a grim view of the future.

From the above articles, it's hard to blame 'Big Government" on this new reality which so many writers instinctively compare to feudalism.

But as Ian Welsh points out, serfs had rights, and serfs had access to what they needed to sustain themselves, giving them a modicum of independence. This was eliminated with the enclosure movement, and indeed Neoliberalism has been described as a new enclosure movement. It's also been described as "accumulation by dispossession," as formerly public services are sold into private hands, and the people whose ancestors' time talent and treasure went into building them now have to buy them back from the investor class.

The benefits that were extended to the public during the twentieth century were predicated on economic expansion and the fact that large amounts of people were needed for production, what David Blacker calls the "all hands on deck" phase of capitalism, or otherwise the "Fordist" model. The Post office, public schools, parks, libraries, zoos, and the like were created as a part of this expansion. Today all of those are under merciless assault.

Now we're in a new phase. Several economists have used the analogy of horses to describe the plight of modern workers. Here's economist Wassily Leontief:

Any worker who now performs his task by following specific instructions can, in princi­ple, be replaced by a machine. That means that the role of humans as the most important fac­tor of production is bound to diminish — in the same way that the role of horses in agricul­tural production was first diminished and then eliminated by the introduction of tractors. 

The general theoretical proposition that the worker who loses his job in one industry will necessarily be able to find employment, possibly after appropriate retraining, in some other industry is as invalid as would be the assertion that horses who lost their jobs in transportation and agriculture could neces­sarily have been put to another economically productive use.

A warning about the robot revolution from a great economist. (Fabius Maximus)

And Gregory Clark:

There was always a wage at which all of those horses could have remained employed. But that wage was so low that it did not pay for their feed.

Machines Replacing Humans: They Shoot Horses, Don’t They? (Asymptosis)

The rulers of the past also had a sense of noblesse oblige. But the philosophy of the new ruling class predicates against this. It says that the economy is a perfect meritocracy, and the ruling class deserves their position due to "skills" and "talent." It furthermore says that the people who are struggling deserve to struggle because of their incompetence, laziness and stupidity. The impoverishment of Americans has been accompanied by a raft of articles about the loss of "values" of the poor - their eschewing of marriage, their out-of-wedlock births, their lack of (extraordinarily expensive) college degree attainment, even their poor dress and grooming habits.

Today's elite believes that they are John Galts holding the world on their shoulders. Furthermore, they believe that the poor are simply parasites on the work of great men like themselves. This self-justifying ideology allows them to rationalize a world where the vast majority are getting poorer even while they amass unprecedented fortunes. Furthermore, government protection just retards"progress" and shelters the weak from the consequences of their own actions in this view. Unlike the aristocrats of the past, today's elite feel no compunction to improve society for everyone, only for themselves, because they are told that their selfishness is what drives "progress." In place of past notion of the common good, they have latched on the the philosophy of Libertarianism and Ayn Rand:

The truth is, what Silicon Valley still calls “Disruption” has evolved into something very sinister indeed. Or perhaps “evolved” is the wrong word: The underlying ideology — that all government intervention is bad, that the free market is the only protection the public needs, and that if weaker people get trampled underfoot in the process then, well, fuck ‘em — increasingly recalls one that has been around for decades. Almost seven decades in fact, since Ayn Rand’s “The Fountainhead” first put her on the radar of every spoiled trust fund brat looking for an excuse to embrace his or her inner asshole.

Consider the following quote…

    The question isn’t who is going to let me; it’s who is going to stop me.

Or this one…

    The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.

Either of those lines could have come from the mouth of Travis Kalanick, or any of his Disruptive ilk. The first is frighteningly close to the line you’ve heard from every entrepreneur you’ve ever wanted to punch: “It’s easier to seek forgiveness than ask permission.” The latter is just a really great excuse for breaking whatever silly law is frustrating your ambitions. Of course, both quotes are Rand.

But Rand’s worldview isn’t confined to breaking laws and risking public safety. It’s when she moves on to human relationships that she really gets into her stride. Courtesy of The New Republic (hardly the most liberal of publications), here’s a handy guide to some other things that Rand and her followers believe….

    Greed good; altruism evil
    It’s rational to be self-interested, selfishness is thus a mark of high ethics. Q.E.D. Winners deserve to be winners because they are winners.

    The rich are being exploited by the poor
    In Atlas Shrugged, Rand’s hero John Galt grows tired of the leeching workers that live off the business acumen of others, so he leads an upper-class strike that leaves industry decimated. Rand’s point is that without economic supermen, the country would collapse. She of course ignores the fact that the same outcome would result if every working stiff in the country up and quit too.

    No social services
    Rand compared Medicare, which she reportedly received, to “a ‘hoodlum’ who robs and kills to acquire a yacht and champagne.”

    Male chauvinism
    Rand was a self-professed “male chauvinist” who believed women should engage in male hero-worship. For this reason, she rejected the idea of a female president. [Specifically she said: “For a woman to seek or desire the presidency is, in fact, so terrible a prospect of spiritual self-immolation that the woman who would seek it is psychologically unworthy of the job”]

Travis Shrugged: The creepy, dangerous ideology behind Silicon Valley’s Cult of Disruption (Pando)

So while Silicon Valley is no doubt a socially progressive place (i.e. gay marriage), if one looks past social beliefs, there is as much ruthlessness as you’d expect in any capitalist industry. Look at the offshore tax avoidance, the despicable overseas working conditions, the outright violations of privacy and illegal behavior. There is a very real arrogance within Silicon Valley that seems to care little about rules and regulations.

Libertarianism preaches a night-watchmen government that stays out of businesses way, and allows private industries to regulate themselves. It is a utopian ideology, as was communism, that has an almost religious-like faith in the free market, and an absolute distrust of any government. It is a perfect philosophy for a large corporation, like Apple, Google or Facebook. If we lived in an ideal libertarian society, these companies would not have to avoid taxes, because they would be non-existent, and they wouldn’t have to worry about annoying restrictions on privacy. In a libertarian society, these companies could regulate their own actions, and surely Google, with their famous “Don’t be evil” slogan, believes in corporate altruism.

In the Valley, innovation and entrepreneurship is everything, so a blind faith in the market is hardly shocking. And last year one of the leading libertarians, Rand Paul, flew out to San Francisco to speak at the Lincoln Labs Reboot Conference, held to “create and support a community of like-minded individuals who desire to advance liberty in the public square with the use of technology.” Paul said at the conference, “use your ingenuity, use your big head to think of solutions the marketplace can figure out, that the idiots and trolls in Washington will never come up with,” surely earning laughs and pats on the back.

Rand Paul has had one on one meetings with Mark Zuckerberg, and the floating island billionaire himself, Peter Thiel. The founder and CEO of Uber, Travis Kalanick is another noted libertarian, who used to have the cover of Ayn Rand’s “The Fountainhead” as his twitter icon. Kalanick runs Uber just as a devoted follower of Ayn Rand would, continuously fighting regulators and living by what writer Paul Carr has called the “cult of disruption.” Carr nicely summarizes the philosophy of this cult: “In a digitally connected age, there’s absolutely no need for public carriage laws (or hotel laws, or food safety laws, or… or…) because the market will quickly move to drive out bad actors. If an Uber driver behaves badly, his low star rating will soon push him out of business.”

So basically, with the internet, regulation has become nothing more than a outdated relic of the past, and today consumers truly have the power to make corporations behave by speaking out on social media, or providing negative ratings on Yelp, or filing a petition on Change.com, etc. It is the same old libertarian argument wrapped up in a new millennial cloak, that corporations will act ethically because if they don’t, consumers will go elsewhere.

Welcome to “Libertarian Island”: How these One Percenters are creating a dystopian nightmare (Salon)

And Silicon valley is reflecting this new reality:

The 1% wants to ban sleeping in cars – because it hurts their 'quality of life' (Guardian)

Homeless on the steps of Airbnb: the faces of San Francisco's other story (Guardian)

San Francisco Catholic Church Floods Steps to Keep Homeless Away (Gawker)

Skyrocketing Prices Drive Single Mom to Rent San Mateo Garage for $1K a Month (NBC)

In Silicon Valley, a New Investment: Eviction (Bloomberg)

The Jungle: San Jose shuts notorious homeless encampment (San Jose Mercury News)

This Map Of Homelessness In Silicon Valley Shows Just How Close The Tech Elite Are To The Destitute (Business Insider)

HOTEL 22: The Dark Side Of Silicon Valley (Business Insider)

Crushing Dispatches from Inside the Silicon Valley Culture Bubble (ValleyWag)

Serfdom? We should be so lucky. Most of us are headed to the glue factory leaving the new overlords to pop nootropics like candy and genetically engineer their children. If you aren't scared you might want to read this: Death Is Optional.