Reinventing Capitalism in the Age of Big Data

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* Book: Viktor Mayer-Schönberger. Reinventing Capitalism in the Age of Big Data.



Evgeny Morozov:

"Mayer-Schönberger’s latest book, Reinventing Capitalism in the Age of Big Data, shares some features with that earlier work. Co-written with another Economist contributor, the German business reporter Thomas Ramge, it deploys clear and anecdote-friendly prose to document another big trend—‘as momentous as the Industrial Revolution’—while making pragmatic recommendations for businesses and policymakers. But Reinventing Capitalism has far greater ambition, as the book’s original German title, Das Digital, suggests. Das Kapital, they argue, is out of date: once it is efficiently utilized throughout the economy, Big Data will not just reinvent capitalism—the English title is too modest on this point—but end it. ‘It may be time to close the door on history and officially eliminate the term “capitalism”’, they proclaim. In place of finance capital and firms, data-rich markets will empower humans to work directly with each other. More dramatically, data will supplant the price system as the economy’s chief organizing principle.

The price system makes an odd target for what is unmistakably a pro-capitalist book. Market pricing has long been lauded for its ability to enable complex forms of social coordination with little or no central planning. From the 1920s, in what would later be known as the Socialist Calculation Debate, Mises and Hayek had famously argued against their left-wing adversaries that it was the absence of the price system that doomed socialist central planning. Lacking real-time insights into the shifting tastes of consumers, most advantageous deployments of resources and fluctuating supplies of intermediate commodities, central planners stood little chance of adjusting their models fast enough to keep up with the rapidly changing world. Many socialists, especially in the wake of the Soviet collapse, found this argument persuasive, conceding an inherent technological flaw in socialist design. As G. A. Cohen put it in his last book, ‘the principal problem that faces the socialist ideal is that we do not know how to design the machinery that would make it run.’

Recent counter-arguments from the left have generally involved pointing out that the most successful modern capitalist enterprises, from Amazon to Walmart, excel at planning; the advent of digital feedback will make such techniques even more widespread. If capitalists can plan, why can’t socialists? The opposite argument—that Big Data clogs the operation of the price system—has also been made: some observers go so far as to claim that the price signals of today’s data-saturated markets, where venture capitalists, sovereign-wealth funds and deep-pocketed tech platforms subsidize services to the point where no one really knows what they cost, resemble those of the Soviet system in the years before its final breakdown.footnote6 Hence the moniker ‘Gosplan 2.0’. (In its structure, this argument is not dissimilar to the charges of Austrian economists against the distorting effects of quantitative easing on asset prices.)

In what follows, I will revisit—and, I hope, revitalize—the Socialist Calculation Debate, exploring some of the ways in which the participants conceived the relations between knowledge, price and social coordination, and how their referents may have changed in the age of big data. I will go on to suggest ways in which the development of digital ‘feedback infrastructure’ offers opportunities for the left to propose better processes of discovery, better solutions for the hyper-complexity of social organization in fast-changing environments, and better matches of production and consumption than Hayek’s solution—market competition and the price system—could provide. But first, it’s worth dissecting the theses of Reinventing Capitalism in more detail, for their very inadequacies are often symptomatic—and therefore illuminating." (

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