Crisis of Value Theory
Summary by Kevin Carson :
Kevin Carson’s fifteenth ‘Org Theory’ chapter has been consistently quoting my (Michel Bauwens) work on the crisis of value (which is of course, very indebted to the similar views of Adam Arvidsson).
Here therefore is a very good overview of the topic, by Kevin Carson:
As Michel Bauwens describes it, it is becoming increasingly impossible to capture value from the ownership of ideas, designs, and technique–all the “ephemera” and “intellect” that Peters writes about as a component of commodity price–leading to a crisis of sustainability for capitalism.
Recall the following: the thesis of cognitive capitalism says that we have entered a new phase of capitalism based on the accumulation of knowledge assets, rather than physical production tools. [McKenzie Wark’s] vectoralist thesis says that a new class has arisen which controls the vectors of information, i.e. the means through which information and creative products have to pass, for them to realize their exchange value. They both describe the processes of the last 40 years, say the post-1968 period, which saw a furious competition through knowledge-based competition and for the acquisition of knowledge assets, which led to the extraordinary weakening of the scientific and technical commons. And they do this rather well. But in my opinion, both theses fail to account for the newest of the new, i.e. to take into account the emergence of peer to peer as social format. What is happening? In terms of knowledge creation, a vast new information commons is being created, which is increasingly out of the control of cognitive capitalism.
In a later blog post for the P2P Foundation, he elaborates on the nature of cognitive capitalism as a response to the limits on accumulation in the finite physical realm, attempting a new form of accumulation based on ownership of the cognitive realm. But this attempt is doomed to fail because of the increasing untenability of property rights in the information realm.
This system is now facing serious barriers that are a function of the finiteness of the natural resource base that is our planet, and global warming is one example of it. One of the meanings of global warming, coupled with the general trend of globalization, is that our growth-system now covers the whole planet, there is no more outside. What this means is that the limits of an extensive development are being reached….
This is no trivial affair, as the failure of extensive development is what brought down earlier civilizations and modes of production. For example, slavery was not only marked by low productivity, but could not extend this productivity as that would require making the slaves more autonomous, so slave-based empires had to grow in space, but at a certain point in that growth, the cost of expansion exceeded the benefits. This is why feudalism finally emerged, a system which refocused on the local, and allowed productivity growth as serfs had a self-interest in growing and ameliorating the tools of production. The alternative to extensive development is intensive development, as happened in the transition from slavery to feudalism. But notice that to do this, the system had to change, the core logic was no longer the same. The dream of our current economy is therefore one of intensive development, to grow in the immaterial field, and this is basically what the experience economy means. The hope that it expresses is that business can simply continue to grow in the immaterial field of experience.
However, Bauwens writes, this is not feasible. The emergence of the peer model of production, based on the non-rivalrous nature and virtually non-existent marginal cost of reproduction of digital information, and coupled with the increasing unenforceability of “intellectual property” laws, means that capital is incapable of realizing returns on ownership in the cognitive realm.
1) The creation of non-monetary value is exponential
2) The monetization of such value is linear
In other words, we have a growing discrepancy between the direct creation of use value through social relationships and collective intelligence (open platforms create near infinite value through the operations of the laws of Metcalfe and Reed), but only a fraction of that value can actually be captured by business and money. Innovation is becoming social and diffuse, an emergent property of the networks rather than an internal R & D affair within corporations; capital is becoming an a posteriori intervention in the realization of innovation, rather than a condition for its occurrence; more and more positive externalizations are created from the social field. What this announces is a crisis of value, most such value is ‘beyond measure’, but also essentially a crisis of accumulation of capital. Furthermore, we lack a mechanism for the existing institutional world to re-fund what it receives from the social world. So on top of all of that, we have a crisis of social reproduction: peer production is collectively sustainable, but not individually.
Thus, there are two simultaneous crises: first, the failure of artificial abundance through subsidized inputs and externalization of cost, endless supplies of natural resources for appropriation (aided by state favortism), and the availability of new markets as outlets for surplus capital and output; and second, the failure of artificial scarcity in the cognitive realm. Taken together, this means that while markets and private ownership of physical capital will persist, “the core logic of the emerging experience economy, operating as it does in the world of non-rival exchange, is unlikely to have capitalism as its core logic.”
Johan Soderberg relates this crisis of realization under state capitalism to capital’s growing dependence on the state to capture value from social production and redistribute it to private corporate owners. This takes the form both of “intellectual property” law, as well as direct subsidies from the taxpayer to the corporate economy. He compares, specifically, the way photocopiers were monitored in the old USSR to protect the power of elites in that country, to the way the means of digital reproduction are monitored in this country to protect corporate power. [Hacking Capitalism, pp. 144-145.] James O’Connor’s theme, of the ever-expanding portion of the operating expenses of capital which come from the state, is also relevant here. [The Fiscal Crisis of the State] The important point is that this strategy of shifting the burden of realization onto the state is untenable. The proliferation of bittorrent and episodes like the DeCSS uprising have shown that “intellectual property” is ultimately unenforceable. The RIAA’s shakedown operation can be circumvented by the simple expedients of encryption and proxy servers. And as we have already seen, in an economy of subsidized inputs, the demand for such inputs grows exponentially, faster than the state can meet them. The state capitalist system will reach a point at which, thanks to the collapse of the portion of value comprised of rents on artificial property, the base of taxable value is imploding at the very time big business most needs subsidies to stay afloat.
In another article, in which he develops these themes at greater length, Bauwens writes that capitalism’s successor system is likely to have a significant role for markets, but that the two structural presuppositions of existing capitalism–artificial abundance of resources and artificial scarcity of information–will be replaced by the reverse.
We live in a political economy that has it exactly backwards. We believe that our natural world is infinite, and therefore that we can have an economic system based on infinite growth. But since the material world is finite, it is based on pseudo-abundance. And then we believe that we should introduce artificial scarcities in the world of immaterial production, impeding the free flow of culture and social innovation, which is based on free cooperation, by creating the obstacle of permissions and intellectual property rents protected by the state. What we need instead is a political economy based on a true notion of scarcity in the material realm, and a realization of abundance in the immaterial realm.
In the purely immaterial realm, the services of capital are becoming increasingly superfluous, as described by Michael Hardt and Antonio Negri:
…the cooperative aspect of immaterial labor is not imposed or organized from the outside, as it was in previous forms of labor, but rather, cooperation is completely immanent to the laboring activity itself. This fact calls into question the old notion (common to classical and Marxian political economics) by which labor power is conceived as “variable capital,” that is, a force that is activated and made coherent only by capital…. Brains and bodies still need others to produce value, but the others they need are not necessarily provided by capital and its capacities to organize production. Today productivity, wealth, and the creation of social surpluses take the form of cooperative interactivity through linguistic, communicational, and affective networks. [Michael Hardt and Antonio Negri, Empire (Cambridge and London: Harvard University Press, 2000), p. 294.]
In addition, capitalism faces a crisis of realization in another regard that Bauwens does not directly address. For over two centuries, as Immanuel Wallerstein observed, the system of capitalist production based on wage labor has depended on the ability to externalize many of its reproduction functions on the non-monetized informal and household economies, and on organic social institutions like the family which were outside the cash nexus.
Historically, capital has relied upon its superior bargaining power to set the boundary between the money and social economies to its own advantage. The household and informal economies have been allowed to function to the extent that they bear reproduction costs that would otherwise have to be internalized in wages; but they have been suppressed (as in the Enclosures) when they threaten to increase in size and importance to the point of offering a basis for independence from wage labor. “ (http://mutualist.blogspot.com/2008/09/chapter-fifteen-excerpts-peer.html)
- Article: The Crisis of Value and the Ethical Economy