Current assessments of where modern capitalism is going
vary greatly, probably more today than ever before. In the previous post we
considered (and rejected) John Kay’s idea that capitalism has been transformed
so radically by the internet and associated developments that it was tamed and
turned into a non-antagonistic stakeholders’ paradise which we should stop
calling capitalism altogether. A somewhat different conclusion is drawn from similar
premises by John Mason (PostCapitalism - A Guide to Our Future, Allen Lane, London 2015), predicting not so much the taming of capitalism
but its collapse, replaced by a world of plentiful free digital goods.
Mason argues that new technologies such as internet and
the rise of the digital economy “are not compatible with capitalism … Once
capitalism can no longer adapt to technological change, PostCapitalism becomes
necessary... in short: ... capitalism is a complex, adaptive system which has
reached the limits of its capacity to adapt” (for a positive review see Donald Gillies
2015).
Many consumption goods - all the media, literature,
musical scores and recordings, photographs, films, television programmes,
reproductions of works of art – and production goods such as software, are
digital products, whose equilibrium price cannot exceed their cost of
reproduction which is zero or near-zero. Mason argues that “The rise of information goods
challenges marginalism at its very foundations because its basic assumption was
scarcity, and information is abundant. Walras, for example, was categoric:
‘There are no products that can be multiplied without limit. All things which
form part of social wealth … exist only in limited quantities’” (p. 163).
Gillies notes that “these areas of capitalism now
being eroded are precisely the ones in which great capitalist fortunes were
made in the 1980s and 1990s”, by owners of software companies and by media
tycoons. In theory financing the production of digital goods could be achieved
by advertising or by strict enforcement of legal protection of intellectual
property, but both methods have limited effectiveness, the first because of its
limited size and the second because of widespread piracy. Alternatively, the
production of digital goods could be organised “in a decentralized and
collaborative way” like Wikipedia, “utilizing neither the market nor management
hierarchy” (Mason, p. 129).
Gillies argues that, if groups of workers are going to
be paid to produce digital goods, they cannot be paid by the private sector and
therefore would have to be paid a wage by the state: PostCapitalism would be a
form of socialism, not a traditional bureaucratic and authoritarian socialism but
a more egalitarian and libertarian, “networked” version. Gillies expects that
the new socialism will be international, and that the same rise of the digital
economy that brought about a decline of capitalism “clearly favours the left in
politics”.
But there is a more trivial, brutal solution to the effects
of the digital economy, namely one in which digital goods, constrained by a
zero reproduction cost and price, will only be produced in a much reduced scale
within the bounds of voluntary selfless generosity, limited advertising income
and ineffective protection of intellectual property. A somewhat impoverished
world and a largely unchanged system would be the unattractive but more
probable outcome. The digital economy rests on the continued real production of physical
goods and their exchange, driven by ordinary markets just as much as any “earlier”
capitalist form. Reports of capitalist collapse have been much exaggerated.
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