Essay

The network versus the hierarchy

New technology and the prophets of postcapitalism

‘IT IS EASIER to imagine the end of the world than to imagine the end of capitalism.’ So wrote the critical theorist Fredric Jameson in New Left Review in 2003, attributing the sentiment to an unnamed ‘someone’ whom posterity, with nothing else to go on, has decided to call Fredric Jameson. But its provenance aside, this bleak observation does capture something of the political mood in the two decades spanning the millennium. The collapse of the Soviet Union in the early 1990s and subsequent disappearance of its foundational ideas from democratic political discourse left liberal capitalism looking less like the winner in a battle between ideologies than ideology’s opposite: if not the expression of human nature itself (as many on the right were apt to claim), then at least the best that humankind could do. Francis Fukuyama came forward to say that capital-h History had reached its terminus, and everyone on the left had a good old laugh. But as Keating, Clinton, Blair and Schröder set about giving a more progressive aspect to the process of neoliberal globalisation, many socialists internalised his conclusions.

If the 2008 global financial crisis can be said to have had a positive effect (among all the calamitous ones) it is that it has upset this political fatalism. That crisis, or set of interlocking crises, functioned as a glitch in the matrix, a window through which the chaotic character of capitalism could again be glimpsed. Even in the light of the recovery (so-called), it is increasingly clear that the long-term trends are towards low growth (or ‘secular stagnation’) and rising inequality and debt. In the meantime, the spectacular rise of China has dealt a blow to the idea that capitalism and democracy necessarily advance together, while climate change science has put us on notice that the planet can only take so much ‘growth’. For some, indeed, it is now liberal capitalism, no less than communism or socialism, that seems utopian and delusional – a city built on sand, like Dubai. Contra Jameson, a number of commentators now declare the end of capitalism to be not just possible but inevitable, albeit with the rider that, at our current trajectory and rate of acceleration, the end of the world is looking pretty likely too.

The rolling symposium on capitalism’s future has been graced by many impressive speakers: Thomas Piketty (on inequality); David Graeber (on debt and ‘bullshit jobs’); Slavoj Žižek (on ideology); Wolfgang Streeck (on all of the above). But perhaps the most fascinating debate of all, and the one that seems to have captured the popular imagination, is the effect that new technologies are having on the economy. Indeed, there is now an impressive body of work suggesting that capitalism’s restless search for greater productivity may have created the one predicament from which it finds it impossible to escape, while also preparing the ground for an alternative system of production, distribution and exchange. According to this argument, the very ‘disruptions’ that in the mid 1990s were said to herald a new form of capitalism (‘info’ or ‘cognitive’: take your pick) are now disrupting capitalism itself.

So far, the debate has tended to focus on the effect that emerging technologies are having, or are likely to have, on work. Massive advances in automation, robotics and artificial intelligence have led to the fear that developed economies are standing on the brink of a ‘jobocalypse’, a spike in unemployment that will spell disaster – not only for the unemployed themselves, but also (since workers are also consumers) for the industries that once employed them. (A cynic might suggest that it is for this reason that Elon Musk and his analogues are suddenly spruiking for a universal basic income, one effect of which would be to boost consumer demand in a system denuded of actual wage earners.) This is what Keynes called ‘technological unemployment’ and it is by no means a new phenomenon: nineteenth-century textile workers were only too aware of it, as were twentieth-century print workers, inter many alia. Indeed, it is precisely the fact that capitalism has been here so many times before that leads critics of the jobocalypse thesis to suggest that the problem is overstated, and possibly not a problem at all. Did not Keynes himself (they ask) underestimate the capacity of capitalism to create new markets? Given that the great economist predicted that increased productivity would lead to a fifteen-hour week within two generations – this was in 1930! – I think it’s safe to say that he did.

Nevertheless, say the prophets of postcapitalism, this time around it’s different. Yes, it’s true that the technological innovations of the past have led to the emergence of new sectors, but it’s also true that recent technological developments are upending the normal price mechanisms and proprietary arrangements inherent to capitalism. According to this view, technological unemployment is just one aspect of a broader disruption – one that threatens to collapse, from the inside, the economy as capitalism understands it.

 

PERHAPS THE BOLDEST version of this thesis comes not from the denizens of the radical left but from the political advisor Jeremy Rifkin. In The Zero Marginal Cost Society (Palgrave, 2014), Rifkin argues that capitalism is essentially a victim of its own success. Though he criticises mainstream economists for their tendency to relegate environmental issues to the realm of ‘externalities’ (reminding them that the economy, like everything else in heaven and earth, is subject to the second law of thermodynamics, and that the ‘entropic bill’ will soon fall due) he accepts the conventional economic assumption that under conditions of ‘perfect competition’ prices should fall towards ‘marginal cost’; that is, the cost of producing one unit of a good (a teacup or a pair of socks) once its fixed costs have been accounted for. For Rifkin, indeed, it is precisely this dynamic that has led to ‘extreme productivity’: intense competition has spurred technological innovation, which has driven the marginal cost of goods across a number of sectors (energy, education, finance) towards zero. The effect of such increasing efficiencies will be to lower prices so radically that the ability of capitalists to turn a profit will be undermined, while also catalysing a new economy based on very different principles. At the moment, that new economy, which Rifkin calls ‘the collaborative commons’, exists alongside the capitalist one. But as efficiencies continue to increase, in the form of trillions of machine-to-machine connections known collectively as ‘the internet of things’, the commons will come to dominate. Hence the subtitle of Rifkin’s book: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism.

Though it’s tempting to quibble with Rifkin’s characterisation of capitalism’s development, according to which individual businesses drive each other to ever-greater productivity under conditions of near-perfect competition, his notion that zero marginal cost goods, or close-to-zero marginal cost goods, are disrupting the normal operation of capitalism is one that deserves to be taken seriously. For as the author and left-wing activist Paul Mason suggests in his excellent book PostCapitalism (Penguin, 2015), there is one commodity – information – that will always have a zero marginal cost. That this happens to be the very commodity that is driving contemporary developments in digital technology and automation, creating new goods and services in the process but also changing the fundamental character of goods and services already in existence, is thus of fundamental importance when attempting to understand the effect that new technologies are having on the market. Information is as important to the modern economy as coal was to the nineteenth-century one, but it behaves in a very different way.

Before continuing it might be useful to consider the form in which you’re reading this essay. If you’re reading it in a paper version, having purchased a hard copy of Griffith Review, your copy of it is commensurate with the fundamental economic assumption that, while human desires are unlimited, the resources needed to meet them are scarce. Notwithstanding that you may pass it on to a friend or swap it for credit at a second-hand bookshop, it can only be used by one person at a time, and there are only so many copies in existence. If, however, you are reading this copy of Griffith Review in a digital version you are face-to-face with a different phenomenon: a good that is (potentially) abundant and that can be used by everyone, forever. That the Griffith Review website may choose to charge you a fee for reading it is (for now) beside the point. The good is fundamentally different in that it can be stored and distributed infinitely and for free, or as close to free as makes no difference. It is a ‘non-rival’ good; in other words, it is shareable.

The problem for capital is obvious: shared stuff doesn’t butter any parsnips, let alone polish any Porsches. It must therefore fall back on monopoly models, attempting to bar access to goods and services in a way that is (theoretically) contrary to the competition-innovation-productivity dynamic identified in Rifkin’s book. And while commentators to the left of Rifkin would point out that this is what capitalists have been trying to do for 250 years, the point is that it is now a necessity if profits are to be made at all. To ‘break up’ Apple, as some recommend, would drive the cost of music to zero, because zero is what it costs to store and reproduce music in an MP3 format.

Rifkin makes much, as well he might, of a 2001 paper co-authored by Larry Summers (‘The “new economy”: background, historical perspective, questions, and speculations’) in which the then US Treasury Secretary concedes that ‘the competitive paradigm cannot be fully appropriate’ to the information economy and that the best way to protect innovation and profit would be to favour the creation of short-term monopolies. As Rifkin suggests, this remarkable submission inverts the thinking of mainstream economics, according to which monopolisation acts as a barrier to competition and innovation. Nor do the inversions stop there. Writing in The Conversation on attempts by the US Government to crack down on infringements of intellectual property, Deakin University’s Philip Soos suggests that those who illegally copy and share content ‘are acting as conventional economists claim people should – that is, they are rational agents seeking to maximise their utility (happiness) by obtaining copies of informational goods at marginal cost’. By contrast, businesses are behaving in a way the economic textbooks say they shouldn’t: as rent-seekers rather than entrepreneurs.

Of course, the fight between ‘open source’ technologies and intellectual copyright is far from new: the battlelines were drawn many years ago in the form of Bill Gates’ ‘Open Letter to Hobbyists’, which bemoaned the unauthorised use of software, and Richard Stallman’s ‘GNU Manifesto’, which effectively launched the free software movement. But the point made by the prophets of postcapitalism is that the tension between what Mason terms ‘the network and the hierarchy’ – between collaboration and ownership – is implicit to the technology itself. The 2000 dotcom crash was an early sign that information technologies did not conform to established models of ‘value’ in the marketplace, and the decades since have seen enormous volatility in information sectors especially: in newspapers (and indeed in publishing in general), music, education and visual media. From the market in academic papers to the ‘privatisation’ of genetic data, the response of the market has been to enclose, and, in enclosing, to remind the world of the process of ‘primitive accumulation’ (Marx) by which capitalism got its start. Like the corporate bigwigs sitting around the conference table at the beginning of Monty Python’s The Meaning of Life, capital now addresses itself to ‘the urgent realisation of just how much there is still left to own’.

Unhappily for capital, however, information doesn’t want to be owned. It wants to be free, as the tech activists say, and once it is free it proves very difficult to recapture. The example of Wikipedia, still lazily defamed in schools and colleges as a reliable source of unreliable information, is instructive. Estimates suggest that if Wikipedia were run as a commercial site it would generate nearly three billion US dollars a year in advertising revenue. But not only is it available for free and not reliant on advertising models, it also makes it practically impossible for anyone wanting to set up shop in the online encyclopaedia business to do so. As Mason suggests, it completely disrupts the normal operations of capitalism: ‘Getting a 12,000-strong corporation to produce 26 million pages of Wikipedia would be as pointless as the Soviet Union trying to create its own version of Starbucks.’

 

IF THE DYNAMIC identified above only applied to information goods such as books or music or visual media it would no doubt prove containable within the broader capitalist system. But the argument made by Rifkin and Mason, as well as by an increasing number of futurists of a broadly left-wing/radical stripe, is that as the information content of physical machines and products increases, the same effect is observable. Moore’s Law, which isn’t a law at all but an observation to the effect that computing power increases exponentially while simultaneously falling in cost, has spilled out into the world of physical objects: machines and products are now alive with information – in the form of software and stored data, real-time analytics and so on – and this increases their efficiency. Rifkin’s optimism regarding the internet of things – the connected, interactive network of vehicles, household appliances, buildings, industrial and agricultural equipment – is based on this trend continuing. It is this ‘intelligent infrastructure’, he suggests, that is giving rise to what he terms a ‘third industrial revolution’. As he puts it: ‘The internet of things is already boosting productivity to the point where the marginal cost of producing many goods and services is nearly zero, making them practically free. The result is corporate profits are beginning to dry up, property rights are weakening, and an economy based on scarcity is slowly giving way to an economy of abundance.’

One of the most exciting examples of the intersection between information and material goods is the emerging phenomenon of 3D printing, which allows the creation of physical objects for close to zero marginal cost. 3D printers work by disintegrating plastic or metal into smaller particles and building up objects layer by layer. Everything from trinkets to prostheses to cars and even houses can now be printed using this technology, which, like many other technologies, is increasing in efficiency and falling in price. But the really exciting aspect of 3D printing is less technological than socio-economic. For while one obviously needs a printer and some raw material with which to make the desired object, one doesn’t need either labour or plant. What one needs instead is information that can tell the printer what to print, and information, as we’ve established, can be stored and reproduced for free. As Crikey journalist Guy Rundle demonstrates in his excellent book A Revolution in the Making (Affirm Press, 2014), we are entering an era in which it will be theoretically possible to effectively democratise production, transferring it from the factory to the home or depot. That 3D printers can now print off their own parts, recycle materials and create little waste (the process is ‘additive’ as opposed to ‘subtractive’) makes this a revolutionary prospect indeed.

This brings us to what may turn out to be the most important aspect of this mooted transition towards a ‘zero marginal cost society’: its impact on the environment. As it happens, energy generation is perhaps the one phenomenon where zero marginal cost is understood intuitively. Renewable energy, as its name suggests, is energy that is naturally abundant: the sun, for example, will continue to shine for the next five billion years or so, providing as much energy every hour and a half as humanity currently consumes in one year. Once you’ve worked out how to harness it, its cost is thus effectively nothing. You install and pay off your rooftop solar, or indeed your national solar infrastructure, and the price of the energy falls to zero.
(As with other technologies, solar cells are increasing in efficiency at a rate that approximates to Moore’s Law. Oh, and they can also be 3D printed.) This is a revolution in itself, but the future of energy generation begins to look really transformative when one combines it with the other technologies that make up the internet of things. For Rifkin, indeed, it is now possible to conceive of a networked ‘energy internet’. In Europe especially, buildings are being transformed into ‘micro power plants’, capturing energy through solar panels, building-integrated turbines and geothermal pumps and storing it using batteries, flywheels, capacitors and other technologies. These buildings can then be connected to the grid and smart censors used to redistribute energy efficiently and according to need. As with 3D printing and production, energy generation and distribution would thus be effectively socialised.

 

UNSURPRISINGLY, THERE ARE many commentators who question this rather rosy picture. In Fictions of Sustainability (Greenmeadows, 2018), for example, the social theorist Boris Frankel questions the ‘Promethean’ suggestion that the economics of scarcity will cease to apply in a postcapitalist world, noting in particular the challenges of providing food security for a global population that could touch sixteen billion. He is especially critical of the ‘accelerationists’ who assume that capitalism can be relied upon to create the conditions for its own transcendence (this, he writes, is to put the ‘cart’ of postcapitalism before the ‘horse’ of anti-capitalist politics) and points out that roughly half of the people in the world do not yet have internet access. ‘To hundreds of millions of people who don’t even have electricity or running water, the zero marginal cost society is like pure fantasy.’

These are fair criticisms. It’s true that there is a teleological strain in much of the commentary around postcapitalism – a strain that will put some people in mind of ‘vulgar’ Marxist arguments about capitalism’s inevitable supersession by communism. As for Frankel’s criticism that such prophecies tend to be Western-centric: that is unquestionably the case. But it is possible to take these criticisms on board and still regard the intensifying conflict between the network and the hierarchy as one of the principal pressure points in a broader radical politics. No, we can’t afford to cross our arms and wait for capitalism’s ‘internal contradictions’ to resolve themselves into ‘luxury communism’; as Peter Frase argues in his book Four Futures (Verso, 2016), the upward march of new technologies is entirely consistent with some very nasty, not to say dystopian, outcomes, the character of which can easily be glimpsed in the degradations of the NSA, China’s ‘social credit’ system and the proliferation of gated communities. All the more reason, then, to insist (as Frase does) on the socialisation of new technologies, or on their absorption, wherever possible, into a system aimed at freedom, fairness, comfort and sustainability. The widespread frustration around waste and pollution and now-commonplace rejection of GDP as a meaningful measure of the social good are signals that people have internalised the message that we simply cannot go on as we are. The argument of the postcapitalists is that new technologies are commensurate with a different kind of society. But the effort to bring that society into being will be a moral and political one, with countless challenges lying in wait.

Ideologically speaking, this is a fight the left should understand in its bones. For what is the conflict between the network and the hierarchy if not a restaging of the centuries-old effort of the ‘commons’ to reassert itself in the face of enclosure and outright theft? Utopian as it can sometimes seem, the open-source movement, with its animating spirit of volunteerism and openness, should be the natural ally of the radical left, which might point to the implicit proof it provides that innovation is not driven by the market, but by interesting, interested human beings working in collaboration with others. It is not necessary to become an expert on the GNU operating system or creative commons licensing. But the resistance to new ‘enclosures’ should be reflexive, while the demand that the state begin to take seriously the emergence of a collaborative commons with enormous productive power in its own right should sit at the heart of any suite of radical political proposals. Debates around universal basic income, meaningful jobs and a shorter working week only make sense within this broader context, which comes down to the tantalising speculation that, as Keynes put it in ‘Economic Possibilities for Our Grandchildren’ (apropos of new technology), humankind is ‘solving its economic problem’.

Like the devil in Baudelaire’s The Generous Gambler, or Keyser Söze in The Usual Suspects, capitalism’s power was derived from its ability to convince the world that it didn’t exist. Now it’s out in the open again, and looking less convincing every day. Those who want a better world – indeed, who want a world at all – will have to reckon with the nature and potential of new and soon-to-be-new technologies. For all that they can seem a bit breathless at times, the prophets of postcapitalism help us to do that.

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