Crisis of Value in a Collaborative Economy
"In many fields, investment is now flowing into industries that depend or make the most of voluntary or free input. Take social networking, where Facebook is an obvious example, or the crowdsourcing benefits drawn from the Encylopedia Galactica Wikipedia.
This one fact naturally has the potential to change everything since we go from a world where labour is expressly defined as activity that demands compensation, to a world where labour is increasingly redefined because it is a source of pleasure, needing no compensation at all. In this respect, if you follow Ricardian logic — which suggests that labour is the key determinant of value, not utility — then value itself must be redefined too.
Indeed, some have already argued that econometricians should start inputting alternative measures of value and wealth into their growth models. Quality of life, for example, should be assessed not only by consumption goods (for example, rice, TVs, train rides) but also more fundamental aspects of well-being (for example, health, emotional states, freedoms) — much harder to value in purely monetary terms.
But there’s also the collaborative side of it.
Brian Arthur comes to the same conclusion ...
- "something new is happening with the collaborative economy. Instead of creating new industries that are based on mechanization and thus require the production of new robots and machines as in the 20th century, what we are witnessing with the collaborative economy is a shift from jobs towards unpaid labor from a crowd of volunteers. Take open-source softwares or Wikipedia for instance, and imagine this for the whole economy. Long story short, this is not about less work, but about having fewer paid positions."
Another way of looking at it, is having less work and more leisure time in an economy that can afford to keep an ever larger portion of the population out of work.
Which gets back to the point about the monopolisation of profits in such a world and how to equitably distribute the wealth that’s created via the collaborative process.
In other words, is it fair for a corporate that depends entirely on voluntary input for its capital returns, to suck up those profits entirely for itself? Or should that wealth somehow be shared amongst the collaborative community? Are these corporates becoming rentiers as some argue, or as others might counter social utilities, which need to make money to cover costs of operation and infrastructure.
There is one potential solution. You could call it the “common agricultural policy” response. A model in which people are compensated by the government for staying out of the “financially compensated” workforce if their occupational field is oversupplied and suffering the effects of overproduction and capacity, and thus become free to deploy leisure time as they see fit with no need for compensation.
Another way of achieving the same result, of course, is simply by debasing the rents collected by industry via permanent money creation — so as to offset the disproportional wealth effect on today’s tech rentiers as well as older generations, which all things relative, appear to have over-benefited from the first mover advantage associated with their era. So not dissimilar to what’s happening now, but with one important difference: that the newly created money flows directly to spending individuals rather than corporates, savers and banks, who do anything but spend.
In fact, not only do they avoid spending, they do their very best to avoid wealth “debasement” by crowding each other out in an ever limited pool of safe assets. This is ironic given that the process only deprives new industries from capital investment, while accumulating “wealth” amongst the older and less productive generation. What these safe asset investors fail to recognise, however, is that the process actually transfers the capital allocation decisions to government instead — since the other side of any safe asset investment is almost always government, meaning its existence is almost entirely dependent on government spending.
The very same government spending that most wealth preservationists — as the fiscal cliff drama has shown — have a major problem with.
We would imagine the die-hard capitalist retort would be: well, isn’t this just state-managed wealth confiscation?
In a way, maybe it is. But, we daresay, that’s the wrong way of looking at it. This isn’t really an anti-capitalist phenomenon. It’s more a process of capitalism’s evolution. It’s the consequence of collaborative forces coming into play in an economy that is no longer preoccupied with living hand to mouth.
Ultimately, it takes two to make a monetary-based economy: investors and spenders. But it’s the relative balance between these two parties that ultimately determines the cost of money and value of savings and investments.
What we have now, unfortunately, is an economy overcome by “investors” looking to protect wealth, in a world that offers ever fewer risk-free opportunities outside the government sector.
And why is that? Because private alternatives are naturally riskier when diminishing capital returns are guaranteed to manifest more quickly due to the collaborative “free” effect. Indeed, unless you invest in an industry monopoly which is prepared to sue anyone who tries to compete in their field — often in a way that suspends or regresses technology — it’s unclear whether the company in question will have enough time in the limelight to be able to return your capital, let alone interest, before it is obliterated by a market competitor or the collective collaborative base.
What’s more, when so much is available for free in the market, who can actually be bothered to spend on stuff that, you know, costs something?
Think of it, perhaps, as entirely new “free” market." (http://ftalphaville.ft.com/2013/01/02/1318343/why-a-free-market-changes-everything/)