Perhaps one of the most poignant features of capitalism is its unparalleled capacity to transform almost anything into a commodity. Indeed, everything is for sale, and a price can be tagged on. Included here are tangibles and intangibles. Simplifying, it can be argued that historically, such transformation started with tangible goods in agriculture and manufacturing propelled by the First Industrial Revolution. By the end of the 19th century, once the financial sector was subsumed by industrial capital, intangibles joined the lively party. They were awarded prices through stock and commodity markets, which essentially intended to balance investor risk and uncertainty. A century later, securities—defined as tradable financial assets—led the financial sector, eventually driving the proliferation of intangibles and the 2008 Global Financial Crisis.
Shifts in the global capitalist economy in the 1960s triggered the emergence of the service sector, or service economy, which has since grown by leaps and bounds. In this light, financial and non-financial intangibles seem to dwarf the tangible economy. Not that the latter is losing steam. But it is undoubtedly growing more slowly in most regions of the world. Such a trend is compounded by the fact that the borderline between goods and services has been erased in some sectors. That is especially true in the digital realm, where businesses offer services that include goods (computers, networking, storage, connectivity, etc.) as part of their overall business services. Buying such goods directly is usually not possible for consumers. Contracts, subscriptions, or usage fees are the only options available. Tangibles’ consumption is tied to an intangible service.
In any event, capitalism can also use its transformational wand to encompass both tangible and intangible goods that it does not directly produce or cannot reproduce. The best example of the latter is nature and its components, including water, climate and weather, the atmosphere, plants and life, and natural ecosystems, among others. Carbon pricing and water privatization are typical ways that can occur. We also hear words like ‘natural capital‘ used quite often. In addition, social services such as health, education, and justice, enshrined in the UN Declaration of Human Rights, can also be privatized and sold for a profit. Even human organs are now commodities, fetching hefty prices in most cases. And so on and so forth.
The emergence of the Internet and the development and consolidation of the so-called digital economy added plenty of ammunition to capital’s transformational arsenal. That can now occur in at least three distinct ways. First, digital technologies can replicate goods that previously had a lonely analog life. E-books on the consumer side are a great example. Second, they can enhance such goods by adding features or integrating them into wider networks. One can indeed easily find any text in an e-book or add personal notes and comments. The e-book can be placed in a folder with others and compared with other e-books addressing similar subjects using GenAI. Third, it can create new offerings, such as search or social media, for example, that can then be used as platforms to foster the previous two transformational layers. Such a dynamic creates an almost endless virtuous (or vicious for some) cycle.
But there is more. Digital technologies also enable the capture of end users’ preferences, habits, choices, locations, and much more. That takes the shape of digital data and led to the emergence of big data. Such data can then be sold to third parties for advertising and other profitable activities. Big Tech firms such as Google and Meta make billions of dollars doing so. Such a transformation has given rise to the concept of intellectual monopoly capitalism, in which intangibles are allegedly critical.
One common trait of the digital capital transformation is that many of its offerings are indeed intangible assets. When we purchase an e-book, we are actually paying for a license that allows us to use the book under specific conditions and limitations. We cannot sell the book as used, nor can we make copies and send them to a few good old friends. Many e-books are actually protected via DRM technologies, a new product of the digital world. Furthermore, the digital owner has the power to revoke the license if we do not comply with the rules. So we really end up with a book-as-a-service deal that links a tangible good to an intangible asset.
In principle, the digital realm expedites the development of intangible assets. However, let us not forget that the digital world also demands the creation of plenty of tangible goods to sustain itself. Internet imaginaries emphasize the “virtual” nature of the digital realm, which has been significantly oversold. After all, such a realm could not exist without having an unbreakable anchor in the tedious analog world. While digital triggers both tangibles and intangibles, the latter are growing faster than the former. Big Tech financial reports are a good source to corroborate such a claim.
The latest incarnation of capital transformational capacity, now centuries old, is digital sovereignty. Given all of the above, that should not come as a surprise. I was certainly not surprised when I started hearing and reading about it over six months ago. The first question that demands an answer here is: why is this happening now? As I have previously argued, sovereignty issues in the digital world surfaced after the Snowden revelations. The European Union, in particular, began taking steps to assert its digital sovereignty by approving the GDPR early and launching projects like Gaia-X. EU policies such as the DMA, the DSA, and the AI Act also set restrictions and regulations on digital companies operating in the Union.
As one of the largest digital markets in the world, such steps could indeed have a significant impact on the bottom line of big tech companies. The answer to prevent that from happening consisted of taking a page from good old capitalism and offering digital sovereignty as a commodity—or sovereignty-as-a-service (SyaaS. That surely entailed the development of new technologies that could guarantee the separation between hosting infrastructure and supreme authority over the valuable digital resources running on foreign platforms. Nevertheless, it takes two to tango. Any SyaaS proposal has to be endorsed by the sovereigns deperately seeking digital sovereignty.
I will look into that in the next post.
Raul
