[iDC] recapitulating the crisis of value theory

Michael Bauwens michelsub2003 at yahoo.com
Sun Oct 5 04:22:40 UTC 2008

Kevin Carson’s fifteenth ‘Org Theory’ chapter has been consistently quoting my 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

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. “

(source: http://blog.p2pfoundation.net/the-consistent-failure-to-monetize-the-immaterial-economy-wont-go-away/2008/10/04#comment-315590)


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