Karl Marx, Capitalism and the political implications of Blockchain and Big Data

Blockchain together with Big Data is a potent mix. There’s been a lot of speculation about their potential impact.

Here we consider implications for political systems. Are they a recipe for a socialist revolution? Or are they a classic capitalist combination?

The answer could well be both…

As juicy as the question is, before we get to it let’s first make sure we’re all on the same page with a couple of quick definitions.

Big Data

Big Data refers to the vast oceans of data we’re all swimming in. Everything we do using computer can be recorded, measured and analysed. Increasingly things that have been just things are becoming computers. Like fridges and watches. This is what we’re calling IoT. The “Internet of Things”. And so the data builds.

More than just the data itself, the idea of Big Data is about doing smart things using complex capture, storage, curation and analytics techniques.

Blockchain

Bitcoin is the world’s leading cryptocurrency, built on a blockchain.

Perhaps you’ve heard of the new digital currency Bitcoin? Well, Blockchain is the technology that makes Bitcoin possible. For more on Bitcoin itself, try starting here.

Rather than delving into technological detail, the potential of Blockchain beyond Bitcoin is best understood by what it creates. And that’s trust. Think of the trust required in every exchange.

Trust that a bank will return your deposit with interest, that an Airbnb guest won’t walk out with your wallet, trust that the government will spend your tax dollars wisely.

In each of these cases Blockchain might be used by, or possibly replace, the intermediaries we currently rely on to provide the trust required for the exchange to occur. Banks and Airbnb beware.

The Blockchain is a public, transparent and distributed database, where new entries and transactions are continuously grouped into “blocks”, that are confirmed as true by consensus from a network of peers, and then linked together on an ever lengthening chain. Get it? A chain of blocks. Easy.

The length of the chain and complexity of its encryption make it computationally impractical to unravel and alter.

In addition to these technical features, Blockchain engenders trust by comprehensively harnessing the horse of self interest to the cart of the common good. All the acts that affirm the integrity and security of the Blockchain system are rewarded.

Comprehensively harnessed. Self interest to common good.

So what happens when the features of Blockchain and Big Data are united? Together are they a recipe for a socialist revival, or a shot in the arm for capitalism?

Why socialism never quite got off the ground

Karl Marx figured rising inequality would lead to worker’s revolution and their taking control of the means of production. Socialism, he concluded, would be the natural heir to capitalism.

Marx’s prediction has failed to materialise for two main reasons.

Only more recently has the divide between capital and labour become more stark. So much so that the World Economic Forum has listed inequality as a key threat to the global economy in 2017.

Firstly, Capitalism to date has proven adaptable and kept most people happy.

Second, where Marx’s theory of Socialism has been put into practice, in the USSR, Cuba and elsewhere, its most significant point of failure has been a reliance on a centrally planned economy.

Central planning, to be as effective and efficient as markets in allocating resources, must assemble, analyse and make decisions using data that is both dispersed, often only existing in the minds of consumers, and temporal, its useful life only as long the sentiment it captures continues.

Point of failure solved?

So how, if at all, does Big Data and Blockchain technology shift this dynamic?

Let’s take food production as an example.

Consider a future where data from sensors in every Fitbit and fridge is anonymously aggregated on a blockchain to accurately and transparently predict the nutritional needs of a nation.

This might look something like the diary aisle in your local supermarket. So much choice. A lot of waste.

Your rate of dairy consumption, together with data on stock in shops, would inform farmers ahead of time much milk will be needed. Factories would know the right mix of milk, cheese, yoghurt and cream to deliver.

This intelligence in the hands of the state levels the playing field for Socialism. Resources could be allocated and production scheduled in real time far more efficiently than a best guess based on last year’s consumption.

And possibly more efficiently than markets do now. Today between the farm and fridge we waste at least a third of all food produced, worth up to US$1 trillion globally.

But this same intelligence when in the hands not of the state but of everyone should in theory make a market at least equally efficient.

While central planning is improved, realising the benefits of Big Data and Blockchain doesn’t require doing away with markets and the state taking over of farm and factory.

But it will depend on how these technologies are deployed in market economies whether they prove an antidote to rising inequality, or instead add to political unrest, predicted by Marx to bring on revolution.

The Capitalist point of failure

Mr Monopoly. The classic icon of markets gone wrong.

Karl Marx suggested wealth concentration would prove to be the point of failure for Capitalist economies.

Data is described as the next oil. How we tap into Big Data as a vast resource will determine whether it further concentrates wealth or distributes it more equitably.

For example, Artificial Intelligence (AI), anticipated to drive a significant amount of our future economic growth, is only as smart as the depth of data upon which it’s built. The battle for AI supremacy will be won not by those with code or talent, but by whoever has access to the most amount of data with which to train and hone the accuracy of their applications.

Like OPEC with oil, Facebook, Google, Microsoft, Apple, Amazon and others are likely to protect their advantage by raising barriers to data supply and access.

That’s where Blockchain comes in. With it we can create a public, transparent and distributed database, where Big Data is anonymised, owned and accessed by all. On a Blockchain our personal data can become a common good, its value widely and fully realised, rather than an asset tightly held by an elite, only utilised in reaching much more narrow ends.

Fixing the point of failure

Big companies won’t volunteer their data. So the state will have a role in lowering barriers to data access, possibly including legislating a right for individuals to download their own data in an easily readable format.

For this our governments should attract broad support.

While not a recipe for revolution, the Socialists among us have plenty of reason to support Blockchain and Big Data as important instruments for securing data ownership and wealth redistribution.

Helpfully, aside from companies with existing Big Data interests, Capitalists too will also appreciate the immense potential of these technologies for supercharging the process of creative destruction that ultimately fuels market economies.

In summary…

And to answer our initial question, Blockchain and Big Data applied together are ideologically agnostic, not inherently Capitalist or Socialist, not good or evil.

As ever, it’s the virtue and values of the humans in whose hands any new technology is placed that determines the purpose to which it is put. It could go either way. A future where our data is put to its best use will require our collective oversight and action.

There’s a lot riding on it. So if this is your first foray into Big Data and Blockchain, making it to the end of this article is an excellent achievement. Well done and thank you. But make sure it’s only the start to your interest and engagement.

Richard Shannon is the founder of Worldview, a startup on a mission to empower people to capture and then squeeze the most value from the personal data they create online. Sign up and start building your own worldview today!