Digital Disconnect

Robert W. McChesney argues that most assessments of the Internet fail to account for the role of capitalism in shaping digital communication. The book contends that both optimistic and pessimistic observers lack a framework rooted in political economy, the study of how economic systems shape politics and social life, and that without one, they cannot explain how the digital revolution has unfolded or what options remain for its future.

McChesney surveys public intellectuals who have assessed the Internet and organizes them into two camps. The "celebrants," including digital media writer Clay Shirky, internet scholar Yochai Benkler, and media commentator Jeff Jarvis, argue that the Internet fosters unprecedented collaboration, democratizes communication, and empowers citizens against monopolists and autocrats. The "skeptics," including technology writer Nicholas Carr, virtual reality pioneer Jaron Lanier, Internet critic Evgeny Morozov, and psychologist Sherry Turkle, counter that the Internet promotes ignorance, isolates people, enables authoritarian surveillance, and erodes creativity. McChesney identifies a "single, deep, and often fatal flaw" shared by both: ignorance about really existing capitalism and an underappreciation of how capitalism dominates social life. He argues that political economy provides the missing analytical framework because the profit motive, commercialism, and advertising are foundational to the Internet's development.

McChesney debunks what he calls the American "catechism": the conventional belief that capitalism is a system of free exchange in competitive markets that rewards merit, generates prosperity, and is inherently democratic. He rejects claims that tech entrepreneurs like Steve Jobs represent a new, benevolent capitalism, arguing the system disciplines even idealistic founders into profit maximization. He documents several tendencies built into capitalism that corrode democratic governance. First is inequality: organized labor in the United States collapsed from 35 percent union membership in the 1950s to roughly 11 percent, wages stagnated despite rising productivity, and income gains concentrated among the wealthiest. McChesney cites "global labor arbitrage," the shifting of production to lower-wage labor markets abroad, as a key factor. Second is monopoly: the revenue share of the top 200 U.S. corporations grew from about 21 percent in 1950 to roughly 32 percent in 2009. Third is advertising, a product of oligopolistic markets where firms differentiate essentially similar products through marketing rather than price competition. McChesney argues economic inequality directly threatens political equality, documenting sharp declines in voter turnout concentrated among poor and working-class Americans. He introduces the concept of positive externalities, benefits to society not reflected in market prices, and contends that journalism is a public good that markets underprovide because people benefit from it without paying directly.

McChesney introduces the political economy of communication (PEC), a subfield examining how media institutions, market structures, and government policies shape media systems. He draws on German philosopher Jürgen Habermas's concept of the public sphere, a commons independent of both the state and dominant corporate institutions, and explains critical junctures, rare periods when dramatic structural changes become possible. He argues the present moment constitutes a critical juncture: The digital revolution is overturning existing media industries, and journalism is at its lowest ebb since the Progressive Era. He critiques professional journalism for relying too heavily on official sources, producing coverage that was ineffectual when political elites marched in lockstep, as in the lead-up to the Vietnam War and the 2003 Iraq invasion.

Turning to the Internet's commercialization, McChesney corrects the myth that the Internet was a private-sector creation. It was developed through government-subsidized research, often by the military and universities, with the total federal subsidy running into the hundreds of billions of dollars. The early Internet was anticommercial by design: The National Science Foundation Network explicitly limited it to noncommercial uses. Privatization proceeded without meaningful public debate in the mid-1990s, aided by a pro-free-market neoliberal political culture and the Internet bubble. The 1996 Telecommunications Act, premised on the claim that the Internet would render regulation obsolete, instead enabled mergers that halved the number of major telephone and cable companies. A critical 2002 decision by the Federal Communications Commission (FCC) reclassified cable modems as an "information service," allowing cable companies to escape common-carrier provisions—rules requiring open and nondiscriminatory access to their networks—and destroying nearly all independent Internet service providers (ISPs). The result was an ISP cartel: Nearly 20 percent of U.S. households had access to only a single broadband provider, and the United States fell from world leader to between fifteenth and thirtieth in global broadband rankings. McChesney describes the fight for Net neutrality, the principle that ISPs cannot discriminate among users, and the movement for community broadband networks as key countervailing battles.

Traditional media conglomerates facing existential threats from the Internet responded with costly digital ventures, culminating in the disastrous AOL-Time Warner merger of 2000, and waged aggressive copyright campaigns, from the Digital Millennium Copyright Act of 1998 to the failed Stop Online Piracy Act of 2011 and 2012. Legal alternatives like iTunes, Netflix, and e-books emerged as closed, proprietary systems designed to maintain artificial scarcity.

McChesney examines the digital monopolies that came to dominate the Internet. Google held nearly 70 percent of search, Microsoft Windows ran on more than 90 percent of computers, Apple controlled an estimated 87 percent of digital music downloads, and Amazon sold 70 to 80 percent of books online. Monopoly is especially pronounced online because of network effects (by which a platform becomes more valuable and harder to displace as more users join it), the explosion of patents, and proprietary 'walled garden' platforms that restrict users to closed ecosystems. The Internet's conversion into an advertising-based medium was built on targeted advertising driven by detailed surveillance of users' online activities. Internet advertising reached $40 billion in 2012, with the top 50 U.S. websites installing an average of 64 tracking technologies on visitors' computers. Surveys showed overwhelming public opposition to tracking but widespread ignorance about its extent, while the Federal Trade Commission's (FTC) regulatory efforts remained minimal.

McChesney also examines the convergence of commercial and military-intelligence interests online. He documents the National Security Agency's (NSA) warrantless wiretapping program begun in 2001, which received cooperation from all major telecom companies except Qwest. By 2010, the NSA intercepted 1.7 billion communications daily. McChesney concludes that what is emerging "veers toward a classic definition of fascism: the state and large corporations working hand in hand to promote corporate interests."

The book's chapter on journalism documents what McChesney considers the most consequential failure of the digital revolution. Combined newspaper advertising revenues were cut in half from 2003 to 2011, and most American cities lost 50 to 60 percent of their paid journalists since the 1980s. McChesney emphasizes this decline predated the Internet. Prospects for digital journalism are bleak: Traditional news media earned only one new dollar of Internet advertising for every seven dollars of print advertising lost. He argues journalism is a public good and presents international data showing that nations with the freest press systems consistently make the largest public investments in journalism. The United States spent only $1.43 per capita on public media compared to $130.39 in Norway. McChesney proposes a "citizenship news voucher": Every American adult would receive a $200 annual voucher to donate to any qualifying nonprofit news medium, potentially providing $30 to $40 billion annually.

In his conclusion, McChesney lists 17 specific policy reforms, from strict advertising regulation and broadband as a free basic right to large public investments in journalism and barriers against militarization of the Internet. He argues none has a chance of enactment because of corporate domination of the policy-making process, and that winning any of these fights requires a broader political movement aimed at replacing really existing capitalism. Drawing on Karl Marx, the 19th-century critic of capitalism, McChesney highlights the contradiction between capitalism's ever-increasing productive capacity and its system of private appropriation of profit, noting that U.S. businesses held $1.73 trillion in uninvested cash in 2012 while poverty reached levels not seen for generations. He outlines values for a postcapitalist economy, including community control of wealth, cooperatives, and democratic worker control, and argues that building nonprofit media operations is central to constructing a new political economy. He concludes that digital technologies can provide the basis for transformative journalism and political mobilization, but left on their present capitalist course, they can be deployed in ways that are "extraordinarily inimical to freedom, democracy, and anything remotely connected to the good life."