Thursday, 12 November 2015

Skating on the edge of Chaos

This is the biggie, and I was very disappointed that, in the end, I missed Paul Mason at the literature festival since I had been hoping to ask an erudite and searching question. 'Postcapitalism - a guide to our future' is a fascinating investigation into the history of the capitalist economic system and an examination of where it might be going in the light of the financial crises that have occurred in recent years. There is a lot of marxist theory in this book, so be prepared to get your head round some ideas that you might think you already know stuff about. I certainly had a basic notion of marxism, having read a bit at polytechnic. It was another book like 'This Changes Everything' that was hard to read because so much of the 'story' leaves you frustrated and angry. I blame it all on the annoying people who invented money, it really is the root of all our problems. 

It is far too complicated to explain all the arguments so I will try and quote a few things to give you the gist of it. Back in 1910 a guy called Hilferding managed to get his head around what was happening to capitalism:
"His book, Finance Capital, would become the reference point for all left-wing debates on the future of capitalism for a century. Hilferding was the first Marxist to understand the scale of capitalism's mutation. What is more, in the new structure many of the permanent features looked exactly like those Marx had listed as counter-tendencies to the falling profit rate: export of capital, the export, via migration, of surplus workers to white-colonial settlements abroad, the pooling of profits via the stock market, the move away from entrepreneurship into rentier-style investing.
The finance system, which in the previous century had functioned as a puny redistributive centre for business profit and an unreliable source of capital, now dominated and controlled the business world. The counter-tendencies to crisis had become synthesised into a new, more stable system.
For Hilferding, the forces of instability had not disappeared, but had been driven into a single sphere: the imbalance between the production and consumption-oriented sectors of the economy. He explicitly ruled out 'under-consumption' as a cause of crisis, pointing out that capitalism could always create new markets where old ones were exhausted, and thus go on expanding output. But the possibility remained that sectors would expand at different rates. Hence the need for state intervention to prevent such an imbalance." (p.58-9)
He still believed however that this change was the final stage of capitalism and would leave inevitably to socialism; in 1989 the death of the Soviet bloc and the rise of globalism put paid to those hopes.

What was not foreseen in the early 20th century was the information revolution that Mason believes is paving the way for a transformation of capitalism: "Once you can copy and paste something, it can be reproduced for free. It has, in economics-speak, a 'zero marginal cost'." (p.117) 
He goes on:
"If you are trying to 'own' a piece of information - whether you're a rock band or a turbofan manufacturer - your problem lies in the fact that it does not degrade with use, and that one person consuming it does not prevent another person consuming it. Economists call this 'non-rivalry'. A simpler would for it would be 'shareable'.
This has major implications for the way the market operates.
Mainstream  economists assume that markets promote perfect competition and that imperfections - such as monopolies, patents, trade unions and price-fixing cartels - are always temporary. They also assume that people in the marketplace have perfect information. Romer showed that, once the economy is composed of shareable information goods, imperfect competition becomes the norm.
Until we had shareable information goods, the basic law of economics was that everything was scarce. Now certain goods are not scarce, they are abundant - so supply and demand become irrelevant.
In short, information technology is corroding the normal operation of the price mechanism. This has revolutionary implications for everything, as the rest of this book explores.
If they'd understood capitalism as a finite system, Romer and his supporters  might have explored the massive implications of this extra-ordinary statement - but they did not. They assumed the economy was, as in the textbooks, composed of price makers and price takers: rational individuals trying to pursue their self-interest through the market." (p.117-118)

Fast forward just a few years:
"In 1997, Kelly proclaimed the existence of an emerging new economic order with three main characteristics:'It is global. It favours intangible things - ideas, information, and relationships. And it is intensely interlinked. these three attributes produce a new type of marketplace and society.
The solution, Kelly said, was to invent new goods and services faster than they could slide down the curve to worthlessness. Instead of trying to defend prices, you had to assume they would collapse over time, but build business in the gap between one and zero. You had, he warned, to 'skate to the edge of chaos', to exploit the free knowledge customers donate when they interact with websites. By the late 1990s , the received wisdom among those who understood the problem was that capitalism would survive because innovation would counteract technology's downward effect on pricing. But nowhere did Kelly explore what might happen if this failed." (p.126-127)

So where are we going with this, and here it begins to get worrying for us ordinary people; my sister's job in financial services was replaced by a computer programme some years ago, very sensibly she is now training to be a nurse:
"In the first wave, we find that most workers in transformation and logistics occupations, together with the bulk of office and administrative support workers, and labour in production occupations, are likely to be substituted by computer capital.
In the second wave, it is everything relying on finger dexterity, observation, feedback, or working in a cramped space that gets robotised. They concluded the jobs safest from automation were service jobs where a high understanding of human interaction was needed - for example, nursing - and jobs requiring creativity." (.174)
But it's not as scary as you might fear:
"So what we have in reality if an info-capitalism struggling to exist.
We should be going through a third industrial revolution but it has stalled. Those who blame its failure on weak policy, poor investment strategy and overweening finance are mistaking symptoms for the disease. Those who continually try to impose collaborative legal norms on top of market structures are missing the point.
An economy based on information, with its tendency to zero-cost products and weak property rights, cannot be a capitalist economy.
The usefulness of the labour-theory is that it accounts for this: it allows us to use the same metric for market and non-market production in a way that the OECD's economists could not. Crucially it enables us to design the transition process so that we know what we are trying to achieve: a world of free machines, zero-priced basic goods and minimum necessary labour time.
The next question is: who is going to make it happen?" (p.175-176)

'Postcapitalism' appears like book that would be really heavy going but it is a thoroughly engaging read. He does not talk down nor get overly technical but assumes that the reader is intelligent and willing to understand the arguments. It is very all encompassing as he, in effect, analyses in quite a lot of detail the social, ecomonic and political history of the 20th century, drawing together ideas from a wide range of sources. 
One thing that I made a note of that struck me very hard was an impact of the Second World War that had never occurred to me before. In a tiny section entitled 'The Massacre of Illusions':
"The scale of death during the Second World War makes it difficult to comprehend. So its impact on the politics and sociology of the working class has been the subject of a horrified silence. But let us puncture it. The majority of the Jews killed in Eastern Europe were from the politicised working-class communities. Many were adherents either of pro-Soviet, left Zionist parties or the anti-Zionist Bund. The Holocaust wiped out an entire political tradition in the global labour movement in the space of three years.
In Spain, the unions, co-ops and militias of the left were destroyed by mass murder - and their traditions suppressed until the 1970s. Meanwhile, in Russia the working-class political underground was exterminated by the gulag and mass executions.
What Orwell called 'the flower of the European working class' was crushed. Even if it had only been a question of numbers, this deliberate slaughter of politicised workers - added to the tens of millions of people killed by military action - would have been a turning point in the story of organised labour." (p.196-197)

I think it makes a strong case, and one that is not reliant on a particular political ideology; it is not anti-capitalist, nor is it proposing new social or political structures. What it is saying is, like Marx, that the end of the current version of capitalism is inevitable, that the mechanism that gave rise to capitalism have been fundamentally changed by technological advances and we should stop trying to cling to the old way of doing things. It is quite a revolutionary book, and more people should read it.

"As we pursue these goals, a general pattern is likely to emerge; the transition to postcapitalism is going to be driven by surprise discoveries made by groups of people working in teams, about what they do to old process by applying collaborative thinking and networks.
What we are looking for are rapid technological leaps that make things cheaper to produce and benefit the whole of society. The task of the decision-making nodes in a networked economy (from the central bank to a local housing co-op) is to understand the interplay between networks, hierarchies, organisations and markets; to model this in different stages, to propose a change, to monitor its effects and adjust their intentions accordingly.
But for all our attempts at rationality, this is not going to be a controlled process. The most valuable things that networks (and the individuals within them) can do is to disrupt everything above. Faced with group-think and convergence, either in the design stage of an economic project or in its execution, networks are a brilliant tool for allowing us not just to dissent, but to secede and start our own alternative.
We need to be unashamed utopians. The most effective entrepreneurs of early capitalism were exactly that, and so were all the pioneers of human liberation." (p288)

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