New Criticals

In retrospect, the year 2013 will be seen as a pivotal moment in the history of capitalism. Edward Snowden, named ‘person of the year’ by several influential media (and ‘traitor of the year’ by a few others), exposed some of the ubiquitous surveillance programs implemented by governments for competitive intelligence purposes. This came as an inescapable reminder that, at times, capitalism is not so much about competition between firms as it is about competition between nation-states. Furthermore, his revelations shed light on the cosy proximity between governments and powerful firms operating at the vanguard of the economy, especially those that are shaping the relatively new and uncharted territory we call ‘cyberspace’. This led activists from the Occupy movement to demonstrate hand in hand with Tea Party advocates in front of the White House, in a rather intriguing twist of events.

Even more intriguing is the global response that has begun to unfold right under our noses. Many defenders of online civil liberties are now turning to the private sector to protect the common good. Recently incorporated in Switzerland, the Blackphone company intends to release the ‘world's first smartphone that puts privacy and control ahead of everything else’, by building on cutting-edge encryption and anonymization protocols. Dozens of startups are currently building encrypted alternatives to Google’s Gmail and Microsoft’s Outlook, such as Virtru, the Dark Mail Alliance, Newsbin or Kim Dotcom’s MEGA. Bitcoin’s rise to prominence in 2013 provides another compelling illustration of the push for privatization occurring in areas formerly believed to fall within the trusted government sphere. By drawing on the Bitcoin protocol, the Bitcloud project intends to replace quasi-utilities such as YouTube and Facebook by a network of ‘distributed autonomous corporations’ that would herald a new Internet era and make government interference practically impossible.

While some individuals still believe that the NSA’s primary target was terrorism, thousands of non-U.S. corporations have gauged that the agency was actually going after their trade secrets and proprietary data. Their suspicion will cost between $30 and $50 billion in lost business opportunities in the U.S. cloud computing industry alone. Tech giant Google, committed to a grand strategy aimed at becoming the Internet’s universal utility, has recently witnessed an epic reversal of public opinion. In the pre-Snowden era, Google Glass was just an awesome device. In 2014, Google Glass is a business risk. In the pre-Snowden era, Amazon’s delivery drones would have been yet another ‘game-changing’ innovation. In 2014, they’re just a scary idea. Google’s incursion into military contracting via the firm’s acquisition of Boston Dynamics will predictably generate bad press – a pattern illustrated in my empirical research on diversification in the global arms industry. And the same may hold true for Amazon, which has recently become a major contractor for the CIA. And while many used to believe that wearables and the ‘Internet of Things’ would elegantly solve some of today’s societal issues, it has now become clear that they will also be part of tomorrow’s problems.

Look at the big picture: A ‘traitor’ named ‘person of the year’? Leftists allying with right-wing hardliners? Western advocates of civil liberties turning to the private sector to defend constitutional freedoms? Government destroying billions of dollars of value, and hurting its own national champions? Was capitalism just turned upside down? No, it wasn’t. In fact, this is merely history repeating.

In my study of the history of capitalism, I became increasingly familiar with a recurrent historical subject who co-produces new norms of conduct in the uncharted territories of capitalist expansion. I called that subject the pirate organization (for a quick historical overview, see the video below, produced prior to the Snowden revelations). In a nutshell, pirate organizations are groups of individuals who become active when capitalist economies transition into the unknown – the high seas in the 17th century, the airwaves in the 20th century, cyberspace nowadays. During such transitional periods, established value systems become ineffective at categorizing events, leading to apparent paradoxes. Traitor or hero? Occupy or Tea Party? Regulating the private sector or banning government interference? During these periods, pirate organizations represent what social scientists would call an ‘endogenous’ source of change, or what philosophers with a Deleuzian inclination would call a ‘fold’ in capitalism’s ‘plane of immanence’. Pirate organizations typically oppose governments and their protected oligopolies in industries located at the vanguard of the economy.

Because of the very nature of the nation-state system, pirate organizations are always considered illegal by at least one powerful state actor, but what distinguishes them from regular criminals is the legitimacy granted upon them by the broader civil society (think Wikileaks). Pirate organizations typically defend the principles of openness and freedom of circulation, and contribute to the creation of common goods (think freedom of the open seas, or uncensored radio broadcasting). From this perspective, piracy is not about getting everything for free, it’s about preserving un-monopolized distribution channels. The reasons why pirate radio stations turned to the private sector to take down the BBC’s monopoly – a battle they won in 1967 – are in many respects similar to the reasons why ‘netizens’ are now turning to private companies such as MEGA, founded by Hollywood’s most dreaded pirate Kim Dotcom.

In 2014, to understand where capitalism is heading, follow the pirates. And examine their business model with the rigor of a corporate banker prepping a pitch for an IPO roadshow – because pirates will shake the world’s economy in the years to come. So everybody gear up for some pirate analysis.

Dr. Jean-Philippe Vergne ('JP') is an assistant professor at the Ivey Business School. Before joining Ivey in 2011, Jean-Philippe Vergne received a PhD in Strategy at HEC Paris, where he taught strategy and leadership in the graduate, executive MBA and executive education programs. In 2011, his dissertation received the inaugural Grigor McClelland Doctoral Dissertation Award as well as the Fondation HEC's Best Dissertation Award, both of which distinguish innovative scholarship in management and organization studies.

Thumbnail image is from here.