Capitalism and ‘High Tech’

A reader has asked why many of the examples I have given are from the “high-tech” industry. Actually, there are good reasons to use examples from high tech to illustrate the laws that govern the capitalist economy.

Capitalist production develops unevenly, not only from country to country but from industry to industry. Marx makes clear in “Capital” that not all industries made the transition from handcraft to manufacture and from manufacture proper to “machinofacture” at the same time.  (1)

In the 19th century, what Marx and Engels called “modern industry” meant the industries that had adopted steam as their main source of motive power. By this definition, the textile industry, both spinning and weaving, was during the first three-quarters of the 19th century the most modern of modern industries. Consequently, in the early and middle 19th century—the time of Marx—the textile industry was the industry where the laws of motion of capitalism showed themselves most clearly. Understanding the development of the textile industry was (and is) crucial to understanding the politics of the 19th century.

The main center of textile production was in Britain, centered on the industrial city of Manchester.  Marx’s co-worker Frederick Engels worked there for many years managing his family’s textile factory. The main raw material for the 19th-century textile industry—cotton—was produced in the United States, not by wage labor but by the labor of African slaves.

During the 19th century, the U.S. was developing its own textile industry, based in the New England states, then the center of U.S. industry. Like the British textile industry, the U.S. textile industry was dependent on cotton produced by slave labor in the southern states of the U.S.

At the time of the American war of independence of 1775-1783, which represents the first phase of the U.S. bourgeois-democratic revolution, slavery, which existed in both southern and northern states, appeared to be dying out. But the invention of the cotton gin, combined with the dramatic rise of the steam-powered textile industry in both Britain and New England, gave a new lease on life to slavery in the southern states of the U.S.

The issue of whether the U.S. would be dominated by the free labor—wage labor—system or chattel slavery moved to the center of U.S. and even world politics, where it was to remain until it was finally resolved by force in the U.S. Civil War of 1861-1865 and then the post-Civil War Reconstruction that ended in 1876 (2).

Britain and the U.S. Civil War

The role of the South as the provider of cheap cotton produced by the labor of enslaved Africans forged the alliance between the British textile manufacturers and the southern U.S. slave owners. When the slaveholders’ rebellion broke out in the southern U.S. in 1861, the capitalist ruling class of Britain did all it could to maintain the existing relationship with the rebel slave owners. Indeed, the ruling British oligarchy made every attempt to ensure a victory for the slave-owning rebels.

The British capitalist rulers, however, faced the opposition of the British working class, which was strongly opposed to the slave-owning rebels despite the mass unemployment in the textile districts caused by the U.S. government blockade of southern ports. One reason for this was that the possibility of emigrating to the U.S. and achieving free land in the U.S. West (3) limited to some extent how far the British capitalists could go in exploiting the British, and indeed the European, working class during the 19th century.

If the rebels had won, perhaps through the direct intervention of Britain in the U.S. Civil War, much of the western U.S.—for example, California—might have been taken over by the slave-owning rebels. The victorious slave owners might then have taken advantage of California’s warm climate to grow cotton with African slave labor.

Partly for these reasons, and partly because of the natural hatred of wage workers for chattel slavery, the opposition of the British working class to British intervention in the war was so strong that the direct British intervention in the U.S. Civil War the rebels were counting on never materialized.

For his part, Karl Marx did all he could to help organize “pro-American” rallies aimed at preventing British aid to the rebels and the possible direct entry of Britain into the war on the side of the rebel slaveholders. Therefore, the struggle against chattel slavery in the southern states of the U.S. union became a central issue not only in U.S. politics but in British politics as well.

None of this would have happened if the textile industry had not played such a crucial role in both the British and world economies. Therefore, it was quite natural that in “Capital” Marx largely used examples drawn from the textile industry, though the fact that Marx’s co-worker Frederick Engels was a textile manufacturer no doubt played a role here.

The rise of heavy industry

By the late 19th century, the most dynamic capitalist industry was no longer the “light” textile industry but the “heavy” iron and steel industries. Unlike the textile industry, the main raw materials of the iron and steel industry—iron ore and coal—were produced by wage and not slave labor.

Along with the oil and rail industries, modern capitalist monopoly began to assert itself in the steel industry. For example, the giant United States Steel Corporation—which still exists today—was organized in 1901 by the leading Wall Street banker of the era, J.P. Morgan, Sr (1837-1913). Morgan’s business was largely based on mobilizing capital owned by British money capitalists and investing it in fast-developing U.S. industries such as rail and steel.

In the steel industry, capital was not only highly concentrated—in huge mills—but highly centralized as well. The mills were owned by a handful of industrial capitalists such as Germany’s Krupp family or the Morgan-organized U.S. Steel Corporation. In contrast, both the concentration of production and the centralization of capital in the textile industry proceeded slowly. The textile industry came to represent the “old organization” of industry based on relatively small-scale production and concentration of workers organized in many independent capitalist firms engaged in free competition with each other.

The rise to dominance of the steel industry was soon reflected in huge shifts in world politics. The United States and Germany began not only to challenge Britain economically but, over time, in the military and political fields as well. Britain was also developing a steel industry, but it was progressing much more slowly than in either Germany or the United States. Here lay the seeds of World War I.

The changing relationship between the steel industry and textile industry was powerfully reflected in the Russian Revolution as well. St. Petersburg—later Leningrad—was the center of Russia’s ultra-modern steel industry. And it was the “Petersburg proletariat,” as it was called among Russian revolutionaries, that emerged as the acknowledged leader of the proletariat of the Russian Empire and, starting with the October Revolution, of the entire world working class. It was natural that the October Revolution broke out in St. Petersburg—officially renamed Petrograd in 1914 (4)—while Moscow, which was the center of the Russian textile industry, lagged behind.

This does not mean that the textile industry disappeared. Far from it! People continued to need clothes in the early 20th century just like they needed clothes in the early 19th century and still need them today in the early 21st century. As a result, the textile industry is still very much with us, even if today textile production is largely located in the “global south” and the textile mills of Manchester and New England are only a memory. During the early 20th century, it was natural for Marxists to take examples from the steel industry as opposed to the textile industry.

The automobile industry

The middle years of the 20th century saw the dramatic rise of the automobile industry. Its development began to overshadow that of the steel industry—though the automobile industry could not and still cannot exist without the steel industry. The automobile based on the internal combustion engine was an invention of the late 19th century. By the 1920s, Henry Ford’s River Rouge plant with its assembly lines and “mass production” was the wonder of the industrial world.

Henry Ford (1863-1947) became the world-famous capitalist of his time much like the late Steve Jobs (1955-2011) was to emerge as the most famous capitalist of our own day. (5) Ford was portrayed in the media as the man who invented the “modern age” through his development of mass-production assembly lines and cheap automobiles. Europe found itself increasingly lagging behind the U.S., especially in the production of automobiles.

A mass market for automobiles first emerged in the United States during the 1920s, symbolized by the Ford Motor Company’s “affordable” Model T, the first automobile to be cheap enough to fall within the budget of the better-paid U.S. worker. It wasn’t until after World War II that a mass market for automobiles developed in Europe.

When industrial unionism finally came to the United States in the middle 1930s, the United Autoworkers Union-CIO emerged as the most dynamic of the new industrial unions. It was in the auto industry that the great wave of sit-down strikes of the mid-1930s began and then spread to other industries. Later, in the 1950s and 1960s, the industrial sit-downs, now declared illegal in U.S. industry, inspired the sit-ins of the Civil Rights-era struggle against Jim Crow in the southern former slave states.

Paul A. Baran and Paul Sweezy in “Monopoly Capital” pointed out the huge role that the automobile industry played in the development of U.S. capitalism in the middle decades of the 20th century. It was therefore quite natural that the Marxists of the mid-20th century often used examples from the automobile industry, much like early 20th-century Marxists had used examples from the steel industry and Marx and Engels had used examples from the textile industry.

The rise of high tech

High tech is actually a combination of five 20th-century technologies and their associated industries. The central technology of high tech is the digital computer. Two other technologies that form the foundation of high tech are electrical miniaturization, which began with the development of the transistor in 1947, replacing the vacuum tube, or valves, as the English call them, and the electronic circuit board.

Tubes and then transistors are crucial in digital computation because their ability to allow or halt the flow of electricity forms the basis of the ones and zeros that underlie the digital computer.

Unlike a tube, a transistor can be reduced to a size measured in terms of atoms. This has made it possible to reduce computers from the room-filling vacuum tube behemoths of the early 1950s to the tiny chips that function as computers inside cell phones and tablet devices today.

In addition, there is satellite technology, which depends on the modern rocket, which was also developed in the 20th century.

And finally there is radio technology, an invention of the early years of the 20th century. Without radio—the broadcasting of information using electromagnetic waves—and satellites, our increasingly Internet-centered world with its laptops, smart phones and tablets would be unthinkable.

High tech is increasingly penetrating into commodities that are not generally considered high tech, such as automobiles that today include powerful computers, and perhaps even more importantly into the way such commodities are being produced. Even the production of many food products is subject to computer control.

For people who live in the imperialist countries, it is easy to forget that high-tech devices and the components such as the chips that function as computers have to be produced in factories by industrial workers. This is especially so because high-tech workers are in many cases highly paid software engineers who work in offices and often receive stock options designed to link their interests to those of the bosses.

The production of high-tech devices involves the production of chips—actually the computers proper—and the assembly of these chips onto circuit boards and then the final assembly of the actual high-tech product.

For example, the Taiwanese corporation Foxconn has built a cyclopean industrial complex in the Peoples Republic of China, where many of the high-tech devices are assembled. It features an unprecedented concentration of hundreds of thousands of industrial workers—many of them women—that dwarfs the steel mills of revolutionary Russia and Ford’s River Rouge plant in its heyday. This colossal enterprise contains the seeds of not only huge class struggles by the Chinese industrial working class that lie ahead of us but also possible wars as well.

Contrary to the impression sometimes created by the U.S. media, the majority of the Taiwanese population are ethnic Han Chinese—though there is a minority of aboriginal people on the island. (6) There is therefore no justification for treating Taiwan as a nation separate from mainland China. The U.S. is determined, however, to maintain the “independence” of Taiwan—that is, its current status as a de facto U.S. colony.

For its part, every government of the Peoples Republic of China since 1949 has remained firm in not recognizing Taiwan’s “independence”—that is, its colonial relationship with the United States. Taiwan is no economic backwater but is playing an important role as a manufacturing center of high-tech components such as CPUs—the central processors for computers from supercomputers to smart phones.

This makes it far less likely the U.S. will agree to peacefully return Taiwan to China, since if that were allowed a great deal of advanced technological knowledge and manufacturing capacity would go with it.

While neither side wants a war at this time, the clock is ticking. We saw above how the relationship between Britain as the center of world textile production and the U.S. as producer of the main raw material of the textile industry almost led to war between the U.S. and Britain in the 1860s. Could something similar happen as regards the relationship between Taiwan, China and the U.S. later in the current century?

Second, we see the evolving relationship between Apple Inc., now the largest U.S. corporation in terms of stock market value—a company that didn’t even exist 40 years ago—which designs computer-based devices but then has Foxconn assemble them from components made in many—both imperialist and oppressed—countries.

If world trade were halted, the production of virtually all high-tech products would immediately come to a screeching halt. In high tech especially, we see that the global socialization of labor has reached unprecedented levels.

High tech and capital

In my recent polemic against Michael Heinrich, I pointed out that there are tendencies for both the de-centralization and the centralization of capital, with centralization being the dominant trend. Both these tendencies are most clearly illustrated in those industries where the productive forces are developing most rapidly, which at present are the high-tech industries.

In high tech, we see the rise of so-called “startups”—most of which quickly disappear, but a few of which grow within a few years into powerful monopolies with the help of so-called venture capitalists, a form of finance capital.

The venture capitalists look for would-be entrepreneurs—often bright computer science students—with ideas to create businesses in new branches of production and communication. They provide the initial capital, which sometimes enables these businesses to grow from little more than lemonade-stand size into large businesses within just a few years.

If the startup makes it to that point, it then turns to Wall Street investment bankers, who organize the startup into a public corporation whose shares can be purchased on the stock exchange. They do this by making initial public offerings, or IPOs, of stock, which can transform the founders of the startup into billionaires within a few years of starting their businesses. In addition to breeding a new layer of billionaires, we see the development of tiny startups into new monopolies within a handful of years.

Recent examples include the Google search monopoly and more recently the social media monopoly Facebook. The social media company Twitter is expected to have an IPO soon. If these startups had to grow big by plowing their profits back into their businesses, this process would take decades if not centuries.

The venture capital business itself is becoming increasingly centralized into a few hands, just like the manufacture of the high-tech devices and the business of software publishing. There is speculation in the business press that increasing monopolization of the venture capital business will put a damper on innovation in the future. The evolution of the venture capital business therefore must be taken into account in any analysis of the evolution of present-day finance capital.

How the role of capitalists is misrepresented and romanticized in the media

If you read or view the mass media, you would think that the late Steve Jobs and Bill Gates invented the new technology dubbed high tech. The media glorifies these capitalists and holds them up as positive examples for the rising generation. For example, it is claimed that Jobs “invented the future” in his garage. If Jobs could do it, then you should be able to do it, too.

Karl Marx pointed out that the capitalist system needs functionaries who are called capitalists. While anybody can be a money capitalist or passive owner, not everybody can be an active capitalist like John D. Rockefeller Sr. (1839-1937), Henry Ford or Steve Jobs. It takes a certain type of personality—a strong will, an ability to manipulate people, combined with a total disregard for the interests of others—to make a “great” active capitalist.

Steve Jobs combined all these characteristics, in spades. He was willing to exploit to the maximum both industrial workers—who produce surplus value—and intellectual workers—engineers—who create new productive forces and products out of the raw material of science. In this sense, and only in this sense, was Jobs a genius. Jobs himself invented virtually nothing, with the exception of a few character fonts. Jobs was no engineer and still less a scientist.

If Jobs had been run over and killed in a Silicon Valley traffic accident in the early 1970s, finance capital would no doubt have found another entrepreneur of genius to “invent the future,” which was in reality being brought into existence by the work of scientists and engineers most of the public have never heard of. Nor would the work of the scientists and engineers, in turn, be possible without today’s hugely productive working class.

Unlike the entrepreneurial “heroes” Bill Gates (7) and Steve Jobs—most of these scientists and engineers enjoyed at most good middle-class salaries but did not become multi-billionaires like Jobs and Gates did. One of the most annoying features of capitalist society is that it glorifies some of the worst examples of the human race while the real heroes of science and engineering are neglected and forgotten.

The rapid rise and fall of monopolies

Since the transition to monopoly capitalism began around 1873, monopolies have tended to form around new industries. The “great” monopolies of the late 19th century were not based on the textile industry, the previous “high-tech” industry, but rather on the new industries of the 19th century, such as railroads, the petroleum industry and the iron and steel industries.

For example, the development of the petroleum industry was the basis for the rise of Rockefeller’s Standard Oil Company, widely considered the first modern monopolistic corporation. The great advances in the production of steel became the basis for the the rise of the Krupp Steel Company in Germany and the U.S. Steel Corporation in the United States, which played such an important role in early 20th-century monopoly capitalism.

The early years of the 20th century saw the infant automobile industry transition from one with many small capitalists—one of which was a certain Henry Ford—to an industry that by the 1920s was already dominated by a handful of monopolies such as the Ford Motor Company, General Motors and Chrysler.

However, once industries like oil, steel and auto were established, the relative stability of the productive forces that these industries represented allowed the monopolies that arose on their bases, like Standard Oil, United States Steel and the Ford Motor Company, to maintain their dominance for decades. Indeed, many of these corporations, or their direct corporate descendants such of as ExxonMobil—a direct descendant of Rockefeller’s original Standard Oil Company—remain among the most powerful corporate monopolies to this day.

As we saw above, the high-tech industry is not really a single industry but rather a group of interlocked industries whose technological base is continuing to evolve at a rapid pace. The result has not only been the formation of monopolies over a few short years, but also in many cases monopolies that have collapsed almost as quickly as they arose when the further development of the technology they were based on destroyed their markets. Let’s examine a concrete example of this process—Sun Microsystems.

The rise and fall of Sun Microsystems

Sun Microsystems was a product of the rise of the micro-computer—dubbed the “personal computer” by Steve Jobs. In the early 1950s, vacuum tube computers with a tiny fraction of the processing power of the small chips found in today’s cell phones filled a whole room. But even as late as the 1960s, so-called mini-computers using transistors were still far too big and expensive to be run outside of institutions such as corporations, large universities and government.

The first primitive form of the UNIX operating system, developed at the end of the 1960s and the beginning of the 1970s by a pair of computer programmers, Ken Thompson (1943-) and Dennis Ritchie (1941-2011), at Bell Labs—run by the AT&T monopoly—ran on these mini-computers.

But it was during the 1970s that the UNIX operating system really grew up. It was developed at the University of California at Berkeley—the same school that was famous for its student radicalism in the 1960s. Unlike the idealist radical students of the 1960s, however, many of the technically inclined or business-minded Berkeley students of the 1970s were eager to get rich in the new industries arising on the basis of the microchip and the UNIX operating system.

Among these were Andy Bechtolsheim, Bill Joy, Vinod Khosla and Scott McNealy, who went on to found Sun Microsystems together in 1982. While Bechtolsheim and Joy were “techies”—somewhat like Steve Wozniak, the co-founder of Apple Computer and a genius at packing the smallest number of chips possible on a circuit board, Khosla and McNealy were businessmen. Khosla was the financier and McNealy was the top salesman and corporate CEO playing a role at Sun somewhat like that played by Jobs at Apple. Perhaps because Sun computers were pitched not at consumers but corporations and other large organizations, McNealy never became as famous as Jobs did as far as the general public is concerned. All of them, however, were destined to become very, very rich.

In the 1970s, microcomputers, or personal computers, were not powerful enough to run the UNIX operating system. As personal computers grew more powerful, Microsoft, which published the proprietary MS-DOS operating system that ran most of the personal computers—with the exception of those made by Apple, which came with its own proprietary operating system—was able through a series of transitional steps to move from the command-line MS-DOS operating system to the Microsoft Windows operating system, named after its graphical user interface. Microsoft succeeded in establishing a monopolistic chokehold on the operating system software of desktop and laptop computers that persists to this day.

Back in the 1980s, the microcomputers that ran on Intel X86 chips were not powerful enough to make good servers or scientific workstations. Sun specialized in making more powerful and pricey microcomputers, which could be used either as servers or powerful scientific workstations. It developed and manufactured its own processors that were far more powerful than the low-end processors produced by Intel. When Intel was producing 32-bit processors, Sun was producing 64-bit SPARC processors.

By the 1990s, Sun had evolved into both an industrial monopoly and a software monopoly. Sun developed its own proprietary software to run on its proprietary hardware, which became the basis of its monopoly super-profits.

Sun’s computers came with a proprietary version of the UNIX operating system that Sun dubbed Solaris—a play on the company’s name—that ran on its powerful—for the time—servers and workstations. Perhaps Sun’s most famous software product was the Java programming language, which makes it possible to write programs that run on many types of computer systems with little change in the source code. Like the Solaris operating system, Sun released Java as proprietary software. (8) By the late 1990s—the height of the Clinton era “dot-com” boom—Sun seemed well entrenched as a powerful monopoly. But in reality it had only a decade left to live.

Sun was hit hard by the turn of the century dot-com economic crisis. But what really undermined Sun was not the cyclical economic crisis but the further development of the very technology that had made its rise possible in the first place. Intel x86 chips, now coming out in 64-bit versions, were becoming so powerful that they could easily replace Sun’s much more pricey SPARC chips in servers and scientific workstations.

On the software side, the development of the free GNU/Linux operating system was rapidly making the use of the proprietary UNIX operating systems like Solaris completely unnecessary. In desperation, Sun announced that it was making Solaris—as well as its more well-known Java-language software—”open-source.”

But nothing could save Sun, as its customers shifted from its servers running Solaris to Intel servers and workstations running free GNU/Linux, BSD UNIX or modern versions of the still proprietary Microsoft Windows operating system.

After three years of losses, Sun reported a net profit of $19 million the second quarter in 2005. After that, it was nonstop losses. And as regular readers of this blog should know, a capitalist firm that does not make a profit is headed for extinction. This was indeed Sun’s fate.

Between November 2007 and November 2008, Sun’s stock lost 80 percent of its value. This exceeded the losses that the stocks of profitable companies were experiencing as the result of the violent but cyclical “Great Recession.” As a result of these losses, Sun was forced to lay off thousands of workers, as much 18 percent of its total workforce.

But this could not save it. On January 27, 2010, what was left of Sun was sold to the Oracle database software monopoly, and the company ceased to exist as an independent capital. Sun was therefore a victim of the very processes that bought it into existence in the first place, the continuing rapid advance of computer technology.

Other high-tech companies in trouble

Could the much richer and more powerful Microsoft share Sun’s fate? Microsoft was for a time the biggest corporation in the world in terms of the value of its stock. Under the leadership of its multi-billionaire founder Bill Gates, the company was built entirely on monopolistic proprietary software, especially its MS-DOS and Windows operating systems. But Microsoft is now facing growing problems that could lead to its downfall.

The threat to Microsoft lies in the development of computers smaller than the original microcomputers. These small computer devices are in the form of phones, tablets and devices that combine the features of laptops and tablets. In this field, the competition is raging, not so much between Microsoft and its rivals—though Microsoft is trying hard to penetrate this market with its Surface tablets and its Windows 8.1 operating system—but between Apple and its proprietary version of the UNIX operating system and the various smart phones and tablets running the open-source Android operating system. (9)

Perhaps Microsoft will finally have a breakthrough into the rapidly growing market for phones and tablet-related devices, but as it stands now the company appears to be in the early stages of a downward spiral.

Closely related to the problems facing Microsoft are the problems facing the Intel chip monopoly—which in the 1990s was closely linked to the Microsoft software monopoly and was dubbed the Wintel monopoly. Intel, whose powerful x86 chips did in Sun, is now threatened in turn by the increasingly powerful chips of the British ARM cartel, as we saw last month. ARM processors were designed to run on the smallest computer devices, such as battery-powered cell phones where the conservation of the battery charge is crucial. Up to now, ARM chips have lacked the power to run modern desktop and laptop computers. But ARM chips are rapidly gaining power, and in the not-too-distant future may be powerful enough to run desktops or laptops.

Intel is reacting by attempting to develop its own low-electricity chips to run smart phones and tablets. But so far, Intel has had little success in these new markets, though it is trying hard. If Intel cannot score a breakthrough soon, and if ARM chips start replacing Intel processors in desktops and laptops, the still very powerful and rich Intel monopoly could find itself fighting for its life.

Hewlett-Packard, which began with a printer monopoly, is often seen as the first Silicon Valley company that started in a garage (in 1939). In recent years, Hewlett-Packard emerged as the biggest producer of desktop and laptop computers. This threatens, however, to be its undoing, as the smaller and cheaper phone and tablet computers are rapidly shrinking the market for desktops and laptops.

Hewlett-Packard is also attempting to enter the rapidly growing markets for new smaller computer devices, but it is having great trouble penetrating them. Just like Microsoft and Intel, its future is considered at this point problematic.

The collection of industries known as high tech are not only helping to produce a leap in labor productivity that can be the foundation of the new mode of production that Marx and Engels foresaw, they are also providing the best laboratory for the economic laws that the classical economists and Marx discovered.

As they fight with one another for their lives, the high-tech companies are obliged to develop the productive forces that are pushing society ever closer to the point where the transformation of capitalism into a new higher mode of production will not only be possible but necessary.

New social and political issues raised by the development of high tech

The development of high tech is raising questions that would have been unimaginable during the 1960s. An example of this is the question of the attempt by corporations to keep secret the working of the software instructions that the computers—processors—inside the high-tech devices—and also non-high-tech devices—execute. To counter this, the free software movement was born exactly 30 years ago with the announcement by computer programmer Richard Stallman that he was launching a project to replace the proprietary UNIX operating system with a free version he dubbed GNU.

In the 1990s, the free software movement split, with the more conservative, corporate-friendly wing founding the “open-source” movement. For many years, the free software and open-source movements were of interest only to so-called geeks or “techies”—people who were into computer programming more for the love of the art of programming than for the large amounts of money that could be earned in this new profession.

Despite their limited size in terms of numbers, these new movements managed to raise important questions beyond the software business proper. These issues involve the publishing and entertainment industries in an era where books, movies and music increasingly consist of strings of ones and zeros that can be downloaded and copied thorough a click of a mouse, or now a sweep of a hand.

For example, if I lend a conventional book to you, I can’t read the book while you have it. If you have it, I don’t. But if its an e-book, which consists of a string of ones and zeros, I can send a copy to you over the Internet. I have sent you a newly created copy while continuing to enjoy my own copy. The same is true of digital music and movies. All the same, these questions seemed to have rather limited political potential, more of interest to relatively affluent middle-class people of the imperialist countries than to workers of the global south who worry about where their next meal is coming from and not whether they can download legally or otherwise the latest Hollywood blockbuster.

But this has changed dramatically over the last few months. The revelations by Edward Snowden that the U.S. National Security Agency, a branch of the U.S. military, is engaging in massive espionage on virtually all modern computerized communications and their users have emerged as a central political issue of world politics.

The NSA surveillance involves both individuals and governments. Among those spied on are the governments of the so-called allies of the U.S. (what I call in this blog the satellite imperialist countries), the so-called friends of the U.S. among the oppressed countries, as well as countries that the U.S. openly considers its enemies. It also, however, includes virtually all individuals who use computers in some way—which includes the users of cell phones.

Not only do most people, including workers in the imperialist countries, own computer-powered devices of some sort, but some years ago it was announced that about 50 percent of the people in the Peoples Republic of China—a developing, not an imperialist, country—own cell phones and are thus as individuals potential targets of the NSA.

The Snowden revelations and the workers’ movement

Both history and theory show that the main targets for the repressive activities of capitalist governments is the working class and its organizations—whether trade unions or parties. This is especially true of the global capitalist empire that is centered in the United States. We should not for a moment be fooled by the claims that the targets are “Islamic terrorists” like Al-Qaeda.

In reality, Al-Qaeda, with its emphasis on the action of small groups of religious martyrs that often target civilians, is not much of threat to imperialism. Indeed, Al Qaeda is in many ways actually useful to imperialism as a scarecrow. But the capitalists know that the workers’ movement is, at least potentially, a threat both to imperialism and the capitalism that breeds imperialism that Al-Qaeda or similar small groups of terrorist martyrs can never be.

The workers’ movement should be in the forefront of the fight against this new universal and growing government surveillance, which dwarfs the most extensive secret police surveillance of past ages. We should also be just as opposed to surveillance by individual corporations.

It is hard to see how we can fight against government surveillance if the source code—the computer instructions in human reading form of all computer programs that run on computer-powered devices—is not made public. Therefore, the demand that the source code of all computer programs should be made public is no longer an issue merely for a few computer geeks who like to tweak the programs that run on their personal computers—it is, or at least should be, a central issue of world politics and therefore a central question for the workers’ movement.

Many “techies” hold libertarian beliefs that frown on mass political action, or attempt to defeat surveillance with technical solutions that however clever are distractions from the main task at hand—the building of a mass political movement that alone can defeat the government and corporate claims that they have a right to engage in virtually unlimited surveillance and spying. The demand to reveal the computer instructions that run the devices that increasingly dominate—and enrich—our lives is actually an extension of the traditional demand of the workers’ movement to “open the books.”

But these demands may not be enough. A certain part of the instructions to the computers can be hardwired into the chips, the actual computers in the devices that are increasingly important in our lives. Should not the factories that produce these chips be subjected to some kind of control to make sure that “back-doors” that allow government and corporate surveillance are not being integrated into the “hard-wiring” of the chips?

Certainly this control cannot be left to the governments engaged in the espionage in the first place. Only the workers’ movement acting on a global basis and working with progressive “techies” can establish the necessary control over the fabs and factories that actually produce the chips.

None of these questions would arise, however, without the revolutionary changes in production that we call high tech—that is, the development of radio, computer, transistor and satellite technology. We would be living in a very different world if the automobile was still considered the leading technological marvel of our age.

Here we see the forces of historical materialism at work. Marx and Engels explained that the ideology and politics of an epoch are determined by the development of the productive forces. As capitalism develops the productive forces to still higher levels, issues are raised that would have been unthinkable a few years earlier.

As we saw, the development of the textile industry in the 19th century moved the struggle against African slavery, which in the late 18th century had appeared to be withering away, right back into the center of world politics. Who, however, could have played the role of Edward Snowden in the 1860s or even in the 1960s?

As the high-tech revolution continues creating new productive forces that can dramatically increase the productivity of labor, not only are new issues like NSA spying coming to the fore but the conditions are being created that will make the society that we call socialism or communism both possible and necessary.

For these reasons, Marxists must pay close attention to the developments of science, and especially in the new rapidly evolving branches of industry—much like Marx and Engels did in their time.


1 “Manufacture” literally means hand production. Until the late 18th century, very little machinery was used in factories. In those days, gains in the productivity of labor were achieved by deepening the division of labor. The introduction of steam-driven machinery beginning in the latter half of the 18th century marked the transition to modern industry, or “machinofacture,” where steam and then electricity replaced human and animal muscle power as the main motive power.

2 Last month, I dated the U.S. bourgeois-democratic revolution from 1775 to 1865. Thinking about this question a little more closely, I believe that I should have dated the U.S. bourgeois revolution proper from 1775 to 1876—that is, to the end of Reconstruction.

By 1876, the ruling capitalist class of the U.S. had achieved all its aims in the bourgeois-democratic revolution. First, the independence of the country from Great Britain was now consolidated. A huge national market, free of tariffs and other barriers to trade, was definitely established. If the South had won its “independence,” the U.S. national market might have been broken up by tariff walls or other government-imposed barriers to trade.

By 1876, as far as the U.S. home market was concerned, these dangers were eliminated. It was also established that the state power was centrally located in Washington, D.C., and not decentralized in the state capitals. A modern currency system in the form of the national banking system and its national banknotes was now in place. Before the Civil War, the pro-slavery southern politicians had prevented the development of a modern national currency.

With the power of the slave owners broken, the U.S. government was now free to carry out huge internal improvements—providing subsidies to accelerate the building of railroads, canals and so forth that were necessary for the most rapid development of industrial capitalism—something representatives of the slaveholders had been largely able to obstruct before the Civil War.

Under Radical Reconstruction, a start had been made to enfranchise the formerly enslaved black population of the South. However, it was not in the interest of the U.S. capitalist class to pursue these aims once it became clear that a comeback by the southern slaveholders was impossible. A serious land reform to give the former slaves the chance to develop independent farms—40 acres and a mule—was never implemented. Such a widespread land reform would have also benefited the southern whites and tied their interests to the revolutionary democratic reconstruction of southern society and freed them from any romantic attachment to the “lost cause.”

But such a development, though important to the working class, was not in the interest of the ruling capitalist class. Instead, a reactionary campaign was launched that largely disenfranchised the former slaves and their descendants in the South for a century. New forms of semi-slavery, like so-called chain gangs, were implemented where African-Americans would be arrested on trumped-up charges, convicted by all-white juries, and forced to perform forced labor for large landowners and capitalists.

The “traditions” of the South and pro-slavery rebels were glorified as part of a campaign to reinforce racism among southern whites. Former leaders of the slave owners, like the rebel “president” Jefferson Davis and General Robert E. Lee, were pictured as great U.S. patriots, though in reality they were the biggest traitors in U.S. history, who almost destroyed the country in their doomed attempt to save slavery.

With the end of Reconstruction, a new phase of the struggle for bourgeois-democracy began, in which the struggles of the petty-bourgeois and proletarian masses against the capitalist class—now increasingly dominated by monopoly and finance capital—came to the fore. This phase, marked by struggles of the oppressed majority against social inequality, for expanded civil liberties, and for working-class organization and political power, continues in the United States, and indeed in all capitalist countries—and will go on until the battle for democracy is finally won with the conquest of political power by the working class.

3 This free land was of course stolen from the Native Americans, who were subject to large-scale genocide. Even in its most democratic phase, capitalism was a disaster for the Native peoples of North America, something we can never forget.

4 St. Petersburg, which was also the political capital of czarist Russia, was changed from the German “Petersburg” to the Russian Petrograd as part of the anti-German chauvinism that accompanied World War I. Its name was changed to Leningrad in 1924 in honor of Lenin, who died that year. In 1991, it was changed back to St. Petersburg by bourgeois counterrevolutionaries who had by then gained control of both the Russia Republic and the Leningrad city administration.

5 Unlike Jobs, Ford was actually an engineer who hated finance capital and did all he could to keep his Ford Motor Company independent of the financiers on Wall Street.

6 Taiwan was stolen from China by Japan in 1895 as a result of China’s defeat in the 1895 Sino-Japanese war. It was formally returned to China following Japan’s defeat in World War II in 1945. However, in 1949, following the defeat of Chiang Kai-shek and his Kuomintang Party on the mainland, Chiang, who was now under the protection of the U.S. empire, managed to hold on to Taiwan. The Peoples Republic was unable to liberate it due to the overwhelming strength of U.S. naval and air power.

Before the U.S. began to move to normalize relations with China in 1971, the U.S. media called Taiwan under Chiang’s dictatorship “Free China,” or occasionally “Nationalist China,” as opposed to “Red China.” China’s seat in the U.N. and on the Security Council was held by the representative of “Nationalist China” and not “Red China.” In those days, nobody questioned the fact that Taiwan was indeed a part of China. However, with the belated recognition by the U.S. of the People’s Republic of China, the U.S. “discovered” that Taiwan is supposedly a separate nation whose “independence” must be protected from China.

Despite the claims of the U.S. that Taiwan is an independent nation, the official name of the government of Taiwan remains the Republic of China. The Republic of China was declared in 1911 by Sun Yat-sen and was replaced by the Peoples Republic of China declared in 1949.

7 Unlike Jobs, Gates was in his youth a skilled computer programmer. Gates helped develop a program that interpreted the programming language BASIC that fitted into the tiny memory of the first “personal computer,” the Altair, that hit the market in 1975. Unlike Apple, however, the company that produced the Altair soon went out business, which is the usual fate of companies that pioneer new industries.

As Microsoft developed into a powerful corporation, Gates stopped writing programs to concentrate on his main interest—making himself the richest man in the world. His main programming talent—writing programs that use very little memory—has also had little influence on modern computer programing, which instead emphasizes writing programs that can be understood by other computer programmers.

8 This reply was partially written on the LibreOffice word processor, which was originally part of a proprietary software package developed by Sun to run on its SPARC-SOLARIS computers. As Sun declined, it made its office software free software.

9 I call the Android operating system “open source” as opposed to free software because its owner, the Google search engine monopoly, adheres to the open-source philosophy, not Richard Stallman’s free software philosophy. Google is for free software only insofar as it increases the profits of Google and no further. Google has not always promptly released the source code of new versions of Android, and even when it does, it is published under a non-copy left license preferred by many pro-corporate supporters of the open-source movement. However, to the extent that Google releases the source code of the operating system, Android is, according to Richard Stallman’s definition, free software.


5 thoughts on “Capitalism and ‘High Tech’

  1. First I would like to thank Sam on this wonderful and very impressive and enlightening piece.

    Second I have a technical question (for Sam) regarding productive vs unproductive labour. Before going further, I would like to clarify that I am aware of the fact that when Marx spoke of “productive” vs “unproductive” labour he meant “productive (or unproductive) of value“. I am aware that many types of labour which clearly fall into the category of “unproductive” such as the work of artists, poets and journalists are extremely useful and important jobs. Indeed the labour that Marx himself spent (as a philosopher and also on his volumes of books on political economy) was an unproductive one. So I am not under the illusion that an unproductive labour is somehow a useless endeavor and the worker spending such labour is some kind of lazy useless person.
    So having made it clear that my question is a technical one and not some sort of “defense” for this or that type of labour, I will go on to ask it.
    Sam says: “He was willing to exploit to the maximum both industrial workers—who produce surplus value—and intellectual workers—engineers—who create new productive forces and products out of the raw material of science. “

    Which brings me to the question for Sam that are all “intellectual workers” categorically “unproductive of value” with no exception?
    I would appreciate it if Sam would take the time and write a brief reply to this question.
    My personal take on the matter is “no”. I don’t think that all “intellectual workers” are unproductive.
    Take engineering for example. A university professor, who does research and experiments and his products are scientific papers published in scientific journals would be “unproductive”. Not just Albert Einstein but also the work of a university professor in an engineering field would also be “unproductive”.
    However, there is a different side to engineering. And that is the work of an engineer in the industry (as opposed to an engineer functioning as a “scientist” and doing research).
    My take (and I would appreciate it if Sam could make a comment on that) is that the work of an engineer in the industry doing “designs” is as productive of value as the work of an assembly line worker in the auto industry. To make an innovation and come up with a new idea which would be published in a scientific journal is not to produce a commodity; but to write a program as a piece of software (which is to be sold on the market), or to design logic circuits (using Hardware Design Languages) which would be parts of a microchip is as productive of value as the labour of the workers who assemble the high-tech devices for the Foxconn corporation.
    Otherwise we will have to consider a blank CD and a CD containing a word processor software to be of the same value (or very little difference in between depending on how much labour the actual copying of the software on the CD would take).
    All carpenters need to do drawing and some simple calculations before taking the saw and hammer in their hands. Does their productive work start with the hammering and sawing or does it include the drawings and calculations?

  2. Incidentally I would like to emphasize that when I gave the example of a blank CD versus a CD containing a software product (eg. a word processor) I was strictly speaking in terms of value and NOT the prices. Of course that prices deviate from the values both if the product goes at its price of production or if it goes at a price dictated by the monopoly of a software company. But as I said before I was talking strictly about the value and not the sale price of the product.

  3. “All carpenters need to do drawing and some simple calculations before taking the saw and hammer in their hands. Does their productive work start with the hammering and sawing or does it include the drawings and calculations?”

    Depends on whether or not the carpenters are self-employed or wage-workers. If wage workers, and they are “on the clock,” then, as the drawing and calculations lead to a surplus value, the productive work includes the drawings and the calculations.

    1. Artesian;
      Now question becomes what if a further division of labour occurs and drawing becomes a separate trade from cutting and hammering? What if both the “drawer/calculator” and the “sawing/hammering” worker are wage labourers to the same capitalist? I think both workers would be creating value. In fact even if the drawing and calculations are done by the capitalist himself, still it would be creating value. It just so happens that in such a case the capitalist would be working in two capacities:
      1) As the owner of the means of production, employing labour power of the physical workers (ie. as a capitalist)
      2) As a self-employed worker (in his capacity as a drawer or “designer”)
      My main point was that “drawing/calculating/designing” does not into the same category as “bookkeeping” or “accounting” (or for that matter even “scientific research”). Contrary to the latter the “designing” is creative of value.

      I thought some over what I asked Sam (although I should say that I welcome an answer from anyone) in my previous two comments.
      I am not sure, but the thought occurred to me that it may be the case that the labour of the software engineer (or the engineer who designs microchips using hardware designing software tools) is creative of value and at the same time the actual value of a “mass produced” CD containing his product is not that all different from the value of a blank CD. The rest of the observable and very significant discrepancy between the price of a Microsoft OS CD and the price of a blank CD is a result of the “license fees” which Microsoft collects and not the result of the labour of the engineers employed by Microsoft. After all, the army of engineers who worked in Microsoft for say a year and created the new OS, ONLY created the original code. Therefore their labour is only as much as the time spent on developing/testing the code, and not developing/testing millions of “separate” codes for each of the CD’s containing Microsoft OS. Their labour is congealed only in the original code and not in the millions of “copies”.

  4. “High-tech devices and the components such as the chips that function as computers have to be produced in factories by industrial workers. … (And) the Taiwanese corporation Foxconn has built a cyclopean industrial complex in the Peoples Republic of China, where many of the high-tech devices are assembled.”

    The reality is different. The fabrication plants that produce semiconductors (“chips”) employ very few people. The ratio in a fab of sunk costs on equipment to the wages paid in a year is extremely high. The other part, employment of many workers to assemble components at Foxconn and other subcontractors, is made possible by extremely cheap wages. Most of their work can be automated. The technology is known, but it ihas been more expensive than using these workers in modern low-tech sweatshops. Foxconn announced that it will introduce a million robots in its factories over the next five years. The number is an exaggeration, but the price of robots has fallen to the point that they begin to displace very low wage workers.

    “High tech” is not simply another wave of industries like those seen earlier in capitalism. It signals the end of capitalist development (although not technological development under capitalism in its final decades).

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