Valuing the Ethical Economy

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Landmark essay by Adam Arvidsson.

Originally published as 'notes on value' at IDC.

URL = https://lists.thing.net/pipermail/idc/2008-February/003139.html


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Part One: Brands as the third circuit of value

Brands can be understood to embody a third important form of capital in the knowledge economy, along with material capital and knowledge capital. Like knowledge capital (IPs) they work to establish a monopoly rent from a resource that is essentially socially produced. Unlike IPs this resource mainly consists in accumulated affect and sociality. (The value of a brand depends on a mass of people maintaining a relatively stable pattern of affectivity around it, a brand is in this sense something a kin to, almost , a loosely knitted community, or maybe a community of weak ties) This way brands are a form of ethical capital: they build on the ability and desire of free (that is not entirely commanded) actors to create community, in the absence of given hierarchies or monetary obligations (cf. Aristoteles’ etikos).


Brands thus establish a third circuit of value (M-C-M’) that is central to informational capitalism. The first, material, circuit of value is the classic one described by Marx, value is extracted by submitting commanded labor to discipline. In this situation the means of production are monopolized by capital and labor time can work as an (approximate) measure that allows the systematic abstraction of concrete labor into abstract value. The second circuit is that of knowledge capital. This builds in part on the direct command over salaried labor and the ‘classic’ abstraction of surplus value. To an increasing extent however it builds on the ability to appropriate socially produced resources that are not directly ‘owned’ by capital and that, consequently cannot be directly commanded. This can be the results of state sponsored investments in research and development, it can be the synergic productivity of social interaction among knowledge workers, research institutions and knowledge intensive firms (learning regions, creative cities) and increasingly it is a matter of the direct appropriation of knowledge and innovation generated in the everyday interaction among ordinary consumers (user- led innovation systems, crowdsourcing, etc.). Brands constitute a third circuit that appropriates and commodifies the ethical practice of ordinary consumers: their ability and desire to build community. This ethical practice is itself the dialectical result of the (virtual) completion of the capitalist subsumption of the social. That process has produced two important outcomes. First, the diffusion of consumer goods, media culture and ultimately networked ICTs has greatly enhanced the ability of ordinary people to produce a symbolic and affective – ethical- framework for life. What Marx has called ‘General Intellect’ has thus come at the disposition of everybody, as mass intellectuality. Second, the subsumption of the social has shattered traditional life forms and generated a widespread isolation and alienation. Networked ICTs enable people to overcome this condition by generating new forms of sociality. Indeed as new media scholars like Danah Boyd and Jean Luis Prada (among others) have argued it is mainly the desire for sociality that motivates the use of social media.[1] The source of brand value is thus the immanent ethical productivity of the social, its new and empowered ability and desire to produce community.


But how is the value of this ethical productivity established. This question is important not only in order to understand how the information economy works today, but also in order to understand the future potential of the free social productivity that capital increasingly relies on. We clearly have a new mode of production, what I call an ethical mode of production, manifested in important phenomena like brand value, Open Source Software, peer to peer etc. I call this mode of production ‘ethical’ for two reasons: One it is mainly based on the desire to construct community (and be recognized by that community). Two, its valuable outcomes consist in forms of community that can maintain (however temporary) forms of order in a complex environment. The valuable contribution of Linux is not primary a result of the labor time invested by its participating programmers, but of the social organization of those efforts into a productive community able to generate a complex outcome. So in the ethical mode of production the creation of use value (wealth) no longer depends directly on the investment of labor time, instead it depends on the ability to create community.


Today such instances of an ethical mode of production are subaltern to, if not directly subsumed by the capitalist economy. The question is whether this ethical mode of production constitute itself as an ethical economy: that is a world economy in the Marxian sense able to trade (in some way) the produce of one particular productive network with that of another and in that way establish an objective price that reflects the socially necessary amount of community construction (affect!?) deployed in its production. Can the ethical economy develop its own value form? To begin to answer that question we must investigate its existing ‘value form’. A good place to begin is to look at the brand, the actually existing value form of the ethical economy.


Part Two: The Valuation of Esteem

  • Brands have a double nature. On the one hand they are commodities,

objects with certain monetary values that are traded (mainly) on financial markets. On the other hand they are a form of ethical capital. Their ethical values consist in the investments of mass affect that they have been able to accumulate. This is what the managerial literature calls ‘brand equity’ (the capacity of a brand to generate value) and it is what is understood to underpin monetary brand values. This ethical value is also what brand valuation companies try to estimate in order to produce a legitimation for the financial values of brands. So, in the self-understanding of contemporary capitalism, the monetary value of brands are based on their ethical values, their ability to accumulate mass affect.


What creates these ethical values? They are not the direct results of investments in labor time. You can work as much as you want on your music and style, that, in itself will not make you a rock star. Rather, suddenly something happens and then, you’ve made it. What determines your value are the quality and quantity of affect (attention) that you have been able to accumulate. The relation between the productive time invested in a project and the mass affect that it is able to attract is non-linear, or viral, to use a popular marketing term.[2] Models could be found in contemporary mathematical theories of network dynamics, and perhaps in Gabriel Tarde’s theories of the role of public sentiment.[3] Indeed, the logical relation between value and labor is rather the reverse of that usually associated with the capitalist economy. Once you have a sufficiently attractive brand, you will attract an abundance of free labor as well as other resources. Linux has no problems recruiting new programmers: people want to work for them for free; people pay to use brands in their everyday life and thus freely co-produce their ethical value through their constructive consumer practices. On financial markets, capital flows to the most attractive brands. More means more in this case, if you have accumulated a significant stock of ethical capital, people will freely give you their time and further attention, or, on financial markets, their capital.


The logic behind ethical capital is political rather than economic. Or better it pertains to what Weber saw as the charismatic, irrational side of politics. If you, or your brand, can mobilize the affective energies of the polis, its members will freely put their resources at your disposition. (Fight for your cause; work for you; vote for you; give to you of their hospitality- indeed, as Weber claimed, peaceful charismatic leaders mainly live off donations from the community that they have created[4]). The source of this valuable charisma is, as in Weber’s classic analysis, the ability to create community. (By contrast the economic logic of value would be based on the ability to command labor (as in the oikos) and thus measure its contribution in terms of labor time.) The predominance of brand value, reputation, ‘ethical capital’, corporate ethics and similar entities as elements to the immeasurable intangible values that are increasingly important to contemporary capitalism is an empirical indication of the fact that this political logic of value is becoming increasingly influential in informational capitalism.


Today such political values can only be translated into one abstract equivalent, monetary exchange value. The question is however, can such political values be made tradable in other ways; and how, in that case, would such a system look like?


One point of departure could be Brennan & Pettit’s idea of an ‘economy of esteem’. Coming from a background of academic economics, they show how that discipline has continuously devalued the importance of honor and esteem (central to its precursors like Smith and Hume) in favor of a monetary economy of commodities. Yet, they argue the economy of esteem is still at work as a powerful force in everyday life, in particular within academia (from which most of their examples derive). The point of the ‘economy of esteem’ is that esteem is a scarce good conferred on an actor by the public in relation to his or her performance in some area. This means that even though the actor might be motivated to perform well in an area in the prospect of achieving esteem, performance is never directly exchanged for esteem. There are two reasons for this. One, because esteem is subjectively and voluntarily conferred at the actor in question: there is no point at which he or she (or they) can righteously claim esteem from the public. And, two, because doing so, claiming esteem, goes against the principle that the charismatic actor must appear not to act directly in order to increase his or her charisma. A brand like Nike can acquire esteem if it donates an empty building wall in Berlin for young people to express themselves on. It will loose esteem in so far as the strategic intentions behind this ‘gift’ become apparent and talked about. So esteem should not, as Brennan& Pettit do, be understood as something that is directly exchanged for performance. [5] Since the relation between esteem and performance is not subject to rational calculation- it is rather an unpredictable, non-linear relation, there is no possibility for any rational exchange. Rather the relation between esteem and performance should be understood along the lines of a gift economy. If I give this performance to the community, I can expect to receive roughly that amount of esteem. But there is no legitimate way I can complain, take action or withdraw my performance if I receive less esteem than I had expected. But can esteem in one community be exchanged for esteem in another?


Part Three: Can there be currencies of esteem?

  • Traditional systems of honor and esteem have worked in close-knit

communities. Scaling them towards the contemporary information economy will necessarily entail making esteem transferable between different communities with different value standards. What is needed to accomplish this is a general medium of exchange, which like monetary exchange value can guarantee the transferability to values. Such a medium would be different from traditional currencies however:


The amount of esteem an actor can acquire thus has a non-linear relation to his or her measurable performance. This is mainly because esteem is a multifaceted affective quality that originates in subjective judgment that cannot be entirely rationalized: it is an irrational quality in the Weberian sense of that term. So any objective measure of esteem- the first precondition for making it tradable- could not depart from some common measurable standard (like labor time)- but would had to consist in an aggregation of a multitude of subjective judgments. It would be a sort of bottom-up currency, where values are defined by the continuous input of public ratings.


Two factors speak for the possibility for the emergence of such general media of exchange of esteem. One factor is the increasing transparency and visibility of social action. The flip-side to increasing surveillance is in this sense the possibility for a new ethics: everything you do will be potentially visible to everyone. One’s public person could thus form a common point of reference that unites estimates of esteem from different communities. Personality becomes a generalized medium of communication. The second factor is the socialization of the means of organization in networked ICTs. The establishment of representative money from the Sumer and onwards has been contingent on the administrative capacity of the state apparatus controlling the money supply. Now such administrative capacity is at the hands of virtually everyone, and consequently we already see the emergence of alternative currencies like LETS or Open Money. Some of these currencies could be esteem-based. Indeed the world’s second largest currency, air-miles, already is.[6] Essentially air-miles is a measure of the affective appreciation that an airline has of you as loyal customer, and they can be traded for a wide range of gifts: free trips, upgrades, car rentals etc. (Again air-miles do not have an objective exchange value, strictly speaking, since their relation to possible gifts is subjectively and variably determined by the airline itself. Relationship should rather be understood as that of a stable gift economy. I give my loyalty to the airline. I can reasonably expect the airline to give me a certain kind of gifts in return.) Slashdot Karma is another one, quantifying the esteem you have accumulated by contributing to various blogs, by systematically integrating a multitude of subjective ratings of your performance.


With the likely proliferation of such alternative currencies two scenarios are possible. One, a new common standard of value emerges. One platform or tool for calculating esteem becomes hegemonic, on that platform a number of generally accepted values emerge. The likelihood of the emergence of such a new common value system is supported by what seems to be a common value-structure among the knowledge workers who are the primary users of ICTs: a combination of post-materialistic ideas of self-realization, a quest for atuthenticity and sustainability with a planetary environmental consciousness.[7] Indeed a number of alternative currencies that measure esteem in terms of precisely these values are emerging, like the The Interra Project, sponsored by VISA founder Dee Hock: "a payment card and transaction platform, that rewards customers for purchasing from locally owned and sustainable businesses, donates automatically to community organizations and facilitates connections to like minded members in a self organizing manner." One would thus acquire esteem points in relation to one’s performance in relation to these common values. Such esteem-points would make one the recipient of different kinds of gifts.


Conclusions on Money and Esteem

  • Alternatively a plurality of such currencies might proliferate.

However the socialization of ICTs and common standards will make them easily convertible. As Paul Hartzog imagines the scenario in his ‘The future of money’ :


So, here’s a scenario for the future. You go to a rock concert, and you’ve never seen the opening band before. You like their music, so you get on your mobile device (PDA, cell phone, etc.) and hit the band’s "mobile commerce" exchange. Your software negotiates with their software to determine what currencies they accept and what currencies your various bank accounts carry, including automatically getting you the best currency exchange rate at that instant. The system discovers that because they are opening for a major musician who has his own currency based on his popularity, the opening band has agreed to accept the headliner’s currency for the duration of the show for people who are actually at the concert. You verify that you are there using some kind of brokered authentication (GPS or a ticket number); the two systems complete the transaction for you, and you have access to the music.


At any rate such esteem-based currencies can develop alongside the monetary economy. For example:


My activity as a blogger earns me esteem. That esteem is converted into a quantification pf my ethical standing. On the basis of the quantification I receive particular forms of gifts (discounts, access to certain services etc). Alternatively it is converted into a currency that I trade for certain kinds of goods.


A service allows workers, consumers, subcontractors and other kinds of ‘stakeholders’ all along the value chain to rate the performance of a brand according to their ability to live up to their own corporate values (or some other standard). Swiping my cellphone over a branded product I get an index of its ethical value. That index will affect my decision to purchase the product, or what I want to pay for it.


I subscribe to a service that calculates the environmental impact and sustainability of my consumption patterns. according to the index thus produced I receive certain kinds of discounts or access to certain services or goods.


In any case such quantifications of esteem will serve to rationalize the ethical economy that we can already see emerging, both in the ethical value logic behind intangibles., and increasingly popular blended value strategies like Ethical Consumerism and Socially Responsible Investment. Indeed the implementation of such systematic alternative value standards will give business and other actors a stronger incentive to adapt to an emerging ethical economy, or which is the same thing, to begin to act politically, with the polis in mind.


In capitalist societies value is embodied in money: we work (ideal- typically) in order to get paid. In many non capitalist societies value is rather embodied in public displays of honour, standing, hierarchy- ethical standing. Such societies generally use what Turner calls ‘concrete media of circulation’ (as opposed to money as an abstract medium of circulation) such as public rituals, to communicate and embody value. Most such value-conferring rituals unfold in societies that have elaborate and relatively static social structures. This is clearly not the case for the information society where structure is dissolving into flexible networks. On the other hand, there are examples, like the Baining of Papaua New Guinea, that have little in terms of an elaborate social structure, but still largely envision value as ethically embodied.[8] Among the Baining, the embodiment of value occurs through a continuous giving of gifts, a practice so common that it is part of virtually every social encounter. Now social media could work as platforms for such a continuous embodiment of ethical value, enabling some sort of ranking (conferral of esteem in a quantifiable way) mechanism become an integral part of most social interactions.


References

[1] Prada.J.M. ‘Web 2.0 as a new context for artistic practices’ Paper presented at !st Inclusiva-net meeting, Medialab, Prado, Madrid, 2007 (posted to IDC-list, 22/12, 2007), Boyd, D. ‘Identity production in a networked culture: Why youth heart MySpace’, http:// www.danah.org/papers/AAAS2006.html, accessed 5/2-08. [2] Gladwell, M. The Tipping Point. How Little Things Make a Big Difference, New York; Brown & co, 2002. [3] Barabasi. A. L. Linked: The New Science of Networks, Cambridge (MA);Perseus Publishing, 2002. , Tarde, G. Psychologie économique, Paris, Alcan, 1902. [4] Weber M. ‘The sociology of charismatic authority’, eds. Gerth, H.H. & Mills, C.W. From Max Weber. Essays in Sociology, London; Routledge, 1948, p. 247. [5] Brennan, G. & Pettit, P. The Economy of Esteem, Oxford; Oxford University Press, 2004, p. 72. [6] The air-miles in circulation in 2002 were worth more than $ 500 billion, making air-miles second only to the dollar in terms of value- in-circulation, see ‘Air-miles threaten dollars dominance’ BBCNews, 22/5, 2002 (available at http://news.bbc.co.uk/2/hi/business/ 1966290.stm accessed 26/1-2008). [7] Ray, P. & Anderson, S. The Cultural Creatives. How 50 Million People are Changing the World, New York; The Rivers Press, 2000. [8] Turner, T. & Fajans, J, ‘Where the Action Is: An Anthropological Perspective on “Activity Theory”’ with Ethnographic Implications’, unpublished manuscript, University of Chicago, 1988, as cited in Graeber, D. Towards an Anthropological Theory of Value, New York, Palgrave, 2001, pp. 69, ff.