Dan Schiller: Digital Capitalism

Digital Capitalism examines how the interaction of business interests, neoliberal policies, and information technologies has shaped the development of the Internet and the capitalist world-system. Calling into question utopian conceptions of the Internet, Schiller argues, “Far from delivering us into a high-tech Eden, in fact, cyberspace itself is being rapidly colonized by the familiar workings of the market system. Across their breadth and depth, computer networks link with existing capitalism to massively broaden the effective reach of the marketplace. Indeed, the Internet comprises nothing less than the central production and control apparatus of an increasingly supranational market system.” Schiller’s books show how this “digital capitalism” was made possible through the installation of neoliberal policies in the telecommunications system in the U.S. and then across the globe. During the era of mainframe computing, businesses in the U.S. began to computerize more and more of their activities. The development of business computer networks that would “make data-processing available more broadly throughout business organizations,” however, was limited by the U.S. government’s strict regulation of the telecommunications system. So “[b]etween the mid-1950s and 1970, business users elaborated a policy agenda around a general objective: freedom to develop corporate network systems and services as they preferred.” They “demanded nothing less than an autonomous sphere of corporate network applications that was essentially free of regulatory oversight and was parasitic on the existing telecommunications network.” This neoliberal project succeeded by instituting a (fictional) division between “telecommunications” and “computing” domains. “On the telecommunications side of the line, the existing rules of public service would continue to apply. However, on the computing side, established exit, entry, and price controls would be relaxed and progressively abandoned. So long as network applications were categorized by regulators as data-processing services, they could be pursued freely.” As computer networks grew at a staggering rate in the following decades, more and more services ended up “on the liberalized computing side of the line,” and eventually even regulated telecommunications companies were allowed to set up subsidiaries in the less regulated domain. “What had originated as a specialized networking industry endowed with exceptional market freedom was now set to expand comprehensively into the greater telecommunications system.” Computer networks were adopted early on in the banking and finance sectors, but soon spread across the economy as businesses sought out a competitive edge. Businesses began to spend enormous sums of money on information technologies needed for information sharing within corporations, between corporations, and between corporations and individuals. “Between 1970 and 1996 . . . the percentage of all U.S. corporate capital investment allocated to information technology climbed steeply, from 7 percent to around 45 percent.” The Internet may have been developed in a Cold War context, but its subsequent history was largely determined by its maturation in a deregulated zone open to market forces aiming to profit from this corporate frenzy for information sharing. Many businesses approached the Internet, a network of networks, as an instrument for extending the information sharing capabilities of their existing local-area networks (LANs) and intranets to greater distances and more users, such as business partners and, eventually, consumers themselves. By the late 1990s, “corporate networks and the open Internet were becoming ‘inextricably intertwined.’” “Only a thoroughgoing modernization of underlying telecommunications systems could sustain such a comprehensive, economywide move into electronic commerce,” so telecommunications companies, which had been slowly adapting to demands for carrying data, were jolted into upgrading system capacities and offering their own Internet services. One reason businesses so strongly demanded powerful and robust networks was the growing importance of “transnational production chains” (TNCs). “Sophisticated network systems . . . comprised the increasingly essential infrastructure for engorged transnational corporations, pursuing export-oriented or even globally integrated production strategies.” However, in order for global telecommunications networks to satisfy the demands of digital capitalism, the neoliberal reforms pioneered in the U.S. had to be exported; the old era of national sovereignty and regulation of telecommunications had to go. “Corresponding to the ongoing buildup of transnational production chains, therefore, was a powerful pan-corporate attempt to subject worldwide telecommunications policy to United States—originated, neoliberal regulatory norms.” Neoliberal telecommunications policies swept across the globe in the 1980s and 90s. National telecommunications systems were privatized in large numbers, and telecommunications became a lucrative sector subject to the speculative excesses of finance capital. The traditional “social-welfare features” of telecommunications systems were dismantled and neoliberalism’s negative effects soon appeared: quality declined as corruption spread, inequality increased as businesses—freed from the goal of universal access—privileged wealthier customers and neighborhoods, and employees in the telecommunications industry were subjected to downsizing. Policy changes allowing consolidation of the telecommunications industry led to a wave of mergers and partnerships and a glut of system building on both national and international scales. Neoliberalism is of course not unique to telecommunications. But Schiller argues that the Internet has functioned as a key “policy wedge” for driving forward the global spread of digital capitalism’s neoliberal policies. Since the computer’s 0s and 1s don’t distinguish between speech and commerce, the defense of the freedom of the former has tended to assist in the extension of the freedom of the latter. Upholding free speech on the Internet has gone hand in hand with the framing of the Internet as an international free-trade zone. “Capital’s stewardship of the Net, taking the form of multilateral support for cyberspace as a stateless jurisdiction, works to ensure that the market development process will only deepen and broaden its incursions on national sovereignty.” Schiller’s next chapter examines the (re)construction of the Internet as “a new consumer medium.” Schiller pessimistically argues, “The practices that saturate our culture and that are being transferred wholesale to the Net are market-driven in intent and in effect. That doesn’t mean they cannot sometimes eventuate in true artistry but rather that art itself is generally placed in harness to a narrow and exclusionary social purpose: selling.” “If the present trend is not comprehensively interrupted, the extent to which cyberspace becomes a commercial consumer medium will be largely determined by profit-seeking companies themselves. Non-profit prospects or alternative visions of cyberspace will either be marginalized or else incorporated—and exploited—by sponsors seeking access to their services and perhaps a patina of legitimacy.” Schiller’s final chapter is a specific study of the role of information technologies in the evolution of the “higher-learning industry.” He claims, “Cyberspace lent itself both to an unparalleled market takeover of the learning process and to a relentless vocationalism.”