What Spizz wants
Capital looks for a new frontier.
I don’t envy economists. They spent years learning a fake bourgeois science only to have the ground shift beneath them. They’d done a good job making just-so justifications for capital accumulation —couching class conflict in terms of an expanding or shrinking “middle class”— but post-pandemic realities don’t seem to be playing along. Interest rates set by the American Federal Reserve do not seem to have the effective impact on unemployment like they used to (see the innumerable business press headlines about “stubbornly high employment rates” The Horror!) and the global order they export through the petrodollar and State Department sanctions list doesn’t seem to have the oomph it used to. This seems to be paired with frustration on the part of American capital to find a new thing to spend a bunch of money on. Here’s what I mean:
Geopolitical shifts
Do we live in a multipolar world now? Nobody knows. But here are a few very observable changes:
The sanction-petrodollar system is falling apart. Ben Aris in an interview with Radio War Nerd painted a stark picture which I’ll paraphrase here. Germany and the UK are in recession while France burns over Macron’s imposed austerity measures. Without cheap Russian fossil fuels, Germany’s manufacturing and petrochemical agribusiness concerns make no economic sense. The liquified natural gas they’ve been coerced into buying from the United States is only getting more expensive.
The Central Bank of Russia, meanwhile, posted a much-better-than-expected report with inflation and unemployment lower and real wages and GDP higher than expected. Their economy has grown, not shrunk, since the invasion. They’ve accomplished this by almost entirely avoiding western sanctions by growing their oil tanker fleet (to replace pipelines), insuring them without the help of Lloyd’s of London, and redirecting all of it away from Europe and towards China and India. The crude sent to these two countries, once refined and turned into other products, is then free to go anywhere in the world sanction-free.
What’s replacing it is a cadre (a Vanguard?) of private equity companies that can act much more, well, privately and quickly. We can see this working in Ukraine as it invites BlackRock to manage its reconstruction fund and considers a bill to require “civil service employees, tax and customs authorities, police officers, high-ranking officials in law enforcement agencies, civil protection services, prosecutors, heads of public sector business entities, and military officers” speak English. Replacing the stick with a poison carrot means the dangers are harder to see and work over a longer time horizon. The market discipline will also likely feel as though it is coming from the inside, as home-grown private equity goons sell their nations’ infrastructure, labor, and resources to yankee bankers. It doesn’t seem likely that American private equity will extend better terms than their Chinese state counterparts.
(Speaking of which— the WSJ recently reported that the Xi administration recognizes this shift and has started hitting “Western management consultants, auditors and other firms with a wave of raids, investigations and detentions.” Good for them.)
The upshot of all this (and there’s a lot more I haven’t touched on that works in this same direction) is that our sanctions can decimate smaller countries like Venezuela, North Korea, or even Iran but they can’t contain something the size of Russia, let alone China or India. What they actually do is make it very expensive to be an American ally. Seems like this will bite us in the ass soon!
Spatial Fix Problems
I don’t know if you’ve noticed but there are a lot of new options for shouting into the void inside your phone. As the Twitter fail whale (real heads will remember) descends to the bottom there is no shortage of apps to nibble at the corpse. A list of them isn’t as important as why so many companies are rushing to replace it— they desperately need revenue.
The end of the era of free money means the venture capital overlords want to get repaid faster and are far more reticent to loan out more. Moreover, new venture capital deals plateaued before going down this past quarter. Now that Silicon Valley firms are forced to act like real companies with black bottom lines they are desperate for a new crop of eyeballs to farm. Making a Twitter clone seems just as good of an idea as any.
But figuring out how to juice revenue is a short, maybe medium-term goal. The real issue here is not how to bring in cash but how to spend it in a way that will guarantee long-term returns, ensure capital flows, and buoy the rate of profit. For centuries, the way firms have increased the rate of profit is to expand into new markets, with the most mature firms becoming international conglomerates. They not only export their goods and services to other nations but they change those nations through war, advertising, economic maneuvers, and diplomatic pressures in ways that build necessary markets.1 The opening up of Japan by American Commodore Matthew Perry in 1853, the Marshall Plan for Europe, or Nixon going to China are all examples of this. Note these are governments doing the history-making but in each case it is on behalf of private business concerns.
Geographer David Harvey calls this the search for a “spatial fix” — finding new places to invest surplus value (i.e. profit) so as to increase the rate of future profits through expanding markets. Consider the smartphone market: since 2016 the value of the global market has increased about 2% a year and is forecast to keep doing that for another three years. But that growth is highly uneven with the Americas increasing less than half a percentage point but India and the continent of Africa growing by 6.9% and 6% respectively. China is, of course, the biggest market but it’s showing signs of maturity and may actually contract by a bit in the next few years.2 The takeaway here is that as Chinese and American companies saturate their domestic markets with smartphones they seek to maintain steady growth in emerging markets abroad.
But it isn’t just where phones are bought and used, the spatial fix is also about where they’re made, how they’re advertised, and how the rest of the economy becomes compatible with smartphones. After all, if there’s no reliable cell service, no one takes mobile payments, or if domestic companies are reticent to advertise online then a smartphone doesn’t make much sense to own or sell. So we see governments moving more of their people in cash, and then digital economies. They create incentives to bolster everything from industrial production to native advertising.
Apple, Samsung, Huawei and other handset manufacturers know that once they fill up these emerging markets with phones that 2% growth will falter, and so there’s already this push for the Next Big Thing. That’s why you see Apple coming out with a $3500 headset and Meta listlessly jumping onto whatever bandwagon seems profitable: from Threads to its Oculus headsets. Augmented Reality headsets are good business not because anyone has a real need for these things, but because they give companies a predictable new market to grow and fill. Not just for the hardware but all the software, accessories, games, and advertising platforms. They want to recreate the salad days of 2009-2014 where they could rebuild consumer habits post-Recession around their own products and services. At that point U.S. smartphone sales had enormous year-over-year growth, to say nothing of the new app stores, Uber-for-X unicorns, and everything else. Seriously look at this:
A new axis for fixing the spizz
Spizz is a great, almost onomatopoetic, word to describe all this money that has nowhere to grow. (Thanks TrueAnon for giving us a better word to describe what Marx called fictitious capital.) Ultimately I think everything from Bitcoin to the Metaverse can all be explained as searching for not only a new spatial fix but a new dimension for the fixing of capital all together. In other words, it isn’t enough to find new markets around the globe, it is becoming increasingly likely that companies can create digital markets that -while never totally isolated from geopolitics- can move and grow much more dynamically than building factories in foreign lands.
The geopolitical changes I outlined above have initiated a spate of redistribution of manufacturing and intellectual property exchange that is as contradictory as it is world-changing. For example, there are seven pipelines that can bring gas from Russia to Western Europe. Three of them were sabotaged last Fall, there’s a fourth Nordstream pipeline that has never been turned on, and a fifth pipeline runs through Poland and was turned off due to competing sanctions in both directions. That leaves two more. There’s one that goes through Turkey that is still in use. The last one transmits about 12 of the 22 billion cubic meters a year of gas that still flows from Russia to Western Europe. The owner of this pipe probably would have been denounced by NATO as a Russian collaborator if it wasn’t Ukraine itself. Yeah, Ukraine is the largest purveyor of Russian gas to Europe. That’s how weird things are.
To avoid this sort of thing it makes sense that companies would like us all to retreat into their properties— whether that’s streaming services, metaverses, what’s left of crypto exchanges, or Amazon’s seller markets. What ties these technologies together beyond their hype-cum-scam stature is that they promise to be platforms of limitless, albeit fenced-in, growth. Whole economies can be contained within their platforms and they can expand faster and in a more controlled manner than the old brick-and-mortar-and-probably-some-paramilitaries-to-soften-up-the-locals system ever could.
This is a fairly wide-open trajectory still. It could prove impossible, or at least electronically improbable as energy markets become less stable. Maybe the nationalistic fervor that’s building will put harder limits on the expansion I’m describing here. But that definitely appears to be what everyone with money is pushing toward. Will it work? Spizz knows.
What I’m listening to right now:
If you want the theory here you go: Hegel wrote, “The inner dialectic of civil society thus drives it … to push beyond its own limits and seek markets, and so its necessary means of subsistence, in other lands which are either deficient in the goods it has overproduced, or else generally backwards in industry.” David Harvey, in his The Limits to Capital, reproduces this quote and notes that, “Hegel leaves open the exact relation between the process of inner and outer [his emphasis] transformation and fails to indicate whether or not civil society can permanently resolve its internal problems through spatial expansion.” Then later Harvey asks, “A comprehensive and irrefutable answer to the problem of Hegel so neatly posed so many years ago has yet to be constructed. Is there, then, a ‘spatial fix’ to capital’s problems?”
This data comes from Statista Market Insights Report, 2023