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.

  • If true, this will necessitate finding another standard of value and self-worth than money. The Europeans are closer than we are to valuing quality of life, and the Africans value community. We are going to have a very tough adjustment.

  • Kevin P.

    Jaron Lanier made similar and more compelling arguments a couple of years ago in “You Are Not a Gadget.”

  • Andy Freeman

    Nonsense on stilts.

    > This cannot be directly translated into market value, because it is not at all scarce – it’s over-abundant.

    False. The market value is very low, approximately $0.00.

    > Normally, increases in productivity are somehow rewarded

    And the folks who did the increases in productivity were rewarded. Bauwens seems to think that folks who make use of that increased productivity deserve rewards, but why?

    Facebook folk “produce” comments about their lives and cat pictures. The folks who made that possible have been well rewarded. The folks who are commenting and taking pictures of their cats, not so much, but so what?

    • Mike Carlson

      This comment evidences the truth value of Santayana’s edict: Those who know not their history are bound to repeat it.

    • Andy Freeman

      I know folks at facebook. They’re making good, no, make that great, money. What “history” says otherwise?

      We’ve had plenty of examples of increased productivity. Those increases haven’t rewarded consumers – those increases have just reduced said consumers costs. The consumers have been rewarded when they’ve produced something that others valued. Why should this time be any different?

      If you think that there are people willing to pay for facebook posts in general, go for it – build a system and be a middleman. Most of the technology to build a large enough demo is open source so you can have traction by the time you need real funding.

      Of course, if you’re wrong….

  • Mark Sparks

    Food. Clothing. Shelter. Transportation. Last I knew, these were all items for purchase in our capitalist system. How does this opinion apply to these items?

  • Morris

    I definitely agree with your idea that technology will lead to efficiency and not growth… With every new frontier discovered, things become easier for society, leaving less knowledge that we need to know. However, I do disagree with Bauwen’s idea. I think technology can influence a capitalism society productively. Yes, social media does advertise things free of charge, but this is bringing attention and insight to so many parts of society that we may not have known about without technology. The two can go hand in hand.

  • I don’t really like the use of the term capitalism because its poorly defined.

    As a system, though its a amalgam of many things, much hangs in the balance, and by balance I mean the three fundamental systems of economic organization.

    Lets examine those three systems:
    ?• Free Enterprise, where capital goods are owned by private owners and controlled by private owners,
    ?• Fascism, where capital goods are owned by private owners and controlled by the state,?
    • Socialism, where capital goods are owned by the state and controlled by the state.

    These 3 systems are separate constructs from the four forms of government:

    • Anarchy (rule by no one,)?
    • Dictatorship or Monarchy (rule by one person,)
    • Oligarchy (rule by a few persons, like we currently have here,)?
    • Democracy (rule by the majority, aka “tyranny of the masses”)

    None of these socio-economic systems are mutually exclusive in the larger context of a political systems.

    In fact, it is necessary to combine the three because there are features of each which complement and fill in the blind spots in each.

    A successful country is one where the systems are successfully blended.

    An unsuccessful country is one where there is an unnecessary bias towards one or another.

    For example, that is why we have a unified power grid but each utility/corporation cooperates in maintaining the unified power grid while trying to minimize the costs, possibly to maximize their profitability.

    We are currently suffering from a excess period of “Laissez-Faire” free-enterprise which did what its good at.

    It piled up most of the money and its hanging onto it. (Those Accountancy Rules are why Trickle Down never works, because the place where its supposed to trickle down from has accountants who are employed to insure that it doesn’t trickle at all.)

    The problem is what we’ve been left with an economy and a polity where things are piled up as follows.

    We’ve become a class-based social government
    • OF the thousandaires (the 99%, that would be me and thee,)
    • BY the millionaires (the 1%, that would be the extremely insular privileged overlords and bosses,)
    • FOR the billionaires (the 12,400 individuals identified by the IRS as the people who count (though they don’t really count as they hire some thousandaires to run machines to do that.)

    Since most of the country clearly is owned by 12,400 people and we’re sick and tired of the lies and bullsh*t of the 1%, the only option left to us 99%ers is an off-grid barter economy, and that’ll never fly.

    How is this different than the political situation that led to the founding of the United States?

    It ISN’T really.

    One system had privilege being a condition of one’s birth.

    The situation in the United States is the (cess)pool of nobles has expanded to people that the corporations like and are willing to fund.

    The first thing we do is change from an ELECTED to a SELECTED form of government.

    Pick names at random out an eligible citizen pool and they’re stuck with doing the job for one, and only one, four year term.

    There could/should/would be no such thing as a career in politics. (The only thing worse than getting stuck with somebody who didn’t want the job is getting stuck with some idiot who did, figuring it was going to lift him a few rungs up the social/economic ladder.)

    And don’t give me that bullshit about average citizens don’t know enough about politics.

    Average citizens know right from wrong and are likely to at least read a bill before they sign and pass it on.

    Average citizens know enough to be suspicious and not so venial and blinded by the lure of undeserved re-election.

    • Andy Freeman

      > We are currently suffering from a excess period of “Laissez-Faire” free-enterprise which did what its good at.

      Nonsense. We’ve never had more biz regulation. And, it’s the regulators who failed.

      In fact, the housing bubble was a creation of regulation. It started with a mandate to give loans to folks who weren’t likely to be able to pay them back. It worked because quasi-govt agencies were given a means for profiting from said mandate. And, thanks to regulators, we put our banks at risk by mandating that they hold stock in said agencies, so when the agencies fell, they took the banks with them.

      Yes, securitized loan “insurance” was a creation of regulation. That’s how regulators could justify “asking” banks to hold such “securities” as tier-1 assets.

  • Kendall3

    So “internet collaboration” has suddenly negated fundamental economic principles (??)

    No way. Ignorance of basic economics leads you & Bauwens far astray.

    If there is a practically unlimited “abundance” of any good or service to meet any level of consumer demand (the air we breathe everyday, for example) — then we are no longer discussing a scarce ‘economic’ good/service, subject to the laws of supply & demand. That does NOT mean those economic laws cease to exist for all other scarce economic goods… which is mostly what humans deal with.

    Abundant knowledge does not negate the need for shoes, energy, food, or toilet-paper… nor the means to actually produce those things for mass human consumption. People need & want lots of ‘tangible’ stuff, now and always. “Actionable Knowledge” still requires vast amounts of tangible resources and human labor … and the immutable economic laws that govern their use — to produce anything. Internet knowledge might live in an ethereal cloud — but humans do not & can not.

    There is no “fault line” in our economic market system… and this “Whither Capitalism” stuff is typical leftist nonsense.

    Utopia ain’t just around the corner — ‘knowledge workers’ can improve things, but the fundamental reality of mankind existing (briefly) in a harsh Natural world of scarcity can NOT be changed.


  • James Bain

    When I read, or hear, or watch any one of the scores of news and information sources I occasion in my efforts to be aware of my surroundings, I can’t shake the feeling that there are two worlds we all exist in. One world has us believe that the existing system is the best of all possible worlds, flawed, but improving day by day. The other world is populated by people who are extreme sociopaths and are quite adept, in most cases, of either hiding that fact or making us feel stupid for thinking they are so.
    I’ve decided that the second scenario is the natural state of humans and that any progress towards a world which truly honors collaboration befitting a mentality which accepts this condition called lifeboat Earth is, while commendable, amounting to whistling past the graveyard, while madmen jockey for rule.
    This present situation, it seems to me, amounts to a contest of wills between competing mobs. I mean Mobs, as in criminal syndicates. That a particular Mob espouses a particular invisible deity and organizes itself around sets of economic and political ideologies, such as “democracy”, or “fascism”, or “capitalism”, or “socialism”, are all rendered meaningless when the historical record shows that not a single social group throughout has escaped the pattern of having one tiny percentage manipulate and control the rest of the population for its own benefit and leisure. This situation has evolved, as all systems of domination and rule have throughout history, into one in which we are now faced with a Mob which can essentially survive most catastrophes, including engineered ones. As Stalin did during that last world war, our “leaders” are in a position to starve us into a form of slavery we will never recover from, in view of the staggering advances made and yet to be made in the devices of control: armaments, training, surveillance, enhanced social manipulations and imprisonment, to name but a few.
    This latest economic debacle, in which future generations have been shackled to incalculable debt, constitutes one of the final steps in the process of sloughing off the unnecessary members of the populations economically, to be followed by a situation which could be real or contrived which physically eliminates the numbers of people required to substantially oppose this slavery, along with instituting the measures which essentially render survivors as thralls, to be employed as basically as pack animals would.

  • tom

    There may be an ever increasing abundance of ideas, but not all of those ideas are of the same value. Which ideas are more important and useful than others will be determined in the marketplace, thereby making capitalism more essential to the internet economy, not less. Socialism will not work in cyberspace, just as it has never worked anywhere else.

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  • Xaffax Darkstar

    The article is correct for so far that in cyberspace economy doesn’t really work in any activity that doesn’t lead to trade of tangible commodities in the real world. Facebook and google make their money as an advertising platform. But what is does do is take knowledge and information out of the market. Once it’s on the internet it’s shared by every one and every one has it. Indeed it becomes like air. And this is a big thing. Because why get an education or why develop new information if you can’t get money out of it? The idea of intellectual property and knowledge workers is a pillar of western civilization. If that falls away how can these people who are essential for development and progress of our civilization still make a decent living, For that we need a new model. We can’t rely on market forces and capitalism for that,