On the Chinese variety of capitalism

Written by Alexander van Wijnen
August 9, 2021

From a Western perspective, the Chinese crackdown on tech companies is a sign of an authoritarian state imposing its will on the market economy. To a certain extent, such an assessment is correct, but it prevents us from gaining an understanding of how Chinese capitalism continues to be a successful system. In his book Capitalism, Alone the economist Branko Milanovic explains that although capitalism has emerged victorious from the post-Cold War period, it has split into two models: “liberal meritocratic capitalism” (e.g. the U.S.) and “political capitalism” (e.g. China). In political capitalism, the state is autonomous, which means the absence of the rule of law is a necessary condition for capitalism to be successful.

It follows that the interest of the state will prevail over the interest of the market. Simply put, the law may not protect private companies against the state. This does not suggest an absence of capitalism, but rather a different ‘variety’ of capitalism. It is likely that the current crackdown will intensify before it abates, but beyond that, it is important to see that China has a different model for successful capitalism: the state will redirect the private sector to produce innovation that is more relevant to the good life, create sustainable growth and foster social stability.

Burning questions:

  • To what extent will Chinese companies align with the state?
  • How will the Chinese state’s policies and regulations affect the global perception of China’s financial markets?
  • Will non-Chinese societies be inspired by the way in which China regulates its tech companies and forces them to build a better life?

On realizing we are not alone

Written by Sjoerd Bakker
July 23, 2021

The recent Pentagon report on Unidentified Aerial Phenomena did not draw any clear conclusions regarding the presence of extraterrestrial objects on earth. It nevertheless opened (some of) our minds to the very idea that alien life forms may already be here. So far, such ideas have been confined to the realm of sci-fi and a small group of believers, but now the stigma may be lifted. What would it mean for humankind were we to realize that we are no longer “alone”? Above all, it would be another and possibly the final blow to our anthropocentric view. We have already come to accept that planet Earth is not the center of the universe, man is only an animal and our minds are far from rational. The next step would be to acknowledge that are there are other species like us, who, first and foremost, are far superior to us. While this would be a sobering realization and one that strikes fear into most of us, it could also offer hope. It would imply that civilizations actually have the potential to develop well beyond our current state, without destroying themselves or the planet they live on.

Burning questions:

  • The report has not immediately stirred debate on extraterrestrials, but could it indeed have a profound effect on our thinking in the long term?
  • Will there be major scientific efforts to study past observations and look out for new phenomena?
  • As we get closer to our first encounter with extraterrestrial intelligence, the question of communication becomes more prominent; what kind of language would we need?

India’s rise as a digital superpower

Written by Pim Korsten
July 23, 2021

New data shows that Indian start-ups raised a record amount of $7.2 billion in the first half of 2021 and the country is closing the gap with China in terms of creating new unicorns. Significantly, Chinese investors have been cut out of the Indian tech market due to regulation that was drafted after rising India-China tensions last year. As such, most foreign capital now comes from European and American investors, from countries that see India as a geopolitical partner in the bid to contain China. Furthermore, an “Indian Stack” is taking shape, driven by large public investments in India’s digital infrastructure, based on its already strong position in the IT sector, and rapid adoption of digital tools by younger generations. Add to this its strong socio-demographics (e.g. soon to be the world’s largest population that is still growing and young) and cultural fundamentals (e.g. its culture and companies having a high willingness to adopt digital tools) and India has all the ingredients to become a digital superpower. As such, the next wave of digital innovation, companies and consumer practices could come from India.

Burning questions:

  • Could the geopolitical fundamentals of India’s digital power imply that it will further the splintering of the Internet, as interoperability with – at least – Chinese applications and ecosystems could be in jeopardy?
  • Does India have a cosmology that fits the demands and technics of digital technology, a digital “cosmotechnics”? (We believe it does.)
  • What could be the organizing and governance principles of the Indian Stack? And how would this relate to other Stacks, such as the American, Chinese or European Stack?

Winter is ending

Written by Alexander van Wijnen
July 9, 2021

During the last decade, fantasy fans were served promptly by the major studios. However, in 2019, Avengers Endgame wrapped up the third phase of the Marvel Universe, Star Wars IX: The Rise of Skywalker marked the end of the last trilogy, and season 8 of Game of Thrones meant the (preliminary) end of Westeros. Then it became quiet, “winter came”. A year later, COVID caused cinemas to close and productions to be postponed, complicating things even further. Although lockdowns spurred streaming media consumption, fantasy fans weren’t exactly spoiled. Consequently, since last year, most customer attention has turned to gaming, which has shown remarkable growth figures and is the preferred medium for younger generations. And with lockdowns ending, some media firms even fear an “attention recession”.

Yet, this might be a bit exaggerated. Behind the screens, the major studios are preparing a new cycle of high-budget fantasy adaptations, which will strongly influence the outcome of the streaming wars in the next decade, determine box offices, and could forever change theatrical window strategies (to only name a few: Lord of the Rings (2022) on Prime, Foundation (2021) on Apple TV+, and House of the Dragon (2022) on HBO max. These modern fantasy worlds are built around epic stories, comics and nostalgia that will remain attractive to aging generations. And while we are accustomed to radically prefer the art of moviemaking to that of gaming, Hollywood seems to have begun embracing gaming IP. In the next fantasy cycle, gaming IP might even become one of the most important sources of fantasy adaptations (e.g., Halo (2022) and The Last of Us (2022)).

Burning questions:

  • According to some, the time is ripe for video gaming adaptations, but which screen and format are best suitable for video gaming intellectual property?
  • How will streaming platforms change theatrical windowing?
  • To what extent will the post-COVID period see consumers return to the cinema?
  • Who will be the winners and losers in the “attention recession”?

Judges break the unwritten rule of environmental agreements

Written by Sjoerd Bakker
July 9, 2021

Even though it concerns the first-ever climate case against a company, the court ruling against Royal Dutch Shell is part of a wider trend of a demand for more action against climate change. Yet, while the intentions behind them are clear, these rulings may actually be counterproductive. They break the unwritten rule that international agreements on climate action are taken with a grain of salt. Such agreements tend to be either abstract or focused on the long term and leave a lot of room for interpretation with respect to short-term action.

The resulting wiggle room allows politicians to sign these agreements and adopt a wait-and-see strategy afterwards. By now it is clear that the courts will no longer accept this and intend to force governments to take action today in order to meet the long-term goals they agreed upon. Looking ahead, the question is whether these rulings will indeed lead to much-needed action, or rather prevent politicians from signing any new agreements that could lead to similar court cases in the future.

Burning questions:

  • Will companies anticipate future court rulings and speed up their own plans of action?
  • Will companies flee to countries where judges are less likely to make similar rulings?

We need more downward mobility

Written by Sebastiaan Crul
June 16, 2021

We often gauge inequality by looking at income distributions and complain about the lack of equal opportunity in society. To fight inequality, governments are in search of social measures to ease the path upwards and close the income gap. For example, better education is widely held to be the great equalizer and the best way to move up on the social ladder. Although this is presumably true, it is only half the story. Income distributions only offer a static snapshot of equality.

To fully comprehend inequality, one should also look at the dynamics of the population. Equally important is the capacity of the population to constantly change positions, keep moving from time to time, including the rich and arrived (i.e. downward mobility). Mathematically, this is called the ergodicity of the system and, more intuitively, this tells us whether the rich stay rich and lock in their privileges and wealth or if one has a good chance to become rich(er), but still end up poor(er). From this point of view, Europe may be more unequal than the U.S., because, according to Nassim Taleb, Europe excels in non-ergodic systems. So, often neglected, the path to equal societies is not only to empower the lower classes, but just as much to add some skin in the game for the richest decile of the income distribution, to increase the chances some of them actually slide down the social ladder.

Burning questions:

  • Is the current surge in “public executions” based on someone’s private behavior a symptom of our non-ergodic system and lack of downward mobility by other means?
  • How do we make our central and bureaucratic organizations, companies and governments have more skin in the game?
  • Can the decentralized architecture of Web3 increase the ergodicity of the system in the future, or will it establish new, unforeseen mechanisms and patterns of absorbing wealth and sticky wealth in a decentralized economy?

The G7 tax deal is all about American geo-economics

Written by Alexander van Wijnen
June 16, 2021

The G7 reached a historic agreement for a global corporate tax rate of a minimum of 15% in which corporations must also pay taxes in nations where they sell (and not just where they’re headquartered). If we take the deal at face value, it seems that power is shifting from corporations to states. After all, since the 1980s, the global corporate tax rate had been dropping from 50% to 24%, as developing countries built growth models by attracting foreign investors with lower taxes and some developed countries also took part in the ‘race to the bottom’ (e.g. Ireland, the Netherlands, Singapore).

However, behind the deal of the G7, more forces are at play. Although it is a multilateral deal, hailed by many as the return of responsible U.S. leadership, it is primarily the U.S. that will benefit. First, it is expected that the biggest share of taxes will be paid by U.S. big tech companies to the U.S. itself. Second, in exchange for its concessions in the deal, the U.S. has demanded the removal of the Digital Services Taxes of European countries. It shows that American multilateralism is still a ‘geo-economic’ instrument to wield power across the globe.

Burning questions:

  • How will the EU adjust to U.S. demands to drop digital services taxes?
  • Will there be a G20 tax deal in July?

Lifestyle politics in the planetary age

Written by Sebastiaan Crul
June 3, 2021

Lifestyle politics refers to the politicization of everyday life choices and is closely tied to our self-actualization in late modernity. This form of political participation has become a strong political weapon in these times of complexity, uncertainty and pressing global issues. In late modernity, various new forms of extra-parliamentary politics are arising to mitigate the (perceived) weakening of state-oriented politics.

On the one hand, lifestyle politics fit the ideal of subsidiarity in our planetary age. To battle planetary challenges such as rising sea levels and pandemics effectively, we have to delegate governance to the lowest level possible. The individual becomes the first “governing institution” of the globalized world. At the same time, if everyday life choices become so central to politics, this dependence on lifestyle could further alleviate the polarization and fragmentation of societies within nation-states. Furthermore, contrary to the expectations of some advocates of lifestyle politics, the pandemic has made us realize that state-oriented politics is anything but obsolete. The inward orientation of lifestyle politics combined with strong nation-states might lead to what the philosopher Tocqueville calls “soft despotism”, meaning that the will and freedom of man are “not shattered but softened, bent and guided”. Individuals are not oppressed, but are subject to the tutelary power of expanding national bureaucratic states and institutions.

Burning questions:

  • How do we align global lifestyle politics with the representative institutions of the political systems of nation-states?
  • Is the tutelary power of the bureaucratic welfare state a serious threat to our post-coronavirus world?
  • How do we prevent lifestyle politics from degenerating into trivial forms of lifestyle consumerism?

The emergence of big tech mesh networks

Written by Arief Huhn
June 3, 2021

On June 8th Amazon will launch Amazon Sidewalk, a new wireless Mesh network which is created by connecting users’ Amazon internet-connected devices to each other. With Sidewalk, Amazon aims to create emergent infrastructure to strengthen connectivity of their consumer hardware and offer new services such as finding lost items. Similarly, Apple launched Airtags in which it uses all their users’ Apple iPhones as an emergent network to spot lost items attached to an Airtag.

As device density and bandwidth of wireless technology increases, mesh networks will become more functional and reliable and thereby more common. These more emergent ad hoc forms of infrastructure show that selling consumer hardware is not only a product play, but also a latent infrastructure play, in which the former can even be seen as a Trojan Horse for the latter. At the same this raises questions around privacy, digital sovereignty and shared value in which the consumer’s hardware and part of the consumer’s bandwidth can suddenly be used to perform valuable functions at an aggregate level.

Burning questions:

  • Which other companies could deploy similar mesh networks?
  • What other services can we expect using these types of infrastructure?
  • Can we expect open decentralized mesh networks based on open standards?

Elon Musk – What does his popularity tell us about 21st century leadership?

Written by Pim Korsten
May 12, 2021

In his opening monologue on Saturday Night Live, Elon Musk revealed he has Asperger’s syndrome. Most likely, this revelation will be used to explain his provocative appearances, mysterious tweets and memestocks and possibly even his crypto allegiances or idiosyncratic products. Yet, instead of framing him as an anomaly, we may also consider Musk a model of typical 21st century leadership.

It could be argued that our metamodern age and the complex, wicked problems of the 21st century demand new types of leadership. Also, 21st century leaders are expected to use the tools offered by the information age. They can use these (e.g. memes) to inspire and unite people in the pursuit of a utopian vision or idea to make and build a better future, to grasp the attention of large but heterogeneous groups of listeners and users in a captivating way. Leaders of countries, organizations, and communities that embody (some of) these qualities could likely become the new “metamodern heroes” of our time. In this spirit, we have already identified Trumpism as a political force that is therefore here to stay, as Trump and his paradigm hold many of these qualities. Musk could be another example, with more to come.

Burning questions:

  • Does leadership actually make a meaningful impact in, for example, business, politics and sport clubs, or are change and success largely determined by systemic, anonymous structures?
  • What are the metamodern leadership qualities that are becoming important in our time?
  • What is the relationship between technology and leadership?