Technology and Inequality in the Age of Neo-Liberalism

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ABSTRACT

Over the last 250 years, capitalism has been responsible for rapid economic growth and technological change in many countries. As Schumpeter suggested, the capitalist process progressively raised the standard of life of the masses. The consequent increase in production of an ever-changing and expanding range of products and services lifted hundreds of millions of people out of poverty and deprivation.

But since the 1980s, neo-liberalism has become increasingly dominant in political leaders’ thinking and policies throughout the world. Neo-liberals believe in the benevolence of the free market, and advocate minimal state intervention and regulation of the economy. They have been very successful in convincing political leaders of the benefits of adopting the policies they advocate. As a consequence, there have been trends toward inequality, and to concentration of the benefits of technological change and economic growth on a small minority of the world’s population. International organisations such as the World Bank and the World Trade Organisation pursue the interests of multi-national corporations in promoting neo-liberal policies that are against the interests of poor people.

SCHUMPETERIAN INNOVATION

As Schumpeter argued:

the capitalist engine is first and last an engine of mass production which unavoidably means also production for the masses… .It is the cheap cloth, the cheap cotton and rayon fabric, boots, motorcars, and so on that are the typical achievements of capitalist production… The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort…the capitalist process…..by virtue of its mechanism, progressively raises the standard of life of the masses. (1954: 67-68)

Schumpeter also emphasized that the engine of economic growth is innovation in products and production processes, rather than price competition:

….markets reward mainly the large organisations which own and control massive agglomerations of land, capital, and resources devoted to innovation and product and service design. (1954: 81)

Since Schumpeter wrote, the long tradition of “worship” of economic growth has become even more dominant. However, the worldwide focus on securing economic growth has been far from completely successful in terms of its contribution to the welfare of the whole world’s population, amongst whom poverty and deprivation are still prevalent. Moreover, economic growth has been enormously extravagant in the use of resources and the environment has been degraded.
Everywhere in the world, inequality is of great significance. When analysts consider inequality, they often only consider differences in income between average living standards in various countries. This can be misleading. For example, while average living standards in rapidly developing countries such as India and China have increased very rapidly in recent years, there are still hundreds of millions of people in such countries living in poverty and suffering from deprivation.
Neo-liberalism is becoming increasingly dominant in political leaders’ thinking throughout the world. Neo-liberals believe in the benevolence of the free market and that there should be minimal state intervention and regulation of the economy.

INFORMATION AND COMMUNICATIONS TECHNOLOGIES (ICTs)

Information and Communications Technologies (ICTs) provide a vast new range of products and services, and also offer ever more powerful potentials for increasing productivity. They help to meet needs for information, communications and entertainment. The huge attention that has been lavished on these technologies is a consequence of many factors, including sheer fascination with the activities they have made possible and the extraordinary opportunities that their exploitation has offered for making profits. This is well known, so I concentrate on the “hidden underside” of some of these activities in this paper.

THE INVISIBLE UNDERSIDE OF THE ICT INDUSTRY.

The ICT industry relies heavily on rare minerals which have to be extracted from the earth. The supply chains involved in the production of commodities such as ICT devices are not apparent to the consumers of these items, and the price that manufacturers of electronic products pay for precious metals such as gold do not reflect the huge human costs paid by the miners –men women and children –who work in terrible, dangerous conditions for low pay to mine those metals. As the gold on the surface of the earth has been mined, so men, women and children have to go deeper into the earth to extract it. Much of this mining is in countries with loose health and safety regulations. A quarter of the gold is mined by poor migrant workers in small-scale mines. The majority of accidents go unrecorded because of the itinerant nature of the workforce and the often illegal areas in which they work. Buyers of ICT devices and services do not perceive the poor pay of the miners who extract these minerals, nor the dangerous conditions in which they work, nor the impact that mining has on these workers’ health and on the environment. Some ICT device makers try to “ethically source” their precious metals – they buy from certified suppliers. However, there can be between four and eight levels in the supply chain of materials before they reach manufacturers. Manufacturers depend on the adherence of all levels in this supply chain to make claims that they buy ethically. But supply chains can never guarantee that the gold is extracted ethically. Much commercial activity now relies on networks, software and electronic transfer of capital. But this activity depends for its existence on mineral extraction and manufacturing processes previously associated with heavy industry, and the repetitive work in arduous conditions which this involves.

SURVEILLANCE PREFERRED TO SUPPORT

In the light of the threat of terrorism and ever increasing demands for security, Closed Circuit TV (CCTV) monitoring, screening technologies, tracking devices and biometric tools are used ever more extensively. New technologies of surveillance often appear to be deployed as means of policing marginalized sections of society for whom there are few opportunities in the new global economy, in preference to supporting and investing in them.

TECHNOLOGY AND DEVELOPMENT

The contested relationship between technologies and development is another theme of this paper. The leadership of Organisations such as the World Bank and the World Trade Organisation (WTO) has been captured by the ideology of neo-liberalism. The World Bank tries to persuade developing countries that they should invest heavily in ICTs as an engine of growth.

Such propositions rely on the belief that ICTs can help developing countries to narrow the gaps in productivity and output that separate them from industrialised countries – and even that they can “leapfrog” stages of development into the information economy. But most developing countries are unable to cope with the new technological paradigm or to exploit its potential. They lack appropriate infrastructures and the capacity to adopt, adapt and to innovate in their own environment.

A few countries such as South Korea and Singapore have used production of consumer electronics to transform the standard of living of a large proportion of their populations. But elsewhere, there is little evidence that ICTs can help those with no ownership and control of this technology and who do not possess the capability to innovate to achieve their development goals. Indeed, many ICT initiatives and projects in developing countries have failed to meet such objectives. Moreover, developing country consumers are influenced to deploy fashionable technologies without considering critical issues such as user capabilities and cultural feasibility. It is generally unrealistic to expect developing countries to achieve development through ICTs without policies and support in place to ensure equitable access and training, something which merely opening up markets does not necessarily ensure: in general, consuming ICTs reinforces existing social and economic inequalities.

THE INFLUENCE OF NEO-LIBERAL IDEOLOGY

Neoliberalism includes the belief that the only legitimate purpose of the state is to safeguard individuals, especially commercial, liberty, as well as strong private property rights; and that the state should be drastically reduced in strength and size. These beliefs apply internationally: there should be free markets and free trade.

Political leaders of the United States and the United Kingdom – Ronald Reagan and Margaret Thatcher –were world leaders in the coherent application of neo-liberal principles to the policies of their own countries in the 1980s. But much of what has become recognized as neo-liberal ideology had been important influences on United States’ governments’ foreign policies long before President Reagan was elected in 1980. Since the end of the Second World War, the United States has had strong influences on agriculture, healthcare, development and education policies in developing countries. This influence had been transmitted through the United States’ strong representation in International Organisations such as the World Bank, the International Monetary Fund and the World Trade Organisation.

ICT producers have promoted their products as means through which excellent education can be made available to diverse and widespread communities. The World Trade Organisation believes that public services should be opened up to international capital, and that this would benefit both globalization and education. However, opening up the markets of poor nations to transnational corporations further is liable to create greater inequalities between rich and poor nations. In accordance with neo-liberal ideology, education is increasingly treated as a tradable commodity as opposed to a public good. Learners are increasingly referred to as customers, clients or consumers. In the UK, the introduction of computers into all school classrooms as part of face-to-face teaching has been promoted as the way to educate children to be the knowledge workers of the future. Yet despite the widespread integration of ICTs at all levels of schooling and into all subjects, there are still large numbers of children leaving school with low levels of literacy and numeracy. Moreover, insufficient attention has been paid to the purposes for which communities need knowledge, and what knowledge is appropriate for particular groups. The use of new technologies is not always the right answer. It is essential to consider what education and training is needed for the population to achieve sustainable development before considering which technologies should be used to deliver them. Governments. Policy makers need to consider the best methods for educating their citizens, taking into account the local infrastructure and which modes of delivery would be most appropriate in any given situation.

Indeed, opening up the markets of poor nations to transnational corporations further is liable to create greater inequalities between rich and poor nations. Choices between private and public delivery systems are crucial determinants of the effectiveness of delivery of products and services to meet the needs of the whole population. In spheres such as healthcare, education and the communications sector, the United States and international organisations have exerted strong influences in favour of private delivery, and this has generally been against the interests of poor people, and especially of those living in developing countries. Multinational corporations are pushing developing countries to rely more on ICTs for development of their economies, and for improving education, when adapting development and education to specific national needs may well be better approaches, especially for contributing to the welfare of poor and disadvantaged people.

HEALTH AND TECHNOLOGY

Despite some noticeable improvements in recent years, technological change still continues to benefit rich people more than poor and disadvantaged people in most countries. Neo-liberal influence has been exerted in favour of low priority for expenditure on healthcare in relation to expenditure on promoting economic growth based on stimulating international trade. Such policies have tended to restrain developing countries expenditure on the provision of clean water which is absolutely fundamental to improving health. In developed regions of the world, resources such as clean water and refrigeration which are also essential for conventional storage and delivery of some vital health supplies such as drugs, vaccines and injections, are readily available. In many areas of developing countries, clean water, refrigeration and other resources which are essential for safeguarding human health are scarce. The main causes of illness and death in developed countries are cancer and diseases of respiratory, cardiovascular and nervous systems. In the developing world, communicable diseases are the main health problem, and many fatal diseases could be prevented by public health measures, especially through the provision of clean water. Although some progress has been made, there is still an inbuilt tendency arising from market forces which ensures that pharmaceutical development is international and continues to concentrate on treating the diseases of the relatively affluent. Policies in developed countries, notably the United States, fail to contribute sufficiently to the promotion of technological innovation in relation to the diseases that afflict developing countries disproportionately. Numerous technologies are available which could offer better, more effective treatment for diseases prevalent in developing countries, but, insufficient resources are devoted to development and exploitation of such technologies. United States expenditure on health care per capita is immense, but this has resulted in a population whose average levels of health are poor relative to several other countries in which health expenditure is far less, but where the distribution of both income and health care has been much less unequal.

THE DYSFUNCTIONAL AGRICULTURE AND FOOD INDUSTRIES

A global food and farming system fit for purpose should ensure that the world’s 7 billion population (expected to rise to 9 billion by 2050) has access to sufficient food to enable everyone to live healthily, without causing more than the minimum of damage to the environment and biodiversity. The present system is dysfunctional.

28 per cent of the world’s population suffer from having too little food to eat
The health of 14 per cent of the world’s population suffers because they eat too
much.

At least a billion people suffer from obesity and other diseases caused by eating too
much. For at least two hundred years, food processing has always involved some
adulteration. But never on the scale which exists now, High fructose corn syrup is
very sweet and very cheap, so food manufacturers put huge quantities in packaged
food, and this makes people fat.

Inequality is very harmful to those people whom it deprives of appropriate food – one of the most basic necessities for sustaining a healthy life. Prominent in this group of about a billion people currently in developing countries are those whom poverty and landlessness deprive of the basic necessities for pursuing a healthy life –those who lack sufficient food and clean water to eliminate hunger, starvation and disease. The world’s climatic conditions, soils, water availabilities are extremely diverse. It would surely be reasonable to expect that technological change would be developed, adapted and implemented so as to extract the most nutritious food from nature in the light of these diverse conditions. In practice, however, the prevailing vision is of a standardized worldwide ‘modern’ agriculture extending from the Green Revolution to the current Gene Revolution as a preferred pathway to development. The overwhelming majority of choices of which technologies to develop and deploy are made centrally by large multinational corporations.

The modern world agri-food ‘system’ involves a wide array of external expensive inputs such as fertilizers, seeds and irrigation. Centralized technology-driven economic growth through sustained innovation led by major multinational corporations, and trade are envisaged as providing pathways out of agriculture; or a shift of subsistence-oriented ‘old’ agriculture to a modern, commercial, ‘new’ form of agriculture.. This vision perceives the role of agriculture as an ‘engine of economic growth’ and looks forward to the economic and social transformation of the agrarian economy – from backward to modern, from subsistence to market-orientated, from the ‘old’ to ‘new’ agriculture.

ALTERNATIVE VISIONS –FOOD SOVEREIGNTY

Alternative visions of Food Sovereignty emphasize working locally with natural systems, generating improved livelihoods with local agricultural production attuned to local ecological conditions. Many millions of peasants and small farmers work for small rewards in bad, sometimes appalling conditions in agriculture. Hundreds of millions of peasants and small farmers are organising themselves in, for example, La Via Campesina, to secure increase in their opportunities to be more self-sufficient by producing a higher proportion of the foods that they and their families eat.. According to La Via Campesina “food sovereignty “requires agrarian reform in favour of small producers and the landless, the reorganization of global food trade to prioritize local markets and self-sufficiency; much greater controls over corporations in the global food chain; and the democratization of international financial institutions” (Branford, 2011:28). Food Sovereignty envisages the empowerment of small farmers locally as central to achieving both economic and ecological sustainability. If the emphasis on world agricultural production were to shift to the preservation and technological development of low input systems, world food needs might be met more fully, to the great advantage of billions of small farmers, and with far less environmental damage.

The rewards received by peasants and small farmers are often so poor that many millions of them have migrated
to cities in the hope of finding better paid work in manufacturing and other occupations. To a considerable extent, such migration may well be inevitable, but some improvements of the pay and conditions experienced by peasants, small farmers and their families could be secured through feasible changes in the direction of technological change and agricultural production towards “Food Sovereignty”, and away from the use of intensive methods of food production; and this might secure some significant reductions in the rate of migration of people from the countryside to cities.

CONCLUSIONS

The world economic system is extraordinarily complicated, and it has only been possible to consider a few examples in a short paper. The primary purpose of the current worldwide system of production and distribution is not to satisfy the most pressing human needs, but to create a never-ending stream of marketable commodities and the ever-increasing profits they generate for the owners of capital. In practice, markets reward mainly the large organisations which own and control massive capital resources. which they use to exert monopolistic control over markets. Major corporations exert power and influence over Governments and International Organisations to structure markets in their favour. They profit disproportionately from trade and technology transfer between advanced and developing countries.

Capitalism has been responsible for extremely rapid technological change over the past two hundred and fifty years. But there is substantial evidence that the pace and directions of innovation and technological change are under human control and not autonomous. Moreover, it is inevitable that any changes –whether technological or not – bring with them some benefits and some costs. Some of those costs are labeled by economists as “externalities” – for example costs and damage inflicted on the environment. Many such allocations of costs and benefits are unfair to many millions of people who suffer poverty and deprivation of numerous kinds.

It is beyond human power to eliminate all the costs of technological change. But human intervention is capable of mitigating and reducing some such costs. It is also capable of modifying and adjusting the allocation of costs and benefits between the various groups of people involved.

This paper constitutes a case for radical transformations in the determination of the ways in which resources and rewards for economic activity are allocated, for significant changes in the constitutions of large enterprises; and in the legal frameworks and regulations which control their activities. Above all, there is an urgent need for growing decentralization of the control of the direction of technology from huge monopolistic corporations to smaller enterprises wherever possible. If large organisations are inevitable, for reasons such as economies of scale, then those organisations need to be regulated to force them to act in the public interest. This need is general, but perhaps most obvious in relation to agriculture and food, in which there is urgent need for far more local small-scale production and distribution to match better with the huge biological, geographical and climatic diversity of the earth’s surface. Whilst the institutions , practices and mindsets of neo-liberal capitalism and its imperatives of profit seeking and increased consumption seem increasingly entrenched in our lives, they are not inevitable.

Harvey (2005: 203-204) points out serious problems arising from the neoliberal agenda :

“The idea that the market is about competition and fairness is increasingly negated by the fact of the extraordinary monopolization, centralization and internationalization of corporate and financial power. The startling increase in class and regional inequalities, both within states(such as China, Russia, India, and Southern Africa) and internationally between states, poses a serious political problem that can no longer be swept under the carpet as something ‘transitional’ on the way to a perfected neoliberal world. The more neoliberalism is recognized as a failed utopian project for the restoration of ruling-class power, the more the basis is laid for a resurgence of mass movements voicing egalitarian demands and seeking economic justice, fair trade, and greater economic security”

An alternative future – of more socially and culturally appropriate technologies harnessed for increasing equality and social justice – is possible.

ACKNOWLEDGEMENTS

This paper was presented at a seminar at Aalto Business School, Helsinki, on 10 October 2013. It draws heavily on Erika Cudworth, Peter Senker and Kathy Walker (editors) Technology, Society and Inequality, New Horizons and Contested Futures, New York, Peter Lang, 2013.

Other References:

Branford, S.,2011,. Food sovereignty: Reclaiming the global food system. London, UK., War on Want.
Harvey, D., 2005, A Brief History of Neoliberalism, New York, Oxford University Press.
Schumpeter, J. A. (1954). Capitalism, socialism and democracy (4th ed.). London, UK: George Allen and Unwin.
Thorsen, D.E., and A.Lie. What is Neoliberalism downloaded from :
http://folk.u10.no/daget/What%20is%20Neo-Liberalism%20FINAL.pdf on 1 September 2013