Power under Pressure: Digital Capitalism in Crisis (2-2)

Massive and sustained corporate investment around ICTs developed in response to the economic downturn of the 1970s, within a multifaceted attempt to renew profitable growth. Five core components of this encompassing response were financialization, militarization, wage repression, transnationalization, and accelerated commodification.
Yet these axes of a developing digital capitalism eventually converged on a new and deeper financial-economic crisis. May we expect this sector to reprise its earlier role in renewing the accumulation process? How may geopolitical-economic forces be rebalanced?

But Facebook is visited by 92% of the Internet population in Turkey, 87% in Indonesia, and (merely) 67% in the United States. This goes far to explain how the company could be valued in January 2011 at $50 billion. These numbers compare favorably with those garnered by the very largest global television networks and, in addition, web services gain a competitive advantage through their unrivaled capacities for audience measurement and tracking. U.S.–based companies have built up transnational media platforms that aspiring rivals will find difficult to dislodge.
6 Communications and media thereby exemplify a larger trend. Between the 1970s and the 2000s, Nolan and Zhang show, across a wide range of industries “the ‘commanding heights’ of the world economy became occupied chiefly by large companies from the advanced economies,” the most
United States–based capital and the U.S. state have mounted an offensive to retain dominance over this strategic pole of profitable growth. But this is a struggle. New sites of economic dynamism and market strength have emerged. Geopolitical power is less concentrated than it was in the aftermath of the Soviet Union’s collapse. There is fresh maneuvering room, because the United States, already overextended, has been additionally weakened by the crisis. Disagreements are intensifying over how the world political economy should be overhauled to resolve today’s crisis. This lends a keen edge to the competition for mastery of the coveted sources of above–average profitability, notably, communications and information.
Developments in the Peoples Republic of China possess exceptional interest in this respect.
Chinese leaders have succeeded in reserving their own national market in communications for homegrown, often state–affiliated, companies.
Domestic suppliers and service providers are market leaders: from gaming site 4399 and game publisher Shanda to CCTV and Shanghai Media Group, from e–commerce giant Alibaba to social network sites
Renren and Kaixin, to microblogger site Weibo, to online video site Youku, to network operators China Mobile and China Telecom, to news agency Xinhua, to PC manufacturer Lenovo and search engine Baidu.
It is symptomatic that the top four web portals—Sohu, Sina, Tencent, Netease—claimed nearly three-quarters of the sector’s revenue in 2009. Although it would be profoundly mistaken to view China as an autarky, and although advertising in particular exhibits substantial outside investment and influence, U.S. trans-nationals have been kept at arm’s length from service provision and many applications.
The nature of this achievement should be specified. Chinese capital is not on a par with the U.S., European, and Japanese–based companies that in many markets have already built up transnational production and distribution chains. Only exceptionally have Chinese extraterritorial groups such as the network equipment vendor Huawei become global leaders. Yet China’s success in reserving its own national market in communications is remarkable in its own right. It constitutes a pronounced exception to the post-World War II historical pattern, in which national communications markets and audiovisual spaces—even in such countries as Brazil and France—came to be dominated by TNCs. As well, it is occurring in the world’s second largest economy. China, furthermore, continues to enjoy high growth, even as stagnation and fiscal crisis persists throughout Europe, North America and Japan; and, finally, China may be poised to use economic policy to spur domestic consumption. China's sizzling communications market only adds to the allure; at latest count, the country boasted 450 million broadband users and 584 million wireless subscribers (TeleGeography successful of which “vastly expanded their international investment, building production networks across the globe” and attaining unprecedented scale and market power. Peter Nolan and Jin Zhang, “Global Competition.
Growing Chinese foreign direct investment is occurring from a very modest base and, as Nolan and Zhang have underlined, these efforts to trans-nationalize are taking place in a field crowded with formidably entrenched corporate behemoths.
On one side, we see a major executive branch initiative to push forward the longstanding U.S. policy of free flow of information (Schiller & Sandvig, 2011). On the other side, we see newly assertive efforts by Chinese party-state leaders to build a transnational communications industry, and impressive attempts by network vendor Huawei to gain entry into the U.S. market for advanced communications systems and service.
Giuseppe di Lampedusa’s fictional formulation, in The Leopard, famously captured the kind of dominative logic that applies today: “If we want things to stay as they are, things will have to change.” Still, this is not a sufficient end–point. Movement within the political economy encompasses more than a mechanistic capital logic, however much of this logic may be revised to foreground digital sites of accumulation. We are living through a process of change whose character is both contingent and contested, and whose outcomes will be determined by the balance of social forces within particular societies and across the world.
In order for digital capitalism to be reconstituted there will, as David Harvey  concludes,. . . have to be wrenching and painful shifts in the geographical and sectoral locus of capitalist class power. The capitalist class cannot, if history is any guide, maintain its power without changing its character and moving accumulation on to a different trajectory and into new spaces. Efforts will be made to impose additional concessions on already hard-pressed populations in lower-growth regions such as the United States and Western Europe—in living standards and in democratic liberties.
Today, the offloading of debt from private financial institutions to government is being used as a basis for inflicting “austerity” budgets in Western Europe and the United States. As these exactions bite more deeply into social experience, there is every reason to forecast that popular opposition to capital’s class project may intensify as indeed we have seen recently in Wisconsin and other Midwest states.
That communications and information remains a pole of growth in itself gives little cause for celebration. Digital bits do not break free of social pathways, and, digital capitalism thus develops as its forbear did—through episodes of crisis and boom—and, as the people of the Middle East have been attempting to remind us, of opportunities for reconstruction along different lines.