Thursday, 25 September 2014

ONCE AGAIN, PROOF THAT FREE ENTERPRISE GRAVITATES TOWARDS MONOPOLY

When the personal computer made its debut in the late 1970s and the Internet began to go mass market in the early 1990s, starry-eyed techno-Utopians believed that this enabled the small person to speak on a level playing field with established corporate giants, and even beat them.

However, the BATR.org article below testifies to the dialectical-materialist reality, that any industry with a large number of competing small startups, which provide a wide degree of choice to consumers, has almost always gravitated towards monopoly, or at least one company or a  handful of companies dominating their industry's market.

It is in fact, the very free market forces which the libertarians so love, which drive the very processes of natural selection, whereby weaker companies either fail and drop out of the market, especially during periods of economic downturn, or are acquired by the stronger ones which survive, and over time, this process repeats itself until only a handful of players are left.

Microsoft was just a small startup worth US$16,000 in 1976 but today the corporation is worth billions of US dollars and virtually monopolises the market for desktop PC operating systems. Google, Facebook and Twitter all began as small start-ups but today dominates their respective areas and functions in cyberspace, with Google dominating several areas and functions in cyberspace.

However, before I go any further, please allow me to digress and explain the Libertarian (right-wing anarchist) political ideology underlying this techno-Utopian radicalism which has spread out from the United States to infect many tech-savvy, urban, middle class Malaysians, and how it goes against my pro-working class ideology.      

For some years now, I came to notice a key difference between popular political and economic perspectives of the Europeans and North Americans (U.S. Americans and Canadians), and that is that the Europeans, well at least the British back in the 1970s, were and still view conflicts of interest in terms of capitalists versus workers, and in Britain at least, this was due to the strongly pro-labour ideology of the old Labour Party which was founded in 1900 by the trade unions and socialist political parties of the 19th Century.

The ideology of the old Labour Party was defined by Clause IV in the party's constitution:-

"To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service."

Today of course, the New Labour Party of Tony Blair and Ed Milliband has abandoned Clause IV and New Labour has become a party of capitalism, with "a slightly more human face than the Conservatives", and New Labour did not repeal the laws restricting the trade unions which were introduced by the Conservative government under Margaret Thatcher.

When I was a student in Salford, Lancashire in the 1970s, most of my fellow students described themselves as socialist of some variety, mostly pro-Labour and its policies, though neo-liberal tendencies have gained ground amongst students since then, or the more radical ones tend towards Anarchism.

Thankfully, this working class consciousness still survives amongst the working class, or what's left of the industrial and services proletariat, though feeling betrayed by New Labour, some are turning far-right demagogues, such as the British National Party which advocates social and economic policies quite similar to those of the old Labour Party, except that it is white-supremacist, anti-immigrant and wants to repatriate all non-whites from the United Kingdom, even if they were born there. The BNP also says that it wants to take the United Kingdom out of the European Union and to pull British troops out of the Middle East, Afghanistan and other foreign interventions which do not directly serve the United Kingdom's interests.

Anyway, the BNP is not all that popular electorally, though the populist rightist United Kingdom Independence Party (UKIP) has been gaining ground electorally. UKIP promises to take the United Kingdom out of the European Union and to limit immigration and seems to be more accommodating to non-whites already in the United Kingdom. Already, some traditional New Labour voters are turning to UKIP, a pro-capitalist party, actually Thatcherites who have turned against the United Kingdom's membership of European Union, which Thatcher supported.

This video documentary by The Guardian shows this working class defection from New Labour to UKIP very clearly:-

"In the first of a new four-part series titled Britain's in trouble, John Harris travels around UKIP's eastern heartlands and finds poverty, anger and the breakdown of normal politics. From the forgotten residents of Jaywick, England's poorest council ward, to an encounter with Nigel Farage at the Royal British Legion, he finds out how a force made up largely of Tory exiles has managed to style itself as a party for the working class." CLICK HERE TO WATCH  Here is a Russia Today video on You Tube which testifies to that from around 3.20 minutes into the video.

My point here, is that whether these workers turn towards left wing or right wing parties for their economic survival, they do so from the perspective of themselves as the working class, even though they could well be betrayed once UKIP is elected to power, just as Hitler killed the leaders of the Sturmabteilung (SA or Storm Detachment), which was the  left-wing Strasserist faction of the Nazi Party (National Socialist German Workers' Party), including its figurehead, Gregor Strasser himself. Strasser reportedly raised his hand in the Nazi salute and shouted "Heil Hitler!" just before the firing squad killed him.

Most of the killings of the SA were carried out by the elitist Schutzstaffel (SS), a paramilitary unit which provided protection to the Nazi Party and its leaders. Membership of the SS was restricted to people who were only of "pure Aryan German" ancestry, requiring proof of racial purity. It's also said that unlike members of the SA, many of whom were working class, many members of the SS came from middle class or aristocratic backgrounds.

Of course, UKIP would not do what the Nazis did to their worker-supporters, but it could just not honour its promises to them and serve capitalist interests instead.

However, the bigger question is what are the more hard-core left parties in Britain and elsewhere doing to organise the suffering working class to fight back against their exploitation by and deprivation under capitalism. In the absence of any viable left alternative, no surprise then that the workers turn to the right which promises them relief from their predicament. In The Guardian's video, you can see how that liberal or leftist pathetically tells voters how bad UKIP is but offers no viable alternative. This is just like opposition politicians in Malaysia who try to win rural votes and small town votes by telling voters how bad the ruling Barisan Nasional is and bring up issues such as Altantuya, Interlok, and others which may be of concern to urban, middle class voters like them but of lower priority or of no priority to to rural voters whose first priority is their economic survival. 

Now we turn to American political radicalism, which is largely about the conflict of interests between small businesses and large corporate businesses - for example, mom and pop stores against Walmart, the independent burger stall owner-operator versus McDonald's, the small farmer against giant factory farms, the independent cafe owner-operator against Starbucks, in software - the large corporate software companies (the "cathedral" in Eric Raymond's words) versus a galaxy of small, independent software companies (the "bazaar"), and so forth.

The cyber-Utopians believed that information and communications technology enable the "little guy" to challenge the big guy. This keynote address in late 1983 introducing the Apple Macintosh micro-computing, with the dramatic "big brother 1984" climax at the end, reveals this "little guy versus big guy" battle. CLICK HERE TO VIEW THIS HISTORIC VIDEO which portrays IBM as that "big brother" or "Goliath" and Apple as the proverbial "David", its nemesis.

So after all those years of media hype, hoohah, bullshit and ballyhoo about how ICT and the Internet enables the small guy against the big, basically Libertarian (right wing anarchist) sites such as BATR.org (Breaking All The Rules) website recognises how highly corporatist the Silly Con Valley and the venture capital investors which finance technology startups have become - thus confirming the dialectical-materialist reality that what began as an industry with a galaxy of competing small players has metamorphosised into giant corporations, whilst new startups in green technology and biotechnology require government funding, since the startup costs of such companies are very high and time to profitability is very long, so they are asking government to commit to support them by buying from them over others - in short demanding some kind of government favouritism for their products and services.

For example, last April, Space-X, an American company founded by space industry entrepreneur Elon Musk, filed a protest against the U.S. Air Force, claiming that it "unfairly prevented it from competing for space satellite launches". The Air Force had signed a "block contact" to purchase 35 from United Launch Alliance - a Boeing and Lockheed-Martin joint venture. Most of the launches are done using the United Launch Alliance' Atlas rocket family, which use the RD-180 rocket engine, made in Russia by NPO Energomash, which is owned and controlled by the Russian government.  CLICK TO READ THE FULL BUSINESS WEEK REPORT

Simply put, Space X wants the U.S. government to give it business - a demand which is anathema to free market, open border libertarians and neo-liberals.

However, I have no objection to governments prioritising their own countries' companies over foreign companies. When I worked as a computer service engineer in the 1980s, there U.S. multinationals in Malaysia had a buy U.S. first policy, so why shouldn't other countries be able to do the same. That was before all the hype, hoohah, bullshit and ballyhoo about globalisation, borderless world, open borders, level playing field and so forth were touted by the worldwide following the formation of the World Trade Organisation in 1994.

One thing about the ICT industry, especially the PC hardware, software, digital content and Internet industries is that they have relatively low barriers to entry, unlike say the semiconductor electronics manufacturing industry, automotive industry, biotechnology industry, oil and gas industry, aerospace industry and so forth, which can require billions of ringgit in investments.


So almost any Tom, Dick and Harry can get into PC hardware, software, content and Internet industry, with the help of some money from angel investors and venture capitalists to help them develop their products or services and to successfully market it. The angel or venture capital funds help carry the startup through its initial loss-making period. This contributes to all the hype, hoohah, bullshit and ballyhoo over the sociologically, economically, culturally and politically transformative power of ICT, coming out from the Silly Con Valley and elsewhere, with starry-eyed journalists in the ICT media, self-serving technology entrepreneurs and business executives, and assorted opportunistic CON-sultants all promoting all this hype, hoohah, bullshit and ballyhoo.

On the other hand, from a technology perspective, Elon Musk and Space X are innovators, in that they developed reusable rockets, which take off into space and descend back to earth complete on their own power, and all that's required is to refuel it and off it can go again. This is unlike traditional rockets where most of the launch vehicle is used once and discarded, and reusable rockets thus save plenty of money. Click these links to view the launch of  Space X's GRASHOPPER ROCKET and of the giant, use-once SATURN V LAUNCH VEHICLE used to send the three Apollo 11 astronauts on their moon mission. In the case of the Apollo moon missions and the Saturn V launcher, a very small part, the COMMAND MODULE housing the three astronauts returns to earth.

So one has to take one's hat off to Space X for developing reusable launch vehicles, though to be absolutely clear, Space X's larger rockets are still not completely re-usable, unlike the Grasshopper in the video, which by the way was a proof of concept which did not not go into space.

On that note, people may again begin to talk about travelling through outer space and actually go places, instead of "going places" virtually, whilst sitting on one's backside behind a computer screen.

Well, developing such re-usable launch vehicles and their precision guidance and control systems, as well as their test launches, is certainly far, far more expensive than developing an iPhone application, a piece of computer software, a game or an online service, so companies like Space X need government support, whilst Silly Con Valley entrepreneurs can relay on private funding and afford to fart in the faces of governments.

Well, at least some techno-Utopians have woken up to reality.


The BATR article follows below.

Yours truly

IT.Scheiss
http://itsheiss.blogspot.com

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Silicon Valley Corporatists

Remember the days when an entrepreneur would perfect their whiz kid ideas in a garage and bring them to market? Did Steve Wozniak ever envision the behemoth that Apple would become and the cult camp that worships every new product that flows from their robotic coolie assembly lines? Riots Over Rotten Apple Mania describes an example of the forbidding underbelly of corporatist business model that Apple exemplifies so dramatically. Notwithstanding this record of 21th century sweat factories, do the venture vulture capitalists of Silicon Valley interject added value in the products and services they fund or do this culture of touting IPO offerings simply game a system to print money based upon imaginary dreams?

The Economic Policy Journal article, Silicon Valley Investor Joins The Corporatism March, cites Ron Conway, a Silicon Valley angel investor, who has backed many of the tech companies that we know and love.”

“Conway wrote a piece for Techcrunch where he's calling for the other Fascism. Remember the Fascist Mussolini from Italy. It was he who said, "Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power."

"Gone are the days when the tech community can innovate and run their businesses in spite of government. As we saw with the SOPA/PIPA debate, public policy has a direct and significant impact on startups and the investors who support them.

Whether it is regulations that stifle innovation or tax policies that hinder job creation, government has a major role in the success or failure of a startup. It is critically important for the tech community to engage in public policy."

Silicon Valley companies are not limited to IT development, just as much as investment funding is not wholly occupied from Wall Street firms. The principle is the same wherever the money comes from, as the Rise of the “venture corporatists” explores in an account about John Doerr of Kleiner Perkins Caufield & Byers.

“None of the alternative energy sources being developed today – solar, wind, geothermal, or biomass–is close to financial sustainability, which means that the supersize returns V.C. funds depend on will require massive government subsidies, regulations, and mandates… So Doerr has launched an audacious campaign to invest millions in handpicked political candidates and influential political action committees, to push for subsidies and pro-greentech policies and require the government to purchase the kinds of fuels and technologies his startups will be marketing. Since 2000, Doerr and his wife, Ann, have contributed more than $31 million to political candidates and causes.

In essence, Doerr is helping to create the biggest new market the world has seen since the dawn of the oil industry–and asking for taxpayer dollars to do it.”

“Green” alternative energy has more to do with replicating money than producing sustainable energy. Instead of writing code for computer-generated speech, the paradigm at play buys the ambassadors of government policy, circuitously as part of the business plan.

Lachlan Markay sums up the paradox for investors and the public in The Venture Corporatists. “As long as green technology remains not simply an economic venture but a moral one, taxpayers will continue to nobly lose money as politically connected “social entrepreneurs” reap a windfall.”

Here lies the rub. What exactly is the moral imperative? The lament of Alex Shud Bayley in No, I still don’t want to work for Google makes a universal point.

“Since I’ve been out of the Silicon-Valley-centred tech industry, I’ve become increasingly convinced that it’s morally bankrupt and essentially toxic to our society. Companies like Google and Facebook — in common with most public companies — have interests that are frequently in conflict with the wellbeing of — I was going to say their customers or their users, but I’ll say “people” in general, since it’s wider than that. People who use their systems directly, people who don’t — we’re all affected by it, and although some of the outcomes are positive a disturbingly high number of them are negative: the erosion of privacy, of consumer rights, of the public domain and fair use, of meaningful connections between people and a sense of true community, of beauty and care taken in craftsmanship, of our very physical wellbeing. No amount of employee benefits or underfunded Google.org projects can counteract that.”

The notion that Silicon Valley business enterprises automatically advance civilization and improve the human condition is one of the most disturbing viewpoints that have infected the smart phone sect. Placing the blame solely on tech executives avoids the reprehensible relationship that Ron Conway is so eager to exploit.

The article, Why DC And Silicon Valley Don't Mix Well seems to agree.

“The thing that DC should be most focused on is "fixes to previous government efforts that tried but failed to fix a problem that turned out not to need a regulatory solution." Other industries seem to want handouts and investments and the like, but you don't see that much in Silicon Valley.”

REALLY ???

However, some executives excel in screwing up a once reliable service.  Silicon Valley corporatist companies often fail. The next likely candidate for a downfall is Yahoo.  Marissa Mayer’s tenure as CEO may be numbered according to Eric Jackson, founder and managing partner of hedge fund Ironfire Capital.

“Jackson says that since Mayer took over she has spent $2 billion buying companies and that most of those acquisitions have been for naught.

"Can you name any other acquisition Yahoo has made besides Tumblr? If not, what does that say about them?" Jackson writes at Forbes. "If these small acquisitions were mostly talent-driven as characterized by management, why was it necessary to spend, say, $30 million to hire 3 people from a dying company? Was this really the best use of shareholder capital? Yahoo should not [be] responsible for bailing out VCs from their failed investments. This isn’t TARP."

Deplorably, many tech corporatists are mismanaged like Yahoo. Divesting a significant portion of Yahoo’s stake at the Alibaba IPO, raises a much needed current valuation, but what does this transaction do to improve the service? The Corporatists only care about tapping the rigged markets for immediate gain.

James Hall – September 24, 2014
CLICK HERE TO VIEW ORIGINAL ARTICLE


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