iPad socialism

John McDonnell’s giving a speech today at Imperial College which will outline his new economic strategy, he’s written a sort of feature preview in today’s Guardian. McDonnell claims companies in the UK hold ~£400 billion of liquid capital, this is the dragon’s hoard of gold which acts as a safety net for large companies, it’s their reserve fund in case of a rainy day. Well the shadow chancellor wants to put it to more productive use, and here are the three specific policy proposals which come out of his letter:

• “A higher tax on retained earnings, alongside improved deductibility for long-term investment” to encourage companies to invest their spare cash.
• Focus investment on infrastructure.
• Focus investment in research & development, particularly in technology.

There’s also a recognition of the new role of platform services - Uber/Lyft, AirBNB, TaskRabbit, pop-up-shops, Kickstarter/Indiegogo, Amazon, etc. who come in and ‘disrupt’ established industries. Usually this means hyper-casualisation of the labour force and reduction of business overheads to the point where distributed networks can easily outcompete any traditional company. Consider the costs associated with the average physical UK business: they have to pay the daily wages of a permanent workforce, pay tax, rent, utilities. For larger companies they need to employ a cleaner for their premises, a receptionist, they need a budget for everyday items like stationery or toilet roll. Now consider that someone like me, lying across the sofa with a laptop, can write a piece of software which replaces all that and doesn’t cost anything.

In the Anglo-American sphere there’s been a typical neoliberal attitude: let companies do what they want with little to no oversight. On the other hand, I’ve noticed France showing a deep reluctance to ‘disruption,’ unions don’t like it, old companies don’t like it, and the state insists on enforcing cross-sector regulations. They either blindly accept or blindly reject, in both cases there’s an unwillingness to properly engage with the new conditions, to ask how we can take advantage of this new thing while preserving pre-existing living standards, workers’ rights, and the interests of now-technologically-obsolete businesses. It makes me happy to see John McDonnell doing just that.

I went to a political meeting yesterday evening, and one person raised a point about the managed deindustrialisation of the South-East. It’s a very valid argument, entirely relevant to jobs losses at train factories, the closure of mines, or steel plants, or wind-turbine factories, or furniture factories for disabled people.

Fine. But we’re in Brighton, its industrial capacity is derisible, yet it’s doing far better than your average northern ex-mining community. Take a walk round the centre and you’ll see all sorts of tech startups, it’s a copy of the silicon valley model that governments have tried so hard to foster. There’s a quincaillerie on Lewes road, they do key-cutting, shoe repairs, along with selling useful household items, and here’s the thing: at the back of the shop they’ve got a 3D printer! Of all the UK businesses which trade in or with Bitcoin, Brighton has by far the largest concentration outside London. It’s got a circle of companies which sit right at the top of the value chain, they’re exactly the sort of outsourced middlemen who make platform services.

That kind of economy has its own attendant problems - it’s insecure and vulnerable to undercutting from other areas leapfrogging up the value chain (China, India), it’s unable to provide stable long-term employment, and gentrification cuts into the town’s ability to attract businesses with low operating costs. It’s not permanent. I actually fully support an industrial strategy for Britain, but for the time being and if only in Brighton, tech services are the only way forward. So there was such a huge disconnect yesterday to be sitting right in the centre of Brighton, bemoaning deindustrialisation while ignoring this alternative economy activity all around us.

Another curious feature of the tech boom is that it seems driven by haphazard and self-organised groups. There are these cultures and communities which contribute greatly to the profitability of the IT sector, but they don’t receive much by way of public support or recognition. There are some initiatives: Sussex University sponsors a startup incubator, and I remember Brookes made attempts to partner with a local makerspace, you get little moves here and there. I don’t see why it can’t be taken further; if Uber is now considered important infrastructure, then why don’t we see similar services built under state or local authority supervision, and run for public benefit?

There was the odd news earlier this month that a partly state-owned ISP in Kazakhstan runs a public bittorrent tracker. The UK government could do that, and it would have a direct positive impact on the economy. The local council could run a server farm with free hosting for enterprises and community groups, or it could direct teenagers in secondary schools to submit bug reports (and maybe some fixes) to important free software projects. There’s so much potential here, so there’s your iPad socialism: nationalise Uber.