Profit and Gift in the Digital Economy

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* Book: Profit and Gift in the Digital Economy. By Dave Elder-Vass, Loughborough University, 2016

URL = http://www.cambridge.org/gb/academic/subjects/sociology/social-theory/profit-and-gift-digital-economy?format=PB&isbn=9781316509388

Description

"Our economy is neither overwhelmingly capitalist, as Marxist political economists argue, nor overwhelmingly a market economy, as mainstream economists assume. Both approaches ignore vast swathes of the economy, including the gift, collaborative and hybrid forms that coexist with more conventional capitalism in the new digital economy. Drawing on economic sociology, anthropology of the gift and heterodox economics, this book proposes a groundbreaking framework for analysing diverse economic systems: a political economy of practices. The framework is used to analyse Apple, Wikipedia, Google, YouTube and Facebook, showing how different complexes of appropriative practices bring about radically different economic outcomes. Innovative and topical, Profit and Gift in the Digital Economy focusses on an area of rapid social change while developing a theoretically and politically radical framework that will be of continuing long-term relevance. It will appeal to students, activists and academics in the social sciences."


Excerpts

The Diversity of the Real Economy

Dave Elder-Vass:

"Although Google makes substantial profits by serving up advertisements alongside these search results, the idea that one can run a successful business by giving away a free service to perhaps a quarter of the human race flies in the face of conventional economics. Yet it also confounds Marxist ideas that economic value is essentially a product of labour: both the delivery of search results and the sale of advertising space alongside them are thoroughly automated processes, in which almost all of the processing required is done by computers not people. Nor does it support conventional ideas of the gift economy, which is usually seen as an alternative to the commercial economy, making personal connections on the basis of reciprocal obligations.

The best-established ways of understanding our economy are the neoclassical tradition that dominates mainstream academic economics and the Marxist tradition that dominates critical politics. For both, despite individual dissenters and substantial differences in the details, the contemporary economy is a monolith: a capitalist monolith, characterised more-or-less universally by the production of commodities by businesses for sale at a profit. For the typical neoclassical economist this is to be celebrated as the most efficient way to run an economy – and extended into whatever benighted spaces have resisted it. For the typical Marxist it is to be criticised as alienating and exploitative, and overthrown by taking control of the state and imposing an entirely different, but equally monolithic, form of economy.[2]

The real economy, however, is far more diverse. It is neither overwhelmingly capitalist as most Marxists assume nor overwhelmingly a market economy as most mainstream economists assume. Both traditions tend to ignore vast swathes of the economy that do not fit with their stylised models, but because their models have thoroughly shaped our thinking they have largely succeeded in obscuring these diverse economic forms from view. This is not a new problem. Feminists, for example, drew attention to the household economy many years ago (e.g. Friedan, 1963; Hochschild, 1989; Molyneux, 1979). But the problem is coming more sharply into focus with the rise of the digital economy, with its proliferation of innovative economic forms.

Our failure to recognise the diversity of our existing economic systems is doubly consequential. On the one hand, it produces a warped and damaging understanding of how the existing economy works; and on the other, it radically limits our ability to think creatively about economic futures. Capitalism as a universal system, if such a thing could even exist, would be utterly inadequate to the challenge of meeting human needs, but this does not mean that the solution is some other universal system. If we are to think productively about alternatives we must stop imagining our economic futures in all or nothing terms: capitalism universal vs. capitalism destroyed.

The central original contribution of this book is to propose a new framework that enables us both to see and to analyse a vast range of diverse economic forms, and to illustrate that framework by applying it to cases in the contemporary digital economy. In this framework, which I call a political economy of practices, each economic form is understood as a complex of appropriative practices: social practices that influence the allocation of benefits from the process of production. Different combinations of appropriative practices give us different economic forms with very different effects on who receives what benefits and harms from the economy. The political economy of practices examines how the practices concerned interact to produce those effects, but it also takes an evaluative stance, offering grounds to judge which forms are more desirable in any given context.

The appropriative practices at work in a fairly conventional capitalist firm like Apple are very different from the set at work in a gift economy structure like Wikipedia, but some of the most interesting processes in the digital economy are hybrid forms that combine elements of both capitalist and gift economy forms. The digital economy is diverse not only in the sense that it includes both capitalist and non-capitalist forms, but also in the sense that there are multiple varieties of the capitalist form, many of which do not conform to the traditional models, and indeed multiple varieties of gift economy forms, as well as forms that are neither, or indeed a mixture of both. From this perspective, it becomes possible to see our economy as a complex ecosystem of competing and interacting economic forms, each with their own strengths and weaknesses, and to develop a progressive politics that seeks to reshape that ecosystem rather than pursuing the imaginary perfection of one single universal economic form." (http://materiallysocial.blogspot.co.uk/2016/06/profit-and-gift-in-digital-economy.html)


Source: This post reproduces text from pages 3-5 of Elder-Vass, D. (2016) Profit and Gift in the Digital Economy, Cambridge: Cambridge UP, due to be published in July 2016.

Complex of Appropriative Practices

Like Kojin Karatani, and the P2P Foundation, the author uses a multi-modal approach to analyze society and the economy:

"Wage labour alone is not enough to give us canonical capitalism, since people may work for wages in a variety of non-capitalist contexts such as government deparments. Nor is commodity production enough to give us canonical capitalism, since commodities may also be produced by individuals working alone, in family businesses that do not pay wages, or in co-operatives (Gibson-Graham, 2006b, p. 263; Sayer, 1995, p. 181). We may even have both wage labour and commodity production without canonical capitalism, notably in state-run enterprises. Canonical capitalism is thus defined by a certain complex of appropriative practices rather than by any specific appropriative practice.

This concept of a complex of appropriative practices, I argue, has several advantages over competing understandings of economic form. Both the neoclassical orientation to markets as the only significant economic form, and the monolithic conception of a mode of production are inadequate for theorising the range of economic forms in diverse economies. This section will examine some of the ways in which the concept of complexes of appropriative practices allows us to theorise social relations more flexibly.

The first is that there is no difficulty in theorising the coexistence of multiple economic forms. There is no longer a conflict, for example, between the belief that capitalism is an important element of the contemporary economy and the recognition that it governs only a minority of productive processes, and thus there is no longer a need to obscure the significance of the gift economy or indeed of other non-capitalist economic forms that coexist relatively stably alongside capitalism. Given this, we can reject the attempt to reduce all contemporary class relations to capitalist appropriation of the product of wage labour that is characteristic of the most vulgar Marxism, and start to theorise the social relations and practices of appropriation that characterise these other complexes. We need not, for example, ignore the appropriation of caring services by children in households because Marxism implies that this would make children exploiters of their parents, but rather examine the complex of processes in which this occurs as an economic form in its own right. We can escape from the hidebound pigeonholing of all social relations into what Folbre and Hartmann have called ‘a formulaic set of class processes’ (1994, p. 59) – those few patterns that Marxists believe have dominated epochs.

As well as examining the coexistence of multiple complexes of appropriative practices within the economy we now have the tools to examine such coexistence within specific sites or social entities. The fact that commercial firms are the site of capitalist practices is no longer a theoretical obstacle to recognising that they may also be the site of other forms of appropriative practice. Nor is the argument that households are the site of gift-forms of appropriative practice compromised by recognising that they may also be the site of wage labour, whether it is capitalist (e.g. when an agency supplies cleaning staff) or not (e.g. when a self-employed cleaner contracts to provide a service). The household, in this perspective, becomes the site of moments of appropriation that operate within the frames of a variety of different complexes of appropriative practices. It is, we may say, a mixed economy of practices in its own right. Struggles within the household over the division and control of domestic labour may then also be theorised as struggles over the mix, struggles over which complex of appropriative practices is to prevail in which circumstances.

Relaxing the requirement that an economic form must correspond to the dominant form of an epoch also makes it easier to theorise varieties of a form.


...


It may also be useful to think of some complexes of appropriative practices as hybrid forms ... To get hybridity, we need other types of economic form as well as the capitalist type. Although I have questioned whether there are other coherently identifiable modes of production than capitalism, there can still be other types of complex of appropriative practices. One candidate is suggested by the idea of the gift economy: there is a wide variety of complexes of appropriative practice in which voluntary transfers of goods or services are made without any expectation or obligation to make a return transfer. Some complexes are hybrids of both capitalism and the gift economy because they include both the practice of capital accumulation and the practice of making transfers of goods or services as gifts. Such hybrids are decisively capitalist and yet simultaneously the sites of more progressive practices." (http://materiallysocial.blogspot.co.uk/2016/07/profit-and-gift-in-digital-economy.html)


What to do with capitalism ?

Dave Elder-Vass:

"We could change our economy by progressively altering the mix of economic forms, steadily reducing the more harmful forms of capitalism and building more human forms of economy alongside. Indeed, it is only if we do build alternatives alongside capitalism that viable alternative economic futures can be developed, and we should welcome the work of thinkers like Erik Olin Wright and Yochai Benkler who are examining some of the ways in which this could occur.


On the other hand, however, this optimism must be qualified. As we have seen, alternative appropriative practices can themselves be entangled in capitalist forms, and ultimately the viability of alternative forms will depend not only on growing them within our existing economy but also on finding ways to criticise and curtail the role of capitalist appropriative practices. Capitalism, despite being only part of our contemporary economy, is still capable of generating massive harms – notably extreme exploitation, alienation, inequality, massive distortions in the use of resources, environmental damage and support for oppressive political regimes. It is still backed by enormous political and discursive power, and it constantly tends to subvert alternatives to its thirst for profit.


Once we recognise that capitalism itself is diverse, however, we may find that there are some forms of it, suitably regulated, that make a positive contribution overall to our well-being. Given this possibility, we can no longer simply dismiss all capitalism on the grounds of Marx’s spurious theory of exploitation. Instead of applying the formulaic dogma of Marx’s labour theory of value, we need to evaluate forms of capitalism by identifying their real tendencies and assessing their actual effects against explicitly stated and justified ethical standards. When we do so I believe we will find, for example, that forms of capitalism that rest on the provision of free content by users are considerably less harmful than those that rest on the extraction of minerals by slave labourers in Africa (Fuchs, 2014, pp. 172–81) and those that rest on the creation of unstable financial assets. These forms can be separated. They are not all parts of one monolith, and they should be treated differently: lightly regulated, heavily regulated or abolished entirely depending upon their impact on human flourishing.


Alongside the less harmful remnants of the capitalist economy, we need to support the development of other forms. The state has an important continuing role to play in the provision of essential services that are made available to all irrespective of their ability to afford them, and in the provision of public goods that we all benefit from. Non-capitalist commodity forms should also continue to be important: family businesses and co-operatives, for example. But the gift economy, particularly if we include large parts of the household economy, is already as important as these, and the digital gift economy is particularly promising. As we have seen, the gift economy is particularly suited to the distribution of digital goods, with their trivial marginal costs, and innovative forms of collaborative production have flourished there, with benefits not only for the users but also for the creators of the content that they share.


Nevertheless, there are also good reasons to restrain claims for the potential of the digital gift economy. One limitation arises from the same factors that give the digital gift economy its advantages: virtually costless distribution of gifts that entails no sacrifice by the donor is only a characteristic of digital information goods. There is little reason to believe that similar economic processes might roll back the non-digital market economy in the way that the open-source movement has generated a tendency for the decommodification of software. Indeed, the digital gift economy itself clearly depends on other sectors of the economy that are currently dominated by the market: for example, the hardware and networks that make the digital gift economy possible are themselves physical products created in the commercial economy, and independent programmers that contribute to open-source software must have other sources of income to support them, which are often derived from the commercial economy (Barbrook, 2005).


Certain elements of the digital gift economy also face attempts at outright suppression by government, acting in the interests of pre-digital media corporations. Most notably, governments have been persuaded by lobbyists for these corporations to extend copyright protection in an attempt to prevent the free distribution of vast amounts of digital media products (Gillespie, 2007, chapter 4; Lessig, 2004). Open-source software seems likely to escape this, partly because of some clever work on copyleft licensing, but perhaps more so, ironically, because of the many ways in which it has become embedded in commercial business. Many IT businesses have found ways to make money out of open-source software, and at least some major open-source software products are predominantly developed at the expense of such companies (Elder-Vass, 2015c). But this is only half of the picture: we must also recognise that commercial companies are amongst the largest beneficiaries of the financial savings that arise from using free open-source software – these savings are a major reason for the massive ‘market’ shares of products like Linux and Apache.


Such entanglements warrant scepticism towards suggestions in the literature that phenomena like open-source software herald the replacement of capitalism (Berry, 2008, p. 98). But once we recognise the diversity of the economy, we no longer need all-or-nothing alternatives to capitalism. The issue we face is not a choice between a gift economy and a commodity economy; the issues are how much of the economy will take a gift form, what kinds of gift form, how much will take a commodity form and what kinds of commodity form.


Let me end... by asking what role a book like this can play in advancing such changes. Books alone do not change the world; any impact they might have depends upon influencing people, and movements of people, but where are the movements that might back a progressive shift towards a gift economy? Part of the problem we confront is what David Harvey calls a ‘double blockage’: ‘the lack of an alternative vision prevents the formation of an oppositional movement, while the absence of such a movement precludes the articulation of an alternative’ (D. Harvey, 2011, p. 227). As Harvey rightly says, the solution to this double blockage is inevitably iterative: the relation between these two absences ‘has to be turned into a spiral’ (D. Harvey, 2011, p. 227).


That spiral is already in progress, though its overall direction is uncertain. There are already movements working towards aims compatible with the ideas expressed in this book, for example Green parties, the Occupy movement, many of the groups that combine in the World Social Forum, and the movements against austerity policies in Europe. And there are already huge numbers of people participating in gift forms of economy. Though many of them do not even recognise that they are forms of economy, these are people who could be persuaded to back further growth of these forms. There are already, too, writers expressing ideas that complement those in this book, for example those who have contributed to the Convivialist Manifesto (Clarke, 2014), and those whose work is collected in The Human Economy (Hart et al., 2010). This book and the political economy of practices that it advocates are, at best, another turn of the spiral, one that encourages a more open but more realistic alternative vision of a future that could enable more of us to flourish rather than being subjected to a logic of pointless accumulation that ultimately benefits no-one.


We cannot know exactly what kind of economy and what kind of society this will lead us to, not least because there is no end point and no single overriding logic to social development but rather a continuing process of change in a fundamentally open system. The mix of economic forms within that system will inevitably develop in response to emerging possibilities but it is up to us, collectively, to find ways to encourage those forms that seem most beneficial for all human beings in the light of ethical debate. We will only be able to engage productively in such a process by abandoning monolithic visions of nirvana and working instead towards multiple partial real utopias. This is not a step backwards but a step forwards for progressive politics: we must reject the dogmas of both of the old political economies and instead engage creatively with our diverse economy and its open future." (http://materiallysocial.blogspot.co.uk/2016/07/profit-and-gift-in-digital-economy_29.html)


[This post reproduces text from pages 228-232 of Elder-Vass, D. (2016) Profit and Gift in the Digital Economy, Cambridge: Cambridge UP.]