Monday, April 16, 2018

Paul Mason’s PostCapitalism?

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.