Amazon – the global digital East India Company of the 21st century?

Posted: October 18, 2014 by Admin in Alienation, At the coalface, Class Matters, Commodification, Economics, Europe, Germany, Information technology, Internationalism, Limits of capitalism, Political & economic power, Workers history, Workers' rights, World economy

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My trade union is engaged in a long term fight against Amazon for half-way tolerable pay and working conditions in its distribution centres in Germany.  Basic stuff like trade union representation or even a works council, reasonable breaks, being paid for the time spent while standing in line for security checks. Compliance with local labour law.  Some degree of respect for workers from the management. etc.

We are trying to extend this fight internationally and have had some initial success.

But it would help all those who are not uncritical admirers of totalitarian hyper-capitalism knew a thing or two about Amazon’s business strategy and role in the great cancer.  Matthew Stoller’s piece here has a good brief summary of just how and why this electronic trading monopolist has become so powerful.

Firstly, this isn’t an electronic retailer any more.  (Amazon CEO Jeff) Bezos’ ambitions are much wider – he is constructing a monopolist trading empire, something like a global East India Company. Amazon itself says that it competes in the following sectors:

physical-world retailers, publishers, vendors, distributors, manufacturers, and producers of our products, other online e-commerce and mobile e-commerce sites, including sites that sell or distribute digital content, media companies, web portals, comparison shopping websites, and web search engines, either directly or in collaboration with other retailers, companies that provide e-commerce services, including website development, fulfillment, customer service, and payment processing, companies that provide information storage or computing services or products, including infrastructure and other web services, companies that design, manufacture, market, or sell consumer electronics, telecommunication, and electronic devices.

Amazon is hardly taxed because all its profits are ploughed back into aggressive expansion and the accumulation of assets. In this sense it is doing what capitalists are supposed traditionally to do, namely invest – as opposed to the recently hegemonic financialisation of everything, everywhere, regardless of what the company actually sells.

Why does it dare to invest? Because Bezos is convinced of his monopoly power. Here are some of the monopolist strategies:

It is a capital-parasite – in other words, it uses the working capital of its ‘partners’.  As the company puts it:

On average, our high inventory velocity means we generally collect from consumers before our payments to suppliers come due.

Or in plain English:

… if you are a supplier to Amazon, you not only sell the company goods at cut-rate prices, but you are also effectively required to make Amazon a 0% loan that turns over as long as you have a relationship with the company. Amazon is a cannibal, running itself on the working capital of other, small companies.

Amazon’s strategy of vertical and horizontal conglomeration and the power it brings is a negative sum game in terms of the surrounding capitalist networks of production and exchange.

It’s quite clear that Amazon is a deflationary force, pushing down wages, prices, tax revenues, and new non-Amazon business activity. It has deflated prices in book publishing, and retailers across the board are terrified that Amazon is in the process of ripping their guts out. The company is having a ripple effect across the economy. To the extent that deflation is a serious problem, which it is, Amazon is a villain. And this isn’t just ‘technological process’, it’s straight up market power over workers, suppliers, and even governments.

Even the benefits to consumers are balanced by a quasi-feudal, company-store relationship between them and the big A.

The one group that is treated with exceptional grace is consumers. They get low prices and great service. But this relationship is increasingly feudal, with low prices and great service as the benefits I get for surrendering my liberties to Jeff Bezos. I may get excellent prices on my Kindle, but I am now a renter of those books. I can’t lend them to my girlfriend any more, unless Amazon says I can. Amazon can take them away at any point. It knows every page I’ve read, everything I’ve highlighted, it knows what I might want to buy. It knows what I’ve watched on Amazon prime, where I’ve lived, what I buy on a regular basis, whether I’m price sensitive, an impulsive buyer, what I might be selling. Amazon knows, and at any point can exert power.

Stoller’s ‘solutions’ are of the ‘regulate this un-American monopoly and it will be fine’ order.  Allow me a certain skepticism, given the recent history of regulating capitalism.  But he at least stumbles on the realisation that economics is always politics.

The problem with Amazon is not fundamentally one of economics. I mean, yes, it’s destroying wealth, but this is a symptom of the real issue. Amazon is a cannibal. It eats other companies in ways large and small, it eats the time of its workers, and it eats our government through tax avoidance, all to create a cash generating machine. It sucks in investment in as much of the economy to serve its ends, much as Walmart did in the 1990s (a substantial amount of American productivity basically boiled down to Walmart getting more efficient). Amazon is a tyrant, it rules through terror, and left unencumbered, it will destroy swaths of the U.S. economy. Arguments for Amazon as pro-consumer essentially boil down to ‘well its use of economic terror is efficient’. And the British East India Trading company sold really cheap tea in 1775.

All Bezos needs now is an armed partner.  But wait – isn’t Bezos a big drone-fetishist, like many of his techno-optimist peers?

Resistance is hard, but essential.

The above is from a worker in Germany; we have taken it form the Irish left-wing site, The Cedar Lounge Revolution, here.

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