Engineering and Freedom, Part 8

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Classical economists assume that the “market” will most effectively regulate prices and production. 

However, markets can certainly exist outside the classic supply and demand principles. The state can, by subsidizing whole or in part the costs of some product or service, create markets.  This is what occurs when governments spend billons on welfare and industrial programmes, for example. 

Markets created by these expenditures are distinct from those under conditions of laissez-faire, because demand and supply exist without price regulation (as the costs of production and consumption are subsidized). 

Economic decision-making in the welfare state sector are subject to political, not mercantile, competition, as the many varied clients of the government organize to ensure the maintenance of their programmes and subsidies. 

This social economy is the “bread” to the “circuses” that are subsidized by the marketing economy. Advertising has provided for free, through the mass media, entertainment that few among its audience would pay for voluntarily. The very fact that it is available for free means that people will watch and listen to it: this audience is the market created by the advertising industry. 

The masses attend to mass-media product simply because it costs them little but their time to do so. There is a psychological disconnect between their consumption of mass entertainment, and the great cost of this entertainment. 

Ordinary consumers in most countries are surtaxed each time they make a legal purchase. They are also subject to a hidden tithe, the added expense of the advertising and promotion of any good or service. 

The profession of marketing has the aim precisely betraying and denying the market. Susan Strasser, a historian of the advertising industry, wrote that, 

In creating the techniques to make people want things, marketers developed principles that belied neoclassical economic theory. According to that theory, price — determined in the marketplace by supply and demand — functions as an information feedback system, telling producers how much of their product to make. When prices go up, the rational manufacturing firm (which can theoretically regulate supply but not demand) will increase output; when they go down, it will cut back on production. In actual practice, manufacturers operate on the new principle that demand could be created by the manufacturer. They initiated market research in order to procure direct market information that might make planning possible before production. Market investigation supported market creation... Furthermore, manufacturers attempted to set prices directly, not only to their own wholesale customers but also to retailers and consumers; price became, in modern jargon, an element of the `marketing mix’, an attribute of the product. With heavy investments in the machinery of mass production and in massive quantities of raw materials, no manufacturer could afford to be the passive actor of neo-classical economics... (Susan Strasser, Satisfaction Guaranteed: The Making of the American Mass Market, Toronto, Random House of Canada, 1989, pp. 27-28) 

Advertising thwarts competition in several ways. First, by inciting a conditioned response among consumer to the mass-media repetition of brand name, slogan or jingle, advertising encourages impulse-buying. Second, advertising is a costly part of doing business, an expense which does not contribute directly to efficiency or productivity. Advertising costs discourage entry by smaller, novel actors into the marketplace. 

The expense of marketing also contributes to the consolidation of industrial operations. Nearly all the major mass-media advertising brand-names belong to multi-divisional, multinational corporations. Only such large concerns can afford the vast costs of promotion and advertising. 

By subsidizing the expense of radio and television (the infrastructure, programming and advertising), consumer-goods firms have created a market for their products — the mass-media audience — that would not exist without the mass-media themselves. 

Commercial broadcasting provides entertainment, and the casual viewer or listener is estranged from the sophisticated infrastructure responsible for creating mass entertainment. He doesn’t pay for it directly (the costs of marketing being hidden in the price of the advertised goods and services), and so he doesn’t attach any monetary value to it. 

The average viewer becomes as dependent upon the mass media as the “client” of the welfare states does to his hand-out, because both offer rewards without much effort. 

The sponsorship of cultural and sports events by large corporations, which has grown steadily in recent years, is of interest here. In effect, corporate sponsorships have come to subsidize these events (often, as governments once did).  

They are popular; obviously there is a “market” for jazz festivals, certain athletic events, and so on. Yet, without the sponsorship either of government or corporations, they would be economically unsustainable. 

A corporate sponsor of a cultural event does not get, and does it expect, a profit from the expense of sponsoring it. What they hope to create is a market, not for the jazz, which already exists, but for the product and brand being advertised. Corporate event-sponsorship is just the latest twist on how business has insinuated itself on the public sphere through the subsidy of goods and services that cannot be sustained by a paying marketplace alone. 

In the past, media of communication were subsidized or otherwise held as legal monopolies by the state, a tradition which holds today for publicly-financed broadcasting or publishing in some countries. Commercial broadcasting, by definition, has always operated courtesy the subsidy of the advertising monies of industry. 

Vast new markets for radio and television were created during the earlier part of the twentieth century, not because there was such a such great demand for these media beforehand, but because the costs of the production of the home appliances necessary to consume their programme content, as well as the programming itself, were “sold” to the public at far below their actual material cost. 

The means were different, but the goal for big business of spending millions on advertising was identical to the vast expenditures governments have undertaken in the past to subsidize previous forms of media, that is, to monopolize the means of communication. In essence, advertising-financed media are propagandists for the gospel of big business, just as government-subsidized media tend to be biassed in favour of the state. 

However, commercial programming has proven far more adept at attracting the attention of the masses, because it is in the interests of the advertisers to provide for free or at low cost content that will bring viewers to watch the ads. Broadcast media have always been legally public utilities. The subsidies given them by the state and especially big business have created a demand for the programming and the requisite equipment for viewing it, that probably would not have ever existed if the full cost of the programming and the infrastructure necessary to create it were borne exclusively by the viewership. 

They were thus established as a distinct sort of utility, one subsidized not mainly by taxes or state-debt expenditure, but by the expense of advertising. Information is always been essential to the conduct of war. Generals need accurate data about the shape of the battlefield as well as the strength of the enemy. They also want to be as secretive as possible with their own activities, so as to surprise the enemy. In the twentieth century, when the conduct of war spread to the whole population, so too did the need of state to begin again to regulate the flow of information. For the junta regimes that were created to fight the Great Wars, the traditional practice of collecting accurate information was employed, but extended also to the “battlefield” of the civilian population, many of whom could have had divided loyalties. 

The censorship of information, to keep the activities of the regime secret from the enemy, was achieved by the rigid control of all media of communication, in both the Axis and Allied countries, and on both sides the general population was “censored” from understanding the enemy by liberal doses of propaganda. Modern propaganda and counter-intelligence methods were developed not by the Soviets or Nazis, but by the democratic West. 

During the First Great War, Allied governments succeeded in re-making the Germans and Austrians into “Huns,” through depictions (in the new cinema medium) of “kaisers” spearing babies on their helmets, before raping their mothers, and so on. Commercial artists were drafted to encourage the masses to sign up for battle, donate to the war cause, go to work in the factories, etc. 

Western governments also put together the first systematic internal espionage operations, to track the movements of enemy aliens. By the Second Great War, intelligence agencies in the U.S., Canada and Britain became institutionalized, and continued with the advent of the Cold War. All the countries fighting the original Great War, no matter what their relative consumer sophistication, experiencing war-induced deprivation, temporarily mocking the conditions of past civilizations. 

However, commercial advertisers drafted to work in the war cause came to understand more fully the persuasive power of propaganda, and applied it to civilian life. The 1920s thus saw a great boom in the consumer economy, guided by advertising in mass-circulation magazines as well as the new medium of radio. 

Radio had been around since the early century, mostly as a hobbyist’s tool. The medium’s spread to the civilian population was blocked by its requisition by the military governments fighting the First World War. However, radio’s technological evolution was speeded by the technological selection pressure of wartime. By the end of the conflict, radio was sophisticated enough to be used for civilian broadcasting. Unlike the mass-circulation magazine, however, the character of the broadcasting audience could not be readily discerned. 

Periodicals have subscription lists, for example, but anyone at all could be listening to a radio broadcast without a trace of who they were. There was no way of identifying just who was and who was not liking a particular programme. Thus it was difficult to sell sponsors on the popular merits of any particular programme content. Broadcast firms had to roll up their sleeves, go out and ask the public what they liked to hear. 

From this, modern marketing techniques were developed. Marketing seeks to divine the greatest amount of information from the smallest possible exposure to the general public. The goal of marketing espionage, like its military counterpart, is to gather accurate, secret information about competitive rivals, while carrying on public campaigns of disinformation in the form of advertising. 

Like traditional espionage, market intelligence requires collecting detailed information from the general public to ensure that their “loyalty” is assured. Commercial broadcasting is essentially the utilization of the media weapons used by all governments during the Great Wars, to the same end of brainwashing the general public, and reducing pressure from competitive rivals. Advertising, especially through electronic media, is as conducive to oligopoly as armaments production is to the creation of a relatively few large-scale states, and for the same reason. 

Only highly-populated societies can afford to sustain arms production indefinitely, just as only large companies have the resources to pour into the production of ads in magazines, radio and television. The costs of both advertising and armaments encourage predation in commerce and politics, so that the going-concerns have the resources to pay for their costs. 

Both arms and ads help maintain the market hegemony of large concerns simply because smaller concerns can ill afford the expense of either. Both advertising and arms have the ultimate effect of managing or denying consumer demand. The junta state does this simply by expropriating all or most resources to the creation of arms so that the means of satisfying consumer demand goes unfulfilled. 

Oligopolistic industry does so by pouring resources into media of persuasion which are aimed at conditioning the public to the normalcy of their status in the first place. These media, which are virtually all electronic means of communication, supply a market which could not be sustained by the conventional laws of supply and demand. 

The commercial development of all the broadcast media, as well as mass-circulation magazines, and most recently Internet “e-commerce,” has been undertaken by industrial concerns subsidizing a want — entertainment — in order to find a market for to advertise their wares. The logic behind the big-business sponsorship of media programming is identical, on much larger scale, to what prompts liquor and tobacco concerns to underwrite arts and sport events. 

Industry, by paying the cost of entertainment production presented through mass media, is guaranteed a big audience because the programming, and the media as well, is offered so cheap. However, if this programming, and the media that are necessary to consume it, were offered on a regular market basis, effectively there would be no market for it, because it would too expensive. In reality, the programming would not be produced at all, nor would the mass media be as “mass” in their scope as they in fact are with the advertising subsidy. 

Part 9 of Engineering and Freedom 

Engineering and Freedom, Part 6

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Formerly, the word “communication” conveyed the idea of what terms such as “transport” or “transportation infrastructure” mean to people today. 

“Communication” means literally to “bring people together,” and this is precisely what technologies such as the rail train, the automobile and the airplane carry out. 

However, all of these automated forms of communication require expensive and elaborate infrastructure in order to be functional. This infrastructure, in order to be realized, had to rely on subsidies provided by the state. In the past, transportation of people and goods was synonymous with the “communication” (in the contemporary sense) of news and information from elsewhere because news could travel only as fast as people. 

The shipping of goods en masse by turnpike, canal and railroad communications went together with the advertisement of these goods in periodical media. 

With the invention of the telegraph in the 1840s, communication of information transcended the communication of goods and people. Just as the railroad resolved the problems inherent in the communication of goods over long distance, the telegraph resolved the problem of the communication of “news” over distance. 

The railroad and the telegraph newspaper together created the abstract “market,” as opposed to the situated marketplace. General-interest newspapers, subsidized by advertising dollars and fed with information by the telegraph, were the only medium with enough reach to create mass interest in the goods on promotion. 

However, the subsidy of postal communications was key to the newspaper boom in the period after the founding of the United States. Paul Starr, in the Creation of the Media, observes that 

[The U.S. postal] network far exceeded the postal systems of any other country. As of 1828 ... the number of post offices per 100,000 inhabitants had grown to 74 in the United States, compared to 17 in Great Britain and 4 in France. In fact, the per capita volume of mail was about the same in the United States as in France, but the American postal network was more comprehensive. The French authorized a new post office only where it could generate $200 in revenue, a principle that would have closed 90 percent of the post offices in the United States. A radical new conception of postal communication emerged in the earliest years of the republic. ... the postal service as a medium of civic communication and nation‑building was embodied in the legislation that became the new system's charter, the Post Office Act of 1792. The law ... had three key elements: It made Congress itself responsible for designating postal routes, gave newspapers special discount rates and privileges, and categorically barred government officials from violating the privacy of letters. By assuming direct control of postal routes, Congress opened a direct political channel for local demands that would spur the development of a broader network. The clamor from localities for new post offices and post roads was incessant, but Congress was not merely acceding to local interests; it wanted to tie the western territories to the union, and postal service helped to achieve that purpose. From 1792 to 1828, Congress established 2,476 new postal routes, abandoning the principle that every route had to be self‑supporting. In 1825, it authorized the postmaster general to designate a post road to the courthouse of any new county seat. As the Post Office did not run a deficit in this period, the federal government was, in effect, using surpluses from the older states to subsidize service into newer ones; almost half of every dollar in revenue from the mid Atlantic states went to support routes in the South and West. (Paul Starr, The Creation of the Media: Political Origins of Modern Communications, New York, Basic Books, 2004, p. 88.) 

“In contrast,” Starr continues, “British North America as of the 1830s had a far more limited postal system. From Quebec east to New Brunswick, there were more than 100,000 people but only seven post offices. While the Canadian Post Office returned a surplus annually to the British Treasury, it was unable to respond to continual pleas for service from new settlements. Rates were high, and the volume of postal communication was low. In 1846, an assembly petitioned the queen for more adequate postal service so Canadians might be on an equal footing with the citizens of the United States .... In the United States, the subsidies to newspapers adopted in 1792 were critical to the emergence of the first national news network.” (Starr, The Creation of the Media, p. 89).

The situation in Europe was quite different. Not only did the state provide no subsidies to newspapers sent through the post, all nations (Britain included, until 1855) imposed “stamp” taxes on newsprint and advertisements. This had the effect, Starr writes, of inhibiting the emergence of “publics”, as existed in the United States. 

Private capital accumulation was not adequate enough to finance nationwide postal networks, in the U.S. or anywhere else. The costs of transporting printed information over the long distances, even of the original 13 states, would have been too high in order to sustain a large enough reading public, to support in turn mass-market publications. 

State-run postal systems operate by having short-distance mail subsidize the costs of long-distance routes, which is why a postage stamp costs the same, whether mailed across town or across the country. The subsidized postal system in the early United States gave publishers the opportunity to have regional and national audiences. 

These rates were, moreover, the same for big players as well as the smaller ones. “Infrastructure” means, literally, “between structure,” and historically, the state has established the ground, or network, by which communication throughout the polity takes place. 

Later on, after the first Great War, industrialists took to the new medium of radio to broadcast to an even larger audience — more numerous because it included even those who could not or didn’t like to read newspapers or other periodicals. Both radio and then television were developed not through the direct sale of entertainment product to viewers, but rather, through the purchasing of air-time to advertisers, and the industries that underwrite them. 

Broadcast media, like mechanized transport, would not have become generalized network systems if they relied for their financing market demand based on price. Just as no ordinary motorist could really afford to bear solely the costs of automobile transport, no average viewer could afford to shoulder the direct cost of the entertainment programmes she enjoys watching or listening to. 

Where private industry did not finance through advertising the construction of broadcast media networks (ie. everywhere except the United States), it was the state that did so. 

The “new” media such as the Internet and wireless telephony, which are seen popularly as manifestations of the capitalist ethos at its anarchical best (or worst), in fact are the products of government/military research and development. 

What might be called “the problem of communication” has been throughout history both the end and the cause of much government intervention and regulation of the civil society. In ancient times, only the most centralized of governments were able to build sophisticated road communications to bring far-flung, diverse populations together. Some states were able to achieve a high degree of centralization through the control of a natural waterway, such as the ancient Egyptians did with the Nile. 

In modern times, governments have solved the problem of industrial overproduction by building canals and railways between markets. Governments also stepped in to build highways to accommodate automobile traffic, as well as airport facilities. 

Advanced transport facilities serve to liberate people from “journey”, travel as ponderous and even dangerous travail. At the same time, they come under the regulation of state, which subsidizes some or all of the costs of sophisticated media of communication. Of all means of transport, sailing has always been the least dependent on state subsidy in order to prosper. 

Governments have been involved in the construction of naval fleets and port facilities, but nautical communication can function very well without a centralized authority for financial support. 

The great commercial city-states of ancient and modern times were nearly all sea-bound traders. The cities of the Hansea league of the twelfth and thirteenth centuries became a powerful confederation through the mastery of the North Sea trade, until their independence was swallowed up by the land-based feudal monarchies of Europe. 

Empires arise from the meeting of land and sea, when those dependent on the commodities-wealth of territory bump up against the shipping-based wealth of the cities. The former usually subjugates the latter, using the conquered city as a capital by which to control both land and sea communications. 

The financing of sophisticated communications technologies such as the rail train, the car, the airplane, radio, television, wireless and the Internet, contradicts the classical-liberal idea of capital accumulation. 

Where production is regulated by prices only, a firm can increase profits by improving productivity, or introducing some innovation — the proverbial “building the better mousetrap.” With these profits, the business would re-invest some (or ideally all) of the profits into further improvements in production, with the aim of increasing profits even more, which can again be re-invested for a better profit margin, and so on. 

This is a gradual process, though, where technology progresses by increments. It is a valid description of certain, relatively simple (but still important) technologies. The sophisticated, networked technologies under discussion here required great outlays of capital at the initial stages, in order to be functional at all. 

Private business was often involved in the development of these media from the beginning, or became involved subsequently. But it was the state which provided the impetus for them. The cash economy is self-regulatory, because demand and production are determined by prices. The market price to consumers of modern technologies would have been too much for any but a wealthy minority to bear. 

However, these same media depended upon mass demand to function, as well. Accordingly, the state subsidized the cost of their infrastructure, in order to inspire such a level of demand. Investment in transportation and communication was a form of socialism, but practised by all modern and modernizing governments, no matter what their political persuasion. 

The automobile, the airplane, the other internal-combustion technologies, as well as the mass media, effectively formed the engineered environment of modern times. Material culture is fed by the mass production, that so depends on regulation and subsidy of transportation in order to be a going concern. Commercial enterprise and exploitation has taken place within the engineered civilization, on a scale not witnessed in the past, but it did not come about as a result of market demand, nor could the price-driven marketplace accommodate its development. Internal combustion, and the earlier types of engines, objectified the body’s digestive system, and thus automated the action of the hands and legs in production and transport. It gave rise to the industrial engineering of the nineteenth century, and the automobile and airplane in the twentieth. 

During the course of the last century, engineering advanced from the automation of physical actions and processes, to objectifying the nerves and senses in electric communications media such as the phonograph, radio, the movies, television, and most recently, the Internet. 

The mass media, all of which present a counterfeit of direct experience, are really the objectified and extended voices and countenances of they who own and control them. These technologies, and particularly the broadcast media, have been used to engineer markets and society for decades, to the detriment of reason and individual freedom. 

In the early industrial era, capitalism was synonymous with heavy manufacturing and resource extraction, and the proletariat were alienated from work through the limited use of their skills in the mass production process. 

The face of big business, which was the big businessman’s face and name, was a very ugly one indeed. Business during the nineteenth century had learned how to automate many of the physical actions, and even some of the gross mental aspects (the telegraph’s imitation of the electric charge of nerves) of the human body. 

It yet had no means, however, to bring together mentally the fragmentation of talent and skill that raw industrialism represents. Broadcasting, first with radio and then with television, was developed as an instrument of propaganda, initially for commercial purposes during the 1920s, and then increasingly for political ones during the ‘30s and ‘40s, by totalitarian regimes and by Western governments that fought the totalitarians. 

After the war, though, broadcasting became exclusively the domain of commercial propaganda, as the more overt political boosterism of state broadcasting was toned down for purposes of “neutrality” (socio-political propaganda was left to the state school system). 

Axiomatically, advertising spreads the gospel of its sponsor, presenting the product only with “the best face.” Early on, business hired stars of stage and screen to personify their products. Hosts of TV news, sports and chat programmes are unlike movie stars in that they are not supposed to provoke the audience. An even, calm disposition must be kept by TV hosts at all times. In so far as the faces that appeared on commercial television had to be acceptable to its customers — big business — TV personalities have become, too, the acceptable face of the business-financiers of electronic media. 

Television was a godsend to the public relations side of business, at least, because unlike other forms of mass media, it can actually present a face, an actual person’s face, communicated immediately to millions of people. 

The ubiquity of corporate spokespersons since the beginning of commercial television, reflects the desire of businesses to create icons — “icon” in the sense of representative, rather than celebrity hero — to stand in for themselves and their entire organization. 

The spokesperson usually has absolutely no input in the decisions which he is to convince millions of people are wise or good for them. In so far as they are simply faces and voices for the decisions of others, for all intents and purposes they are nothing more than the masquerades or imposters, for the collective decision-making of corporate or bureaucratic management. In essence, television allowed business corporations to become “incorporated” in the symbolic, as opposed to legal, sense. 

Businessmen had extended the mechanical powers of the human body through their possession and management of capital property. The electronic image allowed them to extend also their own powers to appear and to speak to the masses, through the hiring of media spokespersons. 

Spokespersons were the idols, the living fetishes, representing concerns whose actions and decisions were suitably obscured by the attention that the many paid to the fetishes. Broadcast advertising employs the tactic of the medicine man or spiritual healer the world over, who distracts his trusting crowd with the one hand, in order to do a sleight with the other hand, to achieve his seemingly miraculous feat. 

This is the technique of professional magicians, too, and advertising has always had a subliminal association with evil, the devil in the older sense of a trickster rather than as a bloodthirsty man-wolf. It is the corporate spokesperson himself who is the idol, the fetish is the product itself, and the advertisement the sleight-of-sight-and-sound which distracts the audience from the merits or lack thereof of the product itself. 

The corporation itself fulfills its legal wish to be an artificial person by becoming, through its spokespersons and public relations representatives, an actual symbolic person, its reality maintained by constant doses of media exposure. 

Corporations and bureaucracies, in putting their best face forward through media marketing, are doing no more than what any individual person does when in public, but on a massive, global scale. 

They take the same risks as any person who assumes an appropriate face for the public, only to find that image betrayed by word of her behaviour outside the eyes of the public. 

On the model of the corporate spokespersons, politicians and celebrities have learned to use electronic media to sell themselves to the public, thereby taking the risk that this image will be undermined by their behaviour when outside the sight of the cameras. 

Nevertheless, the growing expense of marketing through electronic media has meant that only larger concerns can shoulder the cost of it. When this principle is applied to the electronic media itself, it means that the total number of information sources available to people in any particular medium is limited. Media which are financed by the monies of corporate and government advertising are considered “mainstream.” 

Those media which are not so subsidized are called “fringe,” “underground” or more recently, “alternative.” Corporations, through broadcast advertising, seek to inspire behaviour that is the very opposite of what they require of their own personnel in order maintain themselves as an on-going concern. 

Work life, particularly at the junior and senior executive levels, requires a high degree of commitment, planning, organization and hard work. Yet the consumer ethic, as expressed in advertising, seeks to undermine all of these values in favour of spontaneity, leisure and profligate expenditure (See Daniel Bell, The Cultural Contradictions of Capitalism, New York, Basic Books, 1976).   

Moreover, advertising wants to foment not judicious and individualistic decision-making in purchases, but instead, the type of herd behaviour generally associated with “fads” or “crazes,” where people buy something just because everyone else is buying it. This is social behaviour in its most basic form, where the logic and correctness of any action is simply that others around you are doing it, too. 

Encouraging pack behaviour is in keeping, on the other hand, with what might be termed the “communistic” nature of modern business organizations. Virtually any ladder-climber today knows that to get ahead in the business game, work comes first, and family, friends, romance and everything else non-work comes second. This is only a symptom of a more general trend, where work and work-life itself has become the primary social unit for many people. Increasingly, corporate management seeks to control not only the skills of its workforce, but their minds, too, with racial and gender sensitivity training and cult-like “motivational training.” 

Part 7 of Engineering and Freedom