Digital Capitalism

History and Class Consciousness has just like Karl Marx’s works influenced the development of Marxist humanism, an approach that has an emphasis on dialectical analysis alienation, practices, class struggles, and democratic socialism (see volumes 1 and 2 of my book series Media, Communication and Society, of which the volume at hand forms volume 3). In France, Henri Lefebvre has been the most important 20thcentury Marxist theorist and Marxists humanist. There are many parallels between Lefebvre and Lukács. Lefebvre was the French Lukács. Henri Lefebvre (1901–1991) was a Marxist-humanist philosopher and sociologist. He can be considered as the most important and most influential French Marxist theorist. He published more than 60 books, including the three-volume The Critique of Everyday Life and The Production of Space (for an analysis of how The Production of Space matters for a critical theory of communication, see Fuchs 2019 ). Chapter 5 (“Communication in Everyday (Digital) Life. A Reading of Henri Lefebvre’s Critique of Everyday Life in the Age of Digital Capitalism”) analyses how Henri Lefebvre’s three-volume Critique of Everyday Life helps us to critically analyse the analysis of digital capitalism.

Theodor W. Adorno (1903–1969) was a German philosopher and sociologist who together with Max Horkheimer shaped the approach of Frankfurt School critical theory. Among Adorno’s most well-known works are Dialectic of Enlightenment (written together with Horkheimer), The Authoritarian Personality, Minima Moralia: Reflections from Damaged Life, Introduction to the Sociology of Music, Hegel: Three Studies, The Jargon of Authenticity, Negative Dialectics, and Aesthetic Theory. Chapter 4 (Adorno and the Media in Digital Capitalism) analyses how Adorno’s works can inform the critical analysis of digital capitalism.

Dallas Smythe (1907–1992) was a Marxist political economist who played an important role in the formation of the academic field of the political economy of communication. Smythe’s most influential work has been his essay Communications: Blindspot of Western Marxism, in which he coined the notions of the audience commodity and audience labour that he uses in the analysis of advertising’s political economy. These concepts have been revived as the foundation of the analysis of the political economy of targeted advertising on social media platforms. Chapter 6 (Dallas Smythe and Digital Labour) focuses on the question of how Smythe’s work can inform the analysis of platforms such as Facebook and what role the concept of digital labour plays in this context (see also Fuchs 2012, 2014a, 2014b, 2015).

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Introduction

One can frequently hear that the thought of Marx and those inspired by him is outdated and is no longer relevant today. Thinkers such as Marx, Engels, Lukács, Adorno, and Smythe were not just analysing the time they live in but also provided concepts that are relevant for the general analysis of capitalism and can therefore be updated for the analysis of digital capitalism. Given that capitalism has taken on peculiar forms in the 21st century, Marxian analysis continues to be of high relevance in the age of digital capitalism.

1.2 This Book’s Chapters

Chapter 2 is focused on “Friedrich Engels in the Age of Digital Capitalism”. It asks: How relevant are Friedrich Engels’s works in the age of digital capitalism? It shows that Engels class-struggle–oriented theory can and should inform 21st-century social science and digital social research. Based on a reading of Engels’s works, the chapter discusses how to think of scientific socialism as critical social science today, presents a critique of computational social science as digital positivism, engages with foundations of digital labour analysis, the analysis of the international division of digital labour, updates Engels’s Condition of the Working Class in England in the age of digital capitalism, analyses the role of trade unions and digital class struggles in the digital age, engages with platform co-operatives, digital commons projects and public service Internet platforms are concrete digital utopias that point beyond digital capital (ism). Engels’s analysis is updated for critically analysing the digital conditions of the working class today, including the digital labour of hardware assemblers at Foxconn and Pegatron, the digital labour aristocracy of software engineers at Google, online freelance workers, platform workers at capitalist platform corporations such as Uber, Deliveroo, Fiverr, Upwork, or Freelancer, and the digital labour of Facebook users.

Chapter 3 is titled “History and Class Consciousness 2.0: Georg Lukács in the Age of Digital Capitalism and Big Data”. It discusses the relevance of Georg Lukács’ 1923 book History and Class Consciousness in the context of digital capitalism. It does so by analysing how Lukács’ concepts of the dialectic of subject and object, ideology, reification, reified consciousness matter today in the context of big data and digital capitalism. The essay shows that History and Class Consciousness’ critique of reification, ideology, and reified consciousness remains highly topical in the age of digital capitalism and big data. Lukács’ analysis allows us to critically analyse how social media, big data, and various other Internet technologies are used as tools of reification. At the same time, Lukács reminds us that only human praxis can establish alternatives.

Chapter One | Introduction: What is Digital Capitalism?

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This Book’s Chapters

Chapter 4’s title is “Adorno and the Media in Digital Capitalism”. The aim of the chapter is to show the relevance of Theodor W. Adorno’s critical theory for the analysis of digital capitalism. After an introduction (section 4.1), section 4.2 deals with prejudices against Adorno. Outright rejection and opposition to Adorno are particularly prevalent in the field of Cultural Studies. Section 4.3 engages with and updates the notion of the culture industry in the age of digital capitalism. It outlines the foundation of the concept of the digital culture industry. Section 4.4 updates Adorno’s concept and theory of the authoritarian personality. Drawing on empirical research on how Donald Trump and other right-wing authoritarians use Twitter and other social media, it is shown how authoritarianism is communicated on social media. Section 4.5 deals with the question whether we live in a digital society or digital capitalism. It builds on a similar question that Adorno was asking about industrialism, namely Do we live in an industrial society or in a capitalist society? Taken together, the analysis aims to show the relevance of Adorno’s critical theory as part of an update of Marxist theory in the 21st century for the critical analysis of communication and digital capitalism.

Chapter 5’s title is “Communication in Everyday (Digital) Life. A Reading of Henri Lefebvre’s Critique of Everyday Life in the Age of Digital Capitalism”. Henri Lefebvre (1901–1991) was one of the most influential French Marxist intellectuals of the 20th century. Chapter 4 asks: How can Henri Lefebvre’s Critique of Everyday Life inform a critical theory of communication? How can it inform a critique of digital capitalism?

Everyday life is an important category for a dialectical theory of society and communication. Lefebvre stresses the dialectical multidimensionality of society and alienation, which allows us to distinguish between the economic, political, and the cultural as dialectically interacting and interpenetrating dimensions of society, capitalism, alienation in general, capitalist alienation, and alienation in digital capitalism. Lefebvre reminds us of the predominantly capitalist character of digital technologies. In digital capitalism, we find an ideology that mystifies information and the digital. Computing has the potential to deepen capitalism and class and to advance socialist selfmanagement. Lefebvre’s work resonates with the critical theory of digital labour.

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Introduction

Chapter 6’s title is “Dallas Smythe and Digital Labour”. Dallas Smythe established the notions of the audience commodity and audience labour in 1977 for understanding the political economy of commercial media using advertising as their capital accumulation model. His article has resulted in a foundational debate of Media and Communication Studies that involved Smythe Graham Murdock and Bill Livant. In recent years there has been a very significant rise of references to Smythe’s concepts of audience labour/ commodification in academic works. This increasing interest has on the one hand to do with a return of a stronger interest in Marx’s works and Marxist political economy as well as the rise of social media platforms such as Facebook, YouTube, Twitter, Weibo, Pinterest, Instagram, Blogspot, VKontakte, LinkedIn, Tumblr etc. that use targeted advertising as their capital accumulation model. Explaining how this form of capital accumulation model rises has resulted in the development of the category of digital labour. This chapter presents foundations of how to use Dallas Smythe for understanding digital labour on advertising-funded social media.

Chapter 7 holds the title “From Digital Positivism and Administrative Big Data Analytics Towards Critical Digital and Social Media Research”. It argues for a paradigm shift in the study of the Internet and digital/social media. Big data analytics is the dominant paradigm. It receives large amounts of funding, is administrative and is a form of digital positivism. Critical social media research is an alternative approach that combines critical social media theory, critical digital methods and critical-realist social media research ethics. Strengthening the second approach is a material question of power in academia.

Chapter 8 holds the title “Social Media, Big Data, and Critical Marketing”. Its task is to critically understand social media and big data’s political economy. It outlines key classical texts (section 8.2), contemporary texts (section 8.3), and future research directions (section 8.4) that can help us achieve this goal. The focuses on four classical thinkers and one text by each of them: Dallas Smythe, Karl Marx, Raymond Williams, and Sut Jhally. The chapter also focuses on two key areas of current critical research about social media: digital labour and digital alienation.

Studying social media and big data from a critical marketing perspective is interesting but also complex. It involves multiple dimensions, topics, questions, and approaches. Chapter 8 identifies possible research questions that remain fairly unexplored and could be taken up by PhD students and other scholars.

“Social Media and the Capitalist Crisis” is the title of chapter 9. It focuses on an analysis of social media’s roles in the crisis of capitalism. I first present a Marxist analysis of the causes of the ongoing capitalist crisis. It focuses on empirical indicators that measure the development of factors that influence the Marxian rate of profit. The second part discusses the role of targeted social media advertising in the crisis. It focuses on the development of global advertising since the start of the crisis in 2008 and processes of financialisation. The social media industry stands in the context of these developments. The third part discusses ideology in the context of social media. I present empirical results that challenge the idea that contemporary rebellions and revolutions are Twitter revolutions, but stress at the same time that we can also not completely dismiss the role of the Internet in collective action, but rather need a dialectical-realist analysis grounded in empirical social research. I also present some initial empirical findings of the phenomenon of red scare 2.0 in the United Kingdom. It shows how anti-socialist ideology about Jeremy Corbyn is played out and challenged on Twitter. The presentation aims to show how social media are in complex ways embedded into the contradictions of capitalist society, economy, politics and ideology.

Chapter One | Introduction: What is Digital Capitalism?

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This Book’s Chapters

Chapter 10’s title is “Capitalism, Patriarchy, Slavery, and Racism in the Age of Digital Capitalism and Digital Labour”. It asks: How can understanding the relationship of exploitation and oppression inform the study of digital labour and digital capitalism? Chapter 10 combines the analysis of capitalism, patriarchy, slavery, and racism in order to analyse digital labour. The essay presents a typology of differences and commonalities between wage labour, slave labour, reproductive labour, and Facebook labour. It shows that the digital data commodity is both gendered and racialised. It analyses how class, patriarchy, slavery, and racism overgrasp into each other in the realm of digital capitalism. The chapter also introduces the notions of the organic composition of labour and the rate of reproductive labour and shows, based on example data, how to calculate these ratios that provide insights into the reality of unpaid labour in capitalism.

Chapter 11 is focused on “Digital Labour and Imperialism”. Lenin’s Imperialism, the Highest Stage of Capitalism, Bukharin’s Imperialism and World Economy that were both published in 1917 as well as Rosa Luxemburg’s 1913 work The Accumulation of Capital spoke of capitalism as imperialism. It was a time of strikes for pay rises, Henry Ford’s invention of the first assembly line that laid the foundations for Fordism, World War I, trusts and monopolies, antitrust laws, the October Revolution, the Mexican Revolution, the failed German revolution, etc. It was a time of the extension and deepening of as well as of challenges to capitalism. Chapter 11 first reviews the notion of the role of the international division of labour in classical concepts of imperialism. It then uses these foundations for discussing the role of the international division of labour in the production of information and information technology today and introduces in this context the notion of the international division of digital labour. The overall task is to illuminate the relationship of digital labour and imperialism.

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Introduction

Chapter 12’s title is “The Information Economy and the Labour Theory of Value”. It discusses aspects of Marx’s labour theory of value in the context of the information industries. First, taking the Temporal Single-System Interpretation of Marx’s labour theory of value as methodology, the chapter calculates economic demographics at the level of socially necessary labour time and prices of an example case. Second, the chapter questions the assumption that the labour theory of value cannot be applied to the information industries. This chapter tests this hypothesis with an analysis of the development of labour productivity in six countries. Chapter 12 concludes that the labour theory of value is an important tool for understanding the information economy and the peculiarities of the information commodity.

Chapter 13 is the conclusion of the book Digital Capitalism. It presents the main findings of the previous chapters and discusses further implications.

1.3 What is Capitalism?

In order to understand what digital capitalism is, we need an understanding of what capitalism is all about. We need to ask: What is capitalism?

Werner Sombart: Modern Capitalism as Entrepreneurial Acquisition

Werner Sombart (1863–1941) was a German sociologist and economist. In 1902, he published the book Der moderne Kapitalismus (Modern Capitalism). He contributed to the sociology of capitalism. Sombart defines capitalism as an economic system dominated by capital that is focused on the acquisition of money by competition and technological increase of productivity:

capitalism designates an economic system significantly characterized by the predominance of “capital” […] The spirit, or the economic outlook, of capitalism is dominated by three ideas: acquisition, competition, and rationality. The purpose of economic activity under capitalism is acquisition, and more specifically acquisition in terms of money. The idea of in creasing the sum of money on hand is the exact opposite of the idea of earning a livelihood, which dominated all precapitalistic systems, particularly the feudal-handicraft economy. […] While acquisition constitutes the purpose of economic activity, the attitudes displayed in the process of acquisition form the content of the idea of competition. […] Economic rationality penetrates gradually into other cultural spheres, reaching even those which are only remotely connected with economic life. […] capitalist technology must insure a high degree of productivity. […] The technology characteristic of the capitalist system must also lend itself most readily to improvement and perfection. For constant technical improvements are an important weapon in the hands of the capitalist entrepreneur, who seeks to eliminate his competitor and to extend his market by offering goods superior in quality or lower in price. […] The Ideal Entrepreneur combines the traits of inventor, discoverer, conqueror, organizer, and merchant. (Sombart 2017, 4, 6, 9, 11, 12, 15)

Chapter One | Introduction: What is Digital Capitalism?

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What is Capitalism?

Joseph Schumpeter: Capitalism as Entrepreneurial Creative Destruction

Sombart sees the entrepreneur as the subject of capitalism who invents new economic strategies. Sombart here anticipated the Austrian-American economist Joseph Schumpeter’s (1883–1950) stress on the entrepreneur as the subject who innovates capitalism by causing creative destruction. Schumpeter defines capitalism as “that form of private property economy in which innovations are carried out by means of borrowed money, which in general, though not by logical necessity, implies credit creation” (Schumpeter 1939, 216) and where “[c]reative destruction is the essential fact” (Schumpeter 1943/2003, 83).

Sombart’s and Schumpeter’s definitions of capitalism fetishise and idealise the capitalist as capitalism’s subject and are methodologically individualist in character. The economy is reduced to the individual spontaneous activity of the entrepreneur. There is neither a capitalist class nor the working class in these definitions of capitalism. They are devoid of class, labour, surplus-value, surplus-labour, and exploitation – elements that are key for the Marxian understanding of capitalism. Sombart stresses the need to grow capital as a feature of capitalism and that technological innovation is a means for capital growth. Schumpeter has a strong focus on creative destruction via technological innovations.

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Introduction

Max Weber: Capitalism as Calculation of Capital

In the introduction to his book The Protestant Ethic and the Spirit of Capitalism, the German sociologist Max Weber (1864–1920) gives a definition of capitalism:

But capitalism is identical with the pursuit of profit, and forever renewed profit, by means of continuous, rational, capitalistic enterprise. […] We will define a capitalistic economic action as one which rests on the expectation of profit by the utilization of opportunities for exchange, that is on (formally) peaceful chances of profit. […] Where capitalistic acquisition is rationally pursued, the corresponding action is adjusted to calculations in terms of capital. This means that the action is adapted to a systematic utilization of goods or personal services as means of acquisition in such a way that, at the close of a business period, the balance of the enterprise in money assets (or, in the case of a continuous enterprise, the periodically estimated money value of assets) exceeds the capital, i.e. the estimated value of the material means of production used for acquisition in exchange. […] The important fact is always that a calculation of capital in terms of money is made, whether by modern book-keeping methods or in any other way, however primitive and crude. Everything is done in terms of balances: at the beginning of the enterprise an initial balance, before every individual decision a calculation to ascertain its probable profitableness, and at the end a final balance to ascertain how much profit has been made. (Weber 1992, xxxi–xxxiii)

Like Sombart, Weber takes from Marx implicitly the notion of accumulation of capital for defining capitalism. But he does not speak of accumulation, but of renewed profit, capitalistic acquisition, and capital excess. Weber’s notion of rational action is at the heart of his understanding of capitalism which is why he stresses that capitalists have to make calculations about invested capital and expected returns in order to yield profits. Weber influenced the Frankfurt School’s notion of instrumental rationality. His understanding of capitalism falls behind the one of Marx. It lacks a focus on class and exploitation and the labour process that creates commodities and surplus value that are owned by the capitalist class.

The examples of Weber, Sombart, and Schumpeter show that bourgeois definitions of capitalism often are focused in a one-sided manner on capitalists’ actions, interests and rationality. Such understandings disregard the class antagonism and capital’s exploitation of surplus-value producing labour that, as Marx writes, is the “secret of profit-making” (Marx 1867, 280).

Chapter One | Introduction: What is Digital Capitalism?

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What is Capitalism?

Although Anthony Giddens has thoroughly read Marx, which is why he stresses that capitalism “is a class society“ (Giddens 1984, 317) and that the “buying and selling of time, as labour time, is surely one of the most distinctive features of modern capitalism” (Giddens 1984, 144), when it boils down to defining capitalism, the definition he and his colleagues give is devoid of the working class and its exploitation and the focus is on the action of capitalists: capitalism is an “economic system based on the private ownership of wealth, which is invested and reinvested in order to produce profit” (Giddens et al., 2018, 14).

Insofar as they use and define the term capitalism, also neoliberal economists have often understood capitalism as economic order. For example, one of the most famous neoliberals, Milton Friedman, defines capitalism as “organization of the bulk of economic activity through private enterprise operating in a free market” (Friedman 1962 [2002], 4).

Varieties and Commonalities of Capitalism

Hall and Soskice’s (2001) varieties of capitalism approach are grounded in institutional political economy. They see the firm as the central actor in capitalism. According to Hall and Soskice, the firm operates in five spheres: (1) the sphere of industrial relations where working conditions are defined, (2) the sphere of relations between firms and their employees, (3) inter-firm relations, (4) the sphere of corporate governance, (5) the sphere of vocational training and education.

Hall and Soskice understand capitalism not just as an economic system, but as an economic system plus its governance and educational relations. Spheres (1), (2) and (3) constitute economic relations, sphere (4) is political in character, and sphere (5) is part of the cultural system of society. Sphere (5) disregards cultural institutions that are important in the definition of meanings, ideologies, and knowledge, and the reproduction of the body and the mind, especially the media system, entertainment, sports, health care, and the academic system. Furthermore, Hall and Soskice do not include systems and spheres shaped by the accumulation logic that stand outside of the economic system into the definition of capitalism. The problem of institutional approaches is that they define actors such as firms as capitalism’s central collective actors. They do not give enough attention to the key roles that classes and class struggles play in capitalism.

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Introduction

Hall and Soskice (2001) distinguish between two basic types of capitalism, namely liberal market economies and coordinated market economies:

In liberal market economies, firms coordinate their activities primarily via hierarchies and competitive market arrangements. […] In coordinated market economies, firms depend more heavily on non-market relationships to coordinate their endeavors with other actors and to construct their core competencies. These non-market modes of coordination generally entail more extensive relational or incomplete contracting, network monitoring based on the exchange of private information inside networks, and more reliance on collaborative, as opposed to competitive, relationships to build the competencies of the firm. (Hall and Soskice 2001, 8)

Albert (1993) distinguished between the Anglo-American and the Rhine model of capitalism, which is a differentiation that corresponds to the one made by Hall and Soskice. Esping-Andersen (1990) worked out an early version of the varieties of capitalism approach that defines three political economies that he characterises as “three models of welfare capitalism” (Esping-Andersen 1990, 221): the liberal model, the social-democratic model, and the corporatist-statist model.

What Hall and Soskice define with their typology is a distinction between neoliberal capitalism and Keynesian capitalism. But there have also been other forms of capitalism, including right-wing authoritarian and fascist forms of capitalism (such as Nazi-Germany), state capitalism with a socialist ideology such as contemporary China, clientelist versions of capitalism, etc.

Critics stress Hall and Soskice’s neglect of statist forms of capitalism, the need of allowing for the conceptual existence of hybrid models, and the functionalist and dualist character of Hall and Soskice’s approach (Crouch 2005, chapters 1 and 2; Hancké, Rhodes and Thatcher 2007, 7–8; Schmidt 2002; Streeck 2010). Various authors have identified more than two models of capitalism. Schmidt (2002, chapter 3) defines three models of capitalism: market capitalism, coordinated capitalism, and state capitalism. Whitley (1999, chapter 2) defines six types of capitalism: fragmented capitalism, coordinated industrial district capitalism, compartmentalised capitalism, stateorganised capitalism, collaborative capitalism, highly coordinated capitalism. Amable (2003, chapter 3) speaks of five types of capitalism: market-based capitalism (the Anglo-Saxon model), social-democratic capitalism, Asian capitalism, Continental European capitalism, and South European capitalism. He characterises these models along five dimensions: competition, the wage-labour nexus, the financial sector, social protection, and education. The culture here only plays a role in the form of education, while aspects such as the media system and ideology are missing.

Chapter One | Introduction: What is Digital Capitalism?

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What is Capitalism?