The End of Democratic Capitalism?

from NewCo Shift

A clash of fundamentally competing economic philosophies broke into the mainstream news this weekend, with the fate of democratic capitalism hanging in the balance. And while it’s likely too early to call a winner, the trends are certainly not looking good for democracy as we understand it in the west.*

First, the news. Bowing to Chinese law, Apple will be storing the keys to its Chinese customers’ data inside China?—?subjecting that information to Chinese legal oversight, a system which, as Yonatan Zunger points out, is markedly distinct from that of the United States, where Apple had heretofore protected its Chinese customers.

Why does this matter? Certainly it’s a blow for the individual privacy of Apple’s Chinese customers, but then again, to presume one company?—?even one as powerful as Apple?—?could force its policies on the Chinese state is beyond naive. No, to my mind this matters because it creates a precedent for an approach to capitalism that puts profit before principle, regardless of externalities or long term consequence. And that should concern us all.

More here.

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7 Responses to The End of Democratic Capitalism?

  1. Luis F Gonzalez Jr March 20, 2018 at 4:22 pm #

    Apple’s decision to enable authority, to the Chinese state, in having access to their data base and having complied with Chinese rules has a dramatic global effect for US companies. One of the main arguments is the fight of power between two types of capitalism: democratic and autocratic. The two have drastic differences and views on business markets. With China’s economic growth, their global presence has increased with big investments in other nations. Thus making China stronger and having more influence to countries and companies than the USA. The decision made by the firm Apple is a controversial debate about what path is correct and the impacts it has on future negotiations in foreign markets. The precedent set by Apple is one to inform oneself and learn about the possible domino affect it might have on other US companies.

    China has implemented an autocratic capitalistic economy within their markets. While the United States has always incorporated the democratic capitalism philosophy believing it to be the best when coming to suit the American Dream, social mobility, equity, etc. Democratic capitalism is a system based on three qualities: an economy based mainly on free markets and economic incentives, democratic polity, and a progressive system encouraging pluralism. It is a system based on “freedom of thought and voluntary action creatively applied to production” giving the American culture a progressive outlook on the market and social civics. Autocratic capitalism is the opposite opposing democratic polity but instead one individual has unlimited power over all things. Such ideologies have come into conflict in recent times with both sides fighting for major influences in multiple countries. Since “the wake of the global economic crisis, and the dissatisfaction with democracy in many developing nations, leaders in Asia, Africa, and Latin America are studying the Chinese model far more closely — a model that, eventually, will help undermine democracy in their countries” This is true statement supported by the Occupy movement that speaks against inequality, and poor governance in giving economic benefit to only a small portion of the population. The Chinese way governing of the people and business markets is another viable option to democracy besides the standard communism.

    China’s growth in the global stage has given the Chinese nation tremendous influence. China’s new perspective is to connect many nations in order to increase trade, help develop poorer nations, and make their Chinese markets more global. They are accomplishing this through their new Silk Road and the BRICS organization. Both are aimed to increase international commerce and to bring more economic balance. China is seen as growing geopolitical powerhouse, building bridges with many nations, expanding their market audience and economic growth. They realized a nationalistic mindset holds back economic fortune and looks set to build and establish a new world.

    Apple has headquartered their Chinese users’ iCloud account in China. Previously placed in the United States, this new Chinese data center will be beneficial to China as it will comply with the native laws instead of following the US laws. It will be far easier for the Chinese government to have access to all texts, emails, photos, and any other data saved on the cloud. Apple has stood by their recent action and stated that it did not change its company’s values but instead complied with the new Chinese laws “that require cloud services offered to Chinese citizens be operated by Chinese companies and that the data be stored in China.” A disarrangement to such laws would lead to bad user experience and potentially give less privacy and security to Chinese users. Apple’s situation states the tough position many US companies will face if they do not comply with regulations risking omission from the rapidly growing Chinese market. It brings many issues and human rights activists fear the oppression autocratic government can and have done. Apple claims to be in control of the encryption keys and will only hand them over to Chinese authorities when a legal order is presented to the firm. The issue is that a “warrant” for Chinese authorities does not need court approval but instead any police investigation “have broad powers to collect evidence”. Apple will need to comply with these rules thus many privacy lawyers believe this to be a downgrade for privacy in China.

    Apple will not be the first and last company to do this. United States companies need to expand and go into oversea markets more for growth. It is the goal of capitalism. The United States needs to start investing more in foreign areas, trying to connect more nations to their current market. A great idea would be to invest in a project similar to China’s new Silk Road but for the Americas. Creating a more connected western hemisphere with a bigger consumer base and giving more economic power to US companies and indirectly to the United States herself. China is increasing because the nation is looking for more opportunities to expand financially and politically. The United States is closing its help and is on a sinking ship with her global influence.

    Sources:
    https://www.reuters.com/article/us-china-apple-icloud-insight/apple-moves-to-store-icloud-keys-in-china-raising-human-rights-fears-idUSKCN1G8060
    -http://www.quebecoislibre.org/younkins16.htm
    -https://oneworlduv.com/2013/04/does-chinas-autocratic-capitalism-pose-a-challenge-to-democracy/
    http://www.scmp.com/news/china/diplomacy-defence/article/2109409/fast-growing-economies-are-fast-becoming-new-world
    https://www.weforum.org/agenda/2017/06/china-new-silk-road-explainer/

  2. Timothy Guerrero March 23, 2018 at 12:50 pm #

    China might technically be labeled as a Communist state, however, it plays the essential key components of capitalism quite masterfully, enabling arguably some of the worst capitalism has to offer, substances in which a democratic capitalist state such as the United States has opposed for generations. This issue of democratic capitalism pit up against the likes of autocratic capitalism is one author John Battelle elaborates in his article -“The End of Democratic Capitalism?” as Batelle suggests that the level of ethics and morality revolved around certain business practices are now gone and that the inner core and mission of capitalism, the desire to gain profit, will now exploit numerous ethically wrong decisions. In this case, we’re using Apple’s involvement with China, and how Apple submit to China in a manner simply appalling in the United States. The crime? Well, simply put, they allowed the authoritarian, totalitarian state of the People’s Republic of China to access extensive data of its citizens who use Apple’s iCloud or similar software. Apple has always gotten under the strict radar of the Chinese as opposed to Facebook or Google (as those two platforms are banned within the state), as it has always had an emphasis on hardware. However, for Apple to agree to allow China access to this data shows that Apple will always seek what’s best in a business perspective, and not necessarily a moral one. We are grappling with similar issues domestically as well – Mark Zuckerburg just went on CNN to apologize on behalf of Facebook, perhaps the world’s most notorious surveillance company selling themselves as a platform, as the extensive data they collect of over 2 billion people was accessed by Cambridge Analytica, a company that served President Trump’s 2016 presidential bid. We grapple with these issues not only because of their respective complexities, rather how we react to them becomes an indicator of what is societally right or fair. Is it morally okay to allow a massive company or government access to essentially our entire lives? Is it okay to allow a company to analyze data about our lives this extensively? These are prominent questions that will define our generation, and I cannot stress this enough – how we deal with these matters will set the precedent for generations to come regarding how we grapple these new technologies.

  3. Justin Brenner March 23, 2018 at 6:35 pm #

    The Main takeaway that I see from this article is how having to store Chinese Customer Data in China is going to go over for Apple sales in China. No doubt that this will effect their sales negatively, as there are more than likely people who found that having their data stored elsewhere a selling point for apples devices. But with that no longer the case, there will most certainly be a backlash against them, affecting their sales. However, this may not be the case at all, since if Apple has to comply with this, so do other technology manufacturers. The article is mainly about how this rule signals the end of Democratic Capitalism, and while I believe that line of thought is a bit extremist, I do see what it means for business. They’ll have to take extra steps to comply with Chinese business laws, seeing as they are one of the leading countries in terms of technology development and sales. This is more than likely good for China, but we can expect to see some changes made here in the U.S business world.

  4. Jacob Abel March 23, 2018 at 8:02 pm #

    This article brings up themes very similar to the one discussing the fact that companies are now bending to China even more. By highlighting Apple though the author does make the point that most of Silicon Valley is now willing to do whatever is required to do business in China. This is something that those outside of China are going to have to deal with for the foreseeable future as China’s economy is only continuing to grow.
    The larger point that the author makes regarding how an Autocratic government is now, in most measures, the largest economy in the world and did so using capitalism. Since its development as a theory Capitalism has been tied to Democracy whether that be England or the United States. The development of China is something that is going to have to make the west look at itself in a new light. The failing of democratic systems of government in the west has led many to lose faith in their governments.
    While an undemocratic system in China may lead to a government to better adjust to the changing landscape more quickly its definitely important for individuals to push for the survival of democratic principles. People have to push back against these companies as this standard for business is unacceptable. There is also something to be said of the massive Chinese investment in AI and other fields. This is something that the US government is going to have to push back against. They should do so by investing in AI and by working with the private sector to make sure that the US keeps an edge in this field.
    The rise of China has many implications for the West, most notably that a country can succeed without pairing capitalism and democracy. If the west is to remain relevant we must reflection on our values and systems of government.

  5. Antonio Chirichiello March 23, 2018 at 8:28 pm #

    It is terrifying to comprehend that the democratic capitalism is at threat of becoming overtaken by an autocratic capitalism. Autocratic capitalism is a “market driven economic system where the market is controlled by an autocratic state. This is a hard concept to fathom because, we are taught that capital goods are owned by private individuals or business who price their goods and services. In my opinion, it would not be considered a capitalist economy if the government was controlling the inputs and outputs of the market. The market should be determined by a competitive market based system and not the government to decide what businesses do what. If this occurs then I feel they will start taken more of our rights away because, we do not have many left.

    I feel that the country of China is only using the Apple Company by trying to obtain information on people worldwide on top of censoring the internet. This is a major invasion of privacy and they have no right to try to obtain data other than their citizens. According to the article it states that, “Now that Apple has put its own growth and profit over its previous principles, those principles?—?stand ins for democratic capitalism?—?have been seriously weakened”. The Apple Company has decided that the money is more important than the consumer. It is appalling to see them defy their own code of ethics just to earn profits. What about customer relationship is that important for business? I believe so but, it is not important in an autocratic capitalist economy.

    In conclusion, I believe that if the autocratic capitalism that is practiced in China spreads throughout the world democratic capitalism will be replaced. The autocratic capitalistic view will not be successful in my opinion because, the government will only make decisions in their best interests. The success of a company should be determined by competition and not by any other factor. Free trade is international trade that does not consist of tariffs or any other restrictions. So, the government should have minimal part in the buying and selling of goods in an industry. If a government has severe regulation on a market then, the barriers to entry may too difficult. The government can have whoever they want in whatever market they see fit. That is why I believe that there should not be an autocratic capitalism and why we should stick to democratic capitalism.

  6. Antonio Macolino April 2, 2018 at 5:56 pm #

    I found this article to be very surprising. It brought up a topic that I am not too familiar with and a topic that is not talked about enough in the news. That topic is China. Specifically, US business dealings with China. There are big problems that are coming into being that most Americans do not even know about them. To start, I will explain a little bit about the difference between American and Chinese economics.
    The American Economic system is democratic capitalism. This system is a market economy, but businesses are free to make deals and run their business as they please. Also, private information of a company’s users is kept private and protected by the government. China on the other hand runs an autocratic capitalist system. In this system, China does have a market economy like we do, but, this economy is heavily regulated by the government. Businesses are completely controlled by China’s government, and the government also has access to the private information of the consumers of these businesses.
    With Apple recently relinquishing its control of its Chinese customers’ data over to the Chinese government, this shows that American Capitalism might be headed in a very negative direction. In the past, whatever consumer data a company had access to that data would be kept within the company, no matter where the consumers are from. For example, in the case of Apple, any consumer data of Apple’s Chinese customers belonged to Apple, not the Chinese government. But now, the Chinese government has the rights to these customers’ data.
    What this signifies is that American companies are now starting to bow down to the Chinese government. Because China is advancing more rapidly than any country with AI and because their market growth is so great and provides great opportunities for businesses, more and more companies are scrambling to do business in China. In some cases such as the Apple case however, companies are relinquishing their principles just to make a profit. Since this is the mindset of so many large companies, unfortunately I believe this trend will continue. More and more companies in America will give up certain protections and policies that they have just to do business with China. This relinquishing of certain principles will make China more and more powerful. This could potentially lead to China overtaking America as the world’s strongest economy and global superpower.

  7. Coby Dunn April 4, 2018 at 10:00 pm #

    The purpose of any business or firm is to increase profits. That is, and always will be, the essential goal of any business. To not maximize profits, a business would not only be wronging itself, but the people around it. With apples recent folding to Chinese pressure to abandon their privacy policy, we have to question if this was a case in which apple should have stuck to its democratic origins, or given in to Chinese pressure. In respect to business, Apple did the right thing. They allowed their phones to fall under Chinese jurisdiction in that country, and are making sales and making profits. They are stimulating a global economy, and providing their product all over the world. From a political view, Apple may have done the wrong thing. By giving into the Chinese, Apple may have set a precedence for itself that other people could take advantage of. In the US, Apple products will remain private. That is because of the laws we have, and our democratic view. But other countries are going to see this as an opportunity to use apple products to watch its citizens based on the surveillance laws that they have. If china can get away with making apple bend to their will, other countries are surely going to do the same. The other argument though, is if this actually matters. If Apple had said no to Chinese demands entirely what would have happened? China would have made their own version of the iphone, sold it to its citizens, and would have them under the same surveillance they do now. The only thing that would be different would be that Apple would not make any profits. So, I think Apple made the smart business decision. They put away their pride, and did what businesses are supposed to do. They made a profit.

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