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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Location: Northwest Arkansas, United States

Saturday, March 11, 2006

Commons-Based Production and the Collapse of Exchange Value

At P2P, Michel Bauwens quotes an article on the "Death of Exchange Value" in the P2P Wiki. The post argues that peer production, as a commons-based form of production for use-value, is an example of the kind of "'collapse of exchange value' under conditions of abundance" that Marx talked about in this fragment from the Grundrisse:

...In the degree in which large-scale industry develops, the creation of real wealth becomes less dependent upon labor time and the quantity of labor employed than upon the power of the agents set in motion during labor time. And their power ... in turn bears no relation to the immediate labor time which their production costs, but depends, rather, upon the general level of development of science and the progress of technology, or on the application of science to production. ... Labor no longer appears so much as included in the production process, but rather man relates himself to that process as its overseer and regulator ... The theft of alien labor time, which is the basis of present wealth, appears to be a miserable foundation compared to this newly developed one, the foundation created by large-scale industry itself. As soon as labour in its immediate form has ceased to be the great source of wealth, labor time ceases and must cease to be its measure and therefore exchange value [must cease to be the measure] of use value. The surplus labour of the masses has ceased to be the condition for the development of the general powers of the human mind. As a result, production based upon exchange value collapses.

The Wiki article says this "presents a problem" for capitalism, which is based on production for exchange value. It depends on what you mean by "capitalism," I guess. Such a condition of abundance, insofar as it involves the production of what Menger called "non-economic goods," is allowed for in Austrian economics. So there are some "capitalists" out there (those who see themselves as defenders of free markets) who don't see it as that much of a problem.

Anyway, Bauwens also links to material by David Bollier on the way commons-based production is undermining the business model of large sectors of the economy.

It's not widely appreciated that "Centralized Media" - broadcasting, cable television, films, recorded music - have a serious Achilles' Heel. They have huge overhead costs. A small number of large companies are able to dominate their respective markets primarily because they control critical "choke points" of product development and distribution. But it costs A LOT to control these choke points -- and those costs are only going up even as the costs of online alternatives go down.

First, most newcomers can't even enter the Centralized Media market because they need a lot of capital in the first place. You also need big money to invest in brand identities that are needed for distribution and marketing. You need to invest big money in blockbusters. You need a system for identifying and recruiting talent. The marketing apparatus to find and retain customers is expensive. So is the legal enforcement and technologies to identify and prosecute piracy.

In a more static commercial and technological environment, this model worked fairly well. The overhead costs could be absorbed. But technological innovation is making the high-overhead business models of Centralized Media more vulnerable. Socially based online media - i.e., online commons - are undercutting the historic cost structures and risk management strategies for major media companies....

Meanwhile, new software technologies are radically re-organizing markets so that newcomers can more readily enter and compete. The technologies also enable companies to leverage bottom-up, decentralized social energies in ways that Centralized Media simply cannot. It turns out that the most serious threat to Centralized Media is not piracy, but a veritable explosion of user-generated content and creativity. It is consuming far more of people's finite attention and time than ever before - mostly at the expense of mediocre, mass-market product....

What is notable about many online commons is that many of them are out-competing conventional markets. They often produce value more efficiently than conventional corporations. But they do still more: they generate value in more flexible, personally satisfying and culturally authentic ways. Most companies can't begin to compete on those terms.

But even at the more basic economic level, online networks have the ability to aggregate excellent information and creativity from a vast pool of disparate and dispersed people. That's also something that Centralized Media can't do. Their ability to use top-down market power to push and shape consumer demand often can't compete with self-organized communities usinge the network to aggregate and express their own consumer demand. Those communities can then choose to fulfill their needs through a niche market or through a commons that they own and control themselves....

In the new context of pull platforms, social communities can efficiently exploit network effects and proprietary value for themselves. Value tends to stay within the originating communities. Attempts to "export" and privatize that value (through intellectual property rights and other proprietary controls) are not necessarily effective....

In the pull environment, therefore, companies must learn how to co-exist with and respect the commons. They have to adopt a more open, accountable relationship with users/consumers, and show a genuine respect for their autonomy and intelligence. High-handed forms of "push" marketing are likely to flop in the pull environment, where people want - and can insist upon -- a more genuine, transparent and accountable relationship with any vendor.


Anonymous Anonymous said...

Um... so bottom-line, corporations like Sony will see their music-divisions go broke as people download songs/pictures/whatever that are made by small groups of people online?

March 11, 2006 10:22 PM  
Blogger Kevin Carson said...


Or at least see them shrink significantly as more entertainment needs are met by alternative means. Those alternative means don't necessarily mean production on the web. I expect to see, for example, more bands using innovative marketing techniques like Phish to circumvent the big entertainment companies.

Thanks, Jeremy. I'll check it out.

March 12, 2006 10:18 AM  

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