PostCapitalism-_Paul-Mason_-_z-library.sk_-1lib.sk_-z-lib.sk_

Part II

We are now engaged in a grand scheme to augment, amplify, enhance and extend the relationships and communications between all beings and all objects.

Kevin Kelly, 1997¹

The Prophets of Postcapitalism

The jet engine was one of the core technologies of the post-1945 long wave. Invented during the Second World War, the turbofan – to give it its proper name – is a mature technology and should not be producing surprises. Yet it is.

It works by sucking compressed air in at the front and firing a flame through it so that the air expands. This drives a set of fans at the back, which transform the heat into energy. But turbofans are highly inefficient. The first jet engines converted 20 per cent of the heat into thrust. By the year 2001 they had achieved 35 per cent efficiency, with one industry veteran cautiously predicting 55 per cent ‘during the second quarter of the 21st century’.¹

Why should we care? Because by 2030, manufacturers expect the number of airliners in operation to double. That means 60,000 new turbofans.² They will boost the airline industry’s contribution to global warming from 3.5 per cent in 2005 to something like 5 per cent at midcentury.³ So the efficiency of a turbofan is not a geek issue, it’s a global survival issue.

Over the first fifty years of its life, designers managed to improve the turbofan’s efficiency by 0.5 per cent per year. Today, however, they are making innovative leaps: 65 per cent efficiency is within reach and radically new kinds of engine are on the cusp of being deployed. What’s driving the change is a mixture of carbon emission rules and the price of fuel. What’s allowing it to happen is the core technology of the fifth long wave: information.

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In the living memory of the people who make them, fan blades were hammered from solid metal. From the 1960s they were cast – that is, moulded from liquid metal. But cast metal contains imperfections, making the blades prone to failure.

Enter one of the most spectacular engineering solutions you have probably never heard of. In 1980, engineers at US aviation manufacturer Pratt & Whitney grew a fan blade out of a single metal crystal formed in a vacuum.⁴ The result was a metal with an atomic structure that had never before existed. A single crystal blade can tolerate higher speeds. With superalloy metals, the blade can cope with air hotter than its own melting point. So the official roadmap⁵ for aircraft engines now sees gears being added in 2015, a weird-shaped open fan system by 2020 and, sometime after 2035, a self-cooled engine that should take thermal efficiency close to 100 per cent.

Information technology is driving every aspect of this evolution. Modern jet engines are controlled by a computer that can analyse performance, predict failure and manage maintenance. The most advanced engines beam their data from the plane in flight back to the manufacturer’s HQ in realtime.

Now consider what information technology has done to the design process. There are aircraft still flying that were designed on paper, stresstested using slide rules, constructed from full-sized templates drawn on silk. New aircraft are designed and tested virtually, on a supercomputer. ‘When we designed the tail fin of the Tornado fighter we did twelve stress cases on it,’ one veteran engineer told me. ‘With its replacement the Typhoon, we did 186 million.’

Computers have revolutionized the building process as well. Engineers now build every element of the aircraft ‘virtually’, using 3D digital mockups on supercomputers. In these models, every brass screw has the physical qualities of a brass screw, every sheet of carbon fibre bends and flexes as if real. Every stage of the manufacturing process is modelled before a single physical object is made.

The global market for turbofans is worth \$21 billion a year, so what follows is a \$21 billion question: how much of the value of a turbofan lies in the physical components used to make it, how much in the labour, and how much in the information it embodies?

You won’t find an answer in the accounts: in modern accounting standards, intellectual property is valued by guesswork. A study for the SAS Institute in 2013 found that, in an attempt to put a value on data, neither the cost of gathering it, nor its market value, nor the future income it might generate could be adequately calculated. Only through a form of accounting that included non-economic benefits and risks could companies actually explain to their shareholders what their data was really worth.⁶

The report showed that while ‘intangible assets’ were growing on US and UK company balance sheets at nearly three times the rate of tangible assets, the actual size of the digital sector in the GDP figures had remained static. So something is broken in the logic we use to value the most important thing in the modern economy.

However, by any measure, it is clear that the mix of inputs has altered. An airliner looks like old technology. But from the atomic structure of the fan blades, to the compressed design cycle, to the stream of data it is firing back to its fleet HQ, it is ‘alive’ with information.

This phenomenon, merging the virtual world with the real, can be seen across many sectors: auto engines whose physical performance is dictated by a silicon chip; digital pianos that can pick from thousands of samples of real pianos, depending on how hard you stroke the keys. Today we watch movies that consist of pixels instead of grains of celluloid and contain whole scenes in which nothing real ever stood before a camera. On car production lines each component is barcoded: what the humans do, alongside the whizz and purr of robots, is ordered and checked by a computer algorithm. The relationship between physical work and information has changed.

The great technological advance of the early twenty-first century consists not of new objects but of old ones made intelligent. The knowledge content of products is becoming more valuable than the physical elements used to produce them.

In the 1990s, as the impact of info-tech began to be understood, people from several disciplines had the same thought at once: capitalism is becoming qualitatively different.

Buzz phrases appeared: the knowledge economy, the information society, cognitive capitalism. The assumption was that info-capitalism and the freemarket model worked in tandem; one produced and reinforced the other. To some the change looked big enough to conclude it was as important as the move from merchant capitalism to industrial capitalism in the eighteenth century. But just as economists got busy explaining how this ‘third kind of capitalism’ works, they ran into a problem: it doesn’t.

There is a growing body of evidence that information technology, far from creating a new and stable form of capitalism, is dissolving it: corroding market mechanisms, eroding property rights and destroying the old relationship between wages, work and profit. The first people to say this were an awkward squad of philosophers, management gurus and lawyers.

In this chapter, I am going to survey and critique their main ideas. Then I am going to propose something even more radical: that information technology is leading us towards a postcapitalist economy.

DRUCKER: ASKING THE RIGHT QUESTIONS

In 1993, the management guru Peter Drucker wrote: ‘That knowledge has become the resource, rather than a resource, is what makes our society “post-capitalist”. It changes, and fundamentally, the structure of society. It creates new social dynamics. It creates new economic dynamics. It creates new politics.’⁷ At the age of ninety, the last surviving pupil of Josef Schumpeter had jumped the gun a little, but the insight was correct.

Drucker’s case rests on the assertion that the old factors of production – land, labour and capital – have become secondary to information. In his book Post-Capitalist Society, Drucker argued that certain norms essential to capitalism were being replaced. Writing before anybody had seen an internet browser, Drucker observed the information-rich capitalism of the

1980s and imagined in broad outline the network economy that would emerge in the next twenty years.

And that’s what visionaries are for. While many around him saw ‘infotech plus neoliberalism’ as capitalism perfected, Drucker allowed himself to imagine info-capitalism as a transition to something else. He noted that, despite the rhetoric about information, there was no theory of how information actually behaves in economic terms. In the absence of such a theory, he posed a series of questions about what a postcapitalist economy might entail.

First, he asked, how do we improve the productivity of knowledge? If previous eras of capitalism had been based on the increased productivity of machines and labour, then the next must be based on the increased productivity of knowledge. Drucker guessed that the solution must be to connect, creatively, the different knowledge disciplines: ‘The capacity to connect may be inborn and part of that mystery we call genius. But to a large extent to connect and thus raise the yield of existing knowledge, whether for an individual, for a team or for an entire organisation, is learnable.’⁸

The challenge was to train knowledge workers to make the kind of connections that the brain of an Einstein would make spontaneously. Drucker’s solution was straight out of the playbook of management theory: a methodology, a project plan, better training.

Humanity came up with a better solution: the network. This was not the result of any centralized plan or management group, but the spontaneous interaction of people using information pathways and forms of organization that did not exist until twenty-five years ago. Nevertheless, Drucker’s focus on ‘connection’ and the modular use of information as the key to productivity was inspired.

His second question was equally profound: who is the social archetype of postcapitalism? If feudal society was epitomized by the medieval knight, and capitalism by the bourgeoisie, then who is in the historical scheme of things the bearer of postcapitalist social relations? It’s the same question that preoccupied Karl Marx, but Drucker’s answer would dismay most

traditional leftists, who think it’s the proletariat. It would be, Drucker proposed, ‘the universal educated person’.

Drucker imagined this new kind of person emerging as a fusion of the managerial and intellectual classes of Western society, combining the manager’s ability to apply knowledge with the intellectual’s ability to deal with pure concepts. Such an individual would be the opposite of the polymath – those rare people who are simultaneously expert in Mandarin Chinese and nuclear physics. This new type of person would, on the contrary, be someone able to pick up and run with the products of expert research in narrow fields and apply them generally: applying chaos theory to economics, genetics to archaeology, or data-mining to social history.

Drucker made a plea for the emergence of such people as the ‘leadership group’ of the new society: ‘a unifying force … which can focus particular, separate traditions onto a common and shared commitment to values, onto a common concept of excellence, and onto mutual respect’.⁹

Since he wrote that, such a group has emerged: the T-shirted technobourgeoisie of the early twenty-first century, their information stored in the Cloud and their ultra-liberal attitudes to sexuality, ecology and philanthropy seen as the new normal. If all we are talking about in the next fifty years is a fifth long wave of capitalism based on information, then we already have the new men and new women that the theory of long waves would lead us to expect. The problem is, they show no interest at all in overthrowing the old capitalism, and scant interest in politics at all.

However, if we are talking about postcapitalism, then this universal educated person would have to exist in large numbers and have some interest opposed to that of the big hierarchical firms that dominated the twentieth century. They would have to fight, as the bourgeoisie did, for the new economic model and to embody its values in their behaviour. They would have to be, as in the materialist approach to history, the bearer of the new social relations inside the old.

Now look around you.

On the London Underground, I’m in a carriage where everybody under the age of thirty-five has white wires connecting their ears to a device on which they’re listening to something they’ve downloaded via a network. Even those obviously going to business or management jobs have a studiedly informal air and mode of dress. Some – even here where there is no wifi – are working through emails on their smartphones. Or maybe they’re playing games, for the physical actions and intense levels of concentration required are the same. They are glued to digital information and the first thing they’ll do on emerging at street level is to plug back into the global network via 3G.

Everybody else in the carriage fits into a demographic from the twentieth century: the elderly middle-class couple in their hats and tweeds; the stubbly manual worker reading his newspaper; the guy in the suit typing on his laptop, too busy for headphones, but who’s taken the time to polish his shoes (i.e. me).

The first group consists of what sociologists call ‘networked individuals’, adept at drawing down knowledge from a relatively open and global system. They behave in a networked way – from work to consumption to relationships and culture. Thirty years on from Stewart Brand’s famous claim that ‘information wants to be free’, they instinctively believe that under normal circumstances it should be free. They will pay for their drugs at a dance club but still find it an imposition to pay for downloaded music.

This group is already so large and well defined that in some cities – London, Tokyo, Sydney – it is the twentieth-century types that are the minority: still consulting analogue maps instead of GPS, still confused by the coffee options available at Starbucks, appalled and fascinated by the mercurial lifestyles that the other group sees as normal.

The networked individuals of the early twenty-first century – the ‘white wire people’ – conform exactly to the kind of person Drucker expected to emerge: the universal educated person. They’re no longer confined to a niche techno demographic. Any barista, or admin worker, or legal temp can become, if they want to, a universal educated person – as long as they have a basic education and a smartphone. In fact, with the rise of the mobile internet, the most recent studies show that even Chinese factory workers

have become – in the face of stringent work discipline and long hours – avidly networked people in their non-work time.¹⁰

Once you understand how information behaves as an economic resource, and who the new social archetype is, you are part of the way to understanding how the transition to postcapitalism could occur. But this still leaves the question: why should it occur? Drucker’s answers are speculative but they provide the first glimpse of the framework on which a rigorous theory of postcapitalism would have to be based.

Drucker divides the history of industrial capitalism into four phases: a mechanical revolution lasting most of the nineteenth century; a productivity revolution with the advent of scientific management in the 1890s; a management revolution after 1945, driven by the application of knowledge to business processes; and finally an information revolution, based on ‘the application of knowledge to knowledge’.

Drucker, a pupil of Schumpeter, was consciously using the Kondratieff long cycles here (although merging the first two together), but seen from the viewpoint of the individual firm. This leads to Drucker’s most profound observation: that none of these turning points can be grasped without understanding the economics of work. From Virgil to Marx, he argued, nobody had bothered to study what the farmer or factory worker did on a day-to-day basis. Only in the late nineteenth century did capitalists notice what their workers were actually doing, and try to change it.

‘There is still no history of work,’ Drucker complained, and twenty-five years later the history of work remains under-explored. Labour market economics continues focused on unemployment and pay rates, and occupies a lowly status in academia. But once we understand what information is doing to work, to the boundaries between work and free time, and to wages, the scale of the change we’re living through will be apparent.

In the end, Drucker left us with a series of questions. They were the right questions, but twenty-five years on we still have no synthetic theory of infocapitalism, let alone postcapitalism. However, mainstream economics has – accidentally – come close to discovering one.

In 1990 the American economist Paul Romer blew apart one of the key assumptions of modern economics and in the process thrust the question of info-capitalism into the mainstream.

In their search for a model that could predict a country’s rate of growth, economists had listed various factors: savings, productivity, population growth. They knew that technological change influenced all these factors but they assumed, for the purposes of the model, that it was ‘exogenous’ external to their model and therefore irrelevant to the equation they were trying to write. Then, in a paper titled Endogenous Technological Change, Romer reset the whole argument.¹¹ He demonstrated that, since innovation is driven by market forces, it cannot be treated as accidental or external to economic growth but must be an intrinsic (‘endogenous’) part of it. Innovation itself has to be situated within growth theory: its impact is predictable, not random.

But as well as completing a neat piece of algebra about capitalism in general, Romer had come up with a proposition specific to info-capitalism, with revolutionary implications. He defined technological change in a deliberately facile way, as an ‘improvement in the instructions for mixing together raw materials’. That is, he separated out things and ideas – for that is what ‘instructions’ are. Information, for Romer, is like a blueprint or recipe for making something either in the physical world or in the digital world. This led to what he called a new fundamental premise: ‘that instructions for working with raw materials are inherently different from other economic goods’.¹²

An information product is different from every physical commodity so far produced. And an economy primarily based on information products will behave differently from one based on making things and providing services. Romer spelled out why: ‘Once the cost of creating a new set of instructions has been incurred, the instructions can be used over and over again at no additional cost. Developing new and better instructions is equivalent to incurring a fixed cost.’ 13

INFO-GOODS CHANGE EVERYTHING