Internet and the contemporary monopoly capitalism

When we talk about the Internet, we are talking about the bone marrow of contemporary monopoly capitalism

Robert W. McChesney and Dan Hind 8 July 2013

In a wide-ranging interview, the author and media reform activist Robert W. McChesney discusses the political economy of the Internet, the crisis in contemporary journalism, and the struggle to create a media system equal to the needs of democracy.

Robert McChesney is a co-founder of Free Press, a national media reform organization in the United States. He is a professor at the University of Illinois at Urbana-Champaign and the author of several books on the media, including the award-winning Rich Media, Poor Democracy, Communication Revolution and Digital Disconnect: How Capitalism is Turning the Internet Against Democracy. His most recent book, written with John Nichols, is Dollarocracy: How the Money and Media Election Complex is Destroying America.

James Madison: centrist conservative and ardent opponent of permanent war. Wikimedia Commons/Library of Congress. Public domain.

In Digital Disconnect you write that, "we are better off admitting what is plainly obvious: there is no business model that can give us the journalism a self-governing society requires". The convention view is that the market can provide us with the journalism we need, and so we tend to think that the disruption caused by new technology will be temporary. Can you explain why you think this view is wrong?  

The role of advertising in providing between 50 and 100 percent of news media revenues—depending upon the medium—provided the illusion that popular journalism for a mass audience could be a profitable undertaking. Prior to the ascension of advertising in the final third of the 19th century in the United States, popular journalism was heavily dependent upon massive postal subsidies and printing subsidies. It was simply taken for granted that these subsidies were necessary for a mass press; otherwise only an elite news media would survive.

Advertising came with strings—at times, ropes—attached and much of media studies and media criticism has examined the tensions of a commercially generated journalism. To a certain extent the creation of professional journalism in the United States was an attempt to address this problem.

In the digital realm, with journalism floundering, the tensions with advertising have magnified, as desperate journalists have strong pressures not to do anything that might antagonize those who support them.

But, the big story is that advertising in the digital realm is abandoning journalism, indeed all media content. Advertising’s support for journalism in the old media was always opportunistic; it was the best way to reach the desired audience. On the Internet advertising is rapidly shifting to what is called “smart” advertising, meaning that advertisers purchase desired audiences through huge ad networks run by the likes of Google, Microsoft and Yahoo. These networks then find the desired target audiences at whatever website they go to. There is very little money on this for journalism websites, or content producers writ large. In the USA newspaper websites got 100 percent of the revenues for their digital ads in 2003; by 2010 they figure was down to 20 percent. I suspect it is even less today.

The idea that the final consumer can pay the full amount directly through subscriptions to support a viable popular journalism—the kind a self-governing society requires—has not evidence to support it.

The logic points in one direction: as in the first century in U.S. history, if society values independent, competitive popular journalism it will require massive public subsidies to produce it. Much like education. This is a public good.

Is there a sense in which we should think of the public sphere as a commons? After all, we all need to know what's going on, if we are to avoid being deceived, and so to operate as self-governing citizens.

I know there is a good deal of material on the notion of the commons and it importance. I confess I do not know the literature very well at all, though on the surface I am sympathetic. The way your question is phrased I would agree that the public sphere is a commons. And understood in that manner, I imagine it lends itself to the idea that we need the commons to be largely noncommercial.  

And if we do start to think of the sum of things that are widely known as a commons, what does that imply for how we organize the political economy of the media, including, centrally, the internet? 

I believe the Internet should be available to everyone for free. It is a birthright. In the United States Internet access is controlled by a few monopolies—Comcast, Verizon & AT&T—that charge people through the teeth for generally inferior and crappy service. They use the control over the politicians to lock in their monopoly power and eliminate the threat of regulation in the public interest. Then they extract massive “rents”—the term economists used for unearned and undeserved profits. They are parasites.A far more rational system would simply establish ubiquitous broadband through a public utility.
As for the structure of the Internet beyond that, I only have so much time and energy. Obviously, we need Network Neutrality, so all legal services are treated equally. And we need to have privacy such that what a person does on line is accorded the same treatment as what that person does in a traditional letter. I will leave it there for now.

One of the things you highlight in Digital Disconnect and in your other writings is that debates about the internet often divide on lines that reflect the interests of different groups of companies.

The arguments about copyright, for example, often seem to reflect the positions of the traditional content providers on the one hand, and the big digital newcomers on the other. Is there a danger that the language of the commons, along with idealism about the free internet, can become a resource for Google and other companies' deep public relations?

Google and other Internet companies do take the moral high ground on some issues, but all of them have issues where they rub shoulders with the lowliest sewer rats. In Google’s case it is privacy, and monopoly law, and taxation.
The Internet today is dominated by a handful of spectacularly huge monopolies. Network economics encourages monopoly and companies like Google, Microsoft, Facebook, Twitter, Apple, Amazon, eBay, AT&T, Verizon, Comcast often have monopoly power in their core markets not unlike what John D. Rockefeller had with Standard Oil in the late 19th century. In the United States today, 12 of the 31 most valuable public traded corporations—all with a value over $100 billion—are Internet corporations. There are only three “too big to fail” banks on the list, for comparison, and only three energy companies. When we talk about the Internet, we are talking about the bone marrow of contemporary monopoly capitalism.

So that means, yes, we are going to get the greatest and most impressive blast of corporate public relations bullshit in the history of the human race. 
Speaking of the "bone marrow of contemporary monopoly capitalism", we've learned a good deal in the last few weeks about the integration of the big digital companies with the state, through agencies like the NSA in America and GCHQ in Britain. It provides strong support for your argument that "really existing capitalism" is best understood as a condominium of state and corporate interests. What do you make of the information that's come from Edward Snowden?
 You have provided the answer in your question. We have a handful of enormous monopolies—using the term the way economists traditionally used it, as having sufficient market power to dominate a market, set prices and control the level of competition—that have as a key part of their business model gathering as much information about Internet users as possible. It is this commercial impetus that has turned the Internet upside down from what it was originally conceived of a generation ago.
Twelve of the 31 US corporations with a market value over $100 billion are Internet companies, and there are several more in the top 31 like Disney that partially qualify. I suspect the only comparison to the present digital corporate domination of the commanding heights of the economy would have been the automobile industry in its heyday with the attendant steel, glass, rubber, and oil companies.
These giant corporations—Google, Facebook, Apple, Amazon, Verizon, Comcast, Microsoft, AT&T, eBay, and so on—hardly see the government as an adversary as in liberal democratic theory. Yes, that state has potential to be a pain-in-the-ass if it actually represents the interest of the people. But that model is premised on a competitive private economy, the kind that existed many moons ago. Then there would be effective taxation, anti-monopoly provisions, privacy protection, and all sorts of other measures. But these guys effectively control the state, in the USA at least, and the government works very much to advance their interests across the world.
Recent research by leading political scientists concludes that the great mass of Americans have no influence over substantive government policies, and the poorer one is, the greater the likelihood the government will do the opposite of what you would like. It is why John Nichols and I term modern America a “Dollarocracy.”
Since the 1940s or 1950s the US government has been in permanent warfare mode. Aside from geopolitical interests, military spending had been a crucial part of the political economy, providing demand to prevent stagnation and funds for a large part of research and development. Much of the digital revolution was spawned through military (and other government) funding.
At any rate the military is such a profound institutional presence in the United States—it is unchallengeable by either political party—and so closely linked to the really existing economy, that one could argue that its fate is joined at the hip to the fate of corporate capitalism.
Militarism is anathema to democracy, a point well understood by the nation’s framers. Madison was apoplectic about the need to limit the warmaking ability of the government. Militarism, he argued, led to corruption, secrecy, propaganda. He hit the nail on the head.
That is the context for the NSA scandal. The security agencies are unaccountable to Congress or the people and have every incentive to collect as much information as possible. There is no penalty for getting too much, and careers can be ended if you do not get enough. The digital corporate giants have reason to play ball because they get generously compensated, plus they have every reason to wish to remain on superb terms with the military and the state. The US government is effectively their private agency when it comes to representing their interests globally. It is like having the most powerful law firm and security force in the world on retainer.
 In another way the bank bailouts illustrated the same point - that the state and the dominant players in the private economy cooperate in a way that makes a nonsense of what you call the "official catechism" about capitalism and free markets. My sense is that most Americans don't really believe this official version now. Is that right, do you think? Is your argument finally moving into the mainstream? If so, what are the implications for politics and the media? It sometimes seems as though the politicians and opinion-formers are sailing on regardless. We know that they have excellent data ... But is the game up, finally?
U.S. politics is at a new place, both an exciting and dangerous place. The USA is a more progressive nation than it has been for a long time. If there were 70-75 percent voter turnout and parties worth voting for the nation would be an exciting cauldron of social reform. The widespread enthusiasm for the status quo is much less than it used to be. The standard bromides about free enterprise just don’t cut it with a younger population that sees no future. The idea that the USA should be fighting countless endless wars against enemies no one can even identify is wearing thin. It is a social order in decline and without much hope of a future, barring radical changes.
At the same time, the political system—including mainstream news media—is entirely in the hands of big money and resistant to change. The growing chasm between the bulk of the population and the corruption and cynicism of those atop the system is the great defining issue of our times. In one way or another it is what everyone is grappling with.
 You write in Digital Disconnect about how successful public relations efforts often pass unnoticed - we accept something as the way of the world when a huge effort has gone into making it seem so. What do you think we should look out for in the coming months and years? How are Google and the Pentagon and their many partners going to try to keep the show on the road?
Expect more of the same, and expect nothing to change except window dressing. Look at how the Snowden affair has been handled as Exhibit A. The fact that it is the Snowden affair and not the NSA Illegal Spying affair says it all.