Response: A digital capitalism Marx might enjoy

This is a response to an article originally posted on the MIT Technology review . The article claims that the nature of capital has changed so much from the newly industrialized economies Marx knew that there is a fundamental change in capitalism Marx could agree with. They take this position in favor of labor, but we will see just how good their analysis and proposal for the position of the laborer in future society is.

Submitted by Afro Marxist on July 13, 2018

This is something different from the other posts on this site. It seems like every big news outlet has been pushing out some article about Marx recently. Maybe this signifies something about the state of the world right now, or it is just that socialism seems trendy in a time where our lives are playthings to corporations. Whatever it may be, one could find many articles involving Marx or Marxism on just about every big outlet published within the last few months. I decided to write about this one because it brought forth many points that seem to be found in common arguments about technology and the future of the working class. Like every other article with similar content, this one contains a similar problem, there is a big absence of actual Marxist theory and sufficient theory of capitalism.

The article focuses on the premise that the relationship between capital and labor has fundamentally changed from Marx’s time due to the introduction of new technology and its presence in the labor process. We can rightfully acknowledge that things have changed since Marx was alive and wrote about capitalism. However, these changes have not been fundamental to the nature of capitalism itself, the very same that Marx described and critiqued. What the author fails to realize is that these changes they deem “digital capitalism” arise from the conditions the capital-labor relationship produces for its continual reproduction in different spheres of life. These basic and essential relations of capitalism may be represented in different forms or appearances but they all refer to the same relations. The changes taking place in technology are not something alien to capitalism nor the capital-labor relationship. Marx himself wrote about how capitalists must constantly revolutionize the means of production. This already should be sufficient to discredit the article, yet we must go deeper.

“For most of industrial history, capital meant tangible things like looms and furnaces and other machines that you could see and smell and fall into if you were insufficiently cautious. Capitalists spent heavily to outfit their factories, and they put the maximization of these factories’ output above all else. But they also depended on a growing workforce to operate the machines.”

This begins the most fundamental misunderstanding of the Marxist theory. Capital for Marx does not mean “tangible things” you interact with like financial instruments or the physical means of production. This might be sufficient for an economics class but as rigorous readers of philosophy know it is never that simple. This understanding of capital suffers from its implied transhistoricism and generality. For Marx to sufficiently analyze capitalism he had to understand capital, the edifice capitalism is built on, as something grounded in historical reality and specificity to that reality. Capital is not simply a thing that contains productive potential, it is more understood as a social relation which appears in the form of a thing. Many Marxists would argue capital is something so complex, spanning through Marx and preceding figures bodies of work, that it cannot be simplified to a formal definition. But if there were to be one, capital in Marx’s terms can be properly understood as wealth configured as a social relation that grows through the process of circulation, born from the formula M-C-M’ (money-commodity-money+). The point of this post is not to discuss the Marxist theory of capital in length (possibly a topic for a future post), but a reiteration of what capital means is important to how one should respond to the premise of the article which focuses on capital.

“Capital and labor each sought to prevent the other side from gaining the power to dictate the terms of the relationship—and the distribution of profits generated by it.”

It is true that under capitalism capital and labor depend on each other in a dialectical class relationship. However, the relationship cannot be understood as something equal in weight on both sides, as if capital does not already have the power in this relationship and dictate this contradiction. One of Marxism’s main points is how the existence of capital implies that labor is being exploited. Labor is the source of wealth and the existence of capital depends on the existence of labor power being sold as a commodity that can produce other commodities. The generalized commodity production which capital is born of indicates a subjugation of labor to its own power, in essence labor creates its own poverty through capital.

“This evolution fundamentally changes the relationship between labor and capital. While the world of industrial capitalism was shaped by the conflict between the two, there was nonetheless a certain balance of power, since they also needed each other to unlock the riches made possible by technological change. Digital capitalism is different.”

Following up on the previous quote this one shows an even further misunderstanding. There has never been a balance of power between capital and labor, any good theorist knows that just because two things exist in some dependent relationship with each other does not mean they are equal in terms. Capital and labor under capitalism may depend on each other but the name of the game is capitalism for a reason.

“In their recent book, Capitalism Without Capital, Jonathan Haskel, and Stian Westlake describe a 2006 analysis of Microsoft. The company’s market valuation at the time was about $250 billion. But its book value was only $70 billion, largely cash and financial instruments, while a mere $3 billion or so could be ascribed to what is usually thought of as capital: plants and equipment. Almost all of Microsoft’s worth was in intangible assets like its intellectual property and brands. Intangibility is most pronounced in tech firms, but it’s important across the economy. A recent analysis found that less than 20 percent of the market value of S&P 500 firms was due to the tangible assets on their balance sheets—a reversal of the ratio that prevailed in the 1970s.”

For reasons already discussed the notion being pushed here that there is “capitalism without capital” is redundant. Capital is not tangible assets, capital is found to be something profoundly intangible that creates tangible effects. Capitalism is nothing without capital, it is dominated, defined even by the pursuit of money to generate more money (M-C-M’). The idea it could be anything without it is outright absurd.

“On the one hand, as machines grow increasingly autonomous, capital will need fewer workers. In the industrial era, machinery was a substitute for some workers but a complement to many others, such as the tens of millions of relatively low-skilled workers needed to operate factory equipment. Ever more capable AI, in contrast, is very nearly a pure substitute for labor. As it spreads across the economy, labor will lose both leverage within the workplace and the moral claim to a share of the economy’s profits that working provides.”

AI may be able to accomplish many tasks that replace a human role but it cannot be a pure substitute for labor. What made human labor particularly unique for Marx was that it was not the most efficient or consistent, we could say the opposite. Humans have varying levels of productivity which have developed over the time through different societies, this productivity is augmented by the development of technology alongside it. A human worker can be underpaid for the value they produce and value is simply socially necessary labor time required to create a certain commodity. It is this flexible element to living labor that stirs capitalist competition and profit making. Wages can be driven down, workers fired, machines bought, working hours lengthened etc. which will mean capitalists are receiving more for less as they try to stay ahead of the game. The capitalist receives more value from the worker than they invest (again M-C-M’). Let us suppose the socially necessary labor time for producing computer chips is 190 computer chips every 10 hours. Now suppose workers in one firm work for 10 hours creating 200 computer chips while at another firm workers work 10 hours and create 170 computer chips. The first firm is above the average time, so it is more productive and profitable. A machine will give a fixed rate of productivity, you get out what you put in as you cannot exploit a machine like you can a worker. Suppose a machine works 10 hours and creates 3000 computer chips, this is much more than the two firms in the previous example and well above the socially necessary labor time to produce computer chips, so the machine is very profitable for the firm since it is able to implement it above its competitors.

This is the situation we are experiencing currently, human labor dominates so the socially necessary labor time is the human average productivity for a given time, some companies are able to implement machines that produce much more for the same or less amount of time making it seem like human labor is obsolete so machines will replace jobs. This may be true, machines will begin replacing whole jobs. But the important thing to realize is that as soon as all other firms adopt these machines then every firm is making about the same amount of commodities in the same amount of time and there is no competing productivity or supply. So as AI spreads across the economy and all firms begin adopting AI machines the socially necessary labor time to produce commodities will be the same and no profits will be made (This phenomenon is further described by the tendency of the rate of profit to fall). In other words, machines can contain value but only human labor can create value for value is something socially defined, which is of course why humans make machines. One could make the argument that future firms will instead work on competing AI technology to get ahead of other firms but this would already require human input in some way and makes the assumption that people are able to buy all these products, which they will not since so many people would not have jobs and there would be too many products. AI machines can substitute labor physically but it cannot mimic the abstract dimension of labor that makes it valuable and able to generate surplus-value for the creation of capital. This is something futurist utopians fail to realize as capitalism becomes fully automated, or tries to at least.

“Having lost their leverage in the workplace, workers might instead use the ballot box to secure more of the capitalists’ wealth, whether through tax reforms that give fewer breaks to owners and shareholders, and make it cheaper to invest in people, or in the more radical form of a basic income or government–provided make-work. But while such strategies might save people from poverty, it would not recognize workers’ earned right to the economy’s bounty—only the state’s responsibility to provide for those who cannot provide for themselves.”

Of course, these changes to the labor process will be met with opposition by the dispositioned workers themselves. I have no doubt that in a post-ideological society many if not most workers will head to ballot boxes in hope that a few reforms or incremental changes can fix this problem. What this does not take into account is the actions of the capitalists and more radical reaction by workers. We have no reason to believe that the capitalists would not do everything in their power to keep their wealth protected. In fact, the tax reforms that workers may be voting for could be good for the capitalists. It alleviates some suffering the workers face making them tolerant to the sweeping changes that threaten their class position, while the capitalists are able to steadily accumulate more wealth at the small expense they will accept, most of which will probably be rolled back in a few years. The state plays directly into the interests of the capitalists as a class any state-funded plans for basic income or whatever else utopian schemes only help workers to ignore the growing disparity the capitalists are creating.

“The proposal: treat the data we generate while talking to Alexa or liking things on Facebook as the output of a job of sorts, for which the big tech companies ought to pay us a wage. In other words, treat the data these firms amass as labor, not capital.

In such a world we might, on liking a friend’s photo, be asked by the social network of our choice to provide some contextual data in exchange for payment. Getting paid for our data, Posner and Weyl suggest, could mitigate the harm of mass unemployment, recognize what people contribute to production even if they don’t work at a company, and perhaps give the economy a productivity boost too, since companies would find it easier to obtain high-quality data. Perhaps, they say, the data generators of the world could unite and form a data union, the better to negotiate with big tech companies on fair terms.”

This may sound good in principle but it is already built on very faulty premises. The main problem is this would simply relegate the capital-labor relationship not to the workplace but to the personal sphere of our lives. The typical workplace is reproduced in everyday life as the personal so to speak. The very social functions we engage in outside of work where we feel we are no longer slaves to capital now become the social functions that directly help capital. Although as any Marxist knows the personal and social spheres of our lives are inextricably linked, but the scheme proposed here would merge these spheres to the point they are almost indiscernible. How could we ever feel we are anything more than parts of the capital equation when every bit of info about our lives is another tool utilized for the reproduction of capital? In essence, this is not just selling labor power, this is selling our lives. Bottom line is that it is purely utopian to think that companies paying us for our data can solve the problems that will inevitably come with capitalist automation. If anything it seems like a grim admission of the totally dehumanized reality we are headed towards.

“But the case for such a radical approach grows as information accounts for more of the indispensable capital in the economy. A giant piece of mechanical equipment can be used by only one firm at a time, and for only so long before it deteriorates. We have private property rights and free-market competition so that such equipment can find its way to its best use. But the information in our data can be replicated and reused endlessly. The best way to make sure it finds its best use is to allow anyone to access it, under appropriate conditions and in return for fair compensation to society. With new capital comes a new capitalism—perhaps one, finally, that Marx could warm to.”

Presupposing that private property rights and free-market competition ensure that equipment and resources are used in the best possible way is not the biggest error made here. It is such a long living misbelief that the free-market will make sure everything falls into place that it has almost become its own religion which some refer to as free-market fundamentalism. And this is an apt comparison for this type of thinking is an inverted consciousness, an upside down way of looking at the world even as we face the reality of it every day. If this was true it would not explain the great disparity that exists between many parts of the world and between the classes within these countries. Automating jobs should not be a bad thing, so it speaks volumes that under capitalism automation means the poverty of millions of workers and further crisis ahead. There is no “new capital” nor “new capitalism”, capital has remained invariant while the conditions and appearances it has given rise to remain ever changing. Capital creates the conditions for its own reproduction and we surely see this reflected in the form of capitalism we are faced with. Marx would be no more warm to capital now than he was before, he would have even more reason to oppose it. To truly see how the essence of capitalism remains the same while it creates deceptive appearances and forms requires an honest confrontation with Marx and not some poor argument for a futurist society based on inhuman premises.

Original Article