Posts about capitalism

Whither capitalism?

I’ve been arguing for sometime that technology leads to efficiency over growth and that that will have profound impact on society we can only begin to grasp. Michel Bauwens now furthers the argument, asking whether capitalism can continue. I don’t think I’ll go that far yet. But his arguments are fascinating.

Where there is no tension between supply and demand, there can be no market and no capital accumulation. What peer producers are doing, for now mostly producing intangible entities such as knowledge, software and design, is to create an abundance of easily reproduced information and actionable knowledge.

This cannot be directly translated into market value, because it is not at all scarce – it’s over-abundant. And this activity, moreover, is done by knowledge workers, whose ranks are steadily expanding. This over-supply threatens to make knowledge workers’ jobs precarious. Hence, an increased exodus of productive capacities, in the form of direct use value production, outside the existing system of monetisation, which only operates at its margins. In the past, whenever such an exodus occurred – of slaves in the decaying Roman Empire, or of serfs in the waning Middle Ages – that is precisely the time when conditions were set for major societal and economic changes.

Indeed, without a core reliance on capital, commodities and labour, it is hard to imagine a continuation of the capitalist system.

The problem is this: internet collaboration has enabled the creation of use value in a way that totally bypasses the normal functioning of our economic system. Normally, increases in productivity are somehow rewarded, and these rewards enable consumers to derive an income and buy products.

But this is no longer happening. Facebook and Google users create commercial value for their platforms, but only very indirectly. And they are not at all rewarded for their own value creation. Since what they are creating is not what is commodified on the market for scarce goods, these value creators do not receive income. Social media platforms are exposing an important fault line in our economic system.

Davos, disrupted

I’m among the disrupted of Davos. Outside, there’s an #OccupyDavos encampment in igloos (really). Down the road, someone will be giving out an award to the worst company of the world. But the disruption is no longer outside. That’s what I sensed in past years; that’s what they wanted to believe here. Now the disruption is inside. Every institution is challenged. Every.

The World Economic Forum issued a list of global risks (though Google’s Eric Schmidt countered on his Google+ page that he’s optimistic; that’s because he’s a disruptor). I’m sitting in a room here with a debate on capitalism about to begin. Even the sacred science is disrupted. I’m having conversations and sessions about disrupted banking and retail and education and media, of course.

I began this trip to Europe with my pilgrimage to the Gutenberg Museum in Mainz (blogged earlier). I recall Jon Naughton’s Observer column in which he asked us to imagine that we are pollsters in Mainz in 1472 asking whether we thought this invention of Gutenberg’s would disrupt the Catholic church, fuel the Reformation, spark the Scientific Revolution, change our view of education and thus childhood, and change our view of societies and nations and cultures. Pshaw, they must have said.

Ask those questions today. How likely do you think it is that every major institution of society–every industry, all of education, all of government–will be disrupted; that we will rethink our idea of nations and cultures; that we will reimagine education; that we will again alter even economics? Pshaw?

Welcome to Davos 1472.

LATER: Thanks to Andy Sternberg, here is a Storify of my tweets from an opening session at Davos, a Time debate on the future of capitalism (sorry for the long link; having trouble with the WordPress app on my iPad; also can’t get the embed code from Storify on the iPad; will fix it later):