Wall St Versus Silicon Valley: The Choice Obama Will Struggle To Avoid

Fascinating article in the latest NLR from Mike Davis, of City of Quartz fame. The bulk of it is a detailed account of the electoral geography and demographics of Obama's victory, which tells us the precise detail of what I suspect most of us vaguely knew: he won the suburbs, he won the young and, crucially, he won the Hispanic vote which is changing the nation.

Towards the end of the article, however, he turns to the economic sociology of Obama's victory. The American labor movement, despite having, in John Edwards, 'a almost chemically pure' candidate who spoke in authentic social democratic tones, lost their way and remained ineffectual and divided: Obama can ignore them seems the implication.

But Obama does represent sociological change nonetheless: his is the 'Silicon Presidency'. Google CEO Eric Schmidt was at his side during the campaign and inside the transition team. The executives and employees of Cisco, Apple, Oracle, Hewlett-Packard, Yahoo and Ebay overwhelming supported him rather than McCain, including financially.

" A fundamental power-shift seems to be taking place in the business infrastructure of Washington, with ‘New Economy’ corporations rapidly gaining clout through Obama and the Democrats while Old Economy leviathans like General Motors grapple with destitution and welfare, and energy giants temporarily hide in caves.

..... Schmidt and his wired peers, together with the ever-more-powerful congressional delegation from California, become the principal stakeholders in Obama’s promise to launch an Apollo programme for renewable energy and new technology."

Why this alignment?

"Pessimists worry that the Valley is locked into the first stages of the Detroit product-cycle syndrome: the heroic age of Henry Ford followed by tailfins and corporate sclerosis. (Thus Web 2.0 has been criticized as mere product development rather than technological innovation.) The Obama Presidency, from this perspective, can ride to the rescue with Kennedy-scale commitments to basic science as well as stable subsidies to markets like renewable energy, smart utilities and universal broadband that are otherwise whipsawed by volatile energy prices or abdicated by corporations."

The tech industries, implies Davies, are seen as the last 'capitalists with clean hands', given the crisis.

"...the future of every corporation or sector depends upon wise investments to ‘control the state’..... But of all the new Democratic investors, only the tech industries, with their captive universities and vast internet fandoms, still retain enough public legitimacy (domestic and international).... and internal self-confidence hypothetically to act as a constructive hegemonic bloc rather than as a mob of desperate lobbyists."

Yet Obama has called back from the intellectual grave the centrist economists of the Clinton era to serve in his administration. They will struggle, vainly according to Davies, to restore the status quo ante where the financial system generated 40% of all corporate profit in the US. But waiting in the wings is a different fraction of big capital, with a radically different agenda. The contradictions between these two approaches - Davis speculates a weakened dollar may become 'the dog collar' on any Green New Deal - may yet lead to 'protracted stagnation, not timely tech-led recovery'.