Second, information is corroding the market’s ability to form prices
correctly. That is because markets are based on scarcity while
information is abundant. The system’s defence mechanism is to form
monopolies – the giant tech companies – on a scale not seen in the
past 200 years, yet they cannot last. By building business models and
share valuations based on the capture and privatisation of all
socially produced information, such firms are constructing a fragile
corporate edifice at odds with the most basic need of humanity, which
is to use ideas freely.
Third, we’re seeing the spontaneous rise of collaborative production:
goods, services and organisations are appearing that no longer respond
to the dictates of the market and the managerial hierarchy. The
biggest information product in the world – Wikipedia – is made by
volunteers for free, abolishing the encyclopedia business and
depriving the advertising industry of an estimated $3bn a year in
revenue.
Almost unnoticed, in the niches and hollows of the market system,
whole swaths of economic life are beginning to move to a different
rhythm. Parallel currencies, time banks, cooperatives and self-managed
spaces have proliferated, barely noticed by the economics profession,
and often as a direct result of the shattering of the old structures
in the post-2008 crisis.
You only find this new economy if you look hard for it. In Greece,
when a grassroots NGO mapped the country’s food co-ops, alternative
producers, parallel currencies and local exchange systems they found
more than 70 substantive projects and hundreds of smaller initiatives
ranging from squats to carpools to free kindergartens. To mainstream
economics such things seem barely to qualify as economic activity –
but that’s the point. They exist because they trade, however haltingly
and inefficiently, in the currency of postcapitalism: free time,
networked activity and free stuff. It seems a meagre and unofficial
and even dangerous thing from which to craft an entire alternative to
a global system, but so did money and credit in the age of Edward III.
New forms of ownership, new forms of lending, new legal contracts: a
whole business subculture has emerged over the past 10 years, which
the media has dubbed the “sharing economy”. Buzzwords such as the
“commons” and “peer-production” are thrown around, but few have
bothered to ask what this development means for capitalism itself.
I believe it offers an escape route – but only if these micro-level
projects are nurtured, promoted and protected by a fundamental change
in what governments do. And this must be driven by a change in our
thinking – about technology, ownership and work. So that, when we
create the elements of the new system, we can say to ourselves, and to
others: “This is no longer simply my survival mechanism, my bolt hole
from the neoliberal world; this is a new way of living in the process
of formation.”
...
The 2008 crash wiped 13% off global production and 20% off global
trade. Global growth became negative – on a scale where anything below
+3% is counted as a recession. It produced, in the west, a depression
phase longer than in 1929-33, and even now, amid a pallid recovery,
has left mainstream economists terrified about the prospect of
long-term stagnation. The aftershocks in Europe are tearing the
continent apart.
The solutions have been austerity plus monetary excess. But they are
not working. In the worst-hit countries, the pension system has been
destroyed, the retirement age is being hiked to 70, and education is
being privatised so that graduates now face a lifetime of high debt.
Services are being dismantled and infrastructure projects put on hold.
Even now many people fail to grasp the true meaning of the word
“austerity”. Austerity is not eight years of spending cuts, as in the
UK, or even the social catastrophe inflicted on Greece. It means
driving the wages, social wages and living standards in the west down
for decades until they meet those of the middle class in China and
India on the way up.
Meanwhile in the absence of any alternative model, the conditions for
another crisis are being assembled. Real wages have fallen or remained
stagnant in Japan, the southern Eurozone, the US and UK. The shadow
banking system has been reassembled, and is now bigger than it was in
2008. New rules demanding banks hold more reserves have been watered
down or delayed. Meanwhile, flushed with free money, the 1% has got
richer.
Neoliberalism, then, has morphed into a system programmed to inflict
recurrent catastrophic failures. Worse than that, it has broken the
200-year pattern of industrial capitalism wherein an economic crisis
spurs new forms of technological innovation that benefit everybody.
That is because neoliberalism was the first economic model in 200
years the upswing of which was premised on the suppression of wages
and smashing the social power and resilience of the working class. If
we review the take-off periods studied by long-cycle theorists – the
1850s in Europe, the 1900s and 1950s across the globe – it was the
strength of organised labour that forced entrepreneurs and
corporations to stop trying to revive outdated business models through
wage cuts, and to innovate their way to a new form of capitalism.
The result is that, in each upswing, we find a synthesis of
automation, higher wages and higher-value consumption. Today there is
no pressure from the workforce, and the technology at the centre of
this innovation wave does not demand the creation of higher-consumer
spending, or the re‑employment of the old workforce in new jobs.
Information is a machine for grinding the price of things lower and
slashing the work time needed to support life on the planet.
As a result, large parts of the business class have become
neo-luddites. Faced with the possibility of creating gene-sequencing
labs, they instead start coffee shops, nail bars and contract cleaning
firms: the banking system, the planning system and late neoliberal
culture reward above all the creator of low-value, long-hours jobs.
Innovation is happening but it has not, so far, triggered the fifth
long upswing for capitalism that long-cycle theory would expect. The
reasons lie in the specific nature of information technology.
...
We’re surrounded not just by intelligent machines but by a new layer
of reality centred on information. Consider an airliner: a computer
flies it; it has been designed, stress-tested and “virtually
manufactured” millions of times; it is firing back real-time
information to its manufacturers. On board are people squinting at
screens connected, in some lucky countries, to the internet.
Seen from the ground it is the same white metal bird as in the James
Bond era. But it is now both an intelligent machine and a node on a
network. It has an information content and is adding “information
value” as well as physical value to the world. On a packed business
flight, when everyone’s peering at Excel or Powerpoint, the passenger
cabin is best understood as an information factory.
But what is all this information worth? You won’t find an answer in
the accounts: intellectual property is valued in modern accounting
standards by guesswork. A study for the SAS Institute in 2013 found
that, in order to put a value on data, neither the cost of gathering
it, nor the market value or the future income from it could be
adequately calculated. Only through a form of accounting that included
non-economic benefits, and risks, could companies actually explain to
their shareholders what their data was really worth. Something is
broken in the logic we use to value the most important thing in the
modern world.
The great technological advance of the early 21st century consists not
only of new objects and processes, but of old ones made intelligent.
The knowledge content of products is becoming more valuable than the
physical things that are used to produce them. But it is a value
measured as usefulness, not exchange or asset value. In the 1990s
economists and technologists began to have the same thought at once:
that this new role for information was creating a new, “third” kind of
capitalism – as different from industrial capitalism as industrial
capitalism was to the merchant and slave capitalism of the 17th and
18th centuries. But they have struggled to describe the dynamics of
the new “cognitive” capitalism. And for a reason. Its dynamics are
profoundly non-capitalist.
During and right after the second world war, economists viewed
information simply as a “public good”. The US government even decreed
that no profit should be made out of patents, only from the production
process itself. Then we began to understand intellectual property. In
1962, Kenneth Arrow, the guru of mainstream economics, said that in a
free market economy the purpose of inventing things is to create
intellectual property rights. He noted: “precisely to the extent that
it is successful there is an underutilisation of information.”
You can observe the truth of this in every e-business model ever
constructed: monopolise and protect data, capture the free social data
generated by user interaction, push commercial forces into areas of
data production that were non-commercial before, mine the existing
data for predictive value – always and everywhere ensuring nobody but
the corporation can utilise the results.
If we restate Arrow’s principle in reverse, its revolutionary
implications are obvious: if a free market economy plus intellectual
property leads to the “underutilisation of information”, then an
economy based on the full utilisation of information cannot tolerate
the free market or absolute intellectual property rights. The business
models of all our modern digital giants are designed to prevent the
abundance of information.
Yet information is abundant. Information goods are freely replicable.
Once a thing is made, it can be copied/pasted infinitely. A music
track or the giant database you use to build an airliner has a
production cost; but its cost of reproduction falls towards zero.
Therefore, if the normal price mechanism of capitalism prevails over
time, its price will fall towards zero, too.
For the past 25 years economics has been wrestling with this problem:
all mainstream economics proceeds from a condition of scarcity, yet
the most dynamic force in our modern world is abundant and, as hippy
genius Stewart Brand once put it, “wants to be free”.
There is, alongside the world of monopolised information and
surveillance created by corporations and governments, a different
dynamic growing up around information: information as a social good,
free at the point of use, incapable of being owned or exploited or
priced. I’ve surveyed the attempts by economists and business gurus to
build a framework to understand the dynamics of an economy based on
abundant, socially-held information. But it was actually imagined by
one 19th-century economist in the era of the telegraph and the steam
engine. His name? Karl Marx.
...
The scene is Kentish Town, London, February 1858, sometime around 4am.
Marx is a wanted man in Germany and is hard at work scribbling
thought-experiments and notes-to-self. When they finally get to see
what Marx is writing on this night, the left intellectuals of the
1960s will admit that it “challenges every serious interpretation of
Marx yet conceived”. It is called “The Fragment on Machines”.
In the “Fragment” Marx imagines an economy in which the main role of
machines is to produce, and the main role of people is to supervise
them. He was clear that, in such an economy, the main productive force
would be information. The productive power of such machines as the
automated cotton-spinning machine, the telegraph and the steam
locomotive did not depend on the amount of labour it took to produce
them but on the state of social knowledge. Organisation and knowledge,
in other words, made a bigger contribution to productive power than
the work of making and running the machines.
Given what Marxism was to become – a theory of exploitation based on
the theft of labour time – this is a revolutionary statement. It
suggests that, once knowledge becomes a productive force in its own
right, outweighing the actual labour spent creating a machine, the big
question becomes not one of “wages versus profits” but who controls
what Marx called the “power of knowledge”.
In an economy where machines do most of the work, the nature of the
knowledge locked inside the machines must, he writes, be “social”. In
a final late-night thought experiment Marx imagined the end point of
this trajectory: the creation of an “ideal machine”, which lasts
forever and costs nothing. A machine that could be built for nothing
would, he said, add no value at all to the production process and
rapidly, over several accounting periods, reduce the price, profit and
labour costs of everything else it touched.
Once you understand that information is physical, and that software is
a machine, and that storage, bandwidth and processing power are
collapsing in price at exponential rates, the value of Marx’s thinking
becomes clear. We are surrounded by machines that cost nothing and
could, if we wanted them to, last forever.
In these musings, not published until the mid-20th century, Marx
imagined information coming to be stored and shared in something
called a “general intellect” – which was the mind of everybody on
Earth connected by social knowledge, in which every upgrade benefits
everybody. In short, he had imagined something close to the
information economy in which we live. And, he wrote, its existence
would “blow capitalism sky high”.
...
With the terrain changed, the old path beyond capitalism imagined by
the left of the 20th century is lost.
But a different path has opened up. Collaborative production, using
network technology to produce goods and services that only work when
they are free, or shared, defines the route beyond the market system.
It will need the state to create the framework – just as it created
the framework for factory labour, sound currencies and free trade in
the early 19th century. The postcapitalist sector is likely to coexist
with the market sector for decades, but major change is happening.
Networks restore “granularity” to the postcapitalist project. That is,
they can be the basis of a non-market system that replicates itself,
which does not need to be created afresh every morning on the computer
screen of a commissar.
The transition will involve the state, the market and collaborative
production beyond the market. But to make it happen, the entire
project of the left, from protest groups to the mainstream social
democratic and liberal parties, will have to be reconfigured. In fact,
once people understand the logic of the postcapitalist transition,
such ideas will no longer be the property of the left – but of a much
wider movement, for which we will need new labels.
Who can make this happen? In the old left project it was the
industrial working class. More than 200 years ago, the radical
journalist John Thelwall warned the men who built the English
factories that they had created a new and dangerous form of democracy:
“Every large workshop and manufactory is a sort of political society,
which no act of parliament can silence, and no magistrate disperse.”
Today the whole of society is a factory. We all participate in the
creation and recreation of the brands, norms and institutions that
surround us. At the same time the communication grids vital for
everyday work and profit are buzzing with shared knowledge and
discontent. Today it is the network – like the workshop 200 years ago
– that they “cannot silence or disperse”.
True, states can shut down Facebook, Twitter, even the entire internet
and mobile network in times of crisis, paralysing the economy in the
process. And they can store and monitor every kilobyte of information
we produce. But they cannot reimpose the hierarchical,
propaganda-driven and ignorant society of 50 years ago, except – as in
China, North Korea or Iran – by opting out of key parts of modern
life. It would be, as sociologist Manuel Castells put it, like trying
to de-electrify a country.
By creating millions of networked people, financially exploited but
with the whole of human intelligence one thumb-swipe away,
info-capitalism has created a new agent of change in history: the
educated and connected human being.
...
This will be more than just an economic transition. There are, of
course, the parallel and urgent tasks of decarbonising the world and
dealing with demographic and fiscal timebombs. But I’m concentrating
on the economic transition triggered by information because, up to
now, it has been sidelined. Peer-to-peer has become pigeonholed as a
niche obsession for visionaries, while the “big boys” of leftwing
economics get on with critiquing austerity.
In fact, on the ground in places such as Greece, resistance to
austerity and the creation of “networks you can’t default on” – as one
activist put it to me – go hand in hand. Above all, postcapitalism as
a concept is about new forms of human behaviour that conventional
economics would hardly recognise as relevant.
So how do we visualise the transition ahead? The only coherent
parallel we have is the replacement of feudalism by capitalism – and
thanks to the work of epidemiologists, geneticists and data analysts,
we know a lot more about that transition than we did 50 years ago when
it was “owned” by social science. The first thing we have to recognise
is: different modes of production are structured around different
things. Feudalism was an economic system structured by customs and
laws about “obligation”. Capitalism was structured by something purely
economic: the market. We can predict, from this, that postcapitalism –
whose precondition is abundance – will not simply be a modified form
of a complex market society. But we can only begin to grasp at a
positive vision of what it will be like.
I don’t mean this as a way to avoid the question: the general economic
parameters of a postcapitalist society by, for example, the year 2075,
can be outlined. But if such a society is structured around human
liberation, not economics, unpredictable things will begin to shape
it.
For example, the most obvious thing to Shakespeare, writing in 1600,
was that the market had called forth new kinds of behaviour and
morality. By analogy, the most obvious “economic” thing to the
Shakespeare of 2075 will be the total upheaval in gender
relationships, or sexuality, or health. Perhaps there will not even be
any playwrights: perhaps the very nature of the media we use to tell
stories will change – just as it changed in Elizabethan London when
the first public theatres were built.
Think of the difference between, say, Horatio in Hamlet and a
character such as Daniel Doyce in Dickens’s Little Dorrit. Both carry
around with them a characteristic obsession of their age – Horatio is
obsessed with humanist philosophy; Doyce is obsessed with patenting
his invention. There can be no character like Doyce in Shakespeare; he
would, at best, get a bit part as a working-class comic figure. Yet,
by the time Dickens described Doyce, most of his readers knew somebody
like him. Just as Shakespeare could not have imagined Doyce, so we too
cannot imagine the kind of human beings society will produce once
economics is no longer central to life. But we can see their
prefigurative forms in the lives of young people all over the world
breaking down 20th-century barriers around sexuality, work, creativity
and the self.
The feudal model of agriculture collided, first, with environmental
limits and then with a massive external shock – the Black Death. After
that, there was a demographic shock: too few workers for the land,
which raised their wages and made the old feudal obligation system
impossible to enforce. The labour shortage also forced technological
innovation. The new technologies that underpinned the rise of merchant
capitalism were the ones that stimulated commerce (printing and
accountancy), the creation of tradeable wealth (mining, the compass
and fast ships) and productivity (mathematics and the scientific
method).
Present throughout the whole process was something that looks
incidental to the old system – money and credit – but which was
actually destined to become the basis of the new system. In feudalism,
many laws and customs were actually shaped around ignoring money;
credit was, in high feudalism, seen as sinful. So when money and
credit burst through the boundaries to create a market system, it felt
like a revolution. Then, what gave the new system its energy was the
discovery of a virtually unlimited source of free wealth in the
Americas.
A combination of all these factors took a set of people who had been
marginalised under feudalism – humanists, scientists, craftsmen,
lawyers, radical preachers and bohemian playwrights such as
Shakespeare – and put them at the head of a social transformation. At
key moments, though tentatively at first, the state switched from
hindering the change to promoting it.
Today, the thing that is corroding capitalism, barely rationalised by
mainstream economics, is information. Most laws concerning information
define the right of corporations to hoard it and the right of states
to access it, irrespective of the human rights of citizens. The
equivalent of the printing press and the scientific method is
information technology and its spillover into all other technologies,
from genetics to healthcare to agriculture to the movies, where it is
quickly reducing costs.
The modern equivalent of the long stagnation of late feudalism is the
stalled take-off of the third industrial revolution, where instead of
rapidly automating work out of existence, we are reduced to creating
what David Graeber calls “bullshit jobs” on low pay. And many
economies are stagnating.
The equivalent of the new source of free wealth? It’s not exactly
wealth: it’s the “externalities” – the free stuff and wellbeing
generated by networked interaction. It is the rise of non-market
production, of unownable information, of peer networks and unmanaged
enterprises. The internet, French economist Yann Moulier-Boutang says,
is “both the ship and the ocean” when it comes to the modern
equivalent of the discovery of the new world. In fact, it is the ship,
the compass, the ocean and the gold.
The modern day external shocks are clear: energy depletion, climate
change, ageing populations and migration. They are altering the
dynamics of capitalism and making it unworkable in the long term. They
have not yet had the same impact as the Black Death – but as we saw in
New Orleans in 2005, it does not take the bubonic plague to destroy
social order and functional infrastructure in a financially complex
and impoverished society.
Once you understand the transition in this way, the need is not for a
supercomputed Five Year Plan – but a project, the aim of which should
be to expand those technologies, business models and behaviours that
dissolve market forces, socialise knowledge, eradicate the need for
work and push the economy towards abundance. I call it Project Zero –
because its aims are a zero-carbon-energy system; the production of
machines, products and services with zero marginal costs; and the
reduction of necessary work time as close as possible to zero.
Most 20th-century leftists believed that they did not have the luxury
of a managed transition: it was an article of faith for them that
nothing of the coming system could exist within the old one – though
the working class always attempted to create an alternative life
within and “despite” capitalism. As a result, once the possibility of
a Soviet-style transition disappeared, the modern left became
preoccupied simply with opposing things: the privatisation of
healthcare, anti-union laws, fracking – the list goes on.
If I am right, the logical focus for supporters of postcapitalism is
to build alternatives within the system; to use governmental power in
a radical and disruptive way; and to direct all actions towards the
transition – not the defence of random elements of the old system. We
have to learn what’s urgent, and what’s important, and that sometimes
they do not coincide.
...
The power of imagination will become critical. In an information
society, no thought, debate or dream is wasted – whether conceived in
a tent camp, prison cell or the table football space of a startup
company.
As with virtual manufacturing, in the transition to postcapitalism the
work done at the design stage can reduce mistakes in the
implementation stage. And the design of the postcapitalist world, as
with software, can be modular. Different people can work on it in
different places, at different speeds, with relative autonomy from
each other. If I could summon one thing into existence for free it
would be a global institution that modelled capitalism correctly: an
open source model of the whole economy; official, grey and black.
Every experiment run through it would enrich it; it would be open
source and with as many datapoints as the most complex climate models.
The main contradiction today is between the possibility of free,
abundant goods and information; and a system of monopolies, banks and
governments trying to keep things private, scarce and commercial.
Everything comes down to the struggle between the network and the
hierarchy: between old forms of society moulded around capitalism and
new forms of society that prefigure what comes next.