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New Technologies, TikTok, Competition, and “Free” and Human Labor: An Interview with Economist Paula Bach

Economist Paula Bach, in an interview, addresses the future of work, new technologies and their relationship to the capitalist crisis, and how capitalism’s search for profit keeps new technologies from fulfilling their promise of vastly improving the lives of the great majority of people.

Paula Bach

September 19, 2020
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Image: Ideas de Izuierda

In these excerpts from an interview with economist Paula Bach, she addresses some of the fundamental discussions taking place around new technologies and their relationship to the capitalist crisis and the disputes between countries happening in the world today. She also addresses the debates about the current reality and the future of human labor, the potential of new technologies in this respect, and how capitalism in its search for profit transforms technologies into the opposite of what they could accomplish for humanity. The interview was conducted by Mirta Pacheco of La Izquierda Diario just before the Trump administration’s announcement that it would ban TikTok from U.S. app stores beginning on September 20.

For a couple of years now, you have been writing articles arguing that what lies behind the apparent trade war between the United States and China is a fight for both military and political hegemony. Now, there is discussion about Trump’s threat to force TikTok’s Chinese parent company to sell it in the United States. Can you explain the background of the fight between the Trump government and the Chinese government for hegemony, especially in relation to the technology issue?

I use TikTok as an example to raise the issue because it really is novel. The app, which belongs to the Chinese company ByteDance, has grown spectacularly in recent months and now has more than 800 million users worldwide. ByteDance is the first non-U.S. company to achieve such a level of social networking. It is also the first Chinese company that has managed to position itself globally in this way. These achievements are thanks to an innovation in how to use algorithms that encourage users to stay online longer and thus spend more time in the social network. The latter is key because getting users to stay online allows for more advertising. In other words, the longer users are online, the more they can be exposed to advertising. 

Some say that TikTok is thus becoming a sort of artificial intelligence laboratory and a new element in the competition between the United States and China for the latest technologies. In fact, China is once again the United States’s main competitor in terms of state-of-the-art technology, but this time — at least in certain respects — with a more global reach. That seems to me to be an important element.

As for the discussion about TikTok’s spying, it is true that there are two sides to this coin. Obviously, the United States has lots of companies in China and through them carries out all kinds of its own spying. The accusation against China, therefore, is a bit strange — but it’s also laughable in another sense: TikTok and all these companies, whether they are Chinese or they are American, such as Facebook, Amazon, or many others of both countries that are dedicated to the accumulation of data, are absolutely companies whose objective is espionage. They collect information about people’s lives. To be honest, they are companies that investigate the lives, preferences, and tastes of millions of people.

TikTok has 800 million users. WhatsApp has many more. Getting into the preferences and tastes of so many people allows for data mining that in turn makes it possible to generate data packages that are then sold to other companies that are not necessarily “high tech” or at least are not involved in social networking. The data packages are sold mostly to traditional companies, classic capitalists. I’ve been interested in exploring this relationship. The traditional capitalist companies benefit from using data sold to them by these types of companies — the owners of the apps — that, in particular, employ precarious labor, do espionage, and so on and so forth.

Traditional companies use these data packages precisely to increase their sales, improve their markets, increase their profits, and so on. So, there is a mutual game going on between the newer technology companies and the traditional ones, so to speak, and they are all accomplices in this game. All of them share an interest in capturing markets.

It should also be noted that data mining poses a problem at the international level, because there is obviously deep spying between countries. That’s why China, which is full of U.S. companies, has banned Facebook, Twitter, and many other apps and instead has its own. Many apps and U.S. companies are outright banned from Chinese territory. China already has enough spying through “traditional companies.”

This is interesting because it expresses in some ways the contradiction between the internationalization of capital and the internationalization of communications, on the one hand, and the place of nation-states on the other. In a sense, the fight for state-of-the-art technology is deeply related to the need to find new arenas for the accumulation of capital and the need for new markets. Both, in a way, are part of the same thing and are what capitalism needs: new spaces to develop new enterprises. The development of new technologies cannot be thought of independently of this challenge.

The fight for spaces in which to accumulate capital is not an abstraction. TikTok is a great example: a market of 800 million people who use it and to whom advertising can be targeted is, of course, a very appealing market, and is one of the spaces that China and the United States, in effect, are fighting over. In times of crisis such as this, the struggle for markets becomes very important. That’s why we cannot separate the technologies in general from the struggle for the markets and for the arenas of accumulation, nor the role of these new companies from that process. In moments of crisis, these types of  “high-tech” companies play a very important role, capturing markets through the accumulation of data and allowing other, more traditional companies to increase their sales, capture markets, open spaces for extending their reach, compete with others, and create monopolies — all the natural tendencies of capitalism. 

TikTok, in fact, is nothing more than a new emergent from a fight that has been going for some time. The biggest example is 5G, a network with much greater bandwidth than 4G and that can achieve different levels as it evolves and is applied, and that forms the basis for the “Internet of Things” — which itself promises tremendous innovation in terms of the relationship between the virtual and the real. China is very strong in this area. It is quite advanced in 5G and can probably move faster on the Internet of Things. But at the same time, China has a vulnerability, because the United States is much stronger when it comes to producing microchips. So, China is developing its own means to create microchips.

Doing so is made more complex by the current situation, with so many tensions and an acute global economic crisis. For the first time, China’s annual growth will be only 1 percent, which while still positive compared to the United States — which is slated to grow in decline by 6 or 7 percent — is nevertheless considerably less than its previous growth levels.  All of this is happening in the context of a very deep international crisis in which tensions are becoming more serious and in which the problems of unequal development between different sectors are surely going to make combinations more difficult.

You are saying that the current crisis increasingly drives this fight for capital accumulation. With the world in the midst of a pandemic, and beyond the differences between the continents, we’ve seen these technology companies make billions of dollars for their owners.  We’ve also seen that they need human labor, that they need their workers. Does this crisis prove that the idea that robotics spells the end of work is no longer valid? Could you explain that a bit?

I think that posing it that way is somewhat limited, because in some ways it does prove it and in other ways it doesn’t.

The current situation, with the pandemic and the economic crisis, in some ways demonstrates that all the propaganda around the end of work had limitations — to say the least. In truth, the interruption of the work of millions of people immediately halted the economy or at least its principal nodes. That is a central element. So, in a way, the claims regarding the end of work lose a lot of their weight in this context precisely because the situation has shown that it is not the “robots” — I’m using that term generally to refer to new technologies, artificial intelligence, and so on — but the workers who are the fundamental nucleus of the capitalist economy right now. Conversely, it is also interesting to note that at this moment, during the pandemic, the loss of jobs is not associated with technological unemployment – that is, not with increased use of technology — but with the economic crisis and the closure of companies.

Meanwhile, it turns out that the “high-tech” companies such as Alphabet, PayPal, Facebook, and Amazon are the ones that have enjoyed the largest market capitalization during the entire period of the pandemic. All of these companies, along with other smaller ones such as Rappi or Glovo that primarily do home deliveries, are very much part of what is called essential work, work that must be done, and that is dedicated to distribution to people at home.

So, these large-cap companies have actually attracted a lot of work over the last period. Much of the essential work is linked to these types of companies that aren’t exactly letting go of workers in favor of technological innovation but instead make work more precarious. This makes clear a contradiction in the relationship between new technologies and the end of work. In reality, the companies that have incorporated more technology are, in this pandemic period, centers of essential work that is precarious.

At the same time, several of the so-called “unicorn” companies — those valued at $1 billion or more — have been forced to close or downsize and fire workers. Again, this is not about technological unemployment but the economic crisis.

In this sense, the discourse about the end of the work is false in at least one regard — and I think it’s important to point out.

In another sense, we must be careful not to confuse the present moment with what is coming, that is, not confuse the snapshot with the movie. The debate and propaganda about the end of work will certainly continue, and will probably deepen because the need for investment in new technologies already underway requires greater exploitation of labor, layoffs in certain sectors, and hiring people in lower-quality jobs. It is not simply that history repeats itself and that every time capitalism incorporates new technologies it generates layoffs while at the same time creating new tasks. It’s a bit like that, but what is notable is that the new tasks it creates — particularly in the last few decades — materialize as increasingly precarious, degraded jobs. This is something to which we must pay a lot of attention, because what is coming is not “more of the same” but rather a deeper and deeper struggle between capital and labor in which capitalism is going to try to validate the new technologies through higher levels of degradation, exploitation, division, and precariousness of labor. To me, that seems like an important difference to point out. The propaganda about the end of labor will continue, and for a long time.

These technological advances actually allow for producing more goods, more things, but that clashes with companies’ need for more profit. How can this contradiction between, on the one hand, technologies that allow the production of more things for humanity and, on the other hand, the thirst for profit of the owners of these companies, the capitalists, be resolved?

Yes, new technologies make it possible not only to produce more goods but also to produce them in less time. It is a very important aspect.

The term “zero marginal cost” is widely used today. It refers to the fact that with new technologies, especially in some digital service sectors, certain products can be reproduced practically free of charge — think, for instance, of music, films, books, and similar products. That is, they can be reproduced — I am not saying initially produced — without incorporating new labor or capital, which for physical products is completely impossible at the moment. Certain digital services can be reproduced completely or almost completely free of charge — that is, without effectively adding human labor and practically without adding any capital whatsoever, which means almost without adding any costs.

This example is interesting because it means there is an element of technological development still under capitalist rule in which new technologies show the possibility of free reproduction in certain segments. It represents a moment along a historical path on which products, as technologies are developed, require less and less work. This has brought us to this “zero marginal cost” that implies things being “free.”

The most interesting contradiction this raises is this: If products are becoming free and if abundance prevails in the system, do people live better and better lives, with less effort and with more goods at their disposal? The answer is no. That is very far from the reality. The reality, playing out more recently and deepened by the economic crisis, is instead dispossession and a trend in which the vast majority of people find it increasingly difficult to resolve the problems of their lives, live better, and access necessary basic goods.

I think this is so important an element because it highlights a serious contradiction of capitalism: gratuitousness — that is, the tendency, in a sense, that less and less work is needed — is not favorable to capitalism. By this I mean that the key to the capitalist system, its engine, is set on profit. If products are free, capitalism does not work.

How does capitalism resolve this? Sometimes it does so by putting a price on what it doesn’t own and sometimes by creating sources of value where none existed before — by creating new needs, for example.

What do I mean by that? Take patents, for example, which are a way to put a price on what one doesn’t own or create value where none previously existed. Or putting a price on the reproduction of services that could eventually be free. Or the mechanism of cross-subsidies, which is the way in which companies offer a free service that is oriented to offering another service that is much more expensive, thus creating a new need. “Free” is used by capital to accumulate, through multiple mechanisms. Part of this same logic is also capitalism’s incapability of eliminating human labor, because there is, in effect, a contradiction between the tendential possibility of the end of work and the need for profit. This is a complex issue to explain, but essentially it implies an ever-greater degradation of the labor force — at least in terms of the claims of capital. Specifically, it is the creation, on the one hand, of a greater — that is, the creation, on the one hand, of far greater numbers of unemployed while, on the other hand, keeping those with jobs working under ever-worsening conditions in precarious, overworked sectors. Working conditions become increasingly worse and the level of exploitations rises. 

In other words, the possibility of reducing working time does not translate into a free ride for the majority of people or into goods that are cheaper and cheaper and in less and less working time for them; rather, it translates into ever-greater difficulties in sustaining one’s life along with increasingly extended working times or worse conditions. That is what capital needs to regenerate its profits. This is all quite interesting with respect to the relative character of “abundance” and “scarcity.” It is not true that better technologies automatically imply abundance.

The development of public services offers a very interesting example of this. In the period after World War II, many public services became free or quite inexpensive. Yet, many decades later during the neoliberal period, many of them were privatized, making them quite expensive and very difficult to access for large majorities of people. This happened, of course, at the same time as they had advanced technologically. That shows that the relationship between scarcity and abundance is not purely technical. It also shows the relationship of forces between the classes, which was obviously different in the post-war period compared to the neoliberal decades.

The essential problem is unsolvable from a capitalist point of view because of capitalism’s contradiction between a lower amount of incorporated labor and need for profit. Free goods in a capitalist system are meaningless. Capitalism needs products to have value and price so they can be sellable and allow for making a profit. The reality is that there is no other way out, as extreme as it may seem. In truth, to make technological advances turn into free time and abundance for the great majority of people, capitalist profit must be challenged.

One way to pose this challenge, for example, would be to reduce the length of the workday — but that was never easy to conquer, and historically was achieved only through tremendous struggle. We also propose the redistribution of working hours, which in some way can be done by reducing the workday without lowering wages. It would be a very logical step to distribute working hours among the employed and unemployed, as well as among those who are overworked and the millions or even hundreds of millions of people across the world who work only a half-day or less than needed for them live. But we live in a system that is guided not by the logic of what the great masses need, but by the logic of the capitalists’ earnings.

Thus, the solution lies in challenging capitalist profit and private ownership of the means of production, which is the great obstacle for these new technologies that allow for great productivity and tremendous levels of production in less time to result in a higher and more desirable standard of living for millions of people. 

Of course, this is not a problem that can be solved just by spelling it out. Of necessity, it must involve the action of workers — employed, precarious, and unemployed — as well as other social sectors. And it demands, of course, enormous, great struggles like the ones through which every conquest of the working class has been achieved throughout history.

Given how deeply profound this problem is, it is not surprising that coming up with a genuine solution poses that it is a great social upheaval that will open the door to great transformations. This is what is required if the solution is to be a positive one for the broad masses, because capitalism’s own solution is nothing but negative.

First published in Spanish on September 13 in Ideas de Izquierda

Translation: Scott Cooper

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Paula Bach

Paula is an economist from Buenos Aires and a member of the Party of Socialist Workers (PTS).

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