After the pandemic: the big tech state versus the social state

25 May 2020

Leaders must plan now to prepare the way for a more socially sustainable and progressive regulation of big tech in the post-Covid world

Mark Roden
Editorial credit: Willy Barton / Shutterstock.com

The Covid-19 crisis asks certain existential questions about the configuration of the state. The way in which our vision of the state emerges in the aftermath of the pandemic could shape our global democracies and societies for generations. This contribution concentrates on two competing visions, looking primarily at the US state:

  • Firstly, the Big Tech State model, where services are redesigned in line with the interests of neoliberal elites in partnership with tech giants;
  • Secondly, the Social State model, in which the crisis is seen as an opportunity to mobilise society in the direction of greater equality by, for example, moving beyond neoliberal models of healthcare, and by fairly taxing and regulating big-tech.

The Emerging Big-Tech State 

The tech giants have approached this crisis as a lucrative opportunity through which they can reprogramme Western societies and democracies by replacing key elements of services including with respect to education and health with online solutions. This would benefit wealthier sections of the populace who could afford or access the relevant technology and infrastructure, while reducing the overall social interaction these people-centred services provide. It would also lead to future job losses for teachers, doctors and nurses as their roles become reduced by digital alternatives.

In May 2020 Governor Andrew Cuomo of New York State invited influential former Google CEO, Eric Schmidt, to his daily Covid-19 briefing to announce that Schmidt would be leading a new panel to integrate every aspect of New York’s public services with technology – starting with the provision of telehealth, remote learning and broadband. This compounded a previous announcement that the state would outsource services to a partnership fronted by the Bill and Melinda Gates Foundation centred on “smart education” which is also designed to permanently alter educational provision in line with the interests of the big tech billionaires.  This foray into key aspects of the civic realm is perhaps a glimpse of a future where a reconfigured partnership between the neoliberal elite (including progressive neoliberals like Cuomo) and the major tech monopolies begins to materialise.

The power of big tech in the US is consolidated by its enmeshment with the epicentre of financial deregulation and neoliberal economics: Wall Street. Moreover, Wall Street is clearly giving the signal that the future of the stock market is bound up with the interests of the tech giants as their value grows during the Covid-19 crisis. As of 01 May, the stock exchange recorded that Amazon was worth $1.14 trillion; Microsoft $1.32 trillion; Apple $1.26 trillion; Alphabet the parent company of Google) $900 billion; and Facebook $577 billion. That amounts to fully 20% of the S&P 500.  At the time of writing, Jeff Bezos, Amazon’s CEO, has personally made $30 billion during the Covid-19 lockdown period alone.

Supplementing this exponential growth of big tech’s stock exchange value during the crisis is a belief, promoted by the likes of Eric Schmidt, that competition with China requires further deregulation for the big tech industries to compete with the likes of Alibaba and that mimicking China’s big tech – state integration is necessary for the continuation of US hegemony at the geo-political level. This could be a very persuasive line of thinking given that President Trump is a US nationalist, that China is the main source of competition in the global economy, and that being soft on China is an effective line of attack on Joe Biden in the upcoming 2020 US presidential election campaign.

Eric Schmidt chairs the Defense Innovation Board, which advises the US Department of Defense on the increased use of artificial intelligence (AI) in the military, and the National Security Commission on AI which advises Congress. As Naomi Klein puts it, “the main purpose of the two boards is to call for exponential increases in government spending on research into AI and on tech-enabling infrastructure such as 5G.” All of this has the added incentive of lining the pockets of the Silicon Valley CEOs who sit on these Boards.  Thus, competing with China is the raison d’êtrefor the expanded application of AI across society and for schools, hospitals, police and the military to outsource their core activities to tech giants.  The real-world impact of this is the loss of many highly skilled jobs (as outlined above) and a huge encroachment of the unaccountable machine-control of our increasingly privatised and outsourced personal lives.

The convergence of interests between big tech and neoliberalism is laying the groundwork for a future in which big tech is able to place every facet of our lives under surveillance while the data we handover will be mineable a long time beyond the Covid-19 crisis. This poses a clear and present danger to the structures of our democracy when these big tech companies can sway elections and referenda by illegally targeting their users with political advertising at the behest of national governments or private interests, and when, in the case of Amazon, they treat their own workforce as disposable commodities. However, the increasingly authoritarian Trump Administration may supercharge the augmented reach of big tech for personal political ends as democratic institutions in the US continue to be undermined, and as neoliberal elites coalesce around the need for an economic nationalism to rival China at the expense of democracy.

 Constructing the post-Covid Social State

Although greater reliance on big-tech may be unavoidable in the midst of a global pandemic there is an alternative to the dystopian vision of following China’s authoritarian model of capitalism. That alternative lies in what French economist Thomas Piketty called the social state:  a model where a substantial portion of taxation raised by the state is devoted to universal social services such as healthcare and education. In the US the pandemic may produce more equal access to the services the social state provides particularly when it comes to healthcare while in turn, coming out of the crisis may be seen as a critical juncture at which we look to re-regulate and tax the wealth of big tech companies while recasting their role to that of a public utility.

Building the case for universal healthcare

The Covid-19 crisis is leading to a restructuring of the state that could well benefit the left in so far as massive government intervention in the economy will, quite likely, remain for a long time to come. A key aspect of the social state is its provision of public investment and the crisis will, in the words of Piketty, “reinforce the legitimacy of public investment in healthcare.” In this vein, it is worth noting that the political importance of the universal healthcare (or single payer) system advocated by Senator Bernie Sanders in the US has been illuminated by the crisis in that country.  The US neoliberal system of healthcare has seen chronic underinvestment for decades, with unprofitable hospitals being closed in hard to reach rural areas and with the system having fewer beds and doctors per capita than comparable wealthy nations. In a pandemic this fragmented system – reliant as it is on the multiple health systems functioning within individual states – creates duplication and an inability to mass test or to coordinate resources in the ways available within European healthcare models. Moreover, 30 million American were uninsured prior to the crisis, making them less likely to report symptoms and leading to a potential increase in the virus spreading.

It may be no accident that the two of the countries with the most neoliberal approach to capitalism more generally, namely, the US and the UK, have been among the worst affected by the virus.  Britain’s social care sector has long suffered from fragmented and outsourced services, low pay, and a marketised approach which views patients as customers as opposed to sentient beings or beneficiaries of a public service.  The vital point here is that support for universal healthcare is growing as the Covid-19 crisis deepens in the US and by the end of March nearly half (48%) of Americans said they approved of the idea. This may well increase as millions of Americans are made jobless by the pandemic in a country where health coverage is largely based on an employer-based system of contributions. It may be too late for Bernie Sanders, but Joe Biden may become more receptive to the notion of a universal healthcare system post-crisis, thus building on the presently meagre foundations of the social state in the US.

Subjecting big-tech to regulatory control

As demonstrated earlier, the big tech giants want to play a key role in redirecting public services towards remote/online solutions which could have repercussions for privacy and democratic control. In order to ameliorate this within the framework of a social state, the short-term answer may be to view big tech in the way we view public utilities, by apportioning to them greater levels of scrutiny and regulatory burdens, comparable to electricity and gassuppliers. While this falls short of breaking up big tech, as advocated by Senator Elizabeth Warren during her campaign for the Democratic Party nomination in the US, it would be a sensible half-way house given that they are vital parts of the information infrastructure during the pandemic.

After the pandemic there exists an opportunity to bring big tech under democratic and regulatory control and Piketty’s proposal of an international financial register would help do this at the global level if big tech continues to set up partnerships with the banking sector to offer financial services such as Apple Pay and GooglePay.  Moreover, if Piketty’s model of taxing higher incomes of over $500 million at 80% were followed by national governments, the personal wealth of big tech CEOs could also be taxed in the US. This would promote transparency and accountability in a way that does not exist at present. The effective taxation of some of big tech’s wealth could be used as a way of paying for greater public investment in health, education, transport and public infrastructure.  As a holding strategy, big tech could be treated less in terms of predatory capitalism and more as public utilities which are obliged to pay fair taxes and which contribute to the public good across the world.

As Covid-19 subsides, the question of breaking-up and regulating big-tech will once again become pertinent given the inherent danger that vast monopolies pose to democracy given their size, opacity and the ways in which they diminish innovation and smaller competitors. Leaders must plan now so as to prepare the way for a more socially sustainable and progressive regulation of big tech in the post-Covid-19 world.