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Tag Archives: state capitalism

State Capitalism in the Internet Age

In 21st century societies, we must consider the commanding heights the state must jealously guard also consists of social media, search, and online retail.  The lords of facebook, twitter, google, and amazon are gatekeepers of communication with enormous power over culture.

While anyone would be wary of government control over these services, the obvious approach is to maintain these systems without interfering with their function.
They were developed in private shops just as the telephone was but likewise cannot remain solely private.

Social media in modern society is part of the basic communication grid like landlines are.
Would we rather have government or Zuckerberg with power over the telephone service?

Since we consider telephone a utility, how about we ask the same question about other utilities?  What if Zuckerberg could turn off your water or electricity if you say something he doesn’t like—Total Recall-style?
In real life, facebook is a private business that can refuse service.  The only real deterrant against dictatorial control is the potential for poor service to encourage the rise of competitors.  

However, when there’s an entrenched monopoly it is much harder for a correction to take place through market forces.  This is why, even though governments are flawed, it’s necessary to have firm regulations in securing these vital arteries.
For many, facebook is almost a prerequisite to participate in normal society.  Imagine if the DMV could refuse to issue you a driver’s license because they don’t like you!

The core problem is that some services are natural monopolies.  We refer to many of them collectively as “utilities.”  It makes sense to have an electrical grid, railroads, waterworks, sewage, trash under one organization.  These are domains where the barrier to entry is high and where bottlenecks mean competition can clutter or even cripple the system.  The last thing anyone wants is 20 different companies building competing pipelines or powerlines.

On the internet, no one wants to go back and forth between 20 different search engines. I’m sure plenty of readers here remember switching between webcrawler, altavista, askjeeves, yahoo, and about a dozen others before google got in front of the pack and never looked back.

Who looks back nostalgically to a time when you couldn’t get amazon’s low prices, unequaled variety, and numerous product reviews?  Remember when people got movies and video games hoping they’d picked something decent?  Or back when many people got thick consumer reports magazines in the mail?

Perhaps even more importantly, amazon’s natural monopoly of internet retail has become a platform for countless small merchants and authors.  Why not just make some regulations to prevent abuses and keep this mostly the way it is?  The government could even use amazon as a dial to control incentives for a micro-merchant economy.

It’s good to let a natural monopoly be, but as we can see with water or electricity, we can’t play the market game of price discovery.  The solution is to have the state regulate prices, allowing the monopoly a modest profit.  To some this might sound like some kind of commie plot, but just think for one second what the electrical bill would look like without government price controls.

Beyond prices, we should consider that an area’s water supply can’t be switched off on a whim.  Even when people don’t pay their bills, there must be fair warning.  This strikes no one as being outlandish or communist.  We intuitively understand that basic infrastructure must be protected by special rules.

While the natural monopolies of the internet are mostly free for users, we can see there are still prices in a less tangible way as we depart from an enlightenment-materialist mindset.
If we extend the anti-abuse principle we realize there must be strict anti-manipulation policies for social media and search just like there is for the stock market.

On Twitter, shadowbanning, promoting the tweets of dectractors while burying supportive tweets, or manipulating the list of trending hashtags aren’t that different from insider trading. One party rigs the game for unearned monetary profit, another tries to manipulate a collective culture to serve a private agenda.
Both are means of subverting the entire society.
Some kind of government SEC would watch over natural internet monopolies and punish those who try to cheat.

What cannot be allowed is for these private mass entities to run rampant with no control at all.  Even if we have a perfectly selfish ruler who just wishes to stay in power, ceding control of the commanding heights is dumb and suicidal. 

When was the last time the electric and water companies were a serious threat to the power of the state?
What about social media tycoons, big banks, the insurance industry, or the military industrial complex?
The answer speaks for itself.
The ruler who does not control the commanding heights creates a free market for the control of government.

Some Form of State Capitalism Is the Future

When faced with real emergencies like the Great Depression and World War 2, governments around the world, regardless of ideology behaved with the same tendency.  From the Soviet Union to the United States, the state exercised great direct control over the economy.  When things get tough, every economy leans towards becoming a command economy.  We know we’ve stumbled on a constant of government when everybody does it.  

Free market apologists who see all control as communism might point out how the Soviets were forced to allow privatized farm plots.  But they ignore the importance of anti-monopoly laws, inventions from NASA/DARPA research, or the highway system in the US.  Rather than one extreme or the other, there’s clearly a spectrum between control and freedom and the goal is to find a golden mean.

The ability of the market to self-regulate and create spontaneous solutions makes it valuable as an RandD department for society.
Plus it’s better and easier to let the crowd decide on the price of eggs than have some overpaid state bureaucrat do it.

State capitalism then allows the market to do what it does best while controlling the “commanding heights.”
This means, you don’t let the finance sector control the banking system, foreign billionaires buy up utilities and newspapers, or let competing railroads be laid down in different gauges by competing companies.  If you have a strategic commodity like oil or natural gas, you don’t leave anything to chance.

Free market capitalism, on the other hand, allows market entities to capture and control the commanding heights.  Then the parasite load predictably spirals out of control until basic needs like healthcare are both low-quality and crushingly expensive.   At this point, this kind of system becomes an anachronistic, dysfunctional embarassment.

What’s worse, is laissez faire capitalism has been tried before in the USA and failed every time.  Yet it somehow escaped becoming discredited as communism was. In the 1890s people finally had enough after the gilded age of robber barons culminated in yet another economic crisis.  Then, when laissez faire economics returned in the 1920s, the result was the disaster of the world-wide Great Depression that became a major cause of WW2.
 
Today, a sprawling US Star Empire spanning an entire continent and careening toward the 400 million population mark with every known alien race represented on its city-planets finds it simply no longer has the luxury of failing to govern itself.  If it does not change of its own volition, emergencies will force it to change.

Meanwhile, all around the world, various shades of state capitalism preside over rapidly growing economies with governments that aggressively pursue the national interest.
In stark contrast, free market nations are stagnant at best, allow a pan-national elite to indulge in banana republic exploitation, crushing wages with off-shoring and the never-ending mass immigration of hostile peoples. 

The leaders of state capitalist countries commonly have approval ratings over 80% while it’s typical for the do-nothing US congress to have under 20% approval.  The last French president–I’m not sure how that’s possible–had less than 10% approval!  It is not hard to see in which direction the future lies.

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