Here is one of the great paradoxes of our time. The world is dominated by a few corporations that are among the most profitable companies in the history of capitalism. In the US (the home of these giants) and in the UK (an enthusiastic vassal state), parts of the economy are booming and employment is at record levels. And yet, in the middle of this astonishing prosperity, inequality is at levels not seen since the period before the first world war. In the US, the share of total income going to the top 1% of the population is now back to the level it was in the 1920s. And in the UK, more than 4 million people are trapped in deep poverty.

Since this catastrophic rise in inequality seems to be correlated with the rise of the tech industry, it’s tempting to see a causal link between the two. Tempting, but too simplistic. For while digital technology has been a central factor in what’s happened, it’s only a part of the story. More often, it’s been an enabler of other forces rather than a prime mover.

The biggest force reshaping our world has been globalisation. “A really good substitute for a manual labourer in the US is a manual labourer in China or Costa Rica,” says the Stanford economist Paul Oyer. But you can’t outsource complex production lines without high-bandwidth connections between the west and those distant factories. Oyer cites Apple as a canonical example of how to do it well. “The company is designing their products here, so the people who work in engineering are more and more valuable, and making more and more money, but the people who, in the old days, might have made computers here – that’s now done in China.”

Globalisation exported jobs from western economies and gave them to workers in poorer countries, which is why, globally, inequality has reduced even as it increased in the west. But in our suddenly deindustrialised regions, neoliberal governments did little to help workers and communities that had been left behind. It’s been the same story with job-destroying automation. “We always forget,” says Oyer, “to go back and take care of the people who lose their jobs.” Since the companies that deploy the machines were driven by the overriding imperative to maximise shareholder value, they felt no responsibility for the collateral damage they had wreaked on communities and lives. And, once again, governments failed to pick up the pieces.

People wind up working for an algorithm rather than a human being

One of the reasons employment has remained surprisingly buoyant in highly unequal societies is because the concept of work is being transformed. People without education or training find themselves eligible only for poorly paid, insecure and exploitative employment.

Or they participate in what has become known as the gig economy, defined as a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs. Think Uber, Lyft, Deliveroo, DoorDash, outfits that created tech platforms that put service workers in touch with clients, while taking a cut and pretending that the freelancers are independent contractors rather than employees who would be entitled to paid leave, holidays and other rights that workers used to expect. So people wind up working for an algorithm rather than a human being.

This entire new economy would have been impossible without ubiquitous internet connections, smartphones, apps and GPS, in other words, without digital technology. And in the process, it is transforming what Marx called the proletariat into what we now know as a “precariat”.

And then there are the tech giants themselves, huge corporations that directly employ very few people in comparison to their revenues. As of December 2018, for example, Facebook employed only 35,587 people. Volkswagen, in contrast, employs nearly 656,000 people worldwide. Tech companies’ direct employees are drawn from a very skewed demographic – heavily male, overwhelmingly white or Asian, highly educated, lavishly remunerated and based in a smallish number of technology centres.

Those are the people who do the interesting work in the industry. But Google and Facebook in particular have large numbers of “indirect” employees, those who work for contractors, often, but not always, in poor countries, who do the “moderation” of online content needed to keep our social media feeds clear of the horrific stuff that is continually uploaded by trolls, fanatics and sadists. This is poorly paid, traumatic, soul-destroying and psychologically damaging work and it’s a necessary corollary of the success of these tech platforms.

The point of all this is not that digital technology has created the unacceptable levels of inequality that disfigures many liberal democracies, but that it plays a central role in enabling the forces – globalisation, neoliberal economics, sociopathic corporations, global tax-avoidance, automation, political disruption, platform power – that have shaped the world we now inhabit. It’s been an enabler, not a prime mover. And, in the broad sweep of history, it’s only just getting started.

What I’m reading

Who’s watching you?

There’s a sobering piece by Siena Anstis, Ronald J Deibert and John Scott-Railton on the Lawfare blog about what the Jamal Khashoggi murder tells us of the civilian market in spyware .

Back to basics

John Lanchester has a brilliant, illuminating essay in the London Review of Books on the idea of universal basic income.

No laughing matter

Computers can’t tell if you’re really happy when you smile. There’s a nice reminder in MIT’s Technology Review of the sociopathy of machines.