Cloud Capitalism, The Network Effect and The Anonymous Masters
I:
THE RISE OF PLATFORM-CAPITALISM
According to Yanis Varoufakis, capitalism ended around 2008 and has been replaced by something worse. He calls this “techno-feudalism”.
According to Varoufakis, the old logic of competition between corporations is
rapidly being replaced by the economy of platforms. Digital platforms
are websites or applications that function like markets owned by one
single individual. On a platform, individuals or corporations join and compete
with each other, the owner of the platform extracting a rent from them.
The logic of one single marketplace owned by no one in which multiple
corporations compete has been replaced by the logic of multiple digital marketplaces,
that are monopolizing various markets, each marketplace being owned by one
single individual who has indirect control over everything.
“The
moment you enter Amazon, you exit capitalism.” It is the metaphorical
equivalent of walking down a mall and one single individual controlling
who is able to buy, who is able to sell, what prices are charged, and even what
your eyes see. Everything is dictated by the algorithm of one person.
This
platform-based cloud capitalism, what Varoufakis calls
“techno-feudalism”, extends beyond digital marketplaces like Amazon or eBay. It
includes social media websites like Facebook and Youtube, ride-sharing services
like Uber, home-sharing services like AirBnB. It even commodifies the most
intimate aspects of our lives, with platforms like Tinder or OnlyFans.
Byung-Chul
Han describes in all of his books the 21st century shift from the
logic of allo-exploitation to the logic of auto-exploitation. It would be more
appropriate to say that self-exploitation is added on top of
allo-exploitation. The oppression within individuals is added on top of
the oppression between individuals, which has not completely
disappeared. This is related to the rise of platform-based, cloud capitalism.
On a digital platform, where one single individual controls everything, each of
its participants turn into entrepreneurs of the self, having the illusion of
freedom. Marx described the alienation from man and his labor but not the
current alienation between the workers from their managers. On a platform like
Uber, everyone gains the illusion of being self-employed, while your “manager”
becomes more akin to a shadow leader – you are still bound by the
control of a “boss” who you do not even know, the exploitation here is done by
subtle interventions from the algorithms and features of the app itself. An
anonymous manager manages you “from a distance”. The alienation between man and
his labor has been replaced by the alienation between the slave and their
master. The negativity of orders and prohibitions are replaced with the
positivity of incentives and encouragement. A certain percentage of the
products of your labor is still taken from you, but anonymously, from the logic
of the platform itself. You pay a rent for participating in the very
market itself.
“Today,
we do not deem ourselves subjugated subjects, but rather projects·,
always refashioning and reinventing ourselves. A sense of freedom attends
passing from the state of subject to that of project. All the same, this
projection amounts to a form of compulsion and constraint - indeed, to a more
efficient kind of subjectivation and subjugation. As a project deeming itself
free of external and alien limitations, the I is now subjugating itself to
internal limitations and self-constraints, which are taking the form of
compulsive achievement and optimization. Although the achievement-subject deems
itself free, in reality it is a slave.”1
Not
even intimate relationships escape this logic of turning yourself from subject
to project (the mantra of the 21st century is “I am going to work on
myself”). The cycle of working on yourself is a never-ending cycle of a dog
chasing its tail. The more the individual of the cloud-capitalism society work
to improve themselves, the more external expectations rise through
advertisement and consumerist culture. “Performance zombies, fitness
zombies, and Botox zombies: these are manifestations of undead life. The undead
lack any vitality. Only life that incorporates death is truly alive”2.
II:
THE NETWORK EFFECT AND THE FIRST-MOVER ADVANTAGE
According
to the economic philosophy of libertarianism, there shall be no problem with
the recent shift in cloud capitalism, since one is always (apparently) “free”
to compete with the oligopolies or monopolies of platforms. If a platform ends
up monopolizing a marketplace, liberal and libertarian schools of thought say
it is because it has done the best possible job and no better competitor has
come onto the market with a better product and/or cheaper price.
This
is wrong, however. The “free” unregulated market with no state-interventions
leads to monopolization even more easily, in many respects, under
platform-based cloud capitalism. This is because all the beforementioned (and
more) platforms are heavily dependent on the network effect.
The
network effect, in macroeconomic theory, is a market externality stating that
the more users join a network, the more value or utility we derive from it.
Social media platforms, digital marketplaces or ride-sharing services only work
when many people use it, and generally speaking, the more people use them, the better
they work. This naturally leads to an infinite loop whenever you try to compete
with any of the platform monopolies. Let’s say that you are not happy with
Twitter. If you want to compete with Twitter, you need to start your own social
media website to replace it. But no one will use it, since no one is using
it. Competition in a marketplace dominated by the network effect always
leads to a catch-22. In order for people to switch from Twitter to your
website, you need to get people on your platform. In order to get people on
your platform, you need to get people on your platform.
Take
a ride-sharing service like Uber. If you want to compete with Uber, offering a
service of a better quality and/or a lower price, you need to get people to use
your own app. This is always a struggle in the beginning since ride-sharing
only works when people are already using your app. Despite your app offering
quality services at a lower price, people may not use it because there are too
few drivers. And there are too few drivers because there are too few clients.
And there are too few clients because… there are too few drivers.
Platforms
dominated by the network effect ultimately suffer from inertia. They
suffer from the first-mover effect. Whoever ends up monopolizing the market
is not the one who provides the greatest product at the cheapest price,
but the one who provided the greatest product at the cheapest
price when that market was in its infancy. Social media platforms like
YouTube were great in the beginning but slowly became more and more free to
drop their quality without fear that we will leave and choose another, better,
website after the “video-sharing market” stopped being in its infancy and
everyone was “stuck” out of inertia on Youtube. Competition with platform monopolies
is not always impossible, but incredibly hard, since the people who come later
on the market will need a much greater initial investment in order to combat
the inherent inertia of the network effect. People can only switch to a
different network-type platform en masse, because networks have little
to no value when very few people use it. The network effect is able to put us
in the paradoxical situation in which there is a better product at a cheaper
price somewhere else, everyone agreeing that it is better, and yet everyone
still remaining on the old, inferior, platform simply because everyone else is
using it.
III:
CLOUD CAPITAL
The reason I call this system
‘cloud capitalism’ is not only because of the rise of platforms marked by the
network effect. On top of the old, material capital that you can touch (fixed
assets, machinery in factories, equipment) we add a more and more immaterial,
virtual capital. Whoever has power today is whoever has access to certain forms
of data and information. Michel Foucault’s “biopolitics” required access to
demographic information about the population. Big data offers us a much more
“zoomed in” view of each particular individual, giving the start of psychopolitics:
“Demography
is not the same thing as psychography. It cannot tap into or disclose the
psyche. On this score, statistics and Big Data lie worlds apart. Big Data
provides the means for establishing not just an individual but a collective
psychogram - perhaps even the psychogram of the unconscious itself. As such, it
may yet shine a light into the depths of the psyche and exploit the unconscious
entirely.
If
nothing else, Big Data has given rise to a highly efficient form of control.
Acxiom, an American Big Data company, promises clients a ‘360-degree customer
view’. Digital surveillance proves so efficient because it is aperspectival. It
does not suffer from the perspectival limitations characterizing analogue
optical systems. Digital optics enables surveillance from any and every angle.
It eliminates all blind spots. In contrast to analogue and perspectival optics,
it can peer into the human soul itself.”3
Social
capital also takes on a different form in the era of digital, cloud capitalism.
Whereas capitalism naturally tended towards wealth inequalities, now it is also
exploiting recognition inequalities. If a small percentage of the
population hoarded a large percentage of the world’s wealth, now it is also
fair to say that a very small percentage of the population hoards a large
percentage of the world’s attention. Social media only serves to amplify
these differences already started by the radio and television (ex: celebrity
culture). This has implications not only for digital marketing and
advertisement, but also for our mental health.
Hegel
posited that the fundamental desire of humans is the desire for recognition.
Under Alexandre Kojeve’s interpretation of Hegel, what distinguishes us from
animals is that we desire not only material things, but also metaphysical
things such as attention and social status (recognition). Ultimately, we desire
to be desired. Hegel’s master-slave dialectic ends up turning into the opposite
of what it seems, however, like all of his dialectics. The master entraps the
slave, demands to be recognized by them, and then ends up disappointed, because
recognition is only valuable if it is done by a free equal. The master quite
literally ends up enslaved by their slaves. We desire to be desired insofar as
the person desiring us has nothing to gain by doing it and nothing to lose by
not doing it. The people without fame will envy the famous person getting so
much attention (recognition), but if they are to become famous, then they will
start writing songs about fake friends and how everyone wants them now just
because they have money/social status/etc. The workers may envy the boss who is
treated nicely by everyone, but the boss thinks to himself that the workers are
doing it just because he is their boss. The inequalities of recognition of the
master-slave dialectic end up having destructive consequences for both the slave
(who is desiring) and the master (who is desired).
On social media, a large
percentage of the world’s population compares themselves with a small
percentage of the most ‘successful’ population (by whatever standard). So-called
“hustle culture” is nothing but the ideology created by this system. People
need less and less to be oppressed by force, instead we obey out of our own
free will. Slavoj Zizek, inspired by Lacan, calls this the super-ego
compulsion to enjoy. The ideological message today is one in which we are
encouraged to follow our dreams and do whatever we want, as long as we are
always busy consuming something. People less and less feel guilty that they
enjoy too much (ex: the church calling you a sinner) and more and more feel
guilty that they don’t enjoy enough4.
Byung-Chul Han notices
the same trend in what he calls “achievement-society”:
“To
heighten productivity, the paradigm of disciplination is replaced by the
paradigm of achievement, or, in other words, by the positive scheme of ‘Can’.
The positivity of Can is much more efficient than the negativity of Should.
Therefore, the social unconscious switches from Should to Can. The
achievement-subject is faster and more productive than the obedience-subject.
However, the Can does not revoke the Should. The obedience-subject remains
disciplined. Can increases the level of productivity, which is the aim of
disciplinary technology, that is, the imperative of Should. Where increasing
productivity is concerned, no break exists between Should and Can; continuity
prevails.
It
is not the imperative only to belong to oneself, but the pressure to achieve
that causes exhaustive depression. Seen in this light, burnout syndrome does
not express the exhausted self so much as the exhausted, burnt-out soul.
depression eludes all immunological schemes. It erupts at the moment when the
achievement-subject is no longer able to be able. The complaint of the
depressive individual, “Nothing is possible,” can only occur in a society that
thinks, “Nothing is impossible.” No-longer-being-able-to-be-able leads to
destructive self-reproach and auto-aggression. The achievement-subject finds
itself fighting with itself. The depressive has been wounded by internalized
war. Depression is the sickness of a society that suffers from excessive
positivity. It reflects a humanity waging war on itself. The
achievement-subject stands free from any external instance of domination
forcing it to work, much less exploiting it. It is lord and master of itself.”5
To
tie all of this together, it only makes sense that the “compulsion to enjoy” of
hustle culture and achievement-society arrived at around the same time as
platform-based cloud capitalism. According to Marx’s method of historical
materialism, ideology is a false consciousness that maintains the power
structures intact. In capitalism, ideas and beliefs themselves become a commodity
to be bought and sold, conforming to the profit-incentive, and what the
majority of people end up believing is whatever generates capital. The rise in
the self-employed class on platforms like Uber can only be accompanied by an
ideology of achievement leading to burnout: since the master of the individual
working on a platform is anonymous, one is not told to obey their father
and to do their duty anymore, but to “work on themselves” and exploit
themselves to death.
Nonetheless,
we should still challenge Han’s thesis that the master-slave dialectic has been
completely internalized. Han thinks that we live in a society of narcissistic
self-reference where we are both masters and slaves of ourselves, thus ending
up in a self-referential loop of self-recognition. In reality, our
masters have not disappeared completely. They are just more hidden.
Allo-exploitation is still there, but it is only masked as
auto-exploitation. A person exploiting themselves on OnlyFans still has a
master, but they are an anonymous shadow-leader, who asks each young
entrepreneur of the self on the platform for a rent in order to be able
to participate on that market.
The
inequality of recognition and social status given by social media can be understood
in a similar way. There still exist masters, in the strict Hegelian (not in the
Marxist) sense, in the ‘marketplace of attention-seeking’ on social media
websites. There are people who enjoy more fame than the others who are giving
the fame. If the master-slave dialectic were to be completely internalized,
like Han says, then we would recognize ourselves in the mirror endlessly
(Lacan’s mirror-stage?), but this does not make sense. The slaves do seek
recognition among themselves, or a very superficial, faint recognition from the
celebrities in the form of parasocial relationships. Depression is not merely a
“war against oneself”, as Han notes, but it is also a war against an invisible,
anonymous master, taking place within oneself.
Jean
Baudrillard, in “The Transparency of Evil”, explained how the more a system
tends towards complete transparency, the more its “intruders” become sublime
and more invisible – the system will not be destroyed by large
meteorites, but by viruses, spies, intruders, etc. What we are witnessing in
this phase in history is the alienation between master and slave. This can also
serve to explain our paranoid search for dog-whistles in politics, red flags in
relationships and warning signs in mental health issues.
It
should now make sense why we can name this phase in history as “cloud
capitalism”. Whoever has power nowadays is the one who has power in the cloud:
social media following, access to big data, ownership of virtual platforms. The rise in subscription services that replace possession of commodities is also compatible with the same system of cloud-capitalism: you pay a rent in order to have access to a service for a temporary amount of time. The prediction of the World Economic Forum "You will own nothing and you will be happy" perfectly describes the dominant ideology today - "you will own nothing" (because of rent-extraction) and "you will be happy" (because of the compulsion to enjoy and to be happy as a moral obligation).
“Today,
no collaborative, networked multitude exists that might rise up in a global
mass of protest and revolution. Instead, the prevailing mode of production is
based on lonesome and isolated self-entrepreneurs, who are also estranged from
themselves. Companies used to compete
with each other. Within each enterprise, however, solidarity could occur.
Today, everyone is competing against everyone else — and within the same
enterprise, too. Even though such competition heightens productivity by leaps
and bounds, it destroys solidarity and communal spirit. No revolutionary mass
can arise from exhausted, depressive, and isolated individuals.”6
REFERENCES:
1: Byung-Chul Han, Psychopolitics: neoliberalism and
the new technologies of power, Chapter 1
2: Byung-Chul Han, Capitalism and the death drive,
Chapter 1
3: Byung-Chul Han, Psycho-politics
4: Slavoj Zizek, The Pervert’s Guide To Ideology
5: Byung-Chul Han, The Burnout Society, Chapter 2
6: Byung-Chul Han, Why Revolution Is No Longer
Possible, https://ourworld.unu.edu/en/why-revolution-is-no-longer-possible
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