Labour's New Economics Conference: Part Two, Digital Session
by Wendy Liu (@dellsystem) on February 21, 2018



This is the second part of our write-up and analysis of Labour’s New Economics Conference on alternative models of ownership. The “Alternative Models of Ownership” report is available here, and our analysis of the report here. This part focuses on the “21st century challenges: platform co-ops and the digital era” breakout session. You can find our recap of the introductory session here.

It can be frustrating to read the mainstream discourse on the challenges posed by technology platforms. It feels like we’re finally at a point where everyone recognises that tech companies are not unambiguously good, no matter how much they talk about making the world a better place. On the other hand, there’s often very little proposed in the way of actual solutions. The most common narrative seems to consist primarily of hand-wringing, coupled with the same tired lines about a little more regulation or breaking up monopolies. There’s a distinct lack of imagination here, an inability to see beyond the horizons of neoliberalism, which makes it difficult for many to envision how technology could function outside of the current economic paradigm.

In that context, it was refreshing to attend this breakout session, where all the panelists seemed quite willing to rethink deeply ingrained assumptions about how technology should work and—more to the point—how it should be owned. Given the pace of technological development, and its potential implications for the battle between capital and labour, ownership of technology may become the key economic question of our time. This session showed that Labour is prepared to tackle that question, and was a major step up from the strategy set out by the Shadow Digital Minister in December.

This session was moderated by Chi Onwurah, Labour MP for Newcastle upon Tyne Central since 2010 and Shadow Minister for Industrial Strategy, Science and Innovation since 2016. Onwurah began with a personal backstory: she’s been a network engineer for two decades, and what motivated her upon that career path was the intention of using technology to make the world a better place. Now, though, Onwurah sees technology as part of the problem; networks can distribute power, sure, but they can also centralise it, and in recent years we’ve only seen the latter. Whatever freedom technology once represented, especially in the form of the Internet, it’s now clear that the freedom it brings is primarily one-sided: freedom for its owners, but not for its end users.

Onwurah sees this as the result of two separate but entwined factors. The first comes down to a stunning lack of diversity within the tech industry—those in positions of power are overwhelmingly wealthy, white, and male, and as a result less likely to challenge or even notice the prevailing power structures from which they’ve benefitted. The second has to do with the fact that so much recent technological development occurred during a time of neoliberal consensus, when it felt only natural that the fruits of government-funded advances in technology would be appropriated by the private sector.

As the narrative around neoliberalism continues to crumble, we’ll have to ensure that the discourse around technology changes with it. Most importantly, that means rethinking who should own and control the technology upon which we’ve all become so reliant. Some analogies to the welfare state could be useful here—Onwurah suggested that we could reconceptualise cloud computing as social housing for the digital age, whereby digital resources are provided as a free public good for those who need it. Such a proposal would have the welcome side effect of weakening the market power of commercial players—Amazon, for instance, owes the majority of its profits to Amazon Web Services, its cloud computing arm.

Michael Jacobs on automation

First to speak was Michael Jacobs, director of IPPR’s Commission on Economic Justice and former advisor to Gordon Brown. Most of his talk centred around the challenges presented by automation, in line with a report that IPPR released in December. Jacobs stressed that we shouldn’t think of automation as something dramatically new that has never been experienced before; after all, automation has a long history, which was chronicled even in Marx’s time. What Jacobs pinpointed as new to our era—what some call the second machine age—is that it’s not just routinised manual labour that’s being automated away, but also cognitive labour, once thought the preserve of humans. What we’re experiencing now is a qualitatively different type of automation, and it’s happening on a different scale than has ever happened before.

Mainstream discourse around automation tends to frame it as a threat, posing a “risk” to particular professions or even jobs in general. It’s a very pessimistic outlook, but it makes sense; when we’ve organised our entire economy around the idea that most people should be working, it’s hard not to see automation in a negative light. Although the longer-term potential of automation includes reducing the primacy of work (and especially unpleasant work), such a dramatic reorganisation of the economy will not happen overnight, and in the meantime we must address the challenges in the short term.

For Jacobs, that means counteracting automation’s tendency to shift the balance of power away from labour. Beyond directly replacing workers, automation will result in more labour becoming substituted by capital, meaning that returns to capital will result in ever-greater wealth concentration. This is familiar ground for anyone who’s heard much about Thomas Piketty’s Capital in the Twenty-First Century, and Jacobs suggests that if we wish to avoid the increase in inequality that will ensue, we need to counter that shift.

One such strategy would be to embolden labour, by empowering trade unions to manage the challenges posed by automation. In recent years, we’ve seen a hollowing-out of the middle classes as many highly-educated workers (previously considered “skilled”) are now considered “unskilled”, whereas those lucky enough to take advantage of technological change are paid more than ever. Unions could play a crucial role in linking high- and low-wage work, by consolidating bargaining power between the two and thus ensuring that the benefits of automation are shared equally among workers, instead of being used to foster divisions. An ancillary option, which Jacobs mentioned briefly, is to ensure that labour owns more capital, for example via sovereign wealth funds (discussed at more length in the IPPR report).

Jacobs ended with some thoughts on tech platforms. He reminded us that we’re living in an era when companies like Apple and Facebook have more market dominance—and the ensuring cultural, social, and political power that comes with it—than any corporation or possibly even nation state has ever had before. These corporations acquired this power primarily through their hold on our data, which they’ve hoovered up and monetised in ways that we often don’t even know about.

Jacobs didn’t explicitly frame the problem in terms of enclosure of the commons of the digital age, but the concept feels like an apt description of what he outlined. The fact that all these unaccountable corporations have been allowed to keep their hold on our data, purely in exchange for providing some services, may be one of the greatest economic tragedies of our time, one that most of us are only just starting to realise. Perhaps it’s now time to reclaim this digital commons, bit by bit.

Nick Srnicek on platform capitalism

Next to speak was Nick Srnicek, lecturer in Digital Economy at King’s College London and author of Platform Capitalism. Srnicek’s talk focused on technology platforms and the technical architectural features that lead them toward monopoly. He defined a platform as an intermediary between multiple (not necessarily just two) types of users—for example, Facebook provides an interface between advertisers, app developers, publishers, brands, and consumers, among others. The reason so many new technology platforms are natural monopolies comes down to three main factors: network effects (the more users a platform has, the more useful it becomes); competitive advantages resulting from data extraction; and path dependency as other services come to depend on the original platform.

Srnicek proposed that these monopolistic tendencies are severe enough that we should not count on either regulation or competition as a means of settling the problem. The traditional response to natural monopolies, as Srnicek has written, is nationalisation, in order to take these services into public ownership. It’s not a major leap to see that such a solution could still be relevant for the digital age.

Of course, things won’t necessarily be as simple as that: these platforms are global in scope, and their assets are primarily intangible in nature, which means they lack the geographic fixity that made railways or electricity providers so prone to nationalisation. Srnicek acknowledged that the exact details of how one would nationalise an explicitly transnational technology corporation remains an open question. Still, he noted, absent any larger framework of close international cooperation, our next best option is to use the national solutions in our toolbox. A government willing to ban access to, say, Uber or Amazon domestically has enough bargaining power to drastically change the economic landscape, whether it’s by promoting a domestic (and ideally public) alternative or by enforcing stricter regulation in line with democratic aims. Concerns about the possibility of bolstering the surveillance state could be assuaged; Srnicek suggested that similar concerns were raised with Royal Mail, and it’s just a matter of creating the right legal and technical framework to make privacy a non-issue.

Srnicek ended by proposing some specific, smaller-scale solutions that could nevertheless have significant impact on the technological terrain, both in terms of providing useful services and as a means of checking the power of unaccountable corporations. The first was to nationalise mobility—TfL, for example, could become more of a platform, and if Uber wanted to be part of it, it would have to be subject to TfL’s regulations regarding worker pay and conditions. The second was to nationalise cloud computing, in line with Onwurah’s earlier comment about the social housing equivalent of Amazon Web Services. The last was for more co-operative platforms: Twitter, for example, could be democratically run and owned.

Francesca Bria on the smart city

The last speaker was Francesca Bria, Digital Commissioner for Barcelona City Council. Bria’s talk focused on the idea of the smart city, characterising it as an important battleground for addressing the question of technology ownership on a smaller scale. At a time when cities are voluntarily giving up their sovereignty to technology corporations—witness Alphabet’s planned takeover of Toronto, or Amazon’s Hunger Games-like search for its new campus—Bria’s call for a municipal digital revolution concurrently with a democratic revolution offers an alternative perspective, and one that’s sorely needed. The main thrust of her talk is that we should be rethinking the concept of the “smart city” from the ground up, in order to ensure that technology is controlled by democratic means and not technocratic fiat.

This means expanding our understanding of a “smart city” beyond the confines of what’s normally within the remit of municipal governments, by examining the wider context of technological development in recent years. Bria mentioned the recent rise of self-service checkouts, which masquerade as an enhancement for the sake of efficiency but whose more important function is to outsource jobs to the consumer so that the retailer can save on labour costs. This sort of technological advance highlights how the deployment of technology often follows existing economic trends; when it comes to the dominant economic paradigm, technology companies are typically unrevolutionary, instead advancing neoliberal principles. Bria criticised the rising “Uberisation” of the economy, whereby corporations increasingly outsource responsibility to workers, the result of which is increased precaritisation.

As Onwurah said at the beginning of the session, networks can distribute power, or they can centralise it. The growing importance of the Internet has resulted in a truly unprecedented concentration of wealth among a small number of companies. Bria noted that the world’s most valuable public companies were, at the end of 2017, Apple, Alphabet, Microsoft, Amazon and Facebook—all technology companies, and all headquartered in either California or Washington state. Their reticence to pay tax is, by now, fairly well-known, but what’s possibly more worrying is that these companies are behaving like financial institutions, controlling investment flows on the basis of their enormous wealth.

Bria reminded us that much of this wealth is predicated on rent extraction on the basis of our data, and mentioned Shoshana Zuboff’s term “surveillance capitalism” which neatly captures the extent to which data extraction has become the new economic model for the digital age. Bria suggested that the question of who owns this data could determine the future, to paraphrase Angela Merkel at Davos earlier this year. In other words, the current situation is not necessarily inescapable; it could be addressed with the requisite political will.

Bria then sketched out some solutions, including invoking antitrust law; taxing income flows; and changing our broader economic priorities so that we move beyond advertising-funded models for critical digital infrastructure. On a municipal level, specific platforms like Uber and Airbnb could be prevented from operating in certain markets, which has already been happening. On the other hand, attempts by governments to reclaim sovereignty will not be unchallenged; Bria suggested that we could see the rise of digital trade wars, in which the WTO would be deployed to tackle what it sees as “digital protectionism”.

Bria concluded by discussing the concept of “remunicipality”, whereby municipal-level services that were previously privatised could be taken back into public ownership. Such a concept wouldn’t just apply to services like electricity or water; it could equally apply to data. The city of Barcelona already mandates public sovereignty of data within its procurement contracts, with the goal of reclaiming the data commons and using that as a foundation on which to build public infrastructure. Bria mentioned the possibility of using blockchain technology for allowing decentralised data ownership.

Audience questions

The first question revolved around who, specifically, should own data. Srnicek stressed the importance of collective data ownership, as an alternative to the status quo of data being owned by private corporations as well as the possibility of individual ownership resulting in personal data markets. Jacobs suggested that data could be owned at multiple levels, and be conceived of as a commons at all levels. Bria agreed with the idea of collective ownership, adding that encryption could be important for preserving privacy.

Another question addressed the technical skills gap, and whether teaching people how to use and manipulate these systems could result in democratic empowerment or control. Jacobs’ response was to concur that we need more technologically-trained people, but suggested that it wouldn’t be enough, since these systems are designed to be black boxes where not even the designers are necessarily fully aware of how they work. Srnicek countered with an alternative perspective: we should instead be prioritising training people to do care work, as those are the jobs that will be more necessary in the future. Srnicek’s conclusion is an uncommon one, given the prevailing narrative that we need to teach more kids to code, but one that’s difficult to dispute given everything else that was said during this session—the high wages in the technology sector are more accurately seen as the result of monopoly rent extraction, rather than an indicator that the industry is building products that address social needs. In that light, attempting to push more people into the technology industry may not be the most productive use of resources; it’s quite possible that there are already enough software engineers, but their talents just need to be redirected towards more socially valuable outlets.

There was a thought-provoking question about the trade-off between identity and privacy, asked by a former employee of Royal Mail who had been tasked to implement a digital postbox system (which never came to fruition). Bria highlighted the possibility of technical solutions to the problem of preserving privacy while verifying identity, through the use of cryptography to accomplish decentralised identity management. Srnicek added that this problem is especially important in the realm of financial transactions, as such data is currently processed by private corporations, and suggested that we need a public payments platform. Though Srnicek didn’t go into detail about how that would work, what he’s suggesting could easily be an expansion of an existing project by the Government Digital Service called GOV.UK Pay. Currently, the service is limited in scope to niche functions like buying a fishing license or sending money to prisoners, but there’s no technical reason its remit couldn’t be expanded; it’s simply a matter of changing government policy.

Conclusion

This session was an exciting and thoughtful discussion of the economic challenges facing a potential left-wing government in the digital age. The underlying thread was a recognition that technology companies have become too large and too powerful to be left unchecked, and that we can’t simply rely on the market to fix things; the time for a laissez-faire approach is long gone. If we wish to ensure that the fruits of technological development are collectively shared and democratically controlled, then some sort of government action is necessary.

The next challenge, then, is to understand what specifically needs to be done. There are open questions around method and timeline—is it better to focus on incremental change, or to concentrate on specific actions? Furthermore, how can we rebuild the institutions of the public sector and ensure we have skilled people in key positions?

The answers are as yet unclear, but this session was a sign that Labour is asking the right questions, and an indication that it will be prepared for the technological challenges ahead once it gets into government.


author

Wendy Liu (@dellsystem)

Wendy is an editor for the economics section. She is a former startup founder who now writes about the political economy of the tech industry and why tech workers need to unionise. She goes by @dellsystem for fairly prosaic reasons.

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