Thursday 27 August 2015

Beyond Paul Mason's Postcapitalism

The extraordinary economic crisis, which has now been with us for seven years, has at the very least been a crisis in economics. Deep down however, it is a crisis in epistemology. We have been shaken in our certainties about how the world works, what each of us might expect out of life, the role of the state, the provision of social care, the maintenance of the roof over our heads, and the rewards of education, learning – even technical innovation. Each turn of the neoliberal screw and another certainty drops off the world. Because it’s a crisis in epistemology – knowledge – one would expect education to play a central role in understanding how to get out of it. Unfortunately, neoliberalism messes with education too inflicting a market-oriented commodification of knowledge, certification, status, journals, H-indexes and so on: neoliberalism has attempted to uphold the scarcity of education, which disenfranchises those whose experiences do not fit its rigid models and its outdated pedagogies.
Paul Mason’s central argument in his new book “Postcapitalism” is that the dominance of information and technology in society means that the scarcity-preserving ways of capitalism in education, intellectual property and so on, are in conflict with the forces of openness and abundance. It’s a kind of stand-off which is leading to stagnation and will eventually usher in an abundant “postcapitalist” world where free exchange is the rule (a kind of economic Wikipedia), not the maintenance of scarcity. It’s a bold thesis and well-argued: among the things I’ve admired most is his exploration of a lot of off-the-beaten-track economic insight, as well as some endorsements of classic economic theory which is not usually associated with a progressive world-view. In the latter category, his approval of Austrian economics (the root of neoliberalism!), and particularly von Mises and Hayek’s opposition to planning will upset Marxists. But what Mason is saying is that within von Mises’s analysis (which is fundamentally rooted in the study of economic exchange – it was von Mises who first revived the idea of ‘catallaxy’ – the science of exchange – which Hayek would go on to develop) there is a seed for getting a better grasp of what information and technology are doing to our economy and the importance of the ‘gift economy’ in building a new future. However, the problem for economists is stepping outside the paradigm of mainstream economics whilst fashioning progressive arguments in an old language. But to suggest that Mason is still caught in the paradigm of neoclassical econometric models is not to snipe unnecessarily; it is to find a way of articulating what his instincts are telling him without becoming beholden to the bad econometric habits which took us to this terrible situation in the first place.
Mason picks up on the need of capitalism to maintain scarcity in the digital world, creating technological monopolies around intellectual property: not just Apple and Microsoft, but equally academic journals, degrees and so on. However, central to his argument is the role of capital imbalances in triggering economic cycles where technological innovations and the opening of new markets are effects, not causes. He enthuses about the Kondratieff ‘long wave’ cycles (I learnt a lot about Kondratieff), arguing for the veracity of macroeconomic mechanisms and lamenting Kondratieff’s low profile, whilst criticising Schumpeter’s similar cycles which privilege technical innovation as the cause of an economic wave. The Schumpeterian dominance has led to all sorts of policy initiatives to drive investment in new technologies from biotech to Graphene in the hope of revitalising capitalism. Mason questions this, considering whether the information revolution is creating a world where there are no new old-fashioned capitalist markets to be opened up unless scarcity is enforced in ways that will increase inequality further. In championing Kondratieff, Mason is arguing that we have to understand the problem of capital imbalances as triggers for a new wave. He explains:
“a long wave takes place because large amounts of cheap capital have been accumulated, centralized and mobilized in the financial system, usually accompanied by a rise in the supply of money, which is needed to fund the investment boom. Grandiose investments are begun – canals and factories in the late eighteenth century, railways and urban infrastructures in the mid-nineteenth century. New technology is deployed and new business models created – leading to a struggle for new markets – which stimulates the intensification of wars as rivalries over colonial settlements increase. New social groups associated with the rising industries and technologies clash with the old elites, producing social unrest.”
Here, I feel a weakness emerging from Mason’s economic orthodoxy: he doesn’t ask ontological questions. He doesn’t ask “what is capital?”. He does have an attempt at asking "what is money" giving a good description of fiat money, and the importance of confidence in a banks promises, although of course this raises more ontological questions than he has space to address. Instead, he points to the history of financialisation with a fascinating quote from Fernand Braudel commenting on the fall of the Netherlands economy in the 17th century, that
“Every capitalist development of this order seems, by reaching the stage of financial capitalism, to have in some sense announced its maturity: it is a sign of autumn”.
Seeing this against the rapid financialisation of western economies where markets become direct sources of finance for companies, banks pursue consumer debt to generate profits and financial instruments become ever more complex, and ever more dependent of sophisticated and super-fast algorithmic trading (Mason doesn’t mention this, but issues like the dominance of BlackRock’s Aladdin on trading floors across the world is a huge problem) is enlightening. However, there are deeper questions to ask about human-human relations and human-world relations wherein the question about capital and money has to be situated.
Marx’s ontology is a good starting point for addressing these issues. Drawing on the labour theory of value, and pointing out that capitalist investment in the means of production necessarily creates the conditions for continual investment in order to maintain the machines, Mason draws attention to Marx’s idea of the “free machine”. Marx speculated as to whether a ‘free machine’ which did not require any further capital investment to keep it going would ultimately drive its marginal cost of production down to zero. Mason argues that the world of information technology and the internet is such a machine: once made, it keeps going for ever. This drives Mason to the conclusion that the open source, gift economy will produce a new social order. The problem is that without a deeper analysis of the ontological issues, it is hard to determine if he is right or not. There may be free machines, but the deeper human-human and human-world issues are fundamental.
Having said this, Mason’s analysis of the present crisis is, I think, pretty much spot-on: there is a stand-off. Capitalism attempts to maintain scarcity in the face of forces that seek to produce abundance. Everything we see today from Apple to Google, the TTIP agreement, DRM, elite education, branding and pay-walls shows at the very least where the battle lines are, which produce increasing inequality as capital amasses without anywhere to go. Mason argues for a political settlement to address the stand-off, including a universal wage and government intervention in monopolies. I think at this point he reveals the idealism which underpins his arguments. Yes, there is a stand-off – but much of it is a confidence trick – particularly education. Epistemology crises are matters of misplaced faith.
Education is important because it is relational. It is about between-ness, whilst human exchange of capital, goods, services (which really fascinated von Mises), is also an in-between thing. The difference between the free stuff of the free machine that Mason thinks is the future and the paid-stuff which is the result of producing scarcity, is that the free stuff emphasises relations, whilst the paid-stuff allows itself to be objectified, rationalised, counted, econometricised, and so on. More importantly, the marketization of education has emphasised the close relation between money and education. Money is also relational – as we are currently seeing in the woes of the Chinese stock exchange. But the system prefers to objectify it.
Then there is a problem with our technology. Mason’s picture of the future is a big-data based, agent-based-model-simulation driven future which keeps track of the gift economy. But what is the creation of such models and their deployment for coordinating society if not a huge exercise in scarcity production? The stages of thinking that led him to this are stages of thinking about capital, labour and technologies as “things”. But these things are also relations. In fact, they are relations of expectations which become codified in the way people communicate and the technologies they use. Change expectations and you change everything.
There is a stand-off. But all stand-offs need to be negotiated: they need to be exposed as relations and for those relations to be unpicked and expectations explored. The technological issues which sit at the heart of the stand-off need to be argued: technology needs to be politicised. The inequality problem and the creation of scarcity has produced a situation where the stand-off cannot be exposed as relational because those defending their positions all speak with the same voice defending their position: it is a state of ecological imbalance. Fundamentally, it is a pathology of management who early-on used their communications technologies to keep everyone ‘on message’. This has meant that policy in corporations, universities, government is now determined by people who are pretty much the same as one another.

In the end, the only way to address a crisis of epistemology is to work to understand each other better: our technologies need to become better intersubjective technologies. That way, in the words of von Foerster, we can create technologies that address extant social problems, rather than asking our extant technology to create problems it can solve.


Scott said...

Hayek in particular was concerned with the value of local information on economic activity - particularly the sort of context-dependent information that is hard for anyone outside to capture. That seems like the exact opposite of using centralised Big Data solutions for economic management.

Scott said...

That aside, I think its refreshing that Mason is exploring these areas, which don't fit neatly into the typical political boxes of "left" and "right" but trying to come up with a new synthesis for a post-capitalist world. We definitely need to figure something out given we may have already used up the last of capitalism's "lifelines" - demand expansion, the credit boom, and globalisation - and will probably end up with neo-feudalism replacing capitalism by default.

Seb said...

Hey Mark,

you wrote...
"Yes, there is a stand-off – but much of it is a confidence trick – particularly education. Epistemology crises are matters of misplaced faith."
Could you possibly elaborate a little on this thought?



Mark Johnson said...

Hi Seb,

This needs elaboration ;-) What I'm getting at is the business of status and scarcity (they're two sides of the same coin). You know I like Searle's theory, and I think his general description of status functions as speech acts is broadly right. I think a status function is also a scarcity function (think of money or degrees). The most important thing about status functions is that people have to believe it in order to make them work. Mason tells the story about the Texan dollar in the 19th century, which eventually nobody believed in (and so it collapsed). This is what I mean be misplaced faith - we can magic away economic phenomena if we all believe they're not real. However....

there is also an issue about deep human-human relations - love, care, empathy and what Alfred Schutz calls our "tuning-in to the inner world of each other". There is a conflict between educational status functions (so-and-so is professor of x) and intersubjective relations (the same so-and-so is an idiot). Equally, the taxi driver taking me to a conference may appear far more insightful than the delegates I meet there. As the scarcity machine of education ramps-up, so the disjunction between intersubjective relations and declared and codified status becomes more marked. At some point, I would have thought this will unravel... So where do we put our faith? In the declared status or in direct human relations?

more to say - but that's a start!

David K said...

You know, Mark - this is why you suck. You read books that I read and articulate what I think about them far better than I can. :-(

I almost entirely agree with the above - but I found the way he raised Kondratieff almost immediately to explain why his theory wasn't holding up was ... odd (but maybe I'm just too suspicious of cycles as models). Also I was waiting for something on cognitive surplus and enclosure of time (via taylorism/big data) as oppositional.

Mark Johnson said...

Hi David,

It's always nice to get compliments which begin like that!!

The Kondratieff thing has stuck with me more than the 'free machines' thing, which everyone is talking about. I also had a bit of discomfort as he dived into the Kondratieff waves... but I think he successfully argues there's something about Kondratieff which is worth exploring - particularly in contrast to more popular theories of economic development which focus on new technology and innovation (Schumpeter, Nelson and Winter, and the Triple Helix too). It's this business of capital accumulation and financialisation as a driver for new technologies, not the other way round.

For Schumpeterians and innovation theorists there's a solution to our current woes: invest in new technologies. Mason, through his Kondratieff lens, says that won't work any more for reasons that emerge from the interplay between Kondratieff's cycles and the "free machines". He may well be right (JISC may be a good example to support him!). However, it's got me thinking about capital, and what it means for capital to 'accumulate'. What does that mean exactly? The word 'capital' gets used very loosely in the social sciences (Bourdieu's 'social capital', 'cultural capital' is a suitably inappropriate and obfuscatory example popular with educationalists)...

To be honest, I found Mason's book a lot more difficult and challenging than I expected. All the better for that! It deserves to be widely read and critiqued.

On the reality of waves, I really have no clear idea. Music seems to have waves... or are the waves in me? Either way there's something of an 'eternal return'. Either way we have to avoid objectifying it as a "cause" for things (which is what econometricians tend to do). But there's no harm in speculating on it as a 'constraint', or being constrained by the idea of waves as a way of stimulating our imagination about how the world might work....

Anonymous said...

Jim Williamson comments

I hope I will find time to treat your analysis with the depth that it deserves, but retirement keeps me far too busy. A fundamental concept of IT is that manufacturing ability can be copied and shared without cost - so we get an operating system that cost thousands of man-years of work for very little money - if we extend this - it is conceivable that robots could feed and clothe the world within the next fifty years - but this cannot be achieved under neo-liberal economics. This is not to say that people would not be able to work but is closely connected to the concept of a 'citizen's income'. People who want to shine must be encouraged and education supported by IT could become an important life-style choice - as these conversations prove.