The Future of Capitalism is Now: Can AI Solve The Knowledge Problem?
It has happened to all of us: saying out loud something to the tune of “Oh, I want to go to Paris”, and moments later being smothered with adverts for plane tickets on our phones. Cataloging the human experience and turning it into data, which then goes for sale to advertisers, is how tech giants Google and Facebook make their insurmountable fortune. The revenue from digital ads in 2019 to the two platforms was $103.73 and $67.37 billion respectively, showing that the market for personal data is immensely lucrative.
In her 2019 book “The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power”, Harvard Professor Shoshana Zuboff provides a thorough sociological analysis of this industry, which she dubs “Surveillance capitalism”. To the data about ourselves, our preferences and behaviour that is rendered and sold on the surveillance capitalism market, she refers to as “behavioural surplus” — a nod to the Marxist concept of surplus labour. Ethical considerations aside, Zuboff notes that “The discovery of behavioural surplus marks a critical turning point not only in Google’s biography but also in the history of capitalism”. Indeed, upon a closer look, surveillance capitalism diverges from “traditional” capitalism, in that it contradicts the theoretical foundations of capitalism. This provides us with a glimpse into a new form of capitalism and raises questions about the implications surveillance capitalism carries for the future.
The Invisible Hand
Central to capitalism is the well-known notion of the “invisible hand”. Coined by Adam Smith in 1759’s “The Theory of Moral Sentiments”, it refers to how the nature of capitalism inadvertently ensures that market exchanges happen efficiently. Because everyone in the capitalist system has an innate personal self-interest — the buyer, the seller, the worker, and the employer — they enter a transaction only when they know it will be profitable for them. When making this judgment, they are intuitively guided by this “invisible” hand. This enables everyone in the system to benefit, instead of losing money or goods. The hand is invisible because the way it motivates effective exchange is unseen, unintentional, and cannot be described.
Surveillance capitalism is presented in the mainstream narrative namely as such: an industry that has emerged spontaneously, unintentionally. The ubiquitous argument goes, technological progress makes it possible to develop X — in this case, software that tracks consumer behavior. X will be convenient for the public. Therefore, it is necessary to develop X. This sense of necessity characterizes the development of X as something inevitable and therefore removes the possibility of deliberate action in this process. Upon closer consideration, however, it is evident that surveillance capitalism has emerged to a significant extent deliberately. The reason lies in the nature of technology. It is not an independent phenomenon. Rather, it is a tool for the achievement of social and economic purposes. At the beginning of the industrial revolution, the early capitalists developed machinery and innovative production technologies to facilitate capital-intensive production. This allowed them to reduce costs for labour and increase their profits. Similarly, the technology behind surveillance capitalism is not an inevitable development of science, but a deliberately designed tool for commercial gains.
The way self-interest motivates exchange in surveillance capitalism is for this reason very visible. It is because the platforms responsible for it have taken very particular actions to shape and control the market. These actions complete what Zuboff refers to as the process of data rendition. The first step of the process– incursion — entails the exploration of behavioural surplus in a previously unexplored sphere without the public’s approval. Take the creation of Google Street View, for example, thousands of roads and the people on them were photographed without their permission. The following steps of data rendition include normalizing such invasive practices and introducing more moderate, yet not less invasive versions.
In 2017 it was revealed that Facebook had sold the data of millions of users to Cambridge Analytica for the purpose of manipulating the 2016 US presidential election vote. After the scandal, many policies to protect personal data — like the EU’s GDPR policy — were put in place. The policies have been criticized for legitimizing the process of data rendition because they make it seem as though the consumer can opt out. In reality, third parties continue collecting personal data from the so-called ‘essential’ cookies, which cannot be turned off. This is why the formation of the behavioral surplus market diverges from how Smith observed the formation of the capitalist economic system. Instead of being intuitively driven into cooperating within a system that provides every agent with profit, the agents in surveillance capitalism created the system themselves in a calculated and very deliberate manner.
The Knowledge Problem
It is evident that surveillance capitalism represents a new form of capitalism not only in the way it has emerged but also in the way it operates. The reason the hand is “invisible” in the first place has to do with knowledge. How capitalist market exchange works is not simply unknown, it cannot be known. Friedrich Hayek, one of the prominent theoretical defenders of capitalism and liberalism, formulated the so-called “knowledge problem”. He concluded that knowledge about economic processes is: subjective (depends on utility and scarcity), transient (particular to a certain time and space), and tacit (cannot be expressed). Every person in an economic system — be it a factory, a national economy, or the international economy — possesses a particular knowledge about their position. Complete knowledge about, for example, production technology, consumer preferences, and availability of resources cannot be summarized and utilized by authorities, because it changes constantly and is impossible to gather.
Surveillance capitalism, however, succeeds in doing just this. The platforms’ greatest asset is the ability to predict human behaviours and sell them to advertisers and businesses. The level of insight into the market, any market for that matter, they have is unprecedented in any industry before. Data is rendered from more and more spheres of daily life, as new smart technologies are consistently introduced. Aside from smartphones and watches, smart toothbrushes, fridges, mattresses, and bottles are now entering the market. Zuboff even quotes the development of smart fabric, which would take behavioural surplus beyond the domain of electronic devices and into our clothing, or skin — domains we would have considered organic and outside of Google and Facebook’s reach. A new capitalist logic is represented by behavioural surplus: what drives this extremely profitable market is knowledge. Data, as a form of knowledge, is both surveillance capitalism’s product and its resource.
The Future of Capitalism
The knowledge problem is the basis of Hayek’s explanation of why planned economies cannot work. In centralized economic systems, such as socialism, the government allocates production and distributes materials. But their information on what goods need to be produced, how much of them should be produced, and how many resources are available cannot be complete. This is why in attempting to regulate the market, the Soviet State planning committee Gosplan was responsible for creating a scarcity of consumer goods. This misgiving was perhaps most tangible with respect to food. In 1982, The New York Times wrote about the situation inside a Moscow food store. The author, John F. Burns even compared the scarcity with the “desperate shortages of World War II”: “At noontime one day last week the meat counter was down to pitiful cuts of beef and mutton, mostly fat and bone. After a few weeks late last year when it disappeared from Moscow shops, butter was on sale again, but with a limit of 1.1 pounds per shopper. The vegetable counter boasted symmetrically arranged displays of carrots, beetroot and cabbage, but much of it was rotten.”
Gosplan’s estimations of consumer behaviour and needs were incorrect. However, surveillance capitalism deals with inordinate amounts of data tracking exactly these variables. So can it shine a light on the way a planned economy may actually succeed? If a centralized government had information about every Google search, every purchase — already made or potential future ones — it could theoretically, aided by technology, calculate an efficient allocation of production.
Is this possibility likely? In light of global democratic backsliding and rising authoritarian tendencies, perhaps. Ultimately, the development and use of surveillance capitalism depend entirely on the platforms. Google and Facebook have immense lobbying power: the latter’s lobbying budget, for example, was $11,5 million in 2017. The amount of money they have enables both platforms to prevent governments from creating laws that would regulate their activity. This is why, in theory, they could accomplish any project they have envisioned — we just have to wait and see. So while it is still unclear what exactly the future holds for the nature and structure of capitalism, one thing seems to be certain: with surveillance capitalism, the future is already unfolding.
Sources for my references can be found here
