The People's Republic of Walmart

by Leigh Phillips

  Finally, while the big data collected and processed by Amazon is precisely the kind of tool that would aid in overcoming these challenges of large-scale economic calculation—and indeed it is already being used in this way by the Amazons and Walmarts (never mind the Facebooks and Googles) of the world—we have to recognize that alongside the staggering freedom-enhancing potential of the massive data sets held by both corporations and states, there also lies a staggering capacity for freedom restriction.

  The story of Walmart’s major rival Target sending deals on diapers and baby food to several expectant mothers who did not yet themselves know they were pregnant, based on data mined on individual spending patterns, seems almost quaint today. Now, we are only a single Google search for “poor sleep” away from months of bombardment by mattress ads on every social media network to which one belongs. There are more insidious examples: in 2012, the short-lived “Girls Around Me” app used a mash-up of geolocation and social media data to allow individuals to find out all kinds of personal details about women in their vicinity who had used Facebook or Foursquare’s “check-in” feature. The UK’s Daily Mail called it the “Let’s Stalk Women” app, while science fiction author Charles Stross imagined a near future of other, far-nastier data mash-ups—could anti-Semites create a “Jews Near Me” app? Beyond the private sector, states across the world are also increasingly using and misusing big data. Police departments across the United States have begun to experiment with something called “predictive policing” to devise methods for predicting offenders, victims, identities, and locations of crimes. It is the arrival of “pre-crime” from the pages of Philip K. Dick’s Minority Report into the real world. Similarly, China’s “Integrated Joint Operations Platform” combines data from multiple sources, including online tracking and facial recognition–enabled CCTV cameras, as well as health, legal and banking records, in order to flag suspected political dissidents. In Xinjiang, a disputed territory that is home to a long-standing conflict between the Han Chinese majority and the Muslim Uyghur minority, suspects are investigated, visited by the police, arbitrarily detained without charge or trial, and even sent to “political education centers.” Human rights campaigners worry that people in Xinjiang are unable to resist or challenge this level of technological policing. And all this is planning, too.

  Is it enough for progressives to solemnly declare that we have taken the advice of Peter Parker’s Uncle Ben to heart: that with great power comes great responsibility, and that this time, when we have come to power, we will do better than the American or Chinese states?

  There are those who blithely claim that in order to use big data sets for planning, all we must do is anonymize, or “de-identify,” them—that is, irreversibly strip them of whatever identifiers they contain. Google and Facebook say that they already do exactly this when serving up those behaviorally targeted adverts; human research subjects in medical or other scientific trials are de-identified to protect their privacy; and patient identifiers such as name, date of birth, phone number, address and so on are removed from electronic health records before they can be used by health authorities or researchers. It all seems so simple. However, there is a key difficulty: a growing consensus among computer scientists considers permanent de-identification to be impossible, not just technologically, but in principle.

  This is because, however rigorously you might have managed to anonymize a data set, there is always the possibility that at some point in the future, it can be compared to some other data set that is released (or leaked) in a way that re-identifies it. In personal correspondence with us, Cory Doctorow, a science fiction writer and digital rights campaigner, explained how this could work:

  Imagine that the NHS releases prescription data with prescribing doctor, time and place—but not patient names. Then imagine that Uber or Transport for London has a leak that releases a large set of journeys. By correlating those journeys with prescriptions, you can probably re-identify a large number of people in the “anonymized” NHS data … The databases held by the likes of Amazon hold the seeds of personal destruction for millions of people—everything from buttplugs to fungal remedies to books about socialism or atheism to trusses. A public release of that database has the power to cause terrible, widespread harms, and we should not be blithe and hand-wavey about it.

  But such scenarios are no work of speculative fiction. In 2017, Strava, the popular mobile-based fitness route tracker, released some 13 trillion GPS points of its users—its “Global Heatmap”—a public but de-identified record of 700 million bike rides, runs, jogs and swims, 1.4 trillion latitude and longitude points, and a total distance of 16 billion kilometers covering a recorded activity duration of 100,000 years. The company was very proud of what it described as “the largest, richest, and most beautiful dataset of its kind. It is a visualization of two years of trailing data from Strava’s global network of athletes.” A couple of months later, Nathan Ruser, an analyst with the Australian Strategic Policy Institute, a defense-sector think tank, showed on Twitter that because soldiers, sailors and aviators also number among the span-dex-enveloped athletes that often use Strava, the released data had also accidentally revealed “clearly identifiable and mappable” locations of US, Russian, Australian and Turkish military bases, some of which had up to that point been kept secret. The locations of forward operating bases in Helmand Province, Afghanistan, were there for anyone to observe. Ruser even spotted GPS points in the Antarctic that appeared not to correlate to any known research installation. “Is there a hidden base?” he half-joked.

  Can we leap over the dichotomy of surveillance capitalism versus surveillance communism? Could a major goods distributor such as Amazon or a social network like Facebook be built as an international nonprofit cooperative, democratically controlled by a society independent of both the market and the state?

  We admit that these are difficult questions to which we don’t have answers. But we all need to start thinking about what the answers might be.

  The time has come for concrete, rather than abstract, proposals for the democratization of global governance, economics and planning, including around issues of geolocation, social networking, search, data mining, machine learning and ubiquitous computing. Because here’s the thing: the big data cat is out of the bag. Both the ubiquitous surveillance of corporations and the ubiquitous surveillance of the state are already here. We need a third option—one that goes beyond the state-versus-market dichotomy.

  5

  INDEX FUNDS AS SLEEPER

  AGENTS OF PLANNING

  Even if the most perceptive of free market cheerleaders might be ready to concede that large-scale planning does indeed happen within capitalist enterprise, they remain insistent that innovation and rational economy-wide investment allocation are insurmountable stumbling blocks for any more thoroughgoing notion of planning. They double down on their original argument: that the market is simply a more efficient allocator, the only way to guarantee the “correct” incentives to invest or innovate. However, as with the mammoth scale of planning of production and distribution that takes place behind the curtain at corporate giants such as Walmart and Amazon, it is also the case that investment and innovation occur outside of market mechanisms far more than market defenders are willing to admit, or perhaps have even noticed.

  Let’s start with investment. To invest is, at base, the act of putting some portion of economic activity today toward the capacity to produce more tomorrow. Here too, beyond current production and distribution, firms must make plans to allocate those goods and services that will produce yet more goods and services in the future. They must, in short, plan investment: build the factories that will make tomorrow’s gadgets, the hospitals that will house tomorrow’s patients, the rail tracks that will carry tomorrow’s trade, and the windmills, dams or reactors that will power all of them.

  Investment is often presented as a sacrifice, and as a result imbued with moralism. In this story, investors are heroic scri
mpers and savers, putting the future good ahead of the gratification of the moment. In reality, as we are far from the first to point out, they are owners of a disproportionate share of society’s common resources, produced not by themselves but by their workers; by dint of this daily theft of the value produced by workers, they hold disproportionate power over how social life is organized. Under capitalism, workers receive less in wages than the value of the labor power they furnish for producing the goods and services society will consume—this difference is profit, part of which goes to investment and fuels capitalist growth. This is why investment is no sacrifice, or at most the sacrifice of value produced by other people.

  Going further still, it’s a common misperception that the stock market is the major source of investment funds. But in fact, the majority of US capital investment comes from retained profits, not from the stock market.

  When times are good and profits are rolling in, the belief that things can only get better is too easily sparked among the rich and powerful. Investment surges. Bad money chases after good, overcapacity and overproduction develop—and eventually, there’s a crash as investors realize that not everyone will be able to cash in. There are two mutually exclusive rules of capitalist crises: “don’t panic,” and “panic first.” Busts thus inevitably follow booms, and the system goes through repeated cycles—at significant human cost.

  Downturns, which spike unemployment and poverty, discipline workers; the sack, as the Polish economist Michal Kalecki wrote, is the key disciplining device under capitalism, and perhaps even more important a possession to business owners than is profit. This is because the potential for putting workers out of work, not profit and wealth alone, is what gives an owner the power over other human beings, delivering unto the boss (at least for the hours of work) no less a whip hand than that of the slavemaster. In so doing, it gives the owner the ability to use humans as tools in the craft of their choice—as paintbrush, hammer or scythe. It is a reminder of how the system functions at the most basic level. Recessions also discipline capital, enforcing a changing of the guard and creating the conditions for new bouts of accumulation. The system as a whole regenerates and refines itself, fresh faces masking the same core social relationships.

  These cycles of boom and bust are not, however, pure anarchy. Capitalism, too, has something akin to an economy-wide central planner: the financial system—the first car in the rollercoaster, managing spirits and rationing investment. Economist J. W. Mason, who has developed the idea of finance as planner in a series of articles in Jacobin magazine, writes: “Surplus is allocated by banks and other financial institutions, whose activities are coordinated by planners, not markets … Banks are, in Schumpeter’s phrase, the private equivalents of Gosplan. Their lending decisions determine what new projects will get a share of society’s resources.” Banks decide whether a firm will get a loan to build a new plant, a household a mortgage, or a student a loan for tuition and living expenses—and the terms on which each is repaid. Each loan is an abstract thing that masks something very concrete: work for workers, a roof over someone’s head or an education.

  In rationing investment, the financial system is central to managing expectations about the future—connecting today with tomorrow. Interest rates, financial sector regulations and loan decisions are capitalism’s way of choosing between different possible economic plans. Investment today is meant to lead to profits tomorrow. Regulation defines the very terms of how resources are accounted for: what constitutes profit or how a bank’s loan portfolio functions. The financial system’s best guesses of ultimately unknowable future profitability, then, govern how concrete resources are set aside. So much, so straightforward. Yet even here, we begin to see how the capitalist economy is not as anarchic as free market proponents would have us believe.

  Central Bankers, Central Planners

  At the fulcrum of any contemporary financial system sits the central bank, banker to the bankers. Typically, central banks are most visible during crises, when they intervene to prop up the financial system, lending when panic overtakes others. Yet even during “normal” times, central banks, through regulation and monetary policy, help set the overall pace of credit creation and, ultimately, of economic activity overall. Often presented as neutral policy makers, central banks are in fact political beings with political aims, tightly integrated with the rest of the private financial system.

  Take the US Federal Reserve. Its leadership has been very concerned with how quickly wages are growing, what unions are doing and how the balance of power is shifting within workplaces—what socialists would call “the state of class struggle.” Often in very explicit terms, the Federal Reserve has taken great interest in the relationship between workers and bosses, labor and capital, as much as any union organizer. The archives of meeting minutes dating back to the 1950s reveal central bankers talking frankly and knowledge-ably about which unions are currently in bargaining and their relative strength. The auto and steel sectors received particular attention; the governors of the Fed might have been even more interested in the strategy of the United Steelworkers (USW) or United Auto Workers (UAW) than would the average shop steward.

  This was true during the postwar Golden Age of capitalist growth as well. Here are Governor C. Candy Balderson’s views as described in the minutes from the March 3, 1956, meeting of the Reserve’s Federal Open Market Committee:

  The [Federal Reserve] System’s actions should be decisive enough to cause businessmen to realize the danger of a wage-price spiral and not abdicate when they face wage negotiations this spring and summer the way they would if they felt they could simply increase their prices and continue to sell goods. He hoped that labor unions would appreciate the dangers of a wage-price spiral.

  That summer, the Fed ended up taking decisive action, raising interest rates, as a successful steel strike pushed previously reluctant central bankers to Balderson’s side. The years 1957–58 saw a short recession precipitated in part by these higher rates. But Fed governors were explicit that they had deliberately applied the brakes to the economy and altered the costs of investment in order to change the climate in which capital bargained with workers. They planned, overriding what the (labor) market, left to its own devices, would otherwise have delivered.

  Similarly, during the first eight months of the 1973–75 oil-shock recession, interest rates continued to rise—nicely coinciding with UAW bargaining with the Big Three automakers. When the Fed finally lowered rates to stimulate investment and counteract the slump, Fed governors argued that, unlike expansionary fiscal policy carried out by Congress and the president, presumably at the behest of the democratic will, their independent actions would be much easier to undo when the economy “overheated” again and workers started to ask for more. And undone they were—very quickly: as is widely acknowledged, in 1980, under the Carter administration’s Federal Reserve leadership of Paul Volcker, the body used sky-high interest rates to launch an assault, not only (or even primarily) on inflation, but on the remaining power of organized labor. And in the decade following the 2008 financial crisis, Fed-led monetary policy played an oversized role; indeed, distrust for state spending has, since the advent of so-called “neoliberalism” in the 1970s, consolidated itself as common sense. To manage ongoing stagnation, central banks across the global North have made massive purchases of bonds, mortgages and other kinds of equity, adding to their rate-setting and regulatory power. The irony here is that an unaccountable, undemocratic department within the state, in the form of central banks, has intervened in the economy in spite of elite consensus against state intervention in the economy.

  Of course, the path is never straight between the actions of banks (central and private alike) and what happens in the wider economy. Some interventions fail. And aims and tactics will change to reflect the balance of power in the economy: in principle, planning carried out by the financial system could just as easily support, on the one hand, a high-productivity economy that more
evenly distributes growth (as during the 1950s), as it could one of corporate short-termism and upward transfers of wealth (as starting in the 1980s), on the other.

  The financial managers of the global economy—the vast majority working at private rather than central or other public banks—occupy a class, not a control room. They share much in terms of wealth, positions of power, education, and lunches in Davos. But as individuals they have their own histories, ideological leanings and visions for how best to achieve stability for capital. Large-scale planning is mundane, technocratic and systemic, not conspiratorial. Networks of power and ideology replicate themselves without the need for open scheming. Economy-wide planning under capitalism is so diffuse that much can get in the way of even the best-laid plans—never mind the unavoidable yet unpredictable crisis dynamics of the system itself. And so, as capitalism heaves from boom to bust, its managers switch from plans for prosperity to plans for surviving a crisis, all of them contested and imperfectly implemented.