In their article India’s tech CEO boom: What Africa can learn (IOL 25/08/2024), Phapano Phasha and Redge Nkosi explore India’s significant growth as a hub for global talent and economic partnerships, particularly in the technology and innovation sectors. They highlight how India, under PM Narendra Modi, is positioning itself as an emerging superpower, projected to become the world’s third-largest economy in the coming years.

Central to their argument is what they call a “CEO boom” and Indian tech skills. They seem to applaud how the United States and US multinationals in India are attracted to skilled Indian workers in health, agriculture, ICT and FinTech. They also draw parallels between India and African countries, suggesting that Africa could learn from India’s strategic utilisation of its educated, youthful workforce.

In agreement, India has excelled in developing its people, and other developing countries can learn from it. While Phasha and Nkosi acknowledge that India is “also a developing and formerly colonised economy,” they do not address the classism that hinders the country’s progress. This means that only a tiny fraction of its 1.4 billion population reaches the top, while the rest suffer under subalternism, a state of social and economic subordination.

Although India has made remarkable strides in sectors that drive economic growth and have produced many globally recognised leaders in technology and business, this progress is not evenly distributed across its vast population. This class disparity is a critical aspect of India’s social fabric that Phasha and Nkosi do not address in their discussion.

The reality is that India’s celebrated achievements in developing human capital and attracting foreign investment have primarily benefited its upper and middle classes, leaving subaltern classes behind. These groups, which include large numbers of rural inhabitants, lower castes and other marginalised communities, continue to suffer from systemic inequalities that restrict their access to quality education, healthcare and employment opportunities.

This point about exclusion and success for some is the crux of this article, which aims to address some of the blindspots in Phasha and Nkosi’s analysis: global inequalities and the recalibration of global capitalism through capital and technology. Greek economist Yanis Varoufakis thinks the world is going through the worst as capital has killed capitalism to produce a monstrous capitalist system underwritten by technology.

• From the economy of goods and services to the economy of the cloud

In his book Technofeudalism: What Killed Capitalism, Varoufakis suggests we are witnessing a paradigm shift: the global financial system has been superseded by the tech giants’ domains of influence. He argues that traditional capitalists have become ‘vassal capitalists’, suggesting they are now subordinate to and dependent on a new class of ‘lords’—the Big Tech companies—that create vast wealth through innovative digital platforms.

One prominent feature of the modern, neoliberal capitalist system, characterised by its transnational reach and concentration of power among a select few, is that it transcends traditional North-South divides. At the end of the 20th century, significant geopolitical shifts, such as the collapse of the Soviet Union and China’s reforms, accelerated economic globalisation and world market integration. Western capital inundated emerging markets through foreign investment.

While stimulating economic growth, the influx of capital simultaneously heightened underlying capitalist contradictions. This intensified longstanding challenges and inequalities faced by the Global South and triggered a spike in inequality within countries worldwide. This means the poor and marginalised classes have increased in developed countries and also share similar concerns as their counterparts in the South.

Furthermore, capital flows contributed to the emergence of a stateless transnational capitalist class on both sides of the North-South divide. The formation of transnational capital has deepened global class divisions, driven by capitalism’s inherent pursuit of growth and accumulation. Corporations, once a core component of capitalism, now significantly influence global economic dynamics. That is where India’s transnational capitalist class, or “India’s CEO boom” as characterised by Phasha and Nkosi, becomes relevant as it powers an uncaring system that oppresses even its people.

Capitalism’s dynamism means it has transformed itself quickly from the Bretton Woods system (1944-1971) through the deadly neoliberal era of US dollarisation of the world economy to the present phase of ‘techno-feudalism’ (Varoufakis), ‘datafeudalism’ (Carlos García) or ‘techno-capitalism’ (Joshua Hurtado). This phase is driven by rapid tech advances transforming capital into “cloud capital.”

This new form of capital, embedded in digital platforms such as Amazon, Alibaba, Tencent and Uber, manipulates behaviour, exploits labour and extracts value from users without compensation. This technology-driven capitalism has three “harmful tendencies”: expanding commodification into new life domains, creating novel forms of alienation and subordination of life to the pursuit of private capital accumulation. Furthermore, this cloud capital has created a powerful new elite, whom Varoufakis calls the ‘cloudalists’, who wield unprecedented power.

• The US and China rule the Digital World, not India or the EU

Today, the valuation of the top seven tech firms in the US exceeds the combined market capitalisation of major companies in the UK, France, Japan, Canada and China. Varoufakis argues that the concentration of cloud capital in the US and China means the rest of the world lags in technological advancements. Hence, the EU has declared “digital sovereignty” to acknowledge its vulnerable lack of cloud capital necessary to compete with these economic powerhouses.

Therefore, the cloud capital argument suggests that China and the US dominate the modern tech-driven capitalist order. Neither India nor the EU is even close to the two giants. While India supplies talent to drive this new economy, African countries supply critical raw minerals.

Cloud capital is also connected to high-tech sectors, such as nuclear technologies, encompassing aerospace, biotechnology, robotics and clean-energy technologies. China has transitioned from a technology follower to a competitor, capable of innovation and adaptation. This change has resulted in a shift as the US, and to a lesser extent the EU, have adopted a more competitive stance towards China in the technological sphere. This explains the current Sino-American rivalry, or Cold War 2.0, as George Takach calls it.

This rivalry encompasses trade conflicts, technological competition, and geopolitical tensions. This competition is now reshaping the global power dynamic and influencing the formation of new alliances. The escalation is because dominant powers within these networks can control the flow of goods, information, and capital, a dynamic amplified by digital technologies. Like the Cold War of old, the current tech war impacts the Third World.

There is a significant overlap between technology wars and the access to and refinement of critical raw materials, essential upstream components of the corresponding value chains within the mineral-rich Global South. China and the US are the only impactful players in the current global tech-inspired economic order, placing Africa at the bottom. It is unfortunate that not only Phasha and Nkosi overlook this reality but encourage Africa to contribute its humans as commodities over and above lithium, platinum and manganese.

• Where do Africa and the rest of the Third World fit in?

The point is that there is no evidence that these economies stand to benefit from the ongoing tech rivalry besides becoming colonial outposts and de-industrialised backwaters.

Developing countries are also not at the same level of development, with the majority lacking stable financial environments. This makes them vulnerable to being used as proxies or losers in the ongoing tech war. What Phasha and Nkosi call a “boom” is actually a big “burst” for India as it loses its best brains to support destructive Big Tech.

Since 1971, America’s global dominance has been sustained by its trade deficit—a paradox that hinges entirely on its ability to maintain a monopoly over international dollar-denominated payments. This monopoly enables the US to impose the cost of its deficits on the rest of the world. This situation has prompted the IMF to warn that rising deficits pose increasing risks to domestic and global economies.

In contrast, Chinese cloud capital has already accomplished what the dollar system has not and cannot achieve: the seamless integration of cloud capital with financial services. For instance, Tencent’s WeChat application allows users to make free payments anywhere, regardless of their banking affiliation something unavailable anywhere in the world. Also, the Central Bank of China has launched a central bank digital currency (CBDC), the Digital Yuan.

While the US still dominates international payments, it does so through a dollar-based system that is technologically outdated. The rise of China’s advanced payment infrastructure poses a significant threat to this American monopoly for India. The ‘new’ Cold War is a dangerous clash between two competing techno-federal systems: one anchored in the US dollar and the other in the Chinese yuan, which will worsen over time without completely decoupling their technological assets.

The emergence of tech-driven capitalism means traditional economic analysis is getting left behind. Under digitalism and climate change, the global economy is being recalibrated to operate virtually, leaving many people outside this revolution. For example, the EU and the United States strictly impose cross-border adjustment mechanisms on the coal-dependant developing South. However, their digital platforms will mop all the money and skills from India and Africa.

On the other hand, China will always have alternatives due to its advantageous position in the new global digitalised economic system. Besides dumping its electric vehicles and technologies in places like South Africa, its domestic consumption is large enough to absorb any external pressure. India and Africa will only provide natural and human resources to power the cloud.

Siya yi banga le economy!

Siyabonga Hadebe is a PhD candidate in international economic law and a labour market expert based in Geneva.