More than a decade after the onset of the financial crisis, capitalist ideologues are eager for good publicity. Once-alluring promises of meritocracy and social mobility ring increasingly hollow. They pine for a slicker, PowerPoint-friendly legitimation narrative—hard to concoct against a background of rising inequality, pervasive tax evasion and troubling omens about the true state of the post-crash global economy, were central bankers to withdraw their overextended support. What real-world developments could underpin such a narrative? What theme could make the idea of capitalism more morally acceptable to the latest batch of Ivy League graduates, who may risk getting drawn to notions like eco-socialism? Despite the growing ‘tech-lash’ against the faangs, capitalist thinkers still look to Silicon Valley and its culture with a glimmer of hope. For all its problems, the Valley remains a powerful laboratory of new—perhaps, better—market solutions. No other sector occupies such a prominent role on the horizon of the Western capitalist imaginary or offers such a promising field for regenerative mythologies.
A new strand of thinking has begun to address how the global economy might be re-engineered around the latest digital innovations to introduce a modicum of fairness. The ‘New Deal on Data’—the term surfaced in a 2009 paper presented at Davos—is the tech world’s neoliberal equivalent of the Green New Deal, but requires no government spending.footnote1 It envisages formalizing property rights around intangibles, so that individuals can ‘own’ the data they produce. One advantage for its proponents is that this market-friendly ‘new deal’ could help to forestall alternative attempts at imagining users as anything other than passive consumers of digital technology; they could enjoy their new status as hustling data entrepreneurs, but should aspire to little else. The New Deal on Data has accumulated considerable political support: from the European Commission to the United Nations, many world institutions are convinced that some such ‘fairness’ initiative is important to guarantee the future of digitalized capitalism.
The Austrian legal scholar and a one-time successful software entrepreneur Viktor Mayer-Schönberger bears some responsibility for planting the dream of ‘salvation through data’ in the capitalist imagination. His best-selling Big Data (2013), the ur-text on the subject, co-authored with an Economist writer, had a straightforward thesis: the massive amounts of data now being harvested and analysed by a few far-sighted firms would produce new business models and destroy existing ones; disruption was imminent, profits assured.footnote2 Five years later, Mayer-Schönberger’s latest book, Reinventing Capitalism in the Age of Big Data, shares some features with that earlier work. Co-written with another Economist contributor, the German business reporter Thomas Ramge, it deploys clear and anecdote-friendly prose to document another big trend—‘as momentous as the Industrial Revolution’—while making pragmatic recommendations for businesses and policymakers. But Reinventing Capitalism has far greater ambition, as the book’s original German title, Das Digital, suggests. Das Kapital, they argue, is out of date: once it is efficiently utilized throughout the economy, Big Data will not just reinvent capitalism—the English title is too modest on this point—but end it. ‘It may be time to close the door on history and officially eliminate the term “capitalism”’, they proclaim.footnote3 In place of finance capital and firms, data-rich markets will empower humans to work directly with each other. More dramatically, data will supplant the price system as the economy’s chief organizing principle.
The price system makes an odd target for what is unmistakably a pro-capitalist book. Market pricing has long been lauded for its ability to enable complex forms of social coordination with little or no central planning. From the 1920s, in what would later be known as the Socialist Calculation Debate, Mises and Hayek had famously argued against their left-wing adversaries that it was the absence of the price system that doomed socialist central planning. Lacking real-time insights into the shifting tastes of consumers, most advantageous deployments of resources and fluctuating supplies of intermediate commodities, central planners stood little chance of adjusting their models fast enough to keep up with the rapidly changing world. Many socialists, especially in the wake of the Soviet collapse, found this argument persuasive, conceding an inherent technological flaw in socialist design. As G. A. Cohen put it in his last book, ‘the principal problem that faces the socialist ideal is that we do not know how to design the machinery that would make it run.’footnote4
Recent counter-arguments from the left have generally involved pointing out that the most successful modern capitalist enterprises, from Amazon to Walmart, excel at planning; the advent of digital feedback will make such techniques even more widespread. If capitalists can plan, why can’t socialists?footnote5 The opposite argument—that Big Data clogs the operation of the price system—has also been made: some observers go so far as to claim that the price signals of today’s data-saturated markets, where venture capitalists, sovereign-wealth funds and deep-pocketed tech platforms subsidize services to the point where no one really knows what they cost, resemble those of the Soviet system in the years before its final breakdown.footnote6 Hence the moniker ‘Gosplan 2.0’. (In its structure, this argument is not dissimilar to the charges of Austrian economists against the distorting effects of quantitative easing on asset prices.)
In what follows, I will revisit—and, I hope, revitalize—the Socialist Calculation Debate, exploring some of the ways in which the participants conceived the relations between knowledge, price and social coordination, and how their referents may have changed in the age of big data. I will go on to suggest ways in which the development of digital ‘feedback infrastructure’ offers opportunities for the left to propose better processes of discovery, better solutions for the hyper-complexity of social organization in fast-changing environments, and better matches of production and consumption than Hayek’s solution—market competition and the price system—could provide. But first, it’s worth dissecting the theses of Reinventing Capitalism in more detail, for their very inadequacies are often symptomatic—and therefore illuminating.
While the price mechanism has been an effective means of social coordination, Mayer-Schönberger and Ramge argue, it has always had its shortcomings. Digital technology has not only rendered these visible, it has also provided a more efficient alternative method of social coordination. For the price system is a blunt instrument, the authors contend. It compresses the complex, multidimensional preferences of market participants into a single number, often eliminating nuance and detail, which can result in sub-optimal transactions. Consumers become easy prey to cunning marketers, who manipulate them into buying things they do not need simply because the price, ending in nines, looks as if the product has been discounted. But advances in data and information technology can eliminate these inefficiencies. Reinventing Capitalism calls for ‘a reboot of the market’, fuelled by data. There is no longer any need to compress a myriad of heterogeneous facts into the straitjacket of prices, when computer chips can communicate those facts directly. Market players will increasingly rely on data, not prices, to coordinate their activities, discovering new, previously invisible niches and boosting overall market efficiency.