How IT Came to Rule the World, 2.4: Global Money and Spreadsheet Capitalism

Posted on | July 18, 2010 | No Comments

The growth of “petrodollars” due to increasing foreign oil consumption during the 1970s combined with the accelerating developments in computing and communications technologies to create a new realm of electronic finance with vast political and economic repercussions throughout the world. What emerged was a new system of digital capitalism that was propelled, in part, by the new utility in spreadsheet calculation and global markets connected via undersea fiber optics and orbital satellites. I have called this the regime of digital monetarism.

The new regime was unwieldy but within this turmoil an important set of technologies emerged that would add a major new dimension in the process of electrifying money and capital. With Cold War technologies, a global infrastructure for data communications emerged with satellites and undersea communications cables leading the way. Simultaneously, Apple Computers released the Apple II microcomputer based on a Motorola microprocessor. Of central importance was the electronic spreadsheet. VisiCalc (Visible Calculator) was designed for use on the Apple II in 1979 and it became an immediate hit for a large number of different people needing to make financial calculations. In August of 1981, IBM introduced its own “Personal Computer” and soon after Lotus 1-2-3 became available for the “PC” and all the “IBM-compatible” clones such as AST, Compaq and Dell. In an era of incredible economic and financial flux, the electronic spreadsheet became the “killer app” which guaranteed the success of the PC industry and also provided an incredible new utility for individuals who were empowered to create dramatic new numerical calculations and construct new financial “what-if” scenarios in unprecedented short timeframes. Spreadsheet technology was foundational for digital monetarism because it provided a calculative tool that became universally available and provided immediate feedback via the accessibility of the personal computer.

This global political economy combined a new “free enterprise” fundamentalism (Reagan-Thatcherism) with a system of unprecedented capital mobility. Empowered by the calculative and organizing powers of the spreadsheet, global finance targeted debt-ridden governments and began a process of privatizing public assets such as airlines, broadcasting, electricity, transportation, oil fields and telecommunications by valuing assets, creating state-owned enterprises (SOEs) and then finally selling them off as corporate entities to global institutional investors such as pension and sovereign funds.

In the process, national barriers to unregulated capital flows broke down and new forms of communications (Internet) and news (“Bloomberg Box”) emerged to facilitate the information flows needed for investment decisions. Combined with innovations in mathematical algorithms, global money morphed into a variety of financial instruments traded in electronic “dark pools” and on interconnected financial exchanges.

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Anthony J. Pennings, PhD has been on the NYU faculty since 2001 teaching digital media, information systems management, and global political economy. He can be reached at ap70@nyu.edu

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