Does any­one real­ly have a monop­oly on wisdom?

In his new book, Hans Jür­gen Jakobs describes the monop­o­lies of our cen­tu­ry in some depth. He exam­ines issues, such as whether monop­o­lies engen­der depen­den­cies, for­feit diver­si­ty, erode healthy com­pe­ti­tion, and lead to anar­chy. Are our con­tem­po­rary monop­o­lists clever enough to deprive states­men of their pow­er? Or has human cre­ativ­i­ty always brought down monop­o­lies in the end?

In the lat­est of her Duet inter­views, Dr Cal­daro­la, author of Big Data and Law, and Hans-Jür­gen Jakobs dis­cuss the con­cept of monop­o­lies and their effects on today’s life.

In your new book “Monop­o­lies in the 21^st Cen­tu­ry” you write that the new “ism” is no longer social­ism or cap­i­tal­ism, but monop­o­lism. Which monop­o­lies do you mean and in which coun­tries are they espe­cial­ly prevalent?

In my opin­ion, there has been a sus­tained, almost fright­en­ing trend towards con­cen­tra­tion in the econ­o­my for years. This trend is tak­ing place across the bor­ders of the var­i­ous eco­nom­ic blocs. Monop­o­lies have even become part of a new sys­tems com­pe­ti­tion between cap­i­tal­ism, finance cap­i­tal­ism and state cap­i­tal­ism, between democ­ra­cy and autoc­ra­cy and between the USA in the West and the Peo­ple’s Repub­lic of Chi­na in the East. The monop­o­lies that we encounter are either par­i­ty-type or pri­vate­ly owned and close­ly coor­di­nat­ed with gov­ern­ments. The eco­nom­ic monop­o­lies have become deci­sive instru­ments or even weapons in geopo­lit­i­cal con­flicts for a new world order. The most impor­tant monop­o­lies are those for raw mate­ri­als, cap­i­tal and data.

Com­pa­nies and states col­lect data on a large scale. What do you call this type of monop­oly? Data monop­oly? Data car­tel? Human monop­oly? Do those who con­trol these monop­o­lies have more users than tra­di­tion­al states­men have with regard to their respec­tive subjects?

The con­cen­tra­tion trend just men­tioned can be par­tic­u­lar­ly seen in data econ­o­my – per­haps the key mar­ket for the devel­op­ment and shap­ing of future mar­kets. We see how many busi­ness­es col­lect and ana­lyze more and more data and base their busi­ness process­es and devel­op­ments on them. The depen­dence on data is increasing.

In auto­crat­ic dic­ta­tor­ships, this data econ­o­my allows gov­ern­ments to use unre­strict­ed data aggre­ga­tion to achieve per­fect sur­veil­lance of the peo­ple. We see that in Chi­na. There is an app there, WeChat, which nobody in the Peo­ple’s Repub­lic can ignore. Chi­na is home to 1.4 bil­lion peo­ple and over a bil­lion use WeChat. It is the instru­ment used for han­dling almost all transactions.

In Chi­na, a con­cen­tra­tion of data is emerg­ing via WeChat. This ful­fils the dream of every monop­o­list, because in Chi­na he receives the max­i­mum amount of data via WeChat, which gives him max­i­mum trans­paren­cy con­cern­ing user behav­iour. Based on this data, Chi­na’s Social Cred­it Sys­tem was imple­ment­ed, which can reward or penalise user behav­iour with points.

This is a dan­ger­ous devel­op­ment in dic­ta­tor­ships which – as Shoshana Zuboff has impres­sive­ly shown in her book^[1] – can lead to sur­veil­lance cap­i­tal­ism. Busi­ness­es are sug­gest­ed for the sup­posed good of the users – in the case of Chi­na, the cit­i­zens – so that the user is gen­tly guid­ed to the respec­tive busi­ness and con­se­quent­ly the gov­ern­ment gains more trans­paren­cy about the respec­tive user and his work.

To what extent this is com­pat­i­ble with the self-deter­mi­na­tion of users and con­sumers, which is an impor­tant val­ue in west­ern coun­tries, is anoth­er ques­tion. Here in Europe, dig­i­tal busi­ness is less con­cen­trat­ed but rather dis­trib­uted across var­i­ous providers, plat­forms and device man­u­fac­tur­ers. In democ­ra­cies, it is more dif­fi­cult for the state, as well as for the monop­o­lists, to obtain sole and com­pre­hen­sive insight into user behav­iour. Data pro­tec­tion reg­u­la­tions in West­ern coun­tries are still patchy, mean­ing not yet ful­ly devel­oped and not yet har­monised. There is more har­mon­i­sa­tion with­in the EU than there is in oth­er West­ern demo­c­ra­t­ic coun­tries, with the EU being well on the way to secur­ing infor­ma­tion­al self-determination.

You also write that monop­o­lies mean con­cen­tra­tion, effec­tive­ness, effi­cien­cy, pow­er and size, but at the same time they deprive peo­ple of diver­si­ty and com­pe­ti­tion and thus cre­ate depen­den­cy. Aren’t the monop­o­lies you men­tion rivals? What can a monop­o­list get out of raw mate­ri­als with­out ideas and mon­ey? What does a mon­ey monop­oly want and what can it do with­out raw mate­ri­als and ideas? It reminds me of the famous “desert game”, where the quin­tes­sence is that peo­ple, coun­tries, rulers, monop­o­lists achieve more togeth­er than alone. The “desert game”, in which a plane crash­es in the desert, deals with items such as a flash­light with bat­ter­ies, a pock­et knife with a spring blade, a mag­net­ic com­pass, a bot­tle with 1000 salt tablets, 1 litre of water per per­son, and a pis­tol, cal­i­bre 7.65mm, which the sur­vivors are sup­posed to rank accord­ing to their impor­tance for sur­vival. How do you see the rank­ing of the exist­ing monop­o­lies? Who is best equipped to rule the world or win the pow­er struggle?

In the best of all worlds, the prin­ci­ple of fair coop­er­a­tion with every­one applies. All cit­i­zens of this world would achieve the most prof­it and pros­per­i­ty with this prin­ci­ple if they could trade with each oth­er under fair con­di­tions and in open mar­kets and there could be an opti­mal bal­ance. This is the eco­nom­ic the­o­ry of the great fathers Marx and Engels.

What may be true in the­o­ry is usu­al­ly dif­fer­ent or even wrong in real­i­ty. We have recent­ly observed that oth­er polit­i­cal pow­er motives have been cru­cial. The prin­ci­ple of the fair opti­mum is fad­ing into the back­ground and is even being instru­men­talised for the goals of the respec­tive gov­ern­ments. We cur­rent­ly see this in Chi­na’s claim to become the first world pow­er replac­ing the US as a world pow­er, which Chi­na per­ceives as unfair. Monop­o­lies are being used in this strug­gle for first place. This changes the pow­er game enormously.

We were naïve and believed in the idea of ​​glob­al­i­sa­tion – mean­ing that goods can be obtained from any­where at any price. This has now changed. The raw mate­r­i­al monop­o­lies (e.g., cobalt, rare earths, etc.), which are extreme­ly impor­tant for the glob­al econ­o­my, are con­cen­trat­ed in Chi­na. As these raw mate­r­i­al monop­o­lies are state-run in Chi­na, the mon­ey need­ed for this endeav­our is avail­able. With these monop­o­lies, prices can be influ­enced at will. With a cre­at­ed scarci­ty in the mar­ket, the price ris­es while it goes down with an arti­fi­cial surplus.

Monop­o­lies cre­ate depen­den­cies. Because of the monop­oly, cus­tomers are unable to take advan­tage of oth­er offers from oth­er providers and to effec­tive­ly enforce eco­nom­ic pol­i­cy sanc­tions against the monop­oly – includ­ing against the state – espe­cial­ly if they can­not agree to the poli­cies of the coun­try in which the respec­tive monop­oly is based (e.g., the Tai­wan con­flict). Then, they kill them­selves. That is why monop­o­lies are not depen­dent on each oth­er. Instead, in the above-men­tioned con­stel­la­tions, they are an absolute pow­er being used in a tar­get­ed man­ner in geopo­lit­i­cal disputes

In the West, many are hap­py when GAFAM (data monop­o­lists) become com­peti­tors in adja­cent mar­kets. This cements the dom­i­nance of five big cor­po­ra­tions and demon­strates that no new com­peti­tors are enter­ing the mar­ket. The five major cor­po­ra­tions seem to have a ter­ri­to­r­i­al as well as a fac­tu­al divi­sion. Should a new tech­nol­o­gy devel­op – such as AI or Chat­G­PT – then some will rejoice at the pos­si­bil­i­ty of a pow­er shift – even though we don’t know how a new tech­nol­o­gy will trans­form the mar­ket. I think there are three key fac­tors: raw mate­ri­als, data and cap­i­tal. Regard­ing cap­i­tal, we have to remem­ber that we have an incred­i­ble con­cen­tra­tion of finan­cial and invest­ment resources. Here we have asset man­age­ment com­pa­nies or asset man­agers who own shares in all list­ed com­pa­nies. There are often 2 – 3 invest­ment groups from the USA that have at least the block­ing minor­i­ty in the respec­tive list­ed com­pa­ny – if not the major­i­ty of votes. And that, too is a con­cen­tra­tion of cap­i­tal and there­fore pow­er – and that, too, can be a deci­sive instru­ment of pow­er in crises.

Who is behind the monop­o­lies? Many of these peo­ple are unknown because their assets, their goods… mask the real own­ers through straw men, lob­by­ists, anony­mous let­ter­box com­pa­nies or also due to the lack of pub­licly acces­si­ble reg­is­ters. This makes it very dif­fi­cult to clar­i­fy and iden­ti­fy the true own­ers / monop­o­lists – the Rus­sia-Ukraine war has made this very clear. Is this an aspect of the new monop­oly? How can it be dealt with?

Not every­thing is unknown. A monop­oly is rel­a­tive­ly open. The Chi­nese raw mate­r­i­al monop­o­lies men­tioned are under state super­vi­sion. The four largest banks in Chi­na are also state-owned and are also the world’s largest banks.

In the West, GAFAM’s data monop­o­lies are only mod­er­ate­ly masked. It is known that the founders of Google and Face­book still have the major­i­ty of votes and deter­mine the gen­er­al meet­ings via shares.

The fidu­cia­ry rela­tion­ships you men­tioned take place par­tic­u­lar­ly with regard to tax havens. In addi­tion to tax sav­ings, one goal may be to con­ceal influ­ence. But it is clear who is behind the data, cap­i­tal and com­mod­i­ty monopolies.

There are also large con­cen­tra­tions of pow­er on the goods’ mar­kets due to the pres­ence of only a few sup­pli­ers. Let’s con­sid­er the ven­dors in the gro­cery stores. In Ger­many, 75 – 80% of food is owned by four cor­po­rate chains. When it comes to food sup­pli­ers, we have around 10 inter­na­tion­al mul­ti-nation­als that stock 60% of what is offered in the super­mar­ket. They are in a price war and are very suc­cess­ful­ly pass­ing on the costs of the Ukraine war, the ris­ing ener­gy costs and the addi­tion­al costs caused by the pan­dem­ic to the con­sumers, due to their posi­tion of pow­er. With trad­ing com­pa­nies, one must not for­get that six com­pa­nies have their own pri­vate labels, which have goods man­u­fac­tured for them under their pri­vate label, sell them on their own shelves, set prices and are cur­rent­ly increas­ing them sig­nif­i­cant­ly. We are there­fore cur­rent­ly expe­ri­enc­ing high infla­tion in the food mar­ket, because monop­oly struc­tures result in infla­tion because high­er prices are enforced and because the con­sumers have no alter­na­tives. The entre­pre­neurs of the monop­o­lies are well known. Only the flim­sy “excus­es” and the rea­sons for their behav­iour differ.

Are we wit­ness­ing a change of pow­er from the clas­sic dis­trict pres­i­dents to the monop­o­lists – be they pri­vate or state monop­o­lies? If so, will it stop at the ter­ri­to­r­i­al bor­ders or will the new ter­ri­to­ries be defined more as a dig­i­tal ecosys­tem and its metaverse?

Here you address the con­flict between sig­nif­i­cant eco­nom­ic and polit­i­cal pow­er. Let’s look at Chi­na, where we were able to see how suc­cess­ful Chi­nese dig­i­tal cor­po­ra­tions became rebel­lious (e.g. Aliba­ba with Jack Ma) and how the (sin­gle) par­ty act­ed very quick­ly. No com­pa­ny can eas­i­ly evade the will of the state. Jack Ma dis­ap­peared from the scene and the Chi­nese Com­mu­nist Par­ty quick­ly cleared things up.

It’s a lit­tle dif­fer­ent in the west. Our con­sti­tu­tion and our laws arise from the prin­ci­ples of democ­ra­cy, the sep­a­ra­tion of pow­ers, the rule of law… and are organ­ised by soci­etal insti­tu­tions. Pow­er is spread across many lev­els and, unlike in Chi­na, for exam­ple, is not based on the pow­er of individuals.

There is a belief in cap­i­tal­ism that com­pe­ti­tion rel­a­tivis­es the pow­er of indi­vid­u­als. With the devel­op­ing monop­o­lies, this cher­ished prin­ci­ple no longer works. In the last 30 years, there has been no effec­tive com­pe­ti­tion pol­i­cy, par­tic­u­lar­ly in the USA. The emer­gence of monop­o­lies and the fail­ure to cor­rect them with com­pe­ti­tion poli­cies have enabled today’s con­cen­tra­tion of pow­er. Europe and Ger­many were a lit­tle bet­ter in their com­pe­ti­tion pol­i­cy – even if they did­n’t make the cru­cial cor­rec­tions consistently.

If we con­sid­er progress and inno­va­tion – in par­tic­u­lar the emer­gence of a new dig­i­tal soci­ety – then the ques­tion aris­es whether this progress is still pos­si­ble with­out GAFAM. It is symp­to­matic of the cur­rent sit­u­a­tion that the EU has opened an exter­nal rep­re­sen­ta­tion in Sil­i­con Val­ley, thus recog­nis­ing the impor­tance and pow­er of Sil­i­con Val­ley today for the real­i­sa­tion and shap­ing of digi­ti­sa­tion. It is also remark­able that the for­mer Min­is­ter of Health, Jens Spahn, coop­er­at­ed with Google for his health por­tal “gesund​bund​.de” and pre­ferred to dis­play infor­ma­tion from the Min­istry of Health as the result of a Google search query. It was only lat­er that the court stopped the use of Google by the Min­istry of Health with ref­er­ence to antitrust violations.

Mar­kets are first con­sol­i­dat­ed, bequeathed or cleaned up from the point of view of the cor­po­ra­tions and reduced to a few. The state then has to sub­sidise or take over com­pa­nies (see the recent exam­ple of Uniper). Then it becomes eas­i­er for the state and com­mer­cial enter­pris­es to dis­cuss some­thing bilat­er­al­ly and to act togeth­er – this is the pre­vi­ous­ly men­tioned rel­e­vance of monop­o­lies in sys­tem competition.

If we think about the digi­ti­sa­tion of our pub­lic admin­is­tra­tion, it is also impor­tant to remem­ber, with which providers of cloud sys­tems we can or should work togeth­er. Should it be Ama­zon or Microsoft or Google? Ger­many and the EU can­not ignore these GAFAM giants. Pow­er just cre­ates more power.

Let’s look at one of the monop­o­lists, Mark Zucker­berg. Dig­i­tal instru­ments actu­al­ly enable demo­c­ra­t­ic process­es. Will these monop­o­lies real­ly be demo­c­ra­t­ic, phil­an­thropic and ori­ent­ed towards the com­mon good? Will the monop­o­lists as the new “rulers” take over the wel­fare tasks of the state? For tax rea­sons, Mark Zucker­berg has set up foun­da­tions where he him­self decides where to invest the mon­ey he earns. What hap­pens to the inter­ests of the com­mon good that the state tra­di­tion­al­ly got from taxes?

The monop­o­lists define the com­mon good them­selves. They want to be inde­pen­dent of spec­i­fi­ca­tions, laws, gov­ern­ment and pop­u­lar wish­es. Rather, they have their own ideas about what can be good and bad for the world.

First­ly, every­thing has to ben­e­fit their com­pa­ny: share prices, prof­it, range… They argue that they want to make the world a bet­ter place and they know how to do it. They intend to improve the world through tech­nol­o­gy. That is the belief of the big com­pa­nies in Sil­i­con Val­ley- how­ev­er they don’t have to wor­ry about dis­sent­ing voic­es. Con­trast aris­es from those who think dif­fer­ent­ly – from the res pub­li­ca, from cit­i­zens, vot­ers, the com­mu­ni­ty… who decide for them­selves and do not let an indi­vid­ual deter­mine everything.

When Mark Zucker­berg says “col­lec­tiv­i­ty is a human right”, he means the right to con­nect every­one with the means at his dis­pos­al. He deter­mines what the algo­rithms should be like, where and when they will be dis­played (see the US pres­i­den­tial elec­tion 2020) – what results they deliv­er… He does not care about hav­ing a real overview of the argu­ments exchanged on a top­ic, but sole­ly achiev­ing max­i­mum range and which con­tent and algo­rithms will achieve this goal.

A cor­po­ra­tion that depends on online adver­tis­ing offers top­ics of debate in order to attract as much atten­tion as pos­si­ble from its users. This approach leads to polar­i­sa­tion, to good busi­ness fig­ures and, ulti­mate­ly, to the upris­ing and storm­ing of the US Capi­tol on Jan­u­ary 6, 2020.

The next esca­la­tion is that an indi­vid­ual – such as Elon Musk – uses the short mes­sage ser­vice Twit­ter to address and pos­si­bly also manip­u­late large parts of the glob­al pub­lic. There­fore, the last chance we still have is the elec­tion of our gov­ern­ment rep­re­sen­ta­tives – a chance that no longer exists in Hun­gary or even in Turkey. We need to make pro­vi­sions for the com­mon good. That requires responsibility.

More and more ecosys­tems are emerg­ing in which data sub­ject leave behind their data. This is now also shown by the dis­pute between Face­book and Apple, which is about the bat­tle for data sub­jects. The rea­son is that who­ev­er has the most data sub­jects can best devel­op algo­rithms and set trends. It seems as if the own­ers of the respec­tive ecosys­tems want to give them­selves an image. Apple wants to stand for “pri­va­cy and infor­ma­tion secu­ri­ty” while Face­book focus­es on “net­work­ing”. Will the own­ers of these ecosys­tems be the rulers of tomor­row? Are these images the true “par­ty pro­grams” of these new own­ers and rulers? What are their true intentions?

Plat­form own­ers have the pow­er to cre­ate. Since AI will also play a major role in future, those who use and con­trol the inter­ac­tion of AI with plat­forms will be in a deci­sive posi­tion of power.

Just as the var­i­ous app stores are pow­er­ful paid door keep­ers (access con­trols), AI ​​will also become a pow­er­ful influ­encer and pow­er fac­tor. Access to the store does not come cheap because it rep­re­sents 30% of sales for those who wish to offer their prod­ucts in the Apple Store. An agree­ment involv­ing Apple not using its own search engine but instead inte­grat­ing Google search would cost Google billions.

You can­not leave or emi­grate from a dig­i­tal ecosys­tem as quick­ly as you can from a par­ty or a coun­try. The porta­bil­i­ty of data is tech­ni­cal­ly more dif­fi­cult, although it is required by law. Where is this head­ed? Do antitrust laws, state bud­gets, tax laws, the Dig­i­tal Mar­kets and Ser­vice Act, the GDPR, the pro­mo­tion of the start-up scene and medi­um-sized companies….do all these means offer enough oppor­tu­ni­ty for a cor­rec­tion to take place?

Yes, the new Euro­pean laws pro­vide for porta­bil­i­ty. The extent to which com­pa­nies will actu­al­ly imple­ment this porta­bil­i­ty remains an open ques­tion at the moment. Of course, every­one will try to bind their users, cus­tomers… to them­selves as close­ly and as skil­ful­ly as possible.

There are dif­fer­ent strate­gies. One of these strate­gies is the use of the net­work effect. If friends, fam­i­ly, col­leagues… are in an ecosys­tem (e.g., What­sApp), oth­ers will also be in it because they don’t want to lose touch with the “com­mu­ni­ty”, also enjoy­ing the infor­ma­tion exchanged their and want­i­ng to take part in that type of social life.

Of course, these pos­si­bil­i­ties in an ecosys­tem of this type are not free- because we pay for them with our data. As long as pri­va­cy has no demand mar­ket and peo­ple are not will­ing to pay any­thing to pro­tect their pri­va­cy, these tools and plat­forms will keep boom­ing. At present, there is not enough aware­ness of the prob­lem of pri­va­cy. In addi­tion to the sup­posed “free ser­vices” there is the con­ve­nience for users, the net­work effects, the sup­pos­ed­ly dis­tant and vague threat as well as the com­mend­ably smooth tech­ni­cal func­tion­al­i­ty of these dig­i­tal tools that ensure success.

Even though many peo­ple are strug­gling to sur­vive every day because of infla­tion, the few­er jobs that Indus­try 4.0 is caus­ing etc., this all means that peo­ple aren’t up to deal­ing with the social con­se­quences of digi­ti­sa­tion, and it is our task – espe­cial­ly that of the gov­ern­ment – to pro­vide infor­ma­tion and ini­ti­ate the debate.

You men­tion the “World Car­tel Office” in your book. Is that anoth­er new monop­oly? You also talk about “data trustee”. Isn’t that also a monop­o­list for data? You men­tion the use of a “data toll”. What form exact­ly do you think that could take? Who will pay for it and who will ben­e­fit from it?

We need data trustees so that we can have more trans­paren­cy, trace­abil­i­ty and qual­i­ty with regard to the algo­rithms. The com­pa­nies in ques­tion are cur­rent­ly sit­ting on their algo­rithms as if on a secret inven­tion. They are like Coca-Cola, which con­tin­ues to keep the recipe of their fizzy drink a secret. I imag­ine a data trustee to be an inde­pen­dent third par­ty who takes a look at the com­pa­ny’s algo­rithms and checks them – maybe also has them cer­ti­fied and approved for the mar­ket. This is an idea that has been brought up by Bun­des­bank Pres­i­dent Jens Wei­d­mann. This is the only way we can iden­ti­fy and elim­i­nate bias; this is the only way we can ensure equal treat­ment; this is the only way we can guar­an­tee fair process­es and equal rights for all users… It’s about fair­ness and objec­tiv­i­ty with regard to the pro­cess­ing of news.

GAFAM views Europe as a colony. They make sales, save tax­es at the same time through clever tax mod­els, use the good infra­struc­ture which is in place ‑such as the train­ing of Euro­pean cit­i­zens in Europe- use the data of Euro­pean cit­i­zens for eval­u­a­tions and AI devel­op­ments… Here it would only be fair if GAFAM ben­e­fi­cia­ries also had to pay data toll to a fund, which in turn could sup­port the infra­struc­ture of the dig­i­tal tools and the nec­es­sary rules with money.

Our com­pe­ti­tion pol­i­cy is still nation­al­ly ori­ent­ed. There are also bilat­er­al forms or the Car­tel Office of the Euro­pean Union. There are also many dis­cus­sions among coun­tries on how to deal with GAFAM.

If we open the mar­kets and com­pa­nies oper­ate on a glob­al basis, then we also need a glob­alised struc­ture for com­pe­ti­tion and its insti­tu­tions. There were con­sid­er­a­tions about this in the 1990s – e.g., by Jür­gen Haber­maas – but no con­crete imple­men­ta­tions took place. There have been advances in oth­er areas – such as the Inter­na­tion­al Crim­i­nal Court in The Hague – even if not all states have agreed to this.

My opin­ion is:

A world that wants to work togeth­er on a glob­al basis also needs glob­al rules.

I sup­port reg­u­lat­ed globalisation.

Hans-Jür­gen Jackobs

Glob­al­i­sa­tion is cur­rent­ly being polit­i­cal­ly mis­used. Today, glob­al­i­sa­tion is under­stood as think­ing in terms of spheres of inter­est and of pow­er blocs. This is a new glob­al­i­sa­tion – a glob­al­i­sa­tion that oper­ates between pow­er blocs. I’m very much in favour of exchange and plu­ral­i­ty. At the same time, I am also for reg­u­la­tion and I am very much against the inequal­i­ty that glob­al­i­sa­tion has brought so far. I’m all for peo­ple shar­ing the returns.

We cer­tain­ly need “Chi­na cap­i­tal­ism” as a neg­a­tive image in order to con­trast it with a pos­i­tive image in the West. IAR by Joe Biden is the first reac­tion to it We also need clos­er coor­di­na­tion between the FCC and the EU Com­mis­sion on com­pe­ti­tion mat­ters before we think about a world antitrust agency.

Are state monop­o­lies such as Chi­na bet­ter equipped than pri­vate monop­o­lies, democ­ra­cies and so on?

Yes, these are state monop­o­lies if you allow them to exist. These are con­struc­tions that work with the advan­tages of the mar­ket econ­o­my in order to actu­al­ly work against them in the end. It’s a dialec­tic trick. It is a planned econ­o­my that is expand­ing by means of par­tial mar­ket solutions.

We need coun­ter­mea­sures – such as import duties into the EU – when it comes to imports into Europe – espe­cial­ly when dump­ing prices are specif­i­cal­ly under­pinned by gov­ern­ment sub­sidy strate­gies (con­sid­er the exam­ple of dump­ing prices for solar tech­nol­o­gy). This is the only way to cre­ate bal­anced com­pet­i­tive con­di­tions again. An indus­tri­al pol­i­cy is need­ed in these pow­er blocs – and Joe Biden is doing exact­ly that with IAR. Struc­tur­al aid and com­pen­sato­ry mea­sures are need­ed. We must main­tain com­pe­ti­tion while sup­port­ing and main­tain­ing promis­ing, high-qual­i­ty and just plain good industry.

Digi­ti­sa­tion brings with it automa­tion and enor­mous speed. Of course, dig­i­tal media and tools reach the indi­vid­ual cit­i­zen direct­ly and of course these means could be used for a direct and imme­di­ate analy­sis of the peo­ple’s wish­es: for opin­ion-form­ing, clar­i­fi­ca­tion, trans­paren­cy, and the find­ing of a viable con­sen­sus. In oth­er words, demo­c­ra­t­ic process­es can be sup­port­ed even more effec­tive­ly by dig­i­tal pos­si­bil­i­ties. On the oth­er hand, these tools are also prone to mis­use. Democ­ra­cy needs time to form opin­ions and find a major­i­ty con­sen­sus so that deci­sions can be imple­ment­ed that some­times are in oppo­si­tion to the speed of digitisation.

It is not always clear whether quick deci­sions are always the best ones. Even quick deci­sions can turn out to be bad. It’s about the qual­i­ty of the deci­sions and I think it’s impor­tant that the affect­ed peo­ple are involved – even if it’s cum­ber­some and involves many lev­els. There are advan­tages as well as dis­ad­van­tages in dig­i­tal­i­ty as well as in the var­i­ous forms of gov­ern­ment of democ­ra­cy and autoc­ra­cy. Let’s look at Chi­na’s Covid strat­e­gy, where vac­ci­na­tion, vac­cine, lock­down, dis­cus­sion oppor­tu­ni­ties etc. were quick­ly decid­ed. Now, in ret­ro­spect, it is only pos­si­ble to assess whether one or the oth­er strat­e­gy was more suc­cess­ful, whether it was decid­ed demo­c­ra­t­i­cal­ly or auto­crat­i­cal­ly, whether it was imple­ment­ed quick­ly or after a major­i­ty vote.

The range of dig­i­tal­i­ty is also an impor­tant aspect. Data, infor­ma­tion and knowl­edge do not stop at nation­al bor­ders. On the con­trary, they cross them every sec­ond, so that influ­ence from out­side can be felt. Here democ­ra­cies need pre­cise rules of gov­er­nance and improved vot­ing qual­i­ties as a time­ly reac­tion to the speed of dig­i­tal tools, the clout of cen­tral struc­tures, the use of monop­o­lies and the ideas of autoc­ra­cies. The cur­rent sta­tus quo is still insuf­fi­cient because many nec­es­sary adjust­ments are still pend­ing. The USA is a democ­ra­cy which, for exam­ple, wants to counter high infla­tion with a bold step in the form of the IRA Act (Infla­tion Reduc­tion Act) and wants to pro­mote cli­mate pro­tec­tion in the USA. This allows for­eign com­pa­nies to estab­lish them­selves and, in this way, val­ue is cre­at­ed. With start-up aid and start-up sub­si­dies, the USA is aim­ing for a change in its nation­al econ­o­my and an increase in its own val­ue cre­ation. That kind of goal can be designed. Ms. von der Leyen gave the Euro­pean answer to the IRA Act in the form of the Green Deal. The imple­men­ta­tion of the Green Deal will cer­tain­ly take a long time because the Euro­pean Com­mu­ni­ty con­sists of many mem­ber states, requires dif­fer­ent majori­ties (usu­al­ly even una­nim­i­ty) – in short, it is set up and organ­ised very differently.

We see in the west­ern states that the attacks from the left and from the right are becom­ing more and more pow­er­ful. We can also observe that the polit­i­cal­ly lib­er­al cen­tre con­tin­ues to shrink. But I am con­vinced that democ­ra­cies could be well pre­pared with bet­ter gov­er­nance rules.

Could the monop­o­lies arise because of digi­ti­sa­tion and the growth of the real econ­o­my? In the 1980s, invest­ments in the real econ­o­my were twice as high as in the finan­cial econ­o­my. Today – that is, 50 years lat­er – invest­ments in the finan­cial econ­o­my are 10 times high­er than in the real econ­o­my. Is this finan­cial econ­o­my and its returns financ­ing the pan­dem­ic today and per­haps uncon­di­tion­al income tomor­row? If so, the real econ­o­my and the finan­cial econ­o­my are depen­dent on one anoth­er. What effects will this have on the real econ­o­my – espe­cial­ly if the real econ­o­my employs few­er and few­er peo­ple, because the finan­cial econ­o­my actu­al­ly needs the real econ­o­my, its invest­ments and the huge depreciation?

The finan­cial sec­tor has par­tial­ly extri­cat­ed itself from the real econ­o­my. Many things are now being cre­at­ed in the finan­cial sec­tor itself. The long-last­ing low-inter­est pol­i­cy has led to a large sup­ply of cap­i­tal mar­kets. There has been a sys­tem emer­gency for more than 10 years. New prob­lems and depen­den­cies have arisen – espe­cial­ly when the mon­ey need­ed for old-age pro­vi­sions needs to be found then there are big ques­tions out there when crises occur.

After the finan­cial cri­sis of 2008, there was – at least for a short while- the idea that banks and the finan­cial sys­tem had to become an enti­ty for and of its cit­i­zens and com­pa­nies – in short, the real econ­o­my. That was for­got­ten just as quick­ly as the claim “too big to fail” wasn’t sup­posed to exist.

The inher­ent momen­tum in finance is so great and the con­cen­tra­tion of cap­i­tal so immense that the deci­sive change has not yet tak­en place. I am talk­ing about laws to con­tain shad­ow bank­ing (hedge funds, asset man­age­ment, pri­vate equi­ty…). Risky loans are offered here and the risks of a lack of liq­uid­i­ty in the event of a cri­sis also exist. This is a big prob­lem that has been talked about and debat­ed for years with­out any progress being made. In the event of a cri­sis, this can fall on our heads.

We see bank runs at region­al banks, at Sil­i­con Val­ley Bank and at Cred­it Suisse. In the shad­ow bank­ing sec­tor, the effects and thus the risks are even greater. The rea­sons for this are the low inter­est rate pol­i­cy and digi­ti­sa­tion. Many finan­cial trans­ac­tions are con­duct­ed dig­i­tal­ly. There is no longer any human work at the ETF. It is com­put­ers, soft­ware and algo­rithms that invest the mon­ey. Investors are hap­py because they hard­ly have to pay any more fees.

The result is a mas­sive con­cen­tra­tion of cap­i­tal. The ratio­nale of the mar­kets only works if there are enough mar­ket par­tic­i­pants with dif­fer­ent opin­ions. If every­thing fol­lows the same mech­a­nism and pur­sues the same goal, because algo­rithms and automa­tisms organ­ise it that way, then the game changes enormously.

With AI, which we can use in both finance and the real econ­o­my, there is a new pow­er fac­tor that will change the cur­rent sit­u­a­tion. Today we can only guess what will hap­pen. There will cer­tain­ly be changes in pro­duc­tion process­es, job cre­ations, work restruc­tur­ing, speed­ing up of deci­sions… It will be hard to accom­pa­ny this new pace with good busi­ness deci­sions and bal­anced leg­is­la­tion. AI is a dis­rup­tive tech­nol­o­gy that brings many changes and there­fore needs a pub­lic dis­cus­sion. We can’t let this go unnoticed.

We have to think about the goal of digi­ti­sa­tion. Digi­ti­sa­tion is not an end in itself, but the result of a pub­lic debate. We need clar­i­ty about where the jour­ney should go with the help of digi­ti­sa­tion. AI is a dri­ver of new busi­ness, mar­kets and thus new prof­it. Stock trends will go up.

In social terms, AI can lead to an improve­ment in the rela­tion­ship between pub­lic author­i­ties and cit­i­zens by mak­ing admin­is­tra­tive trans­ac­tions eas­i­er and faster (e.g. tax returns, reg­is­tra­tion cer­tifi­cates, smart meters for opti­mal ener­gy con­sump­tion…). AI could also lead to con­sumerism in soci­ety… Many of these advan­tages added to the mix will lead to a new world. Amer­i­cans refer to this as the pur­suit of hap­pi­ness 4.0. The task of social dis­cus­sion must be how we humans deter­mine this “hap­pi­ness”, how we con­trol abuse and how the advan­tages of a changed world ben­e­fit everyone.

Does Europe still have a chance, even though it has few monopolies?

We have strong cor­po­ra­tions. In Bernard Arnault we have one of the rich­est men in the world. But Europe does­n’t have real­ly the biggest beacons.

What mat­ters is where the deci­sions are made and who has the last word. These deci­sion-mak­ing cen­tres are main­ly locat­ed in the USA and the Peo­ple’s Repub­lic of China.

Europe is strug­gling to organ­ise itself. There are good pro­grams, ideas, ini­tia­tives and mon­ey is being made avail­able. Unfor­tu­nate­ly, a lot of things get mixed up, such as Gaia X.

Progress can­not usu­al­ly be achieved in large work­ing groups. There are too many par­tic­i­pants, the deci­sion-mak­ing process is just too demo­c­ra­t­ic and the organ­i­sa­tion and the rules of the game are most­ly unsuitable.

I am putting my hopes in start-ups. Due to our good edu­ca­tion sys­tem, Europe has very well edu­cat­ed and resource­ful young peo­ple. We have a lot of good uni­ver­si­ties that both the US and the Peo­ple’s Repub­lic have their eyes on in order to poach tal­ent from there. Exact­ly this start-up scene as well as the inven­tive­ness of the Euro­peans can be our strength. Europe should ensure that inno­v­a­tive com­pa­nies that come from Europe stay in Europe. We should net­work strong­ly in Europe and let start-ups grow. Medi­um-sized com­pa­nies have poten­tial, while the large Euro­pean cor­po­ra­tions cer­tain­ly had their peak in the indus­tri­al rev­o­lu­tion and can­not assume the role of resource­ful, agile speed­boats. His­to­ry has taught us over and over again that peo­ple have always been resource­ful and have always found a way out from bot­tle­necks, a lack of raw mate­ri­als, goods, cap­i­tal and depen­den­cies…. When the demand for nat­ur­al rub­ber increased and resources were insuf­fi­cient to meet demand, syn­thet­ic rub­ber came along. I am sure that Europe with its ideas and inno­va­tions will influ­ence the monop­oly game.

Mr Jakobs, thank you for shar­ing your insights on the evo­lu­tion of monop­o­lies and their impact on today’s geopo­lit­i­cal confrontations.

Thank you, Dr Cal­daro­la, and I look for­ward to read­ing your upcom­ing inter­views with recog­nised experts, delv­ing even deep­er into this fas­ci­nat­ing topic.

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¹ Shoshana Zuboff, The Age of Sur­veil­lance Cap­i­tal­ism: The Fight for a Human Future at the New Fron­tier of Power