1220 GMT January 26, 2020
Here is one of the great paradoxes of our time. The world is dominated by a few corporations that are among the most profitable companies in the history of capitalism. In the US (the home of these giants) and in the UK (an enthusiastic vassal state), parts of the economy are booming and employment is at record levels. And yet, in the middle of this astonishing prosperity, inequality is at levels not seen since the period before the First World War. In the US, the share of total income going to the top one percent of the population is now back to the level it was in the 1920s. And in the UK, more than four million people are trapped in deep poverty.
Since this catastrophic rise in inequality seems to be correlated with the rise of the tech industry, it’s tempting to see a causal link between the two. Tempting, but too simplistic. For while digital technology has been a central factor in what’s happened, it’s only a part of the story. More often, it’s been an enabler of other forces rather than a prime mover.
The biggest force reshaping our world has been globalization. “A really good substitute for a manual laborer in the US is a manual laborer in China or Costa Rica,” says the Stanford economist Paul Oyer. But you can’t outsource complex production lines without high-bandwidth connections between the West and those distant factories. Oyer cites Apple as a canonical example of how to do it well. “The company is designing their products here, so the people who work in engineering are more and more valuable, and making more and more money, but the people who, in the old days, might have made computers here — that’s now done in China.”
Globalization exported jobs from Western economies and gave them to workers in poorer countries, which is why, globally, inequality has reduced even as it increased in the West. But in our suddenly deindustrialized regions, neoliberal governments did little to help workers and communities that had been left behind. It’s been the same story with job-destroying automation. “We always forget,” says Oyer, “to go back and take care of the people who lose their jobs.” Since the companies that deploy the machines were driven by the overriding imperative to maximize shareholder value, they felt no responsibility for the collateral damage they had wreaked on communities and lives. And, once again, governments failed to pick up the pieces.
One of the reasons employment has remained surprisingly buoyant in highly unequal societies is because the concept of work is being transformed. People without education or training find themselves eligible only for poorly paid, insecure and exploitative employment.
Or they participate in what has become known as the gig economy, defined as a labor market characterized by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs. Think Uber, Lyft, Deliveroo, DoorDash, outfits that created tech platforms that put service workers in touch with clients, while taking a cut and pretending that the freelancers are independent contractors rather than employees who would be entitled to paid leave, holidays and other rights that workers used to expect. So people wind up working for an algorithm rather than a human being.
This entire new economy would have been impossible without ubiquitous Internet connections, smartphones, apps and GPS, in other words, without digital technology. And in the process, it is transforming what Marx called the proletariat into what we now know as a “precariat.”
And then there are the tech giants themselves, huge corporations that directly employ very few people in comparison to their revenues. As of December 2018, for example, Facebook employed only 35,587 people. Volkswagen, in contrast, employs nearly 656,000 people worldwide. Tech companies’ direct employees are drawn from a very skewed democratic — heavily male, overwhelmingly white or Asian, highly educated, lavishly remunerated and based in a smallish number of technology centers.
Those are the people who do the interesting work in the industry. But Google and Facebook in particular have large numbers of “indirect” employees, those who work for contractors, often, but not always, in poor countries, who do the “moderation” of online content needed to keep our social media feeds clear of the horrific stuff that is continually uploaded by trolls, fanatics and sadists. This is poorly paid, traumatic, soul-destroying and psychologically damaging work and it’s a necessary corollary of the success of these tech platforms.
The point of all this is not that digital technology has created the unacceptable levels of inequality that disfigures many liberal democracies, but that it plays a central role in enabling the forces — globalization, neoliberal economics, sociopathic corporations, global tax-avoidance, automation, political disruption, platform power — that have shaped the world we now inhabit. It’s been an enabler, not a prime mover. And, in the broad sweep of history, it’s only just getting started.
* John Naughton is professor of the public understanding of technology at the Open University in the UK. He is the author of ‘From Gutenberg to Zuckerberg: What You Really Need to Know about the Internet.’ This article was first published in the Guardian.