Can tech giants solve climate change, inequality?
The Kennedy era guru on capitalism, John Kenneth Galbraith, presciently proclaimed in “The New Industrial State” (1967) that “The imperatives of technology and organization, not the images of ideology, are what determine the shape of economic society.”
The cacophony of ideology, including religious fervor, is killing people in Ukraine, Gaza, and other warring states. In the meantime, investors worldwide are chasing tech stocks like Nvidia, whilst the rest of the world swelters in what are the hottest years on record. As the World Inequality Report 2022 stated, “Some 10 percent of the world’s population own 76 percent of the wealth, take in 52 percent of income, and account for 48 percent of global carbon emissions.” At the same time, the workforce fears the rise of artificial intelligence (AI) and robotization, where those with low skills will lose jobs amid the skewed demand for others with high knowledge and creativity-intensity.
What we see today is a winner-take-all competitive space across technology, geopolitics, and education that marginalizes those who cannot adjust as fast. The American Magnificent Seven tech stocks represent the cutting-edge of raw capitalist drive for value, speculation, and state intervention in what venture capitalist William Janeway called the “Three-Player” financial capitalism game. (“Doing Capitalism in the Innovation Economy,” 2018)
Essentially, the 2000 Nasdaq tech boom gave American policymakers no fear of tech bubble busts, since that episode did not lead to any systemic consequences for the economy. Banking crises, on the other hand, like the 2008 subprime crisis have widespread impact, which is why banks are regulated more tightly.
As Janeway stated succinctly, “Two overlapping sets of institutions—markets and the political process—compete in the allocation of resources and the distribution of income and wealth generated by their application.” If the bulk of the population were to lose in the tech and markets game, populism may rise to shackle the tech and the rich. The Chinese government’s regulation of their tech platforms reflects some of this populist sentiment.
As Janeway recalled, the state failed to intervene in the economy to prevent the collapse of banks and companies in the 1930s that led to the Great Depression worldwide.
But one factor today is fundamentally different from that era—climate change. Until recently, mainstream economic models did not incorporate climate factors into their GDP calculations. Today, governments are faced with the complex nexus of slow GDP growth, planetary injustice (carbon emissions, biodiversity loss, pollution, and natural disasters), social injustice (widening social, income, wealth, and security levels), as well as the speed of tech disruption.
In an important study of “Climate Change, Capitalism, and Corporations,” University of Sydney professors Christopher Wright and Daniel Nyberg noted that “despite the need for dramatic economic and political change, corporate capitalism continues to rely on the maintenance of ‘business as usual.’” This implies that if the corporate sector cannot solve climate change and social inequalities, the two existential issues of our time, the state must step in.
Alas, United States-China tensions are such that governments are more preoccupied with geopolitical rivalry and industrial policies than supporting mutual cooperation and competitive free markets. Big tech companies seem to add another legion to the armed forces. This implies that nontech companies, other than big oil and gas and natural monopolies, will continue to struggle to cope with decoupling supply chains and tougher regulations, tariffs, and sanctions, as well as natural and conflict calamities.
The Great Tech story implies that the world will see a smaller group of winners who have financial, technology, data, and political clout compared to the rest who’d have less and less confidence in governments to solve their daily problems. No game can continue if it ends up with only a handful of winners, and the majority feeling that the game is loaded against them.
In the new tech rentier game, tech giants will have captive customers who subscribe to their AI software and data centers that allow them to algorithmically influence their spending behavior. But if such algorithmic biases disturb the delicate balance between humans and nature, the system is neither politically sustainable nor ecologically viable. If everyone can spend like the average American, we would need 5.1 earths. The Magnificent Seven do not have such a mission to change that trajectory.
Enjoy the tech bubble while it lasts. Just as night follows day, nightmares follow beautiful dreams. Asia News Network
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Andrew Sheng is former chair of the Hong Kong Securities and Futures Commission.
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The Philippine Daily Inquirer is a member of the Asia News Network, an alliance of 22 media titles in the region.
