Tag Archives: political economy

Enron and 1990s capitalism

It is remarkable how much of bellwether Enron turned out to be regarding structural changes within capitalism — despite the fact that the company ultimately turned out to be fraudulent house of cards built on bizarre and incomprehensible accounting tricks (although then again, maybe its fraudulent aspect is precisely that which most represents capitalism’s fundamentals). Studying the rise and fall of Enron is like studying the political economy of the 1990s in general. The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron (2003) covers the whole saga with definitive detail.

Initially, in the ’80s and early ’90s, Enron was a logistics company in the energy industry, specifically focusing on owning natural gas infrastructure. This involved being the intermediary between gas production plants and consumers, selling access to pipeline capacity, ensuring delivery, etc. Before long, Enron started to financialize all these physical assets, which coincided with the steady deregulation of the energy markets. Gas contracts were made more short-term, and trading markets were set up so that contracts could be bought and sold by third parties, and speculation on future prices started to increase. Of course, since Enron controlled a large portion of national natural gas infrastructure, they had access to high-quality information to inform their bets.

Even as Enron slowly morphed into primarily being a financial firm, they expanded their physical operations globally by hopping on the international development train that was taking off after the end of the Cold War. This was a time when privatization of assets and contracts across the Third World was heating up, and Enron was buying up energy and resource access in places like India and Brazil. A lot of these deals turned out to be total busts, not least because Enron was far more interested in closing big deals, fast, than in actually running an efficient and profitable operation, or even making deals that made long-term financial sense. And when they did make a profitable longer-term deal for themselves, as in the case of the infamous Dahbol gas plant in Maharashtra, India, they turned out to be such blatantly crooked deals that they were eventually shut down by popular backlash. For an analysis specific to Enron’s global operations, check out Vijay Prashad’s Fat Cats and Running Dogs: The Enron Stage of Capitalism (2002).

Within the company, the real fraud turned out to be in the accounting. Enron used “mark-to-mark” accounting, popular on Wall Street, which allowed you to book the total expected profits from a deal immediately, instead of as the cash actually came in over the life of the deal. The flip side of this is that if the expected value of the deal decreases in the future, you have to mark that down as a loss. Of course, Enron never did that, and took the abuse even further by twisting their assumptions about deal profitability to absurd lengths to book whatever amount of profits they needed to hit their quarterly earnings targets. And when they did have to face a loss, Enron shuffled away them away in weird shell company entities so that losses and debt were moved off the company books. However, these didn’t actually disappear, and slowly grew as a ticking time bomb over the course of the ’90s.

But even before the accounting fraud finally blew up, Enron became infamous for their actions during the 2000-2001 California electricity crisis, when they took advantage of a shoddy power deregulation effort to manipulate the markets and engage in serious price-gouging. By this point, Enron’s physical assets had grown to include power systems, and they used these to do things like withhold or divert power to drive up prices, or overload the transmission line schedules to get paid to not produce power, and so on.

Last but not least, Enron even tired to get into the Internet business, by trying to roll out broadband networks and to build a trading operation for Internet access like they had done for natural gas and electricity. This turned out to be a bust, not only because they didn’t understand the technology, but also because the dot-com bubble popped in 2000.

So to sum up, the story of Enron is also a story of logistics infrastructure, energy deregulation, state privatization, international development and neocolonialism, financialization and speculation, Internet and tech — and, fundamentally, the short-term systemic thinking that is central to the overall operations of capitalism. Wowza!

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Netscape and the rise of technocapitalism

Only ’90s kids will remember Netscape, the original browser of the Internet before the era of Internet Explorer, Mozilla Firefox, and Google Chrome. But what we didn’t realize was the impact Netscape had on capitalism, and the way it symbolized and perhaps even initiated a recomposition of political economy. I have a hypothetical periodization of capitalism that I’ve been trying to work out, involving a distinction between industrial capitalism, finance capitalism, and technocapitalism, based on what industries are dominating the economy and directing the flow of capital, and studying the Netscape era yields some very useful information.

Netscape was the first real “unicorn”, a tech start-up that becomes valued in the billions of dollars by big investors. It was the brainchild of Jim Clark, an eccentric entrepreneur in the likes of Steve Jobs, whose impact on Silicon Valley has been documented in Michael Lewis’ The New New Thing (1999). Clark had already made a small fortune during the 1980s from his first start-up, Silicon Graphics, which had revolutionized graphic cards and 3-D rendering and paved the way for graphic user interfaces and the personal computer. But as the company grew, it was essentially taken over by Wall St. investors, who pushed out Clark and took control of the the profits.

Bankers taking control of up-and-coming companies wasn’t exactly a novel thing; it was how things were in the 1980s. But with Netscape, Clark was determined to not lose control and money to the bankers again. The new company, and its core product — an Internet browser — suddenly made the Internet more accessible to the average person by many orders of magnitude, and thus also meant a massive, massive market opportunity.

Its not clear exactly what kind of bargaining power Clark had against Wall St. Part of it was probably just a case of information asymmetry, and the bankers having severe FOMO. But in any case, he and his team played hard and fast against selling out the company too early, or for too few shares or seats on the board, and the result was that Netscape was the first tech firm that had engineers and programmers at the top, controlling the lion’s share of capital and the flow of profit. Wall St. made money too, of course, but they were simply following along in the wake. When the company launched its IPO in 1995, it turned the engineers and programmers into millionaires, and the co-founders into billionaires, and forever changed the game for Silicon Valley. Even though the company would be very quickly run off the road by Microsoft and Internet Explorer, the nature of its rise created a new standard for the ambitions and strategies of its entrepreneurs, and flipped the balance of power between tech capital and finance capital.

However, the Netscape era was only the beginning of a larger recomposition and re-balancing of global capitalism. The rise of technocapitalism rode on the Dot-com bubble, which burst in 2000 and eviscerated the industry. The survivors would kneel once again before finance capital — until the latter had its own reckoning in the 2008 financial crisis, after the housing bubble burst. Once the smoke cleared, tech would once again be in the vanguard of capitalism, based on the foundations built by companies like Netscape years earlier.

Finance capitalism vs. industrial capitalism

What marked the beginning of the modern era of finance capitalism, and what differentiates it from the earlier era of industrial capitalism? There is some good information and arguments on this in David Harvey’s A Brief History of Neoliberalism (2005), and in Gerard Dumenil and Dominique Levy’s Capital Resurgent: Roots of the Neoliberal Revolution (2004) (which is cited extensively by Harvey).

By most measures, finance capitalism arose out of the crisis of the 1970s, and its hegemony has lasted at least until the 2008 crash. There were several factors in why finance capital started becoming so structurally dominant:

  • The collapse of the Bretton Woods system (which regulated international monetary policies and tied the US dollar to a gold standard), thus making most currencies free-floating, and loosening the ability of capital to flow across national boundaries
  • The oil shocks of the 1970s, caused first by the 1973 OPEC embargo and then by the 1979 Iranian Revolution, drastically increased the profits of oil-producing nations, who subsequently invested these super-profits into Western banks
  • The political turn toward financial deregulation in the late 1970s and through the 1980s, which was both a consequence and a cause of the increasing economic power of finance capital
  • The Volcker Shock, which spiked interest rates in 1979 and ushered in an era of high real interest rates through the 1980s and 1990s; this drastically increased the flow of capital toward creditors (financial institutions), and as companies or even whole governments defaulted, sold off assets, and restructured, finance gained more and more direct control over the global economy

One major qualitative change in the era of finance capitalism seems to be the commodification of consumption. This might be a strange way of putting it; after all, isn’t consumption always about consuming commodities? But what I mean here is that under finance capitalism, the very act of consuming — the purchasing goods and services — itself becomes a commodity, to be bought and sold on the market, in the form of various types of consumer debt.

Another major qualitative change was in the nature of corporate governance and the control of profits. After the 1970s, industrial production was increasingly controlled according to the dictates of finance. More and more profits were sucked up into finance companies and to shareholders, rather than reinvested back into production, as was the general trend during industrial capitalism; and on the flip side, many industrial corporations increasingly branched out into finance themselves.

Capital Resurgent, p111

Another way we can describe this periodization is by pinpointing where the center of dynamism was in the economy during different eras. In the era of industrial capitalism, the cutting edge of profit-making was in creating new industrial goods: automobiles, household appliances, houses, gadgets and widgets and doohickeys and whatnot. In the era of finance capitalism, the cutting edge of profit-making shifted toward the creation of new types of debt and other avenues for extracting surplus value from the circulation of capital, rather than just in production and distribution.

I’m not sure quite how accurate all of this is; there are some good graphs in Capital Resurgent clearly demonstrating how finance companies become very powerful in the 1980s and 1990s, if you judge by metrics like market cap or rate of profit. However, other metrics — i.e. consumer debt in the US — don’t as strong or clear of a trend. It’d be useful to find some more raw data-sets on such things, to get a stronger quantitative understanding of the transition.

But the real purpose of thinking through this potential framework of industrial capitalism vs. finance capitalism is to consider whether there has been yet another shift, toward an era of technocapitalism, where the cutting edge of profit-making is in the commodification of data. After all, data has been declared to be the new oil, and tech companies are generally understood to be at the top of contemporary capitalism’s pyramid. This also raises the question of how useful the term “neoliberal” actually is, and whether it is specific to finance capitalism and whether we need a more nuanced understanding for technocapitalism. But more on this another day.

Notes on Endnotes’ “A History of Separation”

Endnotes Issue 4, “A History of Separation”, is all about situating the workers’ movement of the 1800s and 1900s into its historical context.  It continues with Endnotes  rather heretical central thesis that the industrial proletariat is not the class that will overthrow capitalism, and that in fact capitalism will not automatically create a revolutionary class in the first place.

Here is a summary of the arguments that stood out to me.


The workers’ movement of the 19th and 20th century was couched in a very specific identity, that of the industrial worker.  This identity was rooted in the conditions and experiences of laboring in the factories, but also in the institutions and social spaces built by the workers’ movement to help reproduce this identity and pave over divisions of language, religion, etc.  This was all closely connected to the orthodox Marxist valorization of the industrial worker as the producer of all value in society, and thus the rightful heir to the wealth being produced by capitalism.

This not only informed, but overdetermined the class politics of the era.  Early communists believed that capitalism, as it developed, would inexorably proletarianize the rest of society, expanding the ranks of the industrial workforce and uniting them in the factory across divisions of nation, language, religion, etc., and creating a revolutionary force that would overthrow capitalism and establish socialism, a dictatorship of the proletariat.  This seemed correct for a time as industrialization, urbanization, and the expansion of the industrial workforce proceeded; but as capitalism developed and became fully mature in the mid-20th century, the real long-term trend became deindustrialization and the marginalization of industrial workers, as automation steadily reduced the relative need for industrial labor, and produced all sorts of different sectors and strata of workers with no real shared experience or identity — and in particular, a growing population of surplus people of no use to capital.  Capitalism did not unite the masses into a homogeneous collective industrial class, but instead alienated and separated them from one another; the only unity produced by capitalism is the unity of being atomized from everybody and everything, and being dependent on the market.  Unity-in-separation.

The excessive focus on the industrial worker by the workers’ movement also explains the policies of the revolutionary Marxist-Leninist states, which took hold in societies which were backwards and agricultural.  These states saw their primary task as developing the productive forces and creating the proletariat in the first place, and so ruthlessly attacked and undermined and displaced peasants and other rural/agricultural classes, driving them into the factories.  The underlying logic was to produce the revolutionary class that the old regime, dominated by feudal elites who stifled capitalism, had failed to produce.  But this focus on expanding industrial production and industrial workers replicated in the socialist bloc the same dynamic as in the capitalist bloc: the tendency toward the technological displacement of workers and the production of alienation and separation.

Deindustrialization and the full realization of unity-in-separation also meant that the shortcomings of the workers’ movement — whose self-identification revolved largely around the figure of the semi-skilled white male worker — became obvious, thus leading to the relative increase in importance of the various social movements around gender, race, sexuality, etc. in the 1960s and afterwards.  With the identity of the worker no longer able to mobilize a strong and powerful force, other identities became more materially powerful.

None of this is about whether communists at various times had mistaken ideas in their heads about how to go about revolution.  Rather, it is an assessment about how the leading revolutionary strategies of history were emergent from their specific material context, with regards to the particular phase of global capitalism at the time.

Since the long-term tendency of capitalism is the production of a unity-in-separation, the task for revolutionary communists is to engage with the problem of composition, of how to add up different fractions of the exploited masses into a revolutionary force.  What’s necessary, then, is not “class consciousness”, but a “consciousness of capital” as the common enemy of all of our disparate and differentiated lives.  From the last paragraphs of the second-to-last section:

Ours is a society of strangers, engaged in a complex set of interactions. There is no one, no group or class, who controls these interactions. Instead, our blind dance is coordinated impersonally, through markets. The language we speak — by means of which we call out to one another, in this darkness — is the language of prices. It is not the only language we can hear, but it is the loudest. This is the community of capital.

When people make the leap out of that community, they will have to figure out how to relate to each other and to the things themselves, in new ways. There is no one way to do that. Capital is the unity of our world, and its replacement cannot be just one thing. It will have to be many.


So how much of this do I agree with?  A lot, I think.  Its absolutely necessary to not be weighed down with the traditions and myths of the past, and moving beyond the heroic figure of the industrial worker in favor of examining capitalism and class as it actually exists today is a vital task.  In this regard the arguments of Endnotes echos that of Autonomist Marxism, and indeed “A History of Separation” starts with a quote from Mario Tronti.  There is no doubt that the working class today is heterogeneous and stratified, encompassing everybody from software developers to teachers to meatpackers to waitresses.  Building a basis for unity must be the point of organizing, not something assumed or asserted.

The points on automation and decomposition are also on the mark.  This essay goes into more depth on the question of automation and employment, and reaches more or less the same conclusion: that while automation expels the working class from some segments of production, there is a corresponding increase in labor demand in other sectors, mainly lower-wage and more precarious service work, or what Endnotes terms as “surplus population” (surplus to the core sectors of capital but not to the capitalist economy).

I’m not nearly as pessimistic as the essay is with regards to the problem of composing a revolutionary force.  At the risk of sounding like a simpleton I think it is pretty easy to assert that there is more that binds us than separates us, and despite the mass production of unity-in-separation its not at all a hard sell for most people that regardless of our occupations, national backgrounds, etc. we all gotta eat, and we all have to take shit from some kind of boss.  Pushing this generic observation to actual material alliances built around class struggle is another story, of course, but I’m optimistic about these prospects based on the organizing I’m seeing around me, particularly in the tech industry where workers across strata are working together and slowly grasping toward a common identity built through struggle.

Indeed reading Endnotes makes me outright optimistic, despite them being labelled as “bleak” by magazines like N+1, possibly because it echoes what I’ve been hypothesizing on my own in recent years: that the key task of revolutionary communists is to act as catalysts for different fractions of the working class to come together in common struggle, by facilitating communication and collaborative efforts, unveiling avenues of concrete solidarity, and doing whatever else it takes to recompose the working class.

Creating a new Lucas Plan for Google

One of the many, many excellent essays in Issue 2 of Notes From Below discusses the Lucas Plan and the potential to replicate it for the tech industry.  The Lucas Plan was a proposal developed in the 1970s by workers at Lucas Aerospace, a major aircraft designer and manufacturer in the United Kingdom.  The plan sought to overturn management and capitalist control over technology and the use of the workers’ surplus value, in favor of the reorganization of the company and a worker-lead vision for the creation of products far more useful to society.  As quoted from a Guardian essay on the subject:

Over the course of a year they built up their Plan on the basis of the knowledge, skills, experience, and needs of workers and the communities in which they lived. The results included designs for over 150 alternative products. The Plan included market analyses and economic argument; proposed employee training that enhanced and broadened skills; and suggested re-organising work into less hierarchical teams that bridged divisions between tacit knowledge on the shop floor and theoretical engineering knowledge in design shops.

At the heart of all this is the fundamental, radical question: what would we like to do with our labor?  The answer has never, and will never, be “whatever capitalism has me working on now”.

This contradiction between what one would like to work on, and what one is forced to work on, exists in the tech industry.  As it currently stands, the tech industry mostly revolves around the accumulation of data collected from people using search engines, social media, service platforms, etc., and using this data to make it easier for advertisers to sell people stuff.  When you really break it down, the fact that Silicon Valley is largely about advertisement technologies is decidedly uninspiring, even without getting into the other aspects of this system, such as the engineering of addiction and political/ideological polarization.  Surely tech workers would rather work on technologies that are more socially useful than this?

Thus the call for a Lucas Plan for the tech industry is coming at a very timely moment.  And in fact unrest within the industry around its products is already growing.  Google workers are making international news with a petition, signed by thousands of employees, to get the company to abstain from military contracts.  This drive is coming after news that Google has been helping develop artificial intelligence technology for improving the precision of drone strikes.  It is excellent news that so many workers in a major tech company are disgruntled with its entanglement with the military-industrial complex, and shows that the trend of tech workers politicizing and radicalizing is continuing.

Of course, a petition will do little by itself — what is needed is for worker power to be built up, and for organizing happening in Google and elsewhere to strategize around how to actually put some muscle behind their demands on management.  As the Notes From Below essay discusses, the investigation into the class composition of Google and other tech companies is key, in that it is necessary to build up alliances between different layers of tech — from the skilled technical layers (programmers, engineers) to the subaltern layers (gig economy workers, campus service workers).  This way, further organizing, and any new Lucas Plan for Google and other tech companies, will truly reflect the interests of all workers, not just a skilled labor aristocracy.

Its worth nothing that creating a viable Lucas Plan for tech companies will be much more difficult than creating one for an aerospace company that is centered around defense contracts.  The latter has a close relationship with government, and its not a stretch to imagine that nationalization and state support would have been able to play a key role in reorganizing the company and completely overhauling production.  But for the tech industry, its a much greater leap to think about nationalization, and whether this would be desirable at all given the hyper-nationalist and imperialist nature of the US state.  But without some kind of nationalization, how could the tech industry revenue — which is currently based on surveillance and advertisement — be replaced?  Perhaps some sort of municipalization, involving the break up and decentralization of the big tech companies, is the way to go.  This could even be linked with a rural and rustbelt renewal program, to heal those old industrial areas that have been left behind by contemporary global capitalism.  In any case, its clear that drafting an alternative worker-centered vision for the tech industry would require a concurrent revolutionary reorganization of all of society.  A tricky task, to put it lightly, but a necessary one.

Amazon, the decimation of warehouse worker wages, and a warehouse inquiry

In the latest issue of Economist, there is an article with some pretty stunning analysis about the wages of warehouse workers in US counties where Amazon sets up shop — specifically on how they collapse.  The following two graphs speak for themselves.

What’s behind this?  According to the analysis cited by Economist, it appears to be a combination of Amazon workers being younger, more inexperienced, and more unskilled than in other warehouses, and generally not able to find alternative jobs due to there only being a few employers in the area.  Technology also plays a role here, with cutting-edge automation allowing the company to hire younger and less skilled workers in the first place, which is deeply related to the argument that automation doesn’t eliminate the need for work, but rather helps generate the need for less skilled work.

Amazon is growing fast, already worth more than all the major brick-and-mortar retail companies put together.  Its combination of retail, logistics, and tech is allowing it to devour large swathes of the US economy into itself.  Amazon and its low-wage, cyborg workforce is the future — and the present, for that matter.  Engaging in militant labor struggles in Amazon warehouses will only become more and more critical for all those interested in rebelling against the rule of capital.  Thus inquiries and workplace reports, like this one just released by Angry Workers of the World, are a valuable resource that worker militants should use and produce themselves, in order to pick apart the nature of the workplace and reveal the ambient level of worker unrest and struggle.  To quote from the conclusion of the first report:

This all sounds bad, but don’t believe that the workers just sat and took it like the good victims the newspapers like to write about every now and again. In the beginning a lot of people had high expectations of working with Amazon, but after a few weeks they started to realise what working for Amazon really meant. So after a few weeks you started to hear more and more angry and incensed discussions amongst workers around the aisles of the pick tower. Workers who in the beginning tried to run themselves into the ground trying to reach their targets, now having realised it didn’t make a difference in terms of getting a long term contract, stopped stressing about targets and deliberately worked slower than they could. In the beginning we were all worried about even going to the toilet because we might get a warning for “time off task” but after a few weeks when we started to realise we would all be fired soon anyway more and more people started to take “extra” breaks, spending time talking with colleagues, wandering around the warehouse, going to the canteen to grab a cup of coffee, playing a game of ping pong, and of course not giving a toss about ‘power hour’. The permanent staff already know that Amazon don’t care about the workers and the temps quickly learn it, and a lot of us start to do minor individual acts of resistance. That is all a good start, but if we want to change the way Amazon treats us we have to work and resist together!

Moving beyond Marx’s fetishization of science and technology

One of the starting points of my attempts at arguing the importance of analyzing and organizing techno-scientific workers has been a perceived shortcoming in existing Marxist theory on the matter.  McKenzie Wark, in the in introduction to General Intellects: Twenty-One Thinkers for the Twenty-First Century (2017) has some excellent comments on this shortcoming, starting from the arguments of Karl Marx himself.

Wark focuses on Marx’s Fragment on Machines, a set of notes that speculate that technological development is the transferring of skills and knowledge of workers into machines in a process mediated by and for the interests of capital.  However, there is a gap here in terms of the actual process of how this information is turned into machines in the first place.

For Marx, science will appear to the laborer as something alien to him.  Science appears in the form capital dictates.  Science is a productive force: “all the sciences have been pressed into the service of capital”.  But who makes science?  “Invention has become a business,” says Marx, but who does the inventing?…

…The problem is that as actual organized social activities, science and technology do not fit so neatly into the schema of labor and capital.  Hence in Marx they simply come from without as a reified thing called “science” which then becomes part of the machine system as fixed capital. (8-9)

In order to move past this fetishized understanding of science and technology, Wark offers analysis by both J.D. Bernal and himself.  In Bernal’s Science in History series, he argues that contemporary techno-scientific labor (as of the 1950s) was a fusion of high-skill technical labor and the bourgeoisie “gentlemanly culture” of leisurely philosophical-scientific inquiry.  Thus, the new scientific workers who make the science and do the inventing constitute a new class with hybrid origins.  Wark, in A Hacker Manifesto (2004), similarly argues that there is a new techno-scientific class of workers that he dubs “the hacker class”, who today mainly labor with information and are dealing directly with capital’s commodification and enclosing of information and knowledge.  (It would be interesting to compare the arguments of Bernal and Wark with those in “The Californian Ideology”, which seems to take a much more pessimistic view of the new techno-scientific classes).  All of this echoes other efforts at a class analysis of techno-scientific workers, such as analysis by student leftists in the US in the 1960s, debates among French Marxists in the 1970s, and of course recent writings on the new “Tech Left”.

Wark’s comments on this can be summed up in this paragraph that ties the above comments to the project of the book overall:

One task for general intellects might be to imagine a kind of common hacker class interest among those whose efforts end up being commodified as some sort of intellectual property: artists, scientists, engineers, even humanist and social science academics.  We could imagine all of them as belonging to the same class from the point of view of the commodification of information.  We all process information that is part of a complex natural-technical-social-cultural metabolism.  But nearly all of us get to see a ruling class of a rather unprecedented kind extract most of the value from the combined efforts of hackers and workers worldwide.  As general intellects, maybe we should stick our heads above our little cubicles, look around, and figure out how to cooperate with others who understand different parts of the labor process. (11)