Friday, 9 March 2012

Facebook and the collapse of the consumer society

Is Facebook worth $100billion? Probably not, but its unusual business model has prompted an interesting piece from Michel Bauwens, writing in Al Jazeera.

The really interesting part of Bauwens' article isn't about Facebook itself, (which will probably go into unlamented terminal decline as the intrusive, stalker-ish changes required to effectively monitor, control and monetise its users become annoying enough to make many of them abandon Facebook and adopt The Next Big Thing, whatever that turns out to be)*, but about the future of open source software, open source fabrication and shared innovation generally.

If / when the world + dog stops being fascinated by casual acquaintances giving real-time status updates about their life and every day to day event in all its minute and tedious attention to detail ('Kevin Boggis is eating a double choc chip muffin') most people will easily find new ways to fritter away their time ('I don't know what's wrong with young people nowadays, making their own entertainment on social networking sites. When I were a lad, we were all passively slumped in front of the telly watching Blue Peter, Doctor Who and Top of the Pops'). What is interesting about Facebook is that users, unlike employees, are bringing "use value", rather than "exchange value" to the party:

For thousands of years, under conditions of non-capitalist production, the majority of the working population directly produced "use value" - either for themselves as subsistence farmers, or as tributes to the managerial class of the day. It is only under capitalism that a majority of the working population produces "exchange value" by selling their labour to firms. The difference between what we are paid and what the market pays for the products we are making is the "surplus value".

What's far more interesting is the impact of open source and shared innovation on value. You have people releasing usable, valuable stuff into the public domain, sometimes not directly making any money from what they produce. Even when they monetise what they've created, open-source entrepreneurs seem to be shrinking the profit pie:

Even as the open-source economy becomes the default way to create software, and even as it creates companies that reach a revenue of more than $1bn, such as Red Hat, the overall effect is still deflationary. It has been estimated that open-source annually destroys $60bn in revenues for the proprietary sector. 

It's not just software. There are, for example, wikis out there that would once have counted as informative, saleable textbooks, or proprietary knowledge banks, but now just arise from people collaborating to share their interests and expertise, with nobody being directly paid for the value they create. A trivial example, but what happens as technology enables more of this sort of collaboration?

True open-source manufacturing might be limited to a few enthusiasts and hobbyists right now, but what's it going to do the paying-people-to-produce value model, if we ever get to the day when getting the particular widget you want doesn't necessarily involve money flowing down a long chain of value producers (retailers, wholesalers, hauliers, shipping companies, factory owners, shareholders and widget-makers in the factories, etc), but simply modest payments to an energy company and to the people involved the low-value-added supply chain of fungible raw materials which are all you need, once you've downloaded a plan for a workable widget (that was released into the public domain by a hobbyist who just enjoyed tinkering) and reproduced it on a personal / locally available fabricating machine? And I've not even mentioned the tax collectors and bureaucracies who get their cut and produce some value in return (little things like security, public health, education, law enforcement and infrastructure, that are way too small to be seen from the planet inhabited by the various Ayn Randian space cadets currently patrolling cyberspace).

That's not happening yet, but Bauwens cites low-cost Chinese "shanzhai" manufacturing (a hybrid of standard developing-world low-cost manufacture, with a bit of open-source and some outright piracy thrown in) as a crude precursor of the margin-slashing open-source future.

So we've got the availability of open-source adding use value without adding much monetary value. The thing is, for most of the last generation, for most ordinary people, value creation already seems to be partly decoupled from monetary return. Many people in developed economies have already spent a substantial portion of their lives creating lots of surplus value by adapting to new technology and working longer, harder and more productively, in return for stagnating wages, which prompts the $64,000 (or $100 billion) question:

Thus we have an exponential rise in the creation of use value, but only a linear increase in the creation of monetary value. If workers have less and less income, who can buy the commodities that are offered for sale by companies?

Governments and the financial services industry have already tried plugging the purchasing-power gap with an over-extension of credit and/or by encouraging investment in a rising property market, itself fuelled by an over-extension of credit, but that's already gone about as disastrously pear-shaped as it's possible for anything that isn't actually a pear to go. Technology seems to be increasing the amount of surplus value that can be produced without increasing the average worker's purchasing power by very much. Which calls the sustainability of the consumer society, as we know it, into question. 

Add to the wage stagnation and the exodus out of wage labour that peer-based use value creation causes, and we can see that the problem is not solvable within the present paradigm. Is there a solution?

There is - but that is for the next installment. The solution involves an adaptation of capitalism to peer production, but also opens up the avenues for a transcendence of capitalism.

I'm not convinced that the next installment will contain the blueprint of a workable solution, but I am convinced that we're living in interesting times. Read the whole of Bauwens' interesting piece here.


* I may be wrong, but don't start calling me a dimwit until Facebook's clocked up another five years of rude health.


David Timoney said...

Re "Technology seems to be increasing the amount of surplus value that can be produced without increasing the average worker's purchasing power by very much"

Technological advance means we are on a trajectory that will progressively minimise the number of people (amount of labour) we need to produce all necessary goods and services. As this would otherwise be self-defeating, we progressively create pseudo-jobs (i.e. disguised consumption) to maintain the consumer base. Most middle-class jobs are unnecessary (i.e. rent-seeking).

The tragedy is that instead of addressing this at a societal level, we allow the market to do its magic, which means that those who are best placed to game the system appropriate a greater share of wealth.