(Drivebycuriosity) – “The end of capitalism has begun”, claims the British paper “The Guardian” (
). The text looks like a wet socialist dream. Paul Mason, a Marxist and author of this article, declares that information technology (Internet, software, cloud computing and more) will destroy capitalism and replace it by “postcapitalism”.
I disagree. Capitalism is just changing its face, as it has ever done, by adapting and creating new business models. Information technology leads to a stronger and more efficient capitalism. You can see this on the stock market. The Nasdaq 100, which represents the US information technology, hoovers close to an all-time-high. Stocks of companies who belong to the information technology sector, like Apple, Google, Amazon & Facebook, have been climbing much stronger than the rest of the stock market, leading to enormous market capitalizations. Apple, who`s iPhones & iPads are in the heart of information technolgoy, has now a market capitalization of $700 billion, around twice of the company value of Exxon Mobil and is the largest public company in the West.
Changes in information technology are giving birth to new and very successful capitalist business models. Take for instance Airbnb. The company, which wouldn`t be possible without advances in information technology, owns an app that allows people to become entrepreneurs. The partners of Airbnb use their own – or rented – flats as capital to earn money. Their customers also benefit because they can reduce their travel expenses by renting relative cheap Airbnb rooms. The successful business model turned Airbnb, founded in 2008, already into a huge global corporation with a value of maybe $24 billion (wsj).
The success story of Uber goes similar. The company´s app permits people to book temporary cars & drivers. The partners of Uber uses own – or rented – cars as capital to earn money. The popularity of Uber is fast rising because their customers save a lot of costs. Uber, founded in 2009, is now valued at around $50 billion (fortune).
Facebook maybe the poster child of the IT capitalism.The network is increasingly used by companies. They need the network and its huge number of users to find new customers and to communicate with them. Facebook gets in return high & rising revenues which already lead to market capitalization of about $ 270 billion.
The rise of Facebook, Airbnb, Uber, Snapchat (messaging app), Square (mobile payments) and many other post-2000 companies shows that capitalism is getting stronger – even that it looks different than 10 years ago (ritholtz).
Yes, Mason is right, the sharing economy is rising. But people, who want to sucesfully share something need networks, websites, search engines & apps to do so, and the owners of the networks, websites & apps earn a fee which can culminate to gargantuan sums as the examples of Google, Facebook, Airbnb and others show.
Yes, Mason is right, the costs of information are falling thanks to new technologies. But this trend makes it easier to create new business models & companies. Advances in the information technology spur progress in robotics, self-driving cars & trucks, 3D printing, biotech & more. Amazon.com, IBM, Apple, Google and other companies offer data storage and processing either for free or for low fees, giving everybody access to a network of supercomputers (cloud computing). Companies & persons can process and store huge amounts of data without spending much money for own data centers.
Netflix for instance benefits strongly from falling information costs because downloaded movies are just a set of informations. Amazon, Alibaba and other e-commerce-companies are growing fast because the shrinking information costs attract huge number of customers. And falling costs of information strengthen competition (the competitor is just a thumb click or app away) – making capitalism more efficient and flexible.
Capitalism has a long history of adapting to new technologies. In the Renaissance Banks – and modern corporations – became possible because the invention of printing & accounting (both advances in information technology) made it possible to administer large financial & trading companies. Later capitalism adapted to the agricultural & industrial revolutions and got stronger. Now capitalism is taking advantage of the new technological revolution (driveby).
Long live capitalism.
PS For illustration I used a work by digital artist and painter Yoon Lee – a metaphor for the exponential growth of technology and information (dailyserving).