Digital Capitalism

Many varieties of capitalist approaches do not build on Marx. In Hall and Soskice’s collected volume Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, which is the most widely read and cited book on the varieties of capitalism-approach, Marx and his works are conspicuous by their absence only. What is missing in the varieties of capitalism-approach is a focus on class relations, class struggle, surplus-value, exploitation, commodity fetishism, and ideology critique. Streeck (2016 chapter 9, 2010, 2009) stresses that the varieties of capitalist approaches put too much emphasis on differences. He argues for the study of the dynamic commonalities of capitalism (see also Pontusson 2005).

Why should national “capitalisms” become and remain different, despite powerful pressures for cross-national convergence emanating from the diffusion of technologies, international competition, border-crossing markets, transnational firms, international organizations, an increasingly global culture, and the like? (Streeck 2010, 17)

Just like globalisation, financialisation and acceleration, consumer culture and commodification, digitalisation is one of the factors that has advanced the convergence of national capitalisms. Digital technologies have the feature to help transcend boundaries, which under capitalist conditions has advanced capitalist societies convergence. In a way, varieties of capitalism approaches share postmodern theory’s focus on differences without unity. What is instead needed is more focus on what contemporary societies have in common, a focus on the unity in diversity of societies.

Karl Marx: Capitalism as a Formation of Society (Gesellschaftsformation)

Neither classical nor contemporary bourgeois theorists have given a satisfactory definition of capitalism. They all fall far behind Marx’s understanding. We need to start with Marx when we want to understand capitalism. Marx spoke of the “capitalist society” (e.g. Marx 1867, 103, 134, 667, 797, 875, 1063) and “the capitalist mode of production” (e.g. Marx 1867, 90, 95, 98, 125, 278, 341, 345, 382, 645, 711). This means that for Marx capitalism is both a type of the economy (Produktionsweise, mode of production) and a type of society (Gesellschaftsformation, a formation of society/societal formation). Other than Sombart, Weber, Schumpeter, and Giddens, Marx does not limit the notion of capitalism to the economy but assumes that it operates as a dialectic of the economy and society. Wolfgang Streeck argues in this context:

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Introduction

How to study contemporary capitalism, then? My first answer is: not as an economy but as a society – as a system of social action – and a set of social institutions. […] A capitalist society, or a society that is inhabited by a capitalist economy, is one that has on a current basis to work out how its economic social relations, its specific relations of production and exchange, are, to connect to and interact with its non-economic social relations. […] For this reason.alone, capitalism must be studied, not as a static and timeless ideal type of an economic system that exists outside of or apart from society, but as a historical social order that is precisely about the relationship between the social and the economic. (Streeck 2016, 201 & 203)

Streeck (2016, chapter 9) argues that analysing capitalism as a society means analysing it as an economic system, historical social order, culture, polity, and way of life.

Not all Marxist theorists share Marx’s view of capitalism as a formation of society. For example, Dobb (1946) sees capitalism as an “economic form” (p. 9), an “economic system” (p. 11), and “a distinctive economic order” (p. 13) where “a leisured class can exploit the surplus labour of others” (p. 17) and that is based on commodity production, labour-power as a commodity, the capitalist class’ control of the means of production, and surplus-value (pp. 7–8). Another example is the works of Erik Olin Wright. Wright (2006, 100) defines capitalism as an economic system that combines a) “a class structure characterized by private ownership of the means of production, whereby most people earn their living by selling their labour on a labour market“ and b) “ economic coordination organized through decentralized market exchange. Capitalism is not simply a ‘free market economy'; it is a market economy with a particular form of class relations“. Wright (2006, 101) reduces the notion of the capitalist society to “a society with capitalist economic structure“, which is not wrong but overlooks that the logic of capitalism is not limited to the economy but also shapes non-economic systems where it takes on emergent properties.

A formation of society (Gesellschaftsformation) is the totality of all dialectics of practices and structures and all dialectics of objects and subjects that humans produce and reproduce and through which humans produce and reproduce their life and relations in a routinised manner in space-time. The formation of society is a fundamental unity and totality of humans’ social production processes (see Fuchs 2020a, chapter 5). That such a totality of human life is routinised in space-time means that a formation of society’s dialectics of practices and structures are not just produced once, but are again and again recreated (reproduction) based on routines and social roles.

Chapter One | Introduction: What is Digital Capitalism?

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What is Capitalism?

Capitalism as a particular formation of society includes economic relations such as commodity production, markets, capital, labour as well as social, political, legal and cultural relations (Küttler 2008, 238). A formation of society is, according to Marx, a “totality” of “the material conditions of life” (Marx 1859, 262). In society, the material conditions of life is constituted by humans’ social production processes; social and societal production and reproduction processes form the materiality of society (see Fuchs 2020a).

For Marx, (1894, 957), a formation of society is “both a production process of the material conditions of existence for human life and a process […] that produces and reproduces these relations of production themselves”. A formation of society is the totality of relations that humans have “towards nature and one another” (p. 957). Social and societal relations and the conditions of human life are the “results and creation” of the social production processes of humans (p. 957). Human production produces and reproduces societal and social relations and human conditions of life (p. 957).

The originality of Marx’s notion of Gesellschaftsformation is that it is simultaneously both economic and non-economic. Marx analyses the special role of the economy in capitalist society and society in general without reducing the non-economic to the economic whole at the same time ascertaining the trans-economic role of production in all social systems of society so that the economy is in the form of social production sublated in the non-economic spheres, practices and dimensions of society where it takes on emergent qualities.

The concept of the formation of society (Gesellschaftsformation) functions both as a systematic bracket for the analysis of the economy and its effects on all other spheres of life in bourgeois society and as a framework concept for the methodological justification of this procedure in a more general conception of history and society. (Küttler 2001, 591)

Bob Jessop (1997, 2002) takes up Marx’s notion of Vergesellschaftung (societalisation) for the analysis of capitalism. He argues that the “capitalist economy and its dynamic” are “embedded in a wider nexus of social relations and institutions” and that capitalism is “a complex economic and extra-economic social relation” (Jessop 1997, 565). Societalisation has to do with the way of how the economic and the noneconomic are related in society and how social relations are organised. “Societalization refers to the production of ‘society effects’ within a specific ‘timespace envelope’: society effects have two dimensions - social cohesion and system (or institutional) integration” (Jessop 1997, 579, footnote 7).

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Introduction

Capitalist logic aims at making accumulation society’s principle of societalisation, which is a process of struggle, involving domination, struggles, resistance, and hegemony.

What bourgeois societalization really involves is the relative subordination of an entire social order to the logic and reproduction requirements of capital accumulation. […] here is wide variation in how far capitalist market forces (and the associated logic of profit-seeking) come to dominate the overall organization and dynamics of social formations. This raises questions about the conditions under which accumulation can become the dominant principle of societal organization (or societalization). For there are always interstitial, residual, marginal, irrelevant, recalcitrant and plain contradictory elements that escape subordination to any given principle of societalization and, indeed, serve as reservoirs of flexibility and innovation as well as actual or potential sources of disorder. This implies in turn that there is ample scope for conflict over societal projects that privilege radically different organizational principles as well as for conflict over rival projects based on the same principle. (Jessop 2002, 23, 22)

One should revise Jessops’s account with respect to the concept of accumulation. Individuals and groups not just accumulate money, but also decision-power, reputation, symbolic power, etc. The imposition of the logic of accumulation on other realms of society, therefore, does not necessarily imply that private ownership, markets and commodities are introduced, although in neoliberal capitalism this has often been the case.

For Marx, the two key features of the capitalist economy are the general production of commodities and the proletariat’s production of surplus-value that is appropriated and owned by the capitalist class and transformed into profit by commodity sales that enable the accumulation of capital and the reinvestment of capital:

Two characteristic traits mark the capitalist mode of production right from the start. Firstly. It produces its products as commodities. The fact that it produces commodities does not in itself distinguish it from other modes of production; but that the dominant and determining character of its product is that it is a commodity certainly does so! […] The second thing that particularly marks the capitalist mode of production is the production of surplus-value as the direct object and decisive motive of production. (Marx 1894, 1019–1020)

Chapter One | Introduction: What is Digital Capitalism?

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What is Capitalism?

For Marx, class antagonism is a key aspect of the capitalist economy. The working class produces in the unpaid part of the working day surplus-value that is not paid for and is appropriated by capital. “In capitalist society, free time is produced for one class by the conversion of the whole lifetime of the masses into labour- time” (Marx 1867, 667). The members of the working class are via capitalism’s dull compulsion of the labour market forced to sell their labour-power and produce capital, commodities, surplus-value, and profits for the capitalist class. The capitalist economy is a class system, in which workers produce commodities with the help of means of production that are the private property of members of the capitalist class. These commodities are sold on commodity markets so that profit is achieved and capital can be accumulated.

Class relations where capital exploits labour are a key feature of the capitalist economy. Workers are alienated from the conditions of production in class society because they do not own the means of production and the products of their labour. The logic of accumulation is not limited to the realm of the economy but extends into the political and cultural realms. We can therefore speak of capitalist society. Capitalism is a type of society where the mass of humans is alienated from the conditions of economic, political and cultural production, which means that they do not control the conditions that shape their lives, which enables privileged groups’ accumulation of capital in the economy, decision-power in politics, and reputation, attention and respect in culture. Alienation in the economy means the dominant class’ exploitation of the working class’ labour. Alienation in non-economic systems means domination, that is, one group’s benefits at the expense of other groups via means of control such as state power, ideology, and violence. In capitalism, we find the accumulation of capital in the economy, the accumulation of decision-power and influence in politics, and the accumulation of reputation, attention and respect in culture. The key aspect is not that there is growth, but that there is the attempt of the dominant class and dominant groups to accumulate power at the expense of others who as a consequence have disadvantages. Capitalist society is therefore based on an economic antagonism of exploitation between classes and social antagonisms of domination. Table 1.1 shows the levels and structures of capitalist society.

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Introduction

Capitalist society is, as Fernand Braudel stresses, “an accumulation of power” (Braudel 1982, 22). It should better be said that capitalism is a system, the totality of the accumulation of power, a “'system’ extending over the whole of society” (Braudel 1982, 239). Braudel does, however, not give a clear definition of capitalism and sees no special role of capital and class in contrast to other forms of power in capitalism.

David Harvey’s Understanding of Capitalism

My understanding of capitalism resonates with the one by David Harvey. Harvey defines capitalism as a capitalist society, namely as

any social formation in which processes of capital circulation and accumulation are hegemonic and dominant in providing and shaping the material, social and intellectual bases for social life. Capitalism is rife with innumerable contradictions […] racialisation and gender discriminations have been around for a very long time and there is no question that the history of capitalism is an intensely racialised and gendered history. […] although they are omnipresent within capitalism they are not specific to the form of circulation and accumulation that constitutes the economic engine of capitalism. This in no way implies that they have no impact on capital accumulation or that capital accumulation does not equally affect (“infect” might be a better word) or make active use of them. Capitalism clearly has in various times and places pushed racialisation, for example, to extremes (including the horrors of genocide and holocausts). Contemporary capitalism plainly feeds off gender discriminations and violence as well as upon the frequent dehumanisation of people of colour. The intersections and interactions between racialisation and capital accumulation are both highly visible and powerfully present. (Harvey 2014, 7–8)

Chapter One | Introduction: What is Digital Capitalism?

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What is Capitalism?

Capitalist Accumulation

For Harvey, capital accumulation is the central feature of capitalist society that shapes all aspects of this society. It is not clear if he by “accumulation” refers to the accumulation of capital only or, as I argue, the logic of accumulation that originated in the economy but diffused into all realms of capitalism. In a capitalist society, the economy plays a special role because all realms of society are conditioned, shaped, and influenced by the logic of accumulation and by class relations.

Table 1.2 shows how we can make sense of accumulation as a general process and in capitalist society. In capitalism, alienation takes on the form of accumulation processes that create classes and inequalities. Capitalism is based on capitalists’ accumulation of capital in the economy, bureaucrats’ accumulation of decision-power and influence in the political system, and ideologues’, influencers’ and celebrities’ accumulation of reputation, attention, and respect in the cultural system. Capitalism is an antagonistic system. Its antagonisms (see Table 1.2) drive its development and accumulation. Accumulation is an antagonistic relationship that not just constitutes dominant classes and groups but also subordinated, dominated, and exploited groups such as the working class in the capitalist economy dominated citizens in the capitalist political system, and ideologically targeted everyday people in capitalism’s cultural system.

Capitalist society’s antagonistic relations that drive accumulation are the source of inequalities and crises, which means that capitalism is an inherently negative dialectical system. As a response to crises, the ruling class and ruling groups require mechanisms they use for trying to keep the dominated class and dominated groups in check so that they do not rebel and revolt. Capitalism, therefore, is also an ideological system where dominant groups use the logic of scapegoating for blaming certain groups for society’s ills and problems. Scapegoating entails the logic of the friend/ enemy-scheme. And the friend/enemy-scheme can lead to violence, fascism, racism, anti-semitism, and nationalism. Capitalism has barbaric potentials. Crises of capitalism can be fascism-producing crises that turn barbarism from a potentiality of capitalism into an actuality. Only class and social struggles for socialism and democracy can keep capitalism’s negative potentials in check.

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Introduction

In a capitalist society, powerful actors control natural resources, economic property, political decision-making, and cultural meaning-making, which has resulted in the accumulation of power, inequalities, and global problems, including environmental pollution as well as the degradation and depletion of natural resources in the naturesociety-relation, socio-economic inequality in the economic system, dictatorships and war in the political system, ideology and misrecognition in the cultural system.

Undeniably the outlined model of capitalist society has certain parallels to and has to some degree been influenced by Pierre Bourdieu’s (1984) work (see Fuchs 2003, 2008). Bourdieu has generalised Marx’s approach and stresses the importance of accumulation processes in the creation of inequality. But he went a step too far and overgeneralised the notions of capital and class so that they are not specific to the capitalist economy but features of contemporary society in general. For Bourdieu, there are economic, political/ social, cultural, and symbolic forms of capital and dimensions of class. In my own approach, class and capital are economic categories. I share Bourdieu’s insight that accumulation is a key feature of the logic of capitalist society. Bourdieu focused many of his analyses on cultural capital. My approach in contrast is interested in the analysis of society as a capitalist totality, its accumulation processes, antagonisms, and struggles.

Robert L. Heilbroner’s Definition of Capitalism

Robert L. Heilbroner (2018; see also 1985) defines capitalism as “a system of social domination” (2018, p. 1380) and a “historical formation with distinctive political and cultural as well as economic properties” (p. 1383) whose “organizing principle is the ceaseless accumulation of capital” (p. 1380) and that is characterised by the accumulation of wealth as commodities that takes on the form of the “never-ending metamorphosis” M-C-M’ (p. 1379) (money capital is invested, which results in the production of commodities that are sold so that more money capital M’ that contains a surplus-value and profit is produced), the institution of the private property of the means of production (p. 1379), the institution of the wage-labour-contract (p. 1379) and the “propertyless waged labor force” (p. 1380), the capitalist class that is both an economic and a political force (p. 1379), the division between the two realms of the capitalist economy and the state that interact dialectically (pp. 1381–1382), as well as a culture characterised by the “calculating mind-set” (p. 1382) and “the pre-dominance of a prudent, accountant-like comparison of costs and benefits” (p. 1382) and the separation of scientific, political, economic and moral belief systems so that the “ideology of economics” emerged that removes the “problem of good and evil” from political economy and relegates it to the realm of morality (p. 1383). Further immanent features of capitalism that Heilbroner identifies include its “constant revolutionizing of the techniques of production and its continuous commodification of material life” (Heilbroner 2018, 1384), the global expansion of capitalism so that there is a global search for cheap labour-power, cheap raw materials and markets for the sale of commodities (p. 1385), and economic crisis tendencies (p. 1386).

Chapter One | Introduction: What is Digital Capitalism?

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What is Capitalism?

Heilbroner provides a comprehensive understanding of capitalism as a type of society that is first and foremost informed by Marx. A key feature of capitalism is that in the class relation between capital and labour, capital exploits labour so that the latter produces commodities, profit and surplus-value that are the private property of the capitalist class. In his definition of capitalism, Heilbroner does not give much attention to the notions of class and exploitation.

A key feature of capitalism that Heilbroner does not discuss is the political-ideological tendency of the creation and reproduction of scapegoats that are blamed for capitalism’s social ills in order to try to distract attention from the systemic causes of societal problems. It is a consequence of what Horkheimer and Adorno (1947/2002) term the dialectic of the Enlightenment as an important feature of capitalist society, i.e. the tendency of the “self-destruction of enlightenment” (Horkheimer and Adorno 1947 [2002], xvi) in and through capitalism that results in “the reversion of enlightened civilization to barbarism” (p. xix). Capitalism’s freedom of private ownership comes into conflict with social freedom (everyone’s right to lead a good life). There is a capitalist antagonism between economic and social freedom that is at the heart of capitalism’s fascist, racist, anti-Semitic, and nationalist potentials. Auschwitz was a culmination of capitalism’s barbaric potentials. Capitalist society’s antagonisms create crises that increase the likelihood that capitalist barbarism is transformed from potentiality into actuality. In such situations, accumulation turns via crises into annihilation. Crises of capitalism have the potential to be fascism-producing crises. Only social struggles for socialism, humanism, and democracy can keep capitalism’s fascism- and Auschwitzproducing potentials in check. In Heilbroner’s key book on the analysis of capitalism’s logic, The Nature and Logic of Capitalism (Heilbroner 1985), there is no discussion of capitalism’s violent, fascist, racist, anti-Semitic, and nationalist potentials and realities. It is important to overcome the Auschwitz-blindness of many definitions of capitalism.

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Introduction

Furthermore, one should add to Heilbroner’s understanding that in capitalism, individual capitalists are compelled to compete for investment opportunities and the cheapening of resources, that there is a capitalist dialectic of economic competition and monopoly so that competition creates oligopolies and monopolies, and that the political economy of capitalist globalisation not just includes the global search for cheap raw materials, cheap labour and commodity markets but also the global search for opportunities for capital export and investment so that new realms of accumulation are created, and warfare as international and global means for the defence and expansion of capitalism’s logic. Furthermore, one should also add to Heilbroner’s understanding of capitalism the importance of finance capital that follows the accumulation cycle M-M’ in capitalism.

Heilbroner stresses that capitalism is not simply an economic system but a type of society. This is why he speaks of capitalism as a historical formation, social system of domination, “capitalist society” (Heilbroner 2018, 1380), and also as a “social formation” (see Heilbroner 1985, chapter 1). Importantly, Heilbroner stresses that there are economic, political and cultural dimensions of capitalist society. For Heilbroner, the economic logic of capital accumulation determines the roles of the state and of ideology in capitalist society, which means that he reduces politics and culture to the logic of capital accumulation: “All the foregoing aspects of the system can be traced to its inner metabolism, the money–commodity–money circuit” (Heilbroner 2018, 1387). What is missing in Heilbroner’s understanding of capitalism is the dialectic of the economic and the non-economic: the logic of accumulation originated in the capitalist economy and has shaped all realms of capitalist society, where the logic of accumulation takes on specific forms that have relative autonomy such as the accumulation of decision-power in capitalist society’s state system and the accumulation of reputation and definition-power in capitalist society’s cultural system (see Fuchs 2020a).

1.4 What is Digital Capitalism?

The notion of digital capitalism originated in the context of the eulogisation of finance capitalism: The earliest mentioning of the term “digital capitalism” that I was able to trace was in a 1993 article in Forbes magazine, where Forbes then-senior editor Robert Lenzner, a Forbes senior editor, and Forbes reporter William Heuslein wrote the issue’s cover story titled “The Age of Digital Capitalism” (Lenzner and Heuslein 1993). The article describes “computerized financial instruments” (Lenzner and Heuslein 1993, 63), derivatives such as options, futures, currency forwards, interest-rates swaps, options on futures and swaps, etc. “Computers make all this magic [of derivatives] possible. […] Think of all this as an adult Nintendo game with big dollar signs attached” (Lenzner and Heuslein 1993, 63). Digital technologies have played an important role in finance capitalism. Ironically, the financial instruments that Forbes celebrated at the time of the popularisation of the World Wide Web 15 years later played an important role in the global economic crisis that started in 2008.

Chapter One | Introduction: What is Digital Capitalism?

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What is Digital Capitalism?