Introduction to the Ethical Economy

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We have sophisticated metrics which capture Respect and Love’ Kevin Roberts, CEO of the Saatchi & Saatchi Ideas Company

In this and the following instalments (which I hope will appear with a certain regularity) I will suggest that the contemporary information economy can be successfully re-branded as an ‘ethical economy’. What do I mean by that? Let us start with what I do not mean. The term ethical economy does not suggest that contemporary economic relations would in some way be ‘more ethical’ more benevolent or nicer than what was before. I do not propose any kind of optimistic evolutionary narrative; I don’t think that contemporary corporate capitalism is compatible with an ethically sound social order, and I view (as I shall expand on further below) the trend towards corporate ethics, corporate social responsibility, ethical consumerism, and such as merely surface manifestations, reactions to something deeper and much more fundamental. It is this deep, structural movement that I want to capture with the term ‘ethical economy’. This terms intends to capture the fact that in contemporary capitalism the most important source of value is rapidly becoming what has always, from Aristotle via Arendt, been considered the root of the fundamentally human ethical problematic: the human capacity to create an inter-subjective order through processes of communication and interaction. It is this ability co-construct, a however transitory, common social world, that has an ethical relevance- shared symbols, forms of social relations and community and affectively rich experiences- which now increasingly also underpins both the production of use values, and the capitalist appropriation of surplus value. Surplus value becomes increasingly based on surplus-community, or what Maurizio Lazzarato has termed an ‘ethical surplus’. What was once considered external to the cold and rational sphere of economic production and exchange, the ethically rich inter-subjectivity of private life and, or what Habermas called the ‘lifeworld’, has now become the core workshop of the contemporary cognitive capitalism.

The production of such an ethical surplus is generally not organized by a logic of monetary exchange value, but by an ethical logic of sharing and respect. Some actions are motivated by genuine altruism, by the desire to be or do something for others. Other acts are motivated by the quest for the recognition of others, whether this be one’s peers in a community or a friend or a loved one. (Other actions might be motivated by fear, fear of the loss of face or of standing within the community.) In any case, the ethical economy builds on a structure of ethical motivations: motivations that in some way take account of the other as a subject. The ethical economy is similar to some versions of traditional gift economies, as Barbrook has pointed out, only that the expectation of reciprocity is weaker and more indirect than what is generally the case in gift economies. Also the anthropological literature on gifts and gift economies tends to underline how gift-exchange serves to maintain and reproduce existing social bonds. The ethical economy, on the other hand is geared towards the production of new such bonds: towards the production of an ethical surplus.

Neither is the ethical economy premised on a direct exchange of use values- it is not a barter economy. Rather exchange and production are coordinated by a non-monetary medium of exchange: respect. Respect is a quantitative medium, in the sense that people have more or less of it, but it is not, at least not as yet, endowed with an objective measure. This absence of a measure (which we will come back to latter) is a key characteristic of the ethical economy, and the focal point for contemporary and future struggles around its institutionalization.

In some ways we have a return of pre-capitalist relations of production. Like in the fundamental economic unit of the Greek economy, the <>, production is motivated by the fundamentally affective sentiments of love, fear or respect. The difference is that contemporary ethical economy functions according to an affective logic of respect which has been disembedded from fixed role-structures. There are no longer any apriori determined positions of Master and Slave, rather these allocations can (but must not) be determined as the process unfolds. This way the power-game looks more like S&M play than like an actual slave economy (and maybe this is why Queer Theory has become so popular in the social sciences- it actually offers a good way of understanding the emerging logic of contemporary ethical relations of production).

This state of affairs is ambiguous: It has a darker side as well as a more positive one. On the one hand, the capitalist putting to work of the ethical capacity of human beings entails a real subsumtion of life as such within the capitalist valorization process. People live, interact and form a common within capital, and this activity is increasingly subject to management, surveillance and control. (Everything is commoditized and ‘branded’) Because they are now becoming directly productive in radically new ways, our intersubjective relations are also directly policed in radically new ways. This is the fundamental scope of a whole series of contemporary strategies of governance, from brand management, to corporate culture, political correctness and the policing of internet habits. On the other hand, the fact that the ethical capacity of interaction has been thus rationalized, mediatized and technologically enhanced means that immense productive powers which are at once economic and political have been unleashed. If people, as Hannah Arendt once wrote have always been capable of creating a common world though communication and interaction, the size, complexity and scope of that common is now far greater than before. This carries a great promise for future forms of social transformation. Like the printing press ended up revolutionizing the very political structure of Europe and introduced the distinctively modern phenomenon of mass politics, networked information and communication technologies seem to have the promise of achieving a reorganization of political and social life with equally revolutionary implications.

The Ethical Surplus.

‘Functionality is secondary. people are at the center of the universe 2.0..Connecting people in the context of some activity is the most crucial thing an application can do’ Stowe Boyd at Reboot, 2006.

What do we mean we say that the ethical capacity of human interaction is put to work? Let us start with some concrete examples: Consider the example of SMS messaging, presently the perhaps most exciting branch of the communication industries. SMS messaging generates a global revenue of $ 75 billion, which is more than both movies, computer games, music and the sale of laptop computers. Why compare an SMS message with a feature film or a computer game? Because both are in a way cultural products, both provide experiences and not just information. But here the difference ends. An SMS message, in difference to a computer game or a feature film , is something that is produced by users themselves. Both the actual message, as well as the informational and affective relevance that it achieves- its use value- has been produced by users. But not by individual users. Rather, form the point of view of the users, SMS messaging is a tool that serves to produce and coordinate social relations and common activities of experiences: flirtation, coordinating a night on town, keeping in touch with friends. The SMS message is a tool that is employed in user’s ongoing construction of an ethical surplus: an ethically significant and affectively rich common social world. Telephone companies do not intervene in this production process, they limit themselves to taxing it, by charging for SMS traffic. This principle, to appropriate value by being able to enclose, restrict or otherwise tax what is essentially an autonomous production process is emerging as a paradigmatic model of valorization in the ethical economy. It is typical of a new form of capital, what Michel Bauwens has called ‘netarchic captial’. Netarchic capital does not primarily live off Intellectual Property Rights, whether this entails the ability to restrict the circulation of innovation, as in early business models for the information economy like the AOL-Time.-Warner merger in 2000, or the possession of cutting edge technologies. Rather netarchic capital lives off its ability to directly exploit forms of social cooperation. The paradigmatic example of such netarchic capital at work is of course the fundamentally ethical economy of Web 2.0. Social Software, Multiplayer online games like Second Life, dating sites and communication protocols like Skype all follow this logic. They do not necessarily provide particularly advanced or exclusive forms of technology, but rather a platform that empowers, enables or otherwise affects the autonomous ethical productivity of users. These platforms are valuable because they connect people in new ways and make possible the production of new forms of ethical surplus. This their ability to ‘connect people in the context of some activity’ that they control, or for which they control the platform, environment or context, allows them to appropriate a value stream. But how? How does the ethical surplus become valuable? There are basically four ways in which this can happen, and they usually coincide to some extent in each individual case: taxation, appropriation, enclosure and financialization.


In some cases, as in the case of SMS messaging, dating sites and Online Gaming this can a matter of direct taxation. Site owners make users pay a fee for the privilege of producing what the site owners subsequently sell access to: an environment rich in ‘profiles’ and opportunities for romantic adventure on a dating site, a complex and exciting ‘virtual world’ to explore in the case of Online Games. These can be substantial values. To quote Business Weeks recent survey of ‘virtual worlds’, residents of Second Life, spend a quarter of the time they're logged in, a total of nearly 23,000 hours a day, creating things that become part of the world, available to everyone else. It would take a paid 4,100-person software team to do all that, says Linden Lab. Assuming those programmers make about $100,000 a year, that would be $410 million worth of free work over a year. Think of it: The company charges customers anywhere from $6 to thousands of dollars a month for the privilege of doing most of the work."

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Site owners can charge fees for accessing this user produced content. Alternatively they can charge advertisers for the privilege of using it as a medium or distribution channel (BBC has rented a virtual island in Second Life to used as a platform for the distribution of alternative rock music; both Banana Republic and the Gap have stores there.)

Although of course easier to achieve on the internet, where access and use is simple to restrict, this principle applies in other fields as well. A brand, among other things, consists of an extra experience, attitude, or affective pattern for which consumers are prepared to pay a premium price. Macintosh computers cost more than other computers because they are ‘cooler’, more aesthetically refined and allow you to present yourself to other people, as well as experiencing your own interaction with the computer in different ways. Now, in part this difference is produced by Apple’s own advertising and media investments, but to a large, and for brands in general, increasing extent, it is produced by consumers themselves. Their ethical productivity is put to work through various forms of viral marketing, event marketing, real life product placements, so that it co-produces the affective extra for which brand owners can subsequently charge an access fee. Brands are becoming similar to online environments like Second Life: platforms for action and sociality that enable and empower the production of particular forms of ethical surplus.


This brings us to the second dominant mode of valorization, the appropriation of organized co-production. In many sectors ethically motivated forms of production have proven far more efficient than those coordinated by money or bureaucracy. One famous example of this is the Open Source Software movement. A non-monetary economy of respect and peer appreciation has managed to produce software that is far superior to what corporate giants like Mircosoft have been able to churn out. IBM has understood this lesson and now finances the Open Source movement, uses the software it produces and makes money selling service and support around it. But the same logic applies to the cultural productivity of ‘underground’ or counterculture which has formed a significant engine for the development of consumer capitalism since the 1960s and on. At an early stage the music industry began to systematically survey US youth culture, incorporate its innovations and transform them into commoditised music styles. The fashion industry soon followed suit. Today this ‘capture of cool’ has become systematic and a plethora of trendscouts or cool hunting firms have developed. Nor is this restriceted to the cool of youth culture any more. A growing number of companies make recourse to user-led innovation strategies where consumers are invited to contribute to the design and development of new products or brands, often by means of some form of online forum or web community. Procter & Gamble allegedly increased the productivity of its R&D with 30 per cent by actively outsourcing innovation to its consumers. Here, then is an example of the direct appropriation of the ethical economy of everyday life as an important productive externality. This logic has also begun to feed into urban development policies. The transformation of the city into a rich positive externality that can be drawn upon in creative work has, with the impact of Robert Florida’s work, become a key concern, from small town America, via rural Europe to Singapore, where the authoritarian law and order state has decreed higher levels of tolerance for gays and the urban bohemia in the name of global competitiveness.


Often however the networks of ethically motivated productivity do not occur spontaneously but are the result of netarchic capitals own investments. Capital empowers cooperation so that it unfolds in ways that generate a desirable form of surplus. It could be argued that such forms of strategic empowerment of cooperation originated with the toyotist management philosophies that became popular in the 1970s, in part as a response to vociferous labour movements demanding more influence over the production process, and ‘industrial democracy’. Toyotism consists in empowering the ethical productivity of worker sociality so that it itself produces arrangements that are able to coordinate and organize the production process that are far more efficient than those invented by company engineers. Essentially a response to automation, toyotism constitutes an attempt to empower and steer the ethical productivity of worker sociality so that it produces the new kinds of immaterial assets- flexibility, just in time coordination, continuous innovation- that have now become the key strategic sources of corporate value. With the increasing centrality of ‘knowledge’ or ‘creative’ work in the 1980s and 1990s, similar strategies have become common in management. Unlike taylorist or bureaucratic models, contemporary management works with empowerment, rather than discipline. It is increasingly a matter of creating an artificial context, a corporate culture, a ubiquitous brand that enables the freedom of employees to quite naturally take the desired direction. In part this is about what Alex Galloway has called protocol, about providing deep preconditions of action that has a structuring effects- a bit like the basic ‘facts’ of a computer game: that the avatar can only jump a certain distance or only has a determined number of lives. In part it is something more comprehensive, an attempt to directly construct a functional employer subjectivity where freedom naturally evolves in a particular direction. This is the deep rationale behind the contemporary salience in management of psy-tecnologies like neuro-linguistic programming, or the organization of particular forms of corporate sociality or affectively intense experiences- like the weekend survival course. The brand of course works this way to. It strives to become a social medium which is able to organize the free unfolding of inter-subjectivity in particular ways.


But often the value stream is appropriated far from where the ethical surplus is produced. The $ 580 billion that Rupert Murdoch paid for MySpace, or the € 2.1 Billion that Ebay paid for Skype are figures that are entirely unrelated to the size of future revenues form either advertising or users fees that the two sites can generate. The price reflects the logic of financial markets. This logic is connected, if tenuously to the ethical economy of users, in the sense that the ethical surplus that they produce, and that a company is able to claim in some way, form an important part of the motivation of share prices. This development has been particularly clear in the case of brand values, where measurement systems, like that of Branchannel, serve mainly to construct data that can motivate financial decisions. This relationship is tenuous, however since nobody knows what these measurements measure (how to measure Love and Respect?), and even if there are accurate forms of measurement, nobody knows the value of what is, effectively measured- the ethical surplus that grounds these values is beyond measure. This way, the ethical surplus becomes yet one dimension to the complex calculus that guides what Keynes called the ‘animal spirits’ of investors and other financial actors. This separation between production and valorization- that the two processes unfold according to different economies: the ethical economy of users and the economy of speculation and reputation of financial actors- actually points towards a core characteristic of contemporary cognitive capitalism: the crisis of measure. As I shall develop latter, the crisis of measure, meaning that there is no unitary measure of value, actually entails that the capitalist valorization process is loosing its grip over the productivity of social life. This is a strategic opportunity for social transformation. yhueruyed,mal;mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmkwon a ajesak a;lm fa flamlmgsgsgs

To conclude

The ethical economy is based on a real subsumtion of the ethical productivity of human communication and interaction: its ability to produce and ethical surplus that can be appropriated and valorized in different ways. This ability consists in media enhanced networks of communication and interaction which are essentially autonomous. They have become more powerful by means of the infusion of everyday life with media and communication technologies which itself is a result of the capitalist subsumtion of the social. The core of the ethical economy is this a productive potentiality which has developed within capital itself, but which can not be entirely controlled by capital, which always transcends its attempts at control: which is, for the time being, beyond measure. (Indeed, it is this capacity for transcendence that constitutes the value of ethical productivity: You are only interested to trend-scouts when you go against and resist the cannons of the fashion industry, not when you follow them.) Therefore cognitive capitalism tends to rely increasingly on a productive externality that it can not control in its entirety. That is the deep cause of the contemporary crisis of value that marks cognitive capitalism. It also constitutes a strategic opportunity for the overcoming of that system. Basically this situation can go two ways. Either the ethical productivity of media-empowered interaction becomes incorporated within the capitalist logic of measure and command. This would entail a continued diffusion of surveillance technologies and quantifying strategies similar to bench-marking, TQM and the inferno of petty documentation that now faces British and US academics. Or this ethical productivity is able to transcend capitalism and establish viable networks of valorization outside it. This would entail the establishment of different yet robust and sustainable forms of measurement. At any rate, the question of measure is the focal point where these struggles will be determined. I will come back to that problem in future instalment, but first, in the next instalment, I would like to give more detailed attention the history, phenomenology and potential of ethical production, or, to use another term: immaterial labour.

Next Chapter: Ethics and General Intellect

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