For centuries, Africa has been subject to external capitalist threats including colonialism, enslavement, war, and resource plunder, all of which have tested our resilience. By and large, we have developed mechanisms to recognize these threats and methods of mitigating their impacts. We now face a new one, which arguably places us in greater peril, because of its ethereal nature. Those who have always sought to exercise hegemony over us have had to change their approach in order to counter our greater consciousness as a people and bypass contemporary global norms. Naked aggression now meets resistance and attracts opprobrium, so capitalists now approach us cloaked in all manner of ‘good intentions’. The actualization of any benefits to us from these good intentions remains elusive because they are hidden in a ‘virtual’ world order dominated by rhetoric that is increasingly distant from reality and practice. This new ‘order’ resides in, and relies on the technologies that have become integral parts of our lives. Therein lies the danger: succumbing to the fictitious economy and the ‘power’ that it purports to wield.
The excesses of the fictitious economy
Technology has long been key to the progress of human societies, basically because better technology has enabled us to exploit, preserve and use the necessary resources that we need to live in our respective environments and undertake a wide array of tasks. However, tech has also driven financial success and massive cash flows, far out of proportion, to what should be the corresponding flow of goods and services; for example, through content sharing. Tech has consequently become revered and idolized as a source of copious cash flow without the logistical encumbrances of tangible trade. This has led to an exponential growth of the ‘fictitious economy’ and the fallacy of tech as an end in itself rather than a tool to facilitate other human endeavours. Like all fads and fallacies, ‘sell-by’ dates inevitably arrive, ruthlessly exposing the financial underpinnings on which they stand. And Africa should pay attention to this phenomenon because the tech-driven fictitious economy is a threat to the continent.
Siwei Cheng (2011) defines the fictitious economy as “all activities of fictitious capital mainly based on financial platform. Compared with real economy, fictitious economy is another economic pattern, including its structure and evolution, existing at economic system, which can be viewed as ‘software’ of economy.” Basically, this describes the ‘perception economy’ (i.e. the trade in ‘values’ that are subjectively applied by the traders). An example of this is the carbon trade where self-appointed auditors arbitrarily ascribe carbon values to forests and sell them.
Historically, the fictitious economy has functioned as a facilitator of tangible trade in real goods and service which has made it indispensable, for example in determining stock prices. Recent developments in the financial sector suggest that the volume of the fictitious economy has grown to a tipping point where it has begun to outweigh tangible trade, which comes with grave consequences. Unsurprisingly, with this level of growth, decadence crept into the fictitious economy by spending huge sums financing tech projects whose utility or viability can be very difficult to perceive.
A snapshot of the manifestation of the fictitious economy is the obsession with driverless cars. An example of the challenge emanating from this sort of economy is the recall of 363,000 vehicles by the leading electric car manufacturer Tesla because a $15,000 self-drive software installed in them could cause otherwise competent drivers to violate traffic rules after the ADAS ‘autopilot’ system was found to be behind several crashes with emergency vehicles. The whole snafu has cost over $5.5 billion.
Another example of this obsession is how Google (through its parent company Alphabet) has thus far spent over $3.5 billion on research and development of driverless cars in Silicon Valley and Phoenix. Yet due to safety and legal concerns, these cars have to operate with an alert and competent human seated in the driver’s seat. In some instances, they are even operated with safety chase cars driven by humans.
To a layperson, the amount of money that capitalist corporations are willing to spend to replace poorly paid human drivers is a startling display of cognitive dissonance, but this bewilderment isn’t unfounded. Speaking to ‘Car and Driver’ magazine, Ashley Nunes, a researcher at Harvard (one of the intellectual sancta of Western capitalism) who has looked specifically at the business case of autonomous taxis said that its “economics are, to put it mildly, fanciful”. Global financial institutions are endowed with vast analytical capacity in the fields of economics, agriculture, climate, commerce, etc., but are currently unable to analyze fiction; hence their ill-informed decisions to sink billions of dollars into “fanciful projects” are largely based on subjectively perceived values.
These ill-informed decisions have resulted in the collapse and closure of Silicon Valley Bank (SVB) on the 10th of March 2023, which was greeted with consternation around the world, but for vastly different reasons. On the one hand, tech firms around the world (particularly in Western Europe) suddenly couldn’t meet their financial commitments and had to suspend operations. On the other hand, a (relatively small) number of ‘clients’ were in danger of losing their deposits as a result of the collapse. Shortly thereafter, there was a statement from the US Federal Reserve giving reassurances to the depositors, which was surprising, not because of the action itself, but the speed and alacrity with which it was implemented. Almost simultaneously, other financial institutions with similar client profiles started crumbling. These ranged from better-known names like Western Alliance to discount brokerage like Charles Schwab Corp. whose stock value was down by almost 10% as of mid-day on that date, having recovered from an earlier higher drop of as much as 23% of its value. This was swiftly followed by the collapse of Signature Bank, triggering a precipitous fall in the value of banking stocks. The US Treasury Secretary Janet Yellen shed all pretensions of calm and warned of a ‘contagion’ or a possible ‘financial pandemic’. The fallout spread to Europe with the Swiss Bank UBS Group having to take over the Credit Suisse Group in a bid to stem the crisis, which was threatening to bring down the venerable 167-year-old Swiss Bank.
Also in the US, a group of 11 private banks including JP Morgan and Citigroup injected a total of $30 billion into First Republic Bank to shore up its finances. This is a new and puzzling trend in the cutthroat Western capitalist arena, where corporations are rarely concerned about the stability or success of rivals. So, what exactly was going on? The magnitude of the fictitious economy had been exposed and its ‘pillars’ had to support each other in recognition of the fact that none of them could survive the collapse. Describing the current situation as a ‘crisis’ is inaccurate because that gives the impression of a functional financial system that has suddenly suffered a catastrophic loss of money. We should remember that this is a fictional economy, and there wasn’t any actual money, so the current stress is merely a result of that particular truth coming to light.
Why Africa should be concerned
In discussions with fellow African scholars, I have often seen them react with (justifiable) derision at a system that seems to be struggling under the weight of its own financial and intellectual contradictions. They believe (rightly) that we are immune from many of these strange tech innovations, which would be very difficult to apply here, but few understand that the danger to Africa comes not from the frivolous tech innovations of the fictitious economy, but from the money (real and fictitious) that it generates.
‘Dirty’ money (the proceeds of crime) requires ‘laundering’ through legitimate businesses in order to become ‘clean’ money that can be spent in conventional ways. Likewise, ‘illogical’ money that accrues from the fictitious economy also needs to find intangible ‘expenses’ through which it can be used to buy tangible power, influence, and assets. This is where we encounter the “green” world. By what may be a quirk of fate, the growth of the fictitious economy has coincided with the rise of the environmental agenda as a global concern. The aforementioned green world is a global legal, ethical, and financial lacuna where anything goes, and where white-collar crime, rights violations, racism, and other injustices have found legitimacy.
Suddenly, there was an avenue through which capitalist corporations could burnish their social reputations and a veritable army of ‘conservationists’, misfits, ex-military contractors, and PR specialists ready to take the money and produce the content necessary to colonize large swathes of Africa. All of a sudden, there were millions of dollars from tech companies, including Meta, Netflix, Alphabet etc, available to pay for carbon credits ‘generated’ by displacing local people from larger and larger tracts of land. There were huge sums of money being paid out without goods or services in return, and the conservation organizations are willing brokers of this ‘laundering’. The only verifiable truth in the opaque carbon audit process is the geographical area under the programme so the conservationists must continue annexing more and more land to keep the money flowing, hence the continuous violence. Colonialism was a capitalist venture requiring violence and we face a possible recurrence of it driven by the need of capitalists to assuage their guilt over the environmental damage that they themselves are responsible for. Crucially, the fictitious economy has begun to seep into policy and government functions, with countries like Kenya trying to create regulatory frameworks for carbon trade. As a result of this, western states have seen the potential of the green world as a useful new ‘power tool’ to counter the growing Eastern influence in Africa. As a result, they are channeling huge amounts of money into ambitious ‘conservation’ initiatives that all involve controlling vast African landscapes and seascapes.
Real and perceived spheres of control are the lifeblood of the fictitious economy because it doesn’t actually have the resources to engage fairly with the (mostly Southern and Eastern) tangible economy and this could be a source of insecurity. In fact, a closer examination of the bellicose geopolitical posturing on a global scale reveals the angst of the West about this. Consumers of Western media will notice the often subtle but constant reference to the East as a ‘threat’ that has to be ‘dealt with’ in some way, peppered with laments about Western dependence on Eastern sources of both raw materials and manufactured goods.
The global climate crisis has provided a valuable platform on which the fictitious economy can exercise contrived moral authority by painting the East as less environmentally responsible than the West. This requires the creation of vacuous edifices like green bonds, green finance, carbon credits, offsets and the like. These ‘instruments’ have questionable (if any) impacts on the actual environmental crisis. The world will soon have to acknowledge the fact that carbon credits or offsets are mere financial deals that have no effect on emissions and the climate crisis. It is unravelling rapidly and the fictitious economy has already come up with ‘biodiversity offsets’ to replace the carbon schemes. The Organization for Economic Cooperation and Development (OECD) defines biodiversity offsets as “measurable conservation outcomes that result from actions designed to compensate for significant, residual biodiversity loss from development projects.” In this case where biodiversity is considered a tradeable ‘currency’, the highest value of credits will obviously come from tropical Africa, Asia, or South America.
In crude terms, the industrial complex in the Global North will continue unabated, but pay ‘protection fees’ to conservation organizations which will use the said money to annex tropical land, water and seascapes. The sums of protection money are colossal and will demand even more violence against Black and Brown people who are regarded as ‘disposable’ by the fictitious economy. We are in a fight for the resources that are our birthright. This is effectively a fight for our lives. Are Africans ready?