Cap turns China War – Capitalism creates geopolitical tensions with China through competition and hierarchies

Beyond explicit confrontations, since intellectual monopolies organize and plan production and innovation networks taking place in different countries, they generate an overlap of political realms with sometimes contradictory rules and norms. Who oversees production and innovation inside the networks organized by intellectual monopolies? The latter or the different states where intellectual monopolies’ production or innovation networks are based? To whom subordinate firms and other organizations are accountable for their actions? Their state or the intellectual monopoly coordinating the network? The simple answer is both. The complicated part is to identify what happens when they are in contradiction, and what are the consequences of this complex set of power structures for workers and subordinated organizations.

Intellectual monopolies have replaced state functions as policymakers. An extreme example recently disclosed is Eric Schmidt, Alphabet’s former executive chairman, advising the US federal government while still managing Alphabet. He was the chair of the US Defense Innovation Board, which recommended the use of artificial intelligence to the US Department of Defense. He also chaired the National Security Commission on Artificial Intelligence which advises the US Congress on analogous topics (Klein, 2020).

The government’s threat over China is – at least to some extent – driven by US data-driven intellectual monopolies’ concern over Chinese rivals like Alibaba, Tencent and Huawei. The CEOs of Google, Amazon, Facebook and Apple made this clear in their testimonies in the 2020 US Congress Hearing. As a remedy, Schmidt had been pushing for more public investment in research related to artificial intelligence and tech-enabling infrastructure (such as 5G) (Klein, 2020). Furthermore, these data-driven intellectual monopolies make their own rules and norms for their digital republics and, to some degree, replace the role of states. Facebook’s founder and chief executive, Mark Zuckerberg, states it clearly

Every day, platforms like Facebook have to make trade-offs on important social values – between free expression and safety, privacy and law enforcement, and between creating open systems and locking down data.12

(Mark Zuckerberg, Feb 16, 2020)

And immediately afterwards, he advocates for more public regulations and informs that Facebook is working together with different governments to that end. A similar claim was raised by Sundar Pichai, arguing that artificial intelligence needs to be regulated.13

The division of power is not clear, given that corporate power and planning capacities go beyond national frontiers and beyond the capital they own. Overall, there is a legal vacuum in the reach of each state’s power and where the power of the intellectual monopoly controlling a portion of global production and innovation begins. This vacuum allows intellectual monopolies to expand their power and profits.

Another source of conflict between intellectual monopolies and core states concerns the relative absence of the usual benefits of being home to big corporations: employment generation and tax payments. Considering their earnings, global leading corporations do not generate in their home countries expected employment due to outsourcing and offshoring (of production and innovation), which is particularly the case of US and also European intellectual monopolies. This has contributed to the rise in inequalities in these regions. The consequent social distress put pressure on stringent regulations. In the US, we referred in Section 2.1 to the 2017 Tax and Jobs Act (Public Law 115-97), but changes have not been significant.

US intellectual monopolies are masters of tax avoidance. As we mentioned before, operations leading to lower tax bills and financialized profits are easier for companies with higher shares of intangible over tangible assets. Offshoring IPRs to countries where corporations are not required to pay taxes for their intellectual property is a mechanism frequently used to divert profits to tax havens (Bryan et al., 2017) (see Chapter 7 on Apple’s case). By the end of 2016, the top ten companies in terms of offshored savings were: Apple, Microsoft, Cisco, Oracle, Alphabet, Johnson & Johnson, Pfizer, Qualcomm, Amgen and Merck (Pozsar, 2018).

In China, whose global intellectual monopolies sprang from the sustained stimulus and protection of its state, the latter’s central planning capacity is starting to find limits vis-à-vis new intellectual monopolies. These corporations were not born as the chosen ones by the state, but still enjoyed the benefits of China’s protectionism. The recent case of Bytedance provides a good example. The company was spending its Chinese profits to expand its unprofitable business in the US when the US government banned its blockbuster TikTok app. Bytedance was not among Beijing’s favoured companies, among others, because of the difficulties in controlling the videos uploaded to TikTok (Yang, 2020). Regardless of the end of the story between TikTok, the US and Chinese governments and US intellectual monopolies as potential buyers for part of TikTok’s business, what the case put forward was a possible surge of clashes between emerging Chinese (data-driven) intellectual monopolies and their state. Indeed, in late 2020 the Chinese state delayed Ant Group’s IPO, followed by the introduction of antitrust regulation for digital companies.

Meanwhile, Europe remained focused on increasing regulations on foreign data-driven intellectual monopolies, including different accusations of excessive market power and unfair competition. Unlike previous stages in capitalism, Europe risks playing in the subordinate side, where the peripheries have historically been and generally remain. Germany’s fear of falling behind the US and China’s tech giants should also be read as a broader European concern to lag (far) behind those core economies.14 Overall, Europe and Japan are latecomers of the digital economy, and this space is being filled primarily by China, emerging as a digital technological power (UNCTAD, 2019). Moreover, with a drop of eight companies between March 2009 and December 2019, Europe’s share of global top 100 corporations in market capitalization fell from 27% to 15%. This drop was taken over by the US (PWC, 2020). Regulating the digital economy could thus be seen as Europe’s geopolitical rebalancing move.15

5 Final remarks

In this chapter, we argued that core states and certain corporations built a mutually beneficial relationship. We identified US and Chinese policies that contributed to the emergence and spread of global intellectual monopolies. Likewise, we elaborated on how these corporate leaders sustain and expand their respective countries’ geopolitical power. Nevertheless, we also addressed states’ concerns and the overall tensions of the juxtaposition of power between core states and intellectual monopolies.

The US state cannot afford to lose its intellectual monopolies since its global hegemon power significantly depends on those companies. Likewise, it cannot afford to let its intellectual monopolies be given their consequences for income and wealth concentration resulting in increasing social unrest. From the US state perspective, the technological war with China is necessary to remain the only superpower. Nevertheless, this conflict is also a powerful device to redirect public attention and blame – as it has always been the case of the United States – an “other” of the internal consequences of home (and global) capitalism.

Neither can the Chinese state afford to lose its alliance with its intellectual monopolies. Its national innovation system and geopolitical power are based on a strong partnership – although not without tensions – between China’s state and intellectual monopolies, the only ones challenging the US and its intellectual monopolies.

All in all, the US and Chinese states have benefited from their respective intellectual monopolies to build and reinforce their geopolitical power. Meanwhile, in the rest of the world, knowledge and data extractivisms are further expanding inequalities, diminishing social well-being and curtailing development opportunities (see Chapters 11–13). The resulting world scenario is a ticking bomb.

A missing piece in this puzzle that will be addressed in future research concerns integrating international organizations to our analysis, seeking to understand how intellectual monopolies influence them and their role as arenas of core states’ contest for global hegemony. Let us just point out that each time the US withdraws from international coordination, China moves forward. Remarkably, during Trump’s administration, the US withdrew from international treaties and organizations, putting into question its historical openness. A possible interpretation could be that the hegemon fosters an open world economy but as far as it benefits from it.

To conclude, beyond the focus on the US and China, this chapter has also made self-evident that unfolding the interplay between state and corporate power is always context-dependent. While in some contexts the state rules over global leader corporations, the latter overcome even core states’ power in other contexts. As capitalism develops through the interplay of its powerful actors, it is not possible to anticipate concrete outcomes of such a multifaceted relationship. Neither can we anticipate the counter-hegemonic tendencies that, as Cox (1981) emphasized, generally emerge to oppose the state and world order structures of capitalism. The institutions that will lead the counter-offensive to intellectual monopoly capitalism remains to be seen.

Growth is unsustainable AND innovation can’t solve-shifting away from productivism is key to avoid extinction.

Milena Büchs & Max Koch 17. Milena Büchs is Associate Professor in Sustainability, Economics and Low Carbon Transitions at the University of Leeds, UK. Max Koch is Professor of Social Policy at Lund University (School of Social Work), Sweden. 2017. Postgrowth and Wellbeing. Springer International Publishing. CrossRef, doi:10.1007/978-3-319-59903-8.

As the previous chapters have shown, economic growth is regarded as a prime policy aim by policy makers and economists because it is thought to be essential for reducing poverty and generating rising living standards and stable levels of employment (Ben-Ami 2010: 19–20). More generally, support for economic growth is usually intertwined with advocating social progress based on scientific rationality and reason and hence with an optimistic view of humans’ ingenuity to solve problems (ibid.: 17, 20, Chap. 5). Growth criticism thus tends to be portrayed as anti-progress and inherently conservative (ibid.: Chap. 8). While it is important to acknowledge and discuss this view, it needs to be emphasised that growth criticism is formulated with long-term human welfare in mind which advocates alternative types of social progress (Barry 1998). This chapter first outlines ecological and social strands of growth critiques and then introduces relevant concepts of and positions within the postgrowth debate. Ecological Critiques of G rowth Generally speaking, two types of growth criticism can b e distinguished: the first focuses on limitations of GDP as a measure of economic performance; the second goes beyond this by highlighting the inappropriateness of growth as the ultimate goal of economic activity and its negative implications for environment and society. Since GDP measures the monetary value of all final goods and services in an economy, it excludes the environmental costs generated by production. For instance, as long as there is no cost associated with emitting greenhouse gases , the cost for the environmental and social damage following from this is not reflected in GDP figures. Worse even, GDP increases as a consequence of some types of environmental damage: if deforestation and timber trade increase or if natural disasters or industrial accidents require expenditures for clean-up and reconstruction, GDP figures will rise (Douthwaite 1999: 18; Leipert 1986). Several critics of GDP as a measure of progress have proposed alternative indicators of welfare such as the Genuine Progress Indicator, Green GDPs or other approaches which factor in environmental costs (see Chap. 5 for more details), but they do not necessarily object to economic growth being the primary goal of economic activity (van den Bergh 2011). In contrast, the idea of ecological limits to growth goes beyond the critique of GDP as a measure of economic performance. Instead, it maintains that economic growth should not, and probably cannot, be the main goal of economic activity because it requires increasing resource inputs, some of which are non-renewable, and generates wastes, including greenhouse gases, that disturb various ecosystems, severely threatening human and planetary functioning in the short and long term. 4 CRITIQUES OF GROWTH 41 Resources are regarded as non-renewable if they cannot be naturally replaced at the rate of consumption (Daly and Farley 2011: 75–76). Examples include fossil fuels, earth minerals and metals, and some nuclear materials like uranium (Daly and Farley 2011: 77; Meadows et al. 2004: 87–107). Based on work by Georgescu-Roegen (1971), many ecological economists also assume that non-renewable resources cannot be fully recycled because they become degraded in the process of economic activity. Historically speaking, economic growth is a fairly recent phenomenon (Fig. 2.1). Since its onset in the late seventeenth century in Europe and mid-eighteenth century in the US (Gordon 2012), it has gone hand in hand with an exponentially increasing use of non-renewable resources such as fossil fuels (Fig. 4.1). While we are not yet close to running out of non-renewable resources, over time they will become more difficult and hence more expensive to recover. This idea is captured by the concept of “energy returned on energy invested” (EROEI). In relation to oil for instance, it has been shown that the easily recoverable fields have been targeted first and that therefore greater energy (and hence financial) inputs will be required to produce more oil. Over time, the ratio of energy returned on energy invested will decrease, reducing the financial incentive to invest further in the recovery of these non-renewable resources (Dale et al. 2011; Brandt et al. 2015: 2). Relevant to this is also the debate about peak oil—a concept coined by Shell Oil geologist Marion King Hubbert in the 1950s—the point at which the rate of global conventional oil production reaches its maximum which is expected to take place roughly once half of global oil reserves have been produced. There is still controversy about whether global peak oil will occur, and if so when, as it is difficult to predict, or get reliable data on, the rate at which alternative types of energy will replace oil (if this was to happen fast enough, peak oil might not be reached, if it has not yet occurred), the size of remaining oil reserves and the future efficiency of oil extraction technologies (Chapman 2014). However, it is plausible to assume that oil prices will rise in the long term if conventional oil availability diminishes, while global demand for oil increases with continuing economic and population growth. Since economic growth in the second half of the twentieth century required increasing inputs of conventional oil, higher oil prices would have a negative impact on growth unless alternative technologies are developed that can generate equivalent liquid fuels at lower prices (Murphy and Hall 2011). Some scholars have criticised the focus on physical/energy resource limitations as initially highlighted in the “limits to growth” debate (Meadows et al. 1972) and state that instead catastrophic climate change is likely to be a more serious and immanent threat to humanity (Schwartzman 2012). The main arguments here are first that much uncertainty remains about the potential and timing of peak oil, future availability of other fossil fuels and development of alternative low energy resources, while the impacts of climate change are already immanent and may accelerate within the very near future. Second, even if peaks in fossil fuel production occurred in the near future, remaining resources could still be exploited to their maximum. However, this would be devastating from a climate change perspective as, according to the latest IPCC scenarios, greenhouse gas emissions need to turn net-zero by the second half of this century for there to be a good chance to limit global warming to 2° Celsius (and ideally, below that) (Anderson and Peters 2016). It is telling that some of the more recent debates about ecological limits to growth put much more emphasis on environmental impacts of growth, rather than on peak oil or other resource limitations (Dietz and O’Neill 2013). Differently put, limits of sinks, especially to absorb greenhouse gases, and to the regeneration of vital ecosystems are now attracting greater concern, compared to limits of resources. Growing economic production generates increasing pressures on the environment due to pollution of air, water and soil, the destruction of natural habitats and landscapes, for instance, through deforestation and the extraction of natural resources. Therefore, growth often also threatens the regeneration of renewable resources such as healthy soil, freshwater and forests, as well as the functioning of vital ecosystems and ecosystems services such as the purification of air and water, water absorption and storage and the related mitigation of droughts and floods, decomposition and detoxification and absorption of wastes, pollination and pest control (Meadows et al. 2004: 83–84). Recent research on planetary boundaries has started to identify thresholds of environmental pollution or disturbance of a range of ecosystems services beyond which the functioning of human life on earth will be put at risk. Rockström and colleagues have identified nine such “planetary boundaries”—“climate change; rate of biodiversity loss (terrestrial and marine); interference with the nitrogen and phosphorus cycles; stratospheric ozone depletion; ocean acidification; global freshwater use; change in land use; chemical pollution; and atmospheric aerosol loading” (Rockström et al. 2009: 472). They also present evidence according to which three of these boundaries—climate change, rate of biodiversity loss and the nitrogen cycle—have already reached their limits (Rockström et al. 2009). Of those three thresholds, climate change has received most attention. The 5th Assessment Report of the Intergovernmental Panel on Climate Change (IPCC 2014) concluded that global temperatures have risen by an average of 0.85° since the 1880s (while local temperature increases can be much higher than that) and that the concentration of greenhouse gases in the atmosphere has reached unprecedented levels over the last 800,000 years—that of CO2 has now reached 405.6 parts per million (NASA, January 2017, Fig. 4.2), far surpassing the level of 350 ppm which is considered safe by many scientists (Rockström et al. 2009). The IPCC report also maintained that humans very likely contributed to at least 50% of global warming that occurred since the 1950s (IPCC 2014: 5). A range of climate change impacts can already be observed, including a 26% increase of ocean acidification since industrialisation; shrinking of glaciers, Greenland and Antarctic ice sheets, as well as arctic sea ice; and the rise of sea levels of 19 cm since 1901. This is projected to increase by an additional 82 cm by the end of this century at current levels of greenhouse gas emissions (ibid.: 13). Climate change impacts are already felt with increased occurrences of heat waves, heavy rain fall, increased risk of flooding and impacts on food and water security in a number of regions around the world. It is projected that with a rise of 2° of global temperatures, 280 million people worldwide (with greatest numbers in China, India and Bangladesh) would be affected by sea level rise, escalating to a projected 627 million people under a 4° scenario (Strauss et al. 2015: 10). At the 21st Conference of Parties of the United Nations Framework Convention on Climate Change in Paris in 2015, representatives agreed that action should be taken to limit rise of global temperatures to 2° and Fig. 4.2 Concentration of CO2 in the atmosphere. Source NASA, available from https://climate.nasa.gov/vital-signs/carbon-dioxide/. The CO2 levels have been reconstructed from measures of trapped air in polar cap ice cores 4 CRITIQUES OF GROWTH 45 to “pursue efforts” to limit it to 1.5°. This has been adopted by 196 countries, but immense efforts and very radical reductions of greenhouse gas emissions will be required to comply with the agreement. Even if net greenhouse gas emissions were reduced to zero, surface temperatures would remain constant at their increased levels for hundreds of years to come and climate change impacts such as ocean acidification and rising sea levels would continue for hundreds or even thousands of years once global temperatures are stabilised; moreover, a range of climate change impacts are deemed irreversible (IPCC 2014: 16). One controversial question in the debate about economic growth and environmental impacts has been whether growth can be decoupled from the damage it causes. Important to this debate is the theory of the Environmental Kuznets Curve which applies Simon Kuznets’ hypothesised inverted u-shaped relationship between economic development and income inequality to the relationship between economic development and environmental degradation. According to this theory, environmental degradation is low in the early phases of economic development, then rises with increasing development up to a certain point, beyond which it falls again with advancing development because more resources can be invested to render production and consumption more efficient and less polluting. Therefore, this theory suggests that it is possible to decouple economic growth (measured in GDP) from its environmental implications. The counter-argument to this theory is that it does not take into account the difference between relative and absolute decoupling. Relative decoupling refers to the environmental impacts generated over time per unit of economic output, for instance CO2 emissions per million of US$. In contrast, absolute decoupling would examine aggregate environmental impact, compared to total economic output over time. Here it has been argued that while relative decoupling may be possible as the environmental impact per unit of economic output decreases over time due to efficiency gains, absolute decoupling is much harder to achieve while growth continues. Indeed, there is no evidence for absolute decoupling as total environmental impacts, for instance total global CO2 emissions, are still rising with rising global GDP (Jackson 2011: 67–86). This is partly due to rebound effects which we discussed in Chap. 2: rising consumption because the increase in efficiency has made it cheaper to produce/consume (Jackson 2011: 67–86; see also Czech 2013: Chap. 8 criticising “green growth”). Furthermore, if decoupling is examined at the country level, one would need to take consumptionbased resource use/emissions into account rather than productionbased impacts. Substantial environmental impacts related to everything that is consumed in rich countries occur in developing countries from which goods are imported. A focus on production-based environmental impacts would hence be misleading as it ignores the [and] environmental impacts that relate to a country’s living standards and that occur outside of that country. Social Critiques of Growth Economic growth has not only been criticised from an ecological perspective, but also from an individual and social wellbeing point of view. Here, we can again distinguish a critique of GDP as a measure of wellbeing and a wider critique which highlights potential negative consequences of economic growth for human wellbeing. Several scholars have argued that GDP is an inadequate measure of prosperity or wellbeing because it only includes market transactions and ignores activities of the informal economy in households and the volunteering sector which make an important contribution to individual and social wellbeing (Stiglitz et al. 2011; van den Bergh 2009; Jackson 2011). It also excludes the contribution of certain government services that are provided for free (Douthwaite 1999: 14; Stiglitz et al. 2011: 23), and the roles of capital stocks and of leisure in generating welfare (Costanza et al. 2015: 137). Furthermore, all market transactions make a positive contribution to GDP, regardless of whether expenditures increase or decrease welfare. Similar to the way in which environmental costs of growth are either excluded from GDP or even increase it, expenditures that arise from road accidents, divorces, crime, etc., contribute positively to GDP (ibid.: 133). The focus on market transactions also means that an increasing marketisation (or “commodification”) of an economy will be reflected in a rise of GDP, which may or may not be related to actual “welfare” outcomes (Stiglitz et al. 2011: 49). It also implies that GDP is an insufficient cross-national comparator for the quality of life, as it does not take into account the different sizes of the informal economy across countries (ibid.: 15). Furthermore, GDP does not indicate how income and consumption are distributed in society (Stiglitz et al. 2011: 44). This implies that a rise of GDP can be consistent with a rise of inequality of income and wealth. 4 CRITIQUES OF GROWTH 47 However, if greater inequality has negative impacts on social wellbeing (Wilkinson and Pickett 2009), this would be masked by rising GDP figures (Douthwaite 1999: 17). An even more fundamental criticism of GDP as a measure of wellbeing is that it focuses on the accumulation of money or wealth and thus on the material aspects of wellbeing. Such a narrow conception of the goals of economic activity and wellbeing has been criticised early on in the history of economic thought, e.g. by Aristotle’s distinction between oikonomia and chrematistics. The latter refers to the accumulation of wealth and was regarded by him as an “unnatural” activity which did not contribute to the generation of use value and wellbeing (Cruz et al. 2009: 2021). The argument that wider conceptions of wellbeing and prosperity are required has also become relevant for contemporary critiques of economic growth (Jackson 2011; Paech 2013; Schneider et al. 2010) as we will discuss this in more detail in Chap. 5. Arguments About the Psychological and S ocial Costs of G rowth The broader social critique of economic growth highlights potential “social limits” to or even negative consequences of economic growth for individual and collective wellbeing. The term “social limits to growth” was coined by Fred Hirsch (1976). He argued that the benefits of growth are initially exclusive to small elites and that these benefits disappear as soon as they spread more widely through mass consumption. For instance, only few people can own a Rembrandt painting; holiday destinations are more enjoyable when they are not overrun by hordes of other tourists; there are only few leadership positions, etc. From this perspective, there are “social limits” to the extent to which the benefits of growth can be socially expanded and equally shared. Other scholars have expressed concern about individual and collective social costs of economic growth. First, there is the argument that the need to keep up with ever-rising living standards and new consumer habits, “keeping up with the Joneses”—a lot of which is seen to be driven by advertisement and social pressure rather than real needs, for instance fashionable clothing or gadgets—can generate stress and increase the occurrence of mental disorders (James 2007; Offer 2006; Kasser 2002). 48 M. BÜCHS AND M. KOCH Second, it has been argued that economic growth can imply wider social costs. For instance, with its emphasis on individual gain, market relations and competition, and the need that it generates for spatial mobility (e.g. for successful participation in education and labour markets), it is feared to undermine moral and social capital and put a strain on family and community relations, potentially even leading to increasing divorce and crime rates (Douthwaite 1999; Daly and Cobb 1989: 50–51; Hirsch 1976). Social costs of technological development and industrialisation also include industrial workplace and traffic accidents and time lost in traffic jams and for commuting (Czech 2013: Chap. 2; Stiglitz et al. 2011: 24). Technological innovation which arises from growth can also act as a factor for job losses and increasing job insecurity (Douthwaite 1999), especially if growth rates are not sufficiently high to compensate gains in productivity. It is often assumed that growth will benefit the many because of assumed “trickle-down” effects which promise to improve the lot of the poor simply because the “cake” of available wealth is growing. While progress has been made in reducing extreme global poverty and inequality (Sala-i-Martin 2006; Rougoor and van Marrewijk 2015), the number of people living in poverty across the globe remains high.1 At the same time, income inequality in a range of countries has been rising and the situation of many of the people living in extreme poverty is not improving which means the fruits of economic growth remain to be unequally distributed (Collier 2007; Piketty and Saez 2014). The post-development debate goes even further than that in arguing that not only may growth not have reached the global poor to the extent that had been predicted by neoclassical economists, but that it can also have negative impacts on indigenous communities in developing countries, especially those who rely on local natural resources for their livelihoods which often suffer exploitation, pollution or even destruction through the inclusion of local economies into global value chains (Rahnema and Bawtree 1997). While the distinction between critiques of growth that focus on its problematic ecological and social consequences is useful for analytic purposes, the two dimensions are of course closely linked. Ecological consequences of growth have the potential to severely impact or even undermine human wellbeing. Local livelihoods are already affected by current climate change impacts such as ocean acidification and its impact on marine organisms, draughts, floods and severe weather events, the 4 CRITIQUES OF GROWTH 49 frequency of which has been rising. Accordingly, it is estimated that crop and fish yields are already diminishing in several regions (Stern 2015; IPCC 2014) and that millions of people are already being displaced and forced to migrate due to climate change and other environmental impacts (Black et al. 2011). While the overall long-term impacts of climate change and the surpassing of other planetary boundaries are difficult to predict, they clearly have the potential to substantially undermine human wellbeing. Since greenhouse gas emissions are driven by economic growth, the development of alternative economic models that do not depend on growth is urgent since continued growth “threatens to alter the ability of the Earth to support life” (Daly and Farley 2011: 12).