115

hardwired into the memory of the generation born before 1980: a high-pitched whine, which fluctuates and then dissolves into a series of crackles, punctuated by two buzzy bass notes. It’s the sound of a dial-up modem logging on.

When I first heard it sometime in the 1980s, I was trying to get on to Compuserve. Compuserve was a private network, offering email, file transfers and a massive community of bulletin boards. It was a world of words only – in black and white. Even then it was brimming with anger, subversion and pornography.

In 1994 I left Compuserve and joined Easynet, one of the first internet service providers: same technology, different ballgame. Now, the manual proclaimed, I had access to ‘the whole road system, not just one service station’. It gave you access to the World Wide
Web, a system for finding everything available on the linked-up computers of the world.

There was not much there. My workplace computer was linked only to the other computers in the building of the publishing company Reed Elsevier.
When we tried to write our first web page the IT department refused to allow us to store it on ‘their’ server, which was for doing the payroll. There was no email on my workplace Mac and no web access.
Computers were for processing data and were linked together for specific tasks only.


What a visionary, then, was the US journalist Kevin
Kelly, to write this in 1997:

The grand irony of our times is that the era of computers is over. All the major consequences of stand-alone computers have already taken place.
Computers have speeded up our lives a bit, and that’s it. In contrast, all the most promising technologies making their debut now are chiefly due to communication between computers that is, to connections rather than to computations.21

Kelly’s article in Wired triggered a moment of recognition for my generation. Everything up to now
– the 5-inch floppy discs for the university mainframe, the green screens of the early Amstrads, the crackle and buzz of the modem – had been the prologue. Suddenly a network economy was taking shape. Kelly wrote: ‘I prefer the term network economy, because information isn’t enough to explain the discontinuities we see. We have been awash in a steadily increasing tide of information for the past century … but only recently has a total reconfiguration of information itself shifted the whole economy.’22

Kelly himself was no advocate of postcapitalism.
Indeed, his book New Rules for the New Economy was a breathless survival manual for old businesses as they

116


116

tried to engage with the interconnected world. But his contribution was important. It was the moment we began to understand that the ‘intelligent machine’ was not the computer but the network, and that the network would speed up the rate of change and make it unpredictable. In a statement that defines our era, Kelly said: ‘We are now engaged in a grand scheme to augment, amplify, enhance, and extend the relationships and communications between all beings and all objects.’23

The milestones between then and now are the launch of eBay (1997), which led to the dotcom boom. The first wifi-enabled laptop (a Mac) in 1999. The rollout of the broadband internet, which was always on and ten times faster than dial-up (2000). The expansion of
3G telecoms after 2001, which made the mobile internet possible. The launch of Wikipedia in 2001.
The sudden arrival of cheap, standardized digital tools, which was dubbed Web 2.0, in 2004.

At this point, programs and data began to sit within the network rather than on individual computers; the archetypal activities became search, selfpublishing and interaction, including through multibillion dollar online games.

Now came the launch of social networks with
MySpace (2003), Facebook (2004) and Twitter (2006); and the launch of the iPhone (2007), the first true


smartphone. The iPad and the Kindle in the same year sparked the rapid rise of e-book publishing, whose value has grown from under $1.5 billion in
2009 to $15 billion worldwide (2015). Desktop PC sales were overtaken by notebook sales in 2008. Samsung’s first Android phone was launched in 2009.24

Meanwhile, in high-end computing, the first computer to achieve one quadrillion calculations per second was an IBM, in 2008. By 2014, Tianhe-2 in
China, running Linux, could do 33 quadrillion. In terms of data storage, 2002 was the year in which the volume of digital information in the world overtook the amount of analog information. Between 2006 and
2012 humanity’s annual information output grew tenfold.25

It’s hard to tell exactly where you are in a tech revolution but my hunch is the simultaneous arrival of tablets, streaming video and music and the takeoff of social media between 2009 and 2014 will be seen as the key moment of synergy. The rollout of billions of machine-to-machine connections, known as the
‘Internet of Things’, in the next ten years will then populate the global information network with more intelligent devices than there are people on earth.

To live through all this was exhilarating enough.
Even more exhilarating now is to watch a kid get their first smartphone and find it all – Bluetooth,

117


117

GPS, 3G, wifi, streaming video, hi-res photography and heart-rate monitor – as if it had always been there.

The network economy emerged, and has become social. In 1997, just 2 per cent of the world’s population had internet access. Now it is 38 per cent, and in the developed world 75 per cent. Today there are ninety-six mobile-phone subscriptions for every
100 people in the world, and 30 per cent of the earth’s inhabitants have an active 3G (or better) mobile. The number of telephone landlines per person is actually falling.26

In the space of a decade, the network has pervaded our lives. The average teenager with a smart device is living a more psychologically connected life than the geekiest computer nerd fifteen years ago.

When Romer and Drucker made their contributions in the early 1990s, the issue was still the impact of intelligent machines. Today we understand implicitly that the network is the machine. And as software and data have moved into the network, the debate about the economic impact of information technology has also begun to focus on the network.

In 1997, Kelly proclaimed the existence of an emerging new economic order with three main characteristics: ‘It is global. It favors intangible


things – ideas, information, and relationships. And it is intensely interlinked. These three attributes produce a new type of marketplace and society.’27

Kelly accepted as commonplace what Romer had seen as new seven years before: the tendency of information technology to make data and physical products cheaper, so that the marginal cost of producing them declines towards zero. But, he assured his readers, there was a counterweight to endless supply and falling prices, namely endless demand: ‘Technology and knowledge are driving up demand faster than it is driving down prices … The extent of human needs and desires is limited only by human imagination, which means, in practical terms, there is no limit.’28

The solution, Kelly said, was to invent new goods and services faster than they could slide down the curve to worthlessness. Instead of trying to defend prices, you had to assume they would collapse over time, but build a business in the gap between one and zero.
You had, he warned, to ‘skate to the edge of chaos’, to exploit the free knowledge customers donate when they interact with websites. By the late 1990s, the received wisdom among those who understood the problem was that capitalism would survive because innovation would counteract technology’s downward effect on pricing. But nowhere did Kelly explore what might happen if this failed.

118


118

Then came the dotcom crash. The spectacular fall of
Nasdaq, beginning in April 2000, changed the perception of the generation that had struggled with dial-up modems and got rich. Following the disaster
John Perry Barlow, a cyber-rights campaigner who’d lost 95 per cent of his money, drew the harsh conclusion: ‘The whole dot-com thing was an effort to use 19th and 20th century concepts of economy in an environment where they didn’t exist, and the internet essentially shrugged them off. This was an assault by an alien force that was repelled by the natural forces of the internet.’ And he pointed out where the debate might go next. ‘In the long term it’s going to be very good for the dot-communists.’29

A NEW MODE OF PRODUCTION?

In 2006 Yochai Benkler, then a law professor at Yale, concluded that the network economy was ‘a new mode of production emerging in the middle of the most advanced economies in the world’.30 Benkler had been trying to define a legal framework for Open
Source publishing, known as the ‘Creative Commons’.
In The Wealth of Networks, he described the economic forces that were undermining intellectual property, causing common ownership models and unmanaged production to spread.

First, he said, the rise of cheap physical computing


power and communications networks had put the means of production of intellectual goods into the hands of many people. People can blog, they can make movies and distribute them, they can selfpublish e-books – in some cases creating a millionstrong audience before the traditional publishers even know the authors exist: ‘The result is that a good deal more that human beings value can now be done by individuals who interact with each other socially, as human beings and as social beings, rather than as market actors through the price system.’31

This, he argued, leads to the rise of non-market mechanisms: decentralized action by individuals, working through cooperative, voluntary forms of organization. It is producing new forms of ‘peer-topeer’ economics, in which money is either absent or not the main measure of value.

Wikipedia is the best example. Founded in 2001, the collaboratively written encyclopaedia has, at the time of writing, 26 million pages and 24 million people registered to contribute and edit – with about
12,000 people regularly editing and 140,000 people vaguely taking part.32

Wikipedia has 208 employees.33 The thousands who edit it do so for free. A user survey found 71 per cent of them do it because they like the idea of working for nothing, and 63 per cent because they believe

119


119

information should be free.34 With 8.5 billion page views per month the Wikipedia site is the sixth most popular in the world – just above Amazon, the most successful e-commerce company on earth.35 By one estimate, if it were run as a commercial site,
Wikipedia’s revenue could be $2.8 billion a year.36

Yet Wikipedia makes no profit. And in doing so it makes it almost impossible for anybody else to make a profit in the same space. Furthermore, it is one of the most valuable learning resources ever invented and has (so far) defied all attempts to censor, subvert, troll or sabotage it, because the power of tens of millions of human eyeballs is greater than any government, stalker, interest group or saboteur can match.

The principle Wikipedia works on is the same the early Open Source programmers used on GNU and
Linux, but applied to a mass consumer product.
When we visit Amazon, and buy a camera or a book, our recorded choices help other users choose. In economics this is called a positive ‘externality’ – an unintended economic benefit.

With Amazon, it is the corporation that reaps most of the benefit, in the form of increased buying and selling power. With Wikipedia, there is only a human benefit: no kid ever again has to sit in a small town library, as I did, lost in a maze of mediocre and


random knowledge, itself trapped for ever on sheets of paper that can never be updated or corrected without printing a completely new book.

Benkler draws out the economic lesson of a phenomenon like Wikipedia: that the network makes it possible to organize production in a decentralized and collaborative way, utilizing neither the market nor management hierarchy.

Economists like to demonstrate the archaic nature of command planning with mind-games like ‘imagine the Soviet Union tried to create Starbucks’. Now, here’s a more intriguing game: imagine if Amazon,
Toyota or Boeing tried to create Wikipedia.

Without collaborative production and Open Source there would be only two ways to do so: by using either the market or the command structures of a corporation. Since there are maybe 12,000 active writers and editors of Wikipedia, you could hire that number, and maybe get away with some of them being outworkers in the sweatshop economies of the world, controlled by a better-paid managerial layer in the American sun-belt. Then you could incentivize them to write the best possible encyclopaedia on the web. You would give them targets, bonuses, promote teamwork through quality circles, etc.

But you could not produce anything as dynamic as

120


120

Wikipedia. Getting a 12,000-strong corporation to produce 26 million pages of Wikipedia would be as pointless as the Soviet Union trying to create its own version of Starbucks. A 208-strong foundation would always do it better. And even if you could produce something just as good as Wikipedia, you would face a massive problem: Wikipedia itself, your major competitor, doing it all for free.

So maybe, instead of using a corporation to command
Wikipedia into existence, you could try using market forces to trade it into existence. After all, doesn’t business school teach us the market is the most efficient system?

People would maybe pay small amounts of money for small chunks of knowledge, while being comfortable with the idea that the information rests in the public domain as free. Maybe the academics, amateurs and enthusiasts who write the pages would be glad to receive a small amount of money for each contribution.

This, in fact, is more like what actually happens – but it is not money the participants are exchanging. They are in effect exchanging gifts. And as anthropologists have long realized, the gift is only the physical symbol of something more intangible: call it goodwill, or happiness.


Wikipedia, like Linux, is radical in two ways. First, in the communal nature of what is produced: it is free to use but impossible to grab, own and exploit.
Second, in the collaborative nature of the production process: nobody in a central office decides what the pages should be about; Wikipedia’s employees simply regulate the standards of creation and editing, and defend the whole platform against erosion by property and management hierarchies.

Benkler defines this as ‘commons-based peer production’ – and the concept challenges the certainties of mainstream economics some more.
Nothing has changed about humanity. It’s just that our human desire to make friends, build relationships based on mutual trust and obligation, fulfilling emotional and psychological needs, has spilled over into economic life.

At the precise moment in history when it became possible to produce stuff without the market or the firm, significant numbers of people started doing so.

In the first place, the cheapening of computer power and network access puts the ability to produce information goods into the hands of many people, not the few. Next, you need what Benkler calls
‘planned modularity’: that is, a task is broken up into chunks small enough for people to complete on their own and then submit the outcome to a wider

121


121

network. A Wikipedia page is a perfect example: adding a snippet of info or deleting an erroneous one is a modular task that can be done from the top deck of a bus on a smartphone, or from a PC in the web café of a Manila slum.

For Benkler, then, cheap technology and modular forms of production have driven us towards nonmarket, collaborative work. It is not a fad, he argues, but ‘a sustainable pattern of human production’.
Though he uses the words ‘new mode of production’
Benkler does not say that this is something different from capitalism. He argues instead that it will lead to a radically different and more sustainable form of capitalism. He predicts a redistribution of wealth and power from dominant firms and elites to a wider mixture of individuals, peer networks and businesses that can adapt to the new situation.

The problem is, Benkler is describing the new forms of info-capitalism without describing their dynamics, which are necessarily contradictory.

Info-tech drives labour out of the production process, reduces the market price of commodities, destroys some profit models and produces a generation of consumers psychologically attuned to free stuff. But in the first full decade of its existence it has helped fuel a global crisis during which the poorest citizens of developed countries were reduced to scrambling


through dumpsters, even as they eked out the last few cents of credit on their mobile phones.

Info-capitalism is real, but if we analyse the whole thing – the collision of neoliberal economics with network technology – we must conclude it is in crisis.

THE ECONOMICS OF FREE STUFF

In the late nineteenth century economists began to notice that not all the effects of capitalism could be understood through the act of buying and selling.
Given most factories were by then surrounded by slag heaps, slums and stinking rivers, it was hard not to notice that capitalism has effects external to what is done in the marketplace. They called these
‘externalities’, and a debate began over how to account for them.

At first they focused on ‘bad’ externalities: if I buy coal-fired power from an energy supplier and it pollutes the air, that pollution is an externality. The solution to bad externalities is easy: you work out a way to allocate the cost to the buyer and seller. So with the dirty power station, for example, you impose a pollution tax.

However, there are also ‘good’ externalities – such as the lower hiring costs that arise when similar businesses cluster in the same neighbourhood. There

122


122

is no need for a solution to good externalities, but they often show up as reduction in cost and activity.

But in an information economy, the externalities become the major issue. In the old world, economists categorized information as a ‘public good’: the costs of science, for example, were borne by society – so everybody benefited. But in the 1960s economists began to understand information as a commodity. In
1962, Kenneth Arrow, the guru of mainstream economics, said that in a free-market economy, the purpose of inventing things is to create intellectual property rights. ‘Precisely to the extent that it is successful there is an under-utilisation of information.’37

If you think about it this way, the purpose of patenting the advanced HIV drug Darunavir can only be to keep its price at $1095 a year, which is, as
Médecins sans Frontières put it, ‘prohibitively expensive’. The information exists to place millions of people on this advanced HIV treatment, but thanks to the patent it is underutilized. Conversely, because
India famously prevented pharmaceutical companies slapping twenty-year patents on other advanced HIV treatments, their cost has slumped since the year
2000, and the information on how to make them has been utilized.

In an economy where information is everywhere, so


are externalities. If we survey the giants of infocapitalism, almost the whole of their business model is about capturing good external side-effects.

Amazon works, for example, by offering to sell you things based on your previous choices – information you provided for free and could not choose to withhold. The whole business model is based on the one-sided capture of externalities by Amazon. It works for supermarkets too: by aggregating their customer data and preventing its utilization by everybody else, big supermarkets such as Walmart or
Tesco gain a huge commercial advantage.

Now imagine Walmart or Tesco were prepared to publish their customer data (suitably anonymized) for free. Society would benefit: everybody from farmers to epidemiologists could mine the data, and make more accurate decisions; individual customers could see at a glance whether they’d been making rational or irrational shopping decisions. But the supermarkets would lose market advantage; their ability to manipulate consumer behaviour using price points, sell-by dates and two-for-one deals would be reduced. The whole point of their vast e-commerce systems is that customer data is, as Arrow would put it, ‘underutilized’.

If we restate Arrow’s observation in a different way, its revolutionary implications are obvious: if a free-

123


123

market economy with intellectual property leads to the underutilization of information, then an economy based on the full utilization of information cannot have a free market or absolute intellectual property rights. And this is just another way of saying what Benkler and Drucker understood: that info-tech undermines something fundamental about the way capitalism works.

But what does it create in its place? For the term
‘postcapitalism’ to be meaningful, you would have to describe exactly how network technology triggers a transition to something else, and what the dynamics of a postcapitalist world would look like.

None of the writers I’ve surveyed above achieves that
– and for a reason: none of them is working with a fully rounded theory of capitalism itself. But what if somebody did anticipate the information-driven fall of capitalism? What if someone had clearly predicted that the ability to create prices would dissolve if information became collectively distributed and embodied in machines? We would probably be hailing that person’s work as visionary. Actually there is such a person. His name is Karl Marx.

THE GENERAL INTELLECT

The scene is Kentish Town, London, February 1858, sometime around 4 am. Marx is still a wanted man in


Germany and has spent ten years becoming increasingly depressed about the prospects for revolution. But now Wall Street has crashed, there are bank failures across Europe and he is scrambling to finish a long-promised book on economics. ‘I’m working like a madman right through the night’ he confides, ‘so that I’ll at least have the outlines clear before the deluge.’38

Marx’s resources are limited. He has a pass to the
British Library, giving him access to the latest data.
By day he writes articles in English for the New York
Tribune. By night he is filling eight notebooks with near-illegible scrawl in
German: free-flowing observations, thought experiments and notes-to-self.

The notebooks, known collectively as the Grundrisse
(which translates as ‘The Outline’), will be saved, but not read, by Engels. They will be stored in the HQ of the German social-democratic party until the Soviet
Union buys them in the 1920s. They will not be read in Western Europe until the late 1960s, and in English not until 1973. When they finally get to see what
Marx is writing on this cold night in 1858, scholars will admit that it ‘challenges every serious interpretation of Marx yet conceived’.39 It is called the Fragment on Machines.

The Fragment on Machines starts with the observation that as large-scale industry develops it changes the

124


124

relationship between worker and machine. In early industry, there was a man, a tool worked by hand and a product. Now instead of a tool, the worker: ‘inserts the process of nature, transformed into an industrial process, as a means between himself and inorganic nature, mastering it. He steps to the side of the production process instead of being its chief actor.’40

Marx had imagined an economy in which the main role of machines was to produce, and the main role of people was to supervise them. He was clear that in such an economy the main productive force would be information. The productive power of machines like the
‘self-acting’ cotton-spinning machine, the telegraph and the steam locomotive was ‘out of all proportion to the direct labour time spent on their production, but depends rather on the general state of science and on the progress of technology, or the application of this science to production’.41

Organization and knowledge, in other words, made a bigger contribution to productive power than the labour of making and running the machines.

Given what Marxism was to become – a theory of exploitation based on the theft of labour time – this is a revolutionary statement. It suggests that – once knowledge becomes a productive force in its own right, vastly outweighing the actual labour spent creating a machine – the big question becomes not


wages versus profits but who controls the ‘power of knowledge’.

Now Marx drops a bombshell. In an economy where machines do most of the work, where human labour is really about supervising, mending and designing the machines, the nature of the knowledge locked inside the machines must, he writes, be ‘social’.

Let’s use a modern example. If, today, a software developer uses a programming language to write code linking a web page to a database, then she is clearly working with social knowledge. I’m not talking specifically here about
Open
Source programming, just an ordinary commercial software project. Every layer of the process has been created by sharing information, pooling it, tweaking the code and the interfaces.

The programmer herself doesn’t own the code she’s working on, obviously. But equally the company employing her can’t own more than a fraction of it. It can legally patent every piece of code she outputs. It can even force her to sign an agreement that what she writes in her spare time belongs to them – but the code will still contain thousands of bits of previous code written by other people that cannot be patented.

Plus, the knowledge it took to produce the code is

125


125

still in the programmer’s brain. She can, if market conditions allow, move to a different workplace and execute the same solution, should it be required.
With information, part of the product remains with the worker in a way it did not during the industrial era.

It is the same for the tool she’s using: the programming language. It has been developed by tens of thousands of people contributing their knowledge and experience. If she downloads the latest update, it is sure to contain changes based on lessons learned by everyone else using it.

On top of that, the consumer data – the record left by each interaction with the website – may be wholly owned by a company. Yet it is socially produced: I send you a link, you click on it, or retweet it to 10,000 followers.

Marx couldn’t imagine a web server. However, he could observe the telegraph system. By 1858 the telegraph, running alongside the world’s railway lines and terminating at every railway station and business HQ, was the most important piece of infrastructure in the world. Britain alone boasted a network with 1,178 nodes outside London, and hundreds more linking the City, Parliament and the
London docks.42


Telegraph operators were highly skilled but, as with the software programmer, the knowledge needed to work an electric key was insignificant alongside the knowledge embodied in the vast, cross-border machine they were actually supervising.

The memoirs of telegraph operators show clearly the social nature of the technology. Rule number one was that you could send information only as fast as the person on the other end could receive it. But in the complex telegraph systems, where rooms full of senders and receivers negotiated use of the crowded line capacity with far distant operators, ‘handling egos was as much a part of an operator’s work as handling a telegraph key. Considerate, helpful operators made work easier; domineering, cavalier, or self-righteous ones made work more difficult.’43
Their work was social, the knowledge embodied in the machine was social.

In the Fragment on Machines, these two ideas – that the driving force of production is knowledge, and that knowledge stored in machines is social – led
Marx to the following conclusions.

First, in a heavily mechanized capitalism, boosting productivity through better knowledge is a much more attractive source of profit than extending the working day, or speeding up labour: longer days consume more energy, speed-ups hit the limits of

126


126

human dexterity and stamina. But a knowledge solution is cheap and limitless.

Second, Marx argued, knowledge-driven capitalism cannot support a price mechanism whereby the value of something is dictated by the value of the inputs needed to produce it. It is impossible to properly value inputs when they come in the form of social knowledge. Knowledge-driven production tends towards the unlimited creation of wealth, independent of the labour expended. But the normal capitalist system is based on prices determined by input costs, and assumes all inputs come in limited supply.

For Marx, knowledge-based capitalism creates a contradiction – between the ‘forces of production’ and the ‘social relations’. These form ‘the material conditions to blow [capitalism’s] foundation skyhigh’. Furthermore, capitalism of this type is forced to develop the intellectual power of the worker. It will tend to reduce working hours (or halt their extension), leaving time for workers to develop artistic and scientific talents outside work, which become essential to the economic model itself.
Finally Marx throws in a new concept, which appears nowhere else – before or after – in his entire writings: ‘the general intellect’. When we measure the development of technology, he writes, we are measuring the extent to which ‘general social


knowledge has become a force of production … under the control of the general intellect’.44

The ideas outlined in the Fragment were recognized in the 1960s as a complete departure from classic
Marxism. In the twentieth century, the left had seen state planning as the route out of capitalism. They had assumed that capitalism’s inner contradictions lay in the chaotic nature of the market, its inability to fulfil human need and its propensity to catastrophic breakdown.

In the 1858 Fragment, however, we are confronted with a different model of transition: a knowledgebased route out of capitalism, in which the main contradiction is between technology and the market mechanism. In this model, scribbled on paper in 1858 but unknown to the left for more than 100 years, capitalism collapses because it cannot exist alongside shared knowledge. The class struggle becomes the struggle to be human and educated during one’s free time.

It was the Italian leftist Antonio Negri who described the Fragment on Machines as ‘Marx beyond Marx’.
Paolo Virno, one of his co-thinkers, pointed out that its ideas ‘are not present in any of his other writings and in fact seem alternative to the habitual formula’.45

127


127

The question remains: why didn’t Marx pursue this idea more widely? Why does the general intellect disappear as a concept except on this one unpublished page? Why does this model of the market mechanism being dissolved by social knowledge get lost in the writing of Capital?

The obvious answer – beyond all the textual discussions – is that capitalism itself at the time did not bear out the proposition. Once the 1858 panic was over, stability returned.
The socialization of knowledge inherent in the telegraph and the steam locomotive were not sufficient to blow the foundations of capitalism sky-high.

In the following decade, Marx constructed a theory of capitalism in which the mechanisms of exchange are not exploded by the emergence of a general intellect, and in which no mention is ever made of knowledge being an independent source of profit. In other words, Marx retreated from the specific ideas in the
Fragment on Machines.

The emergence of twentieth-century Marxism as a doctrine of state socialism and crisis-driven transition was no accident; it was grounded in the
Marx of Capital.

Here, though, I am not concerned with a history of
Marxism, but with the question: is there a route to


postcapitalism based on the rise of information technology? It is clear from the Fragment that Marx had at least imagined such a route.

He imagined socially produced information becoming embodied in machines. He imagined this producing a new dynamic, which destroys the old mechanisms for creating prices and profits. He imagined capitalism being forced to develop the intellectual capacities of the worker. And he imagined information coming to be stored and shared in something called a ‘general intellect’ – which was the mind of everybody on earth connected by social knowledge, in which every upgrade benefits everybody. In short, he had imagined something close to the info-capitalism in which we live.

Furthermore, he had imagined what the main objective of the working class would be if this world ever existed: freedom from work. The utopian socialist Charles Fourier had predicted that labour would become the same as play. Marx disagreed.
Instead, he wrote, liberation would come through leisure time: ‘Free time has naturally transformed its possessor into a different subject, and he then enters into the direct production process as this different subject … in whose head exists the accumulated knowledge of society.’46

This is possibly the most revolutionary idea Marx

128


128

ever had: that the reduction of labour to a minimum could produce a kind of human being able to deploy the entire, accumulated knowledge of society; a person transformed by vast quantities of socially produced knowledge and for the first time in history more free time than work time. It’s not so far from the worker imagined in the Fragment to the ‘universal educated person’ predicted by Peter Drucker.

Marx, I think, abandoned this thought experiment because it had scant relevance to the society he lived in. But it has massive relevance for ours.

A THIRD KIND OF CAPITALISM?

To the neoliberals, the emergence of info-capitalism seemed like their greatest achievement. They could barely conceive that it might contain flaws.
Intelligent machines, they believed, would create a post-industrial society in which everybody did highvalue, knowledge-based work and in which all the old social conflicts died out.47 Information would enable the idealized capitalism of the textbooks – with transparency, perfect competition and equilibrium – to become reality. In the late 1990s the literature of the mainstream – from Wired magazine to the
Harvard Business Review – was filled with celebratory descriptions of the new system. But there was an ominous silence about how it worked.


Ironically, it fell to the people who had rediscovered the Fragment on Machines, the far left disciples of
Antonio Negri, to make the first attempt at a theory of info-capitalism, which they dubbed ‘cognitive capitalism’.

Cognitive capitalism, say its proponents, is a coherent new form of capitalism: a ‘third capitalism’, following the merchant capitalism of the seventeenth and eighteenth centuries and the industrial capitalism of the last 200 years. It is based on global markets, financialized consumption, immaterial labour and immaterial capital.

Yann Moulier-Boutang, a French economist, believes that the key for cognitive capitalism is the capture of the externalities. As people use digital devices, they become ‘co-producers’ with the companies they are dealing with: their choices, their apps, their friend lists on Facebook can all be given monetary value by the company that provides the service and harvests the information. ‘Capturing positive externalities,’ writes Moulier-Boutang, ‘becomes the number one problem of value.’48

In cognitive capitalism, the nature of work is transformed. Manual labour and industry don’t stop, but their place in the landscape changes. Because profit increasingly comes from capturing the free value generated by consumer behaviour, and because

129


129

a society focused on mass consumption has to be constantly fed coffee, smiled at, serviced by call centres, the ‘factory’ in cognitive capitalism is the whole of society. For these theorists, ‘society as a factory’ is a crucial concept – vital to understanding not just the nature of exploitation but resistance.

For a pair of Nike trainers to be worth $179.99 requires 465,000 workers in 107 factories across
Vietnam, China and Indonesia to produce to the same exact standard. But it also requires the consumer to believe that the Nike swoosh makes these chunks of plastic, rubber and foam worth seven times the average US hourly wage.49 Nike spends $2.7 billion a year on getting us to believe just that (compared to
$13 billion actually making the shoes and clothing) – and that marketing budget buys way more than advertisements at the Superbowl.

In fact since Nike got its head around the rules of cognitive capitalism in the early 2000s, its spend on
TV and press adverts has fallen by 40 per cent.
Instead, the focus is on digital products: Nike+ for example, which uses an iPod to log runners’ performances, has recorded – and fed back to Nike –
150 million individual jogging sessions since its launch in 2006.50 Like all businesses, Nike is in the process of becoming, effectively, ‘information plus things’.


This is what the cognitive capital theorists mean by the ‘socialized factory’. We are no longer in a world of clearly delineated production and consumption, but one in which ideas, behaviours and customer interactions with the brand are critical to generating profit; production and consumption are blurred. This partly explains why struggles against the new capitalism are often focused on consumer issues, or brand values (eg. corporate social responsibility), and why protesters behave more like the ‘tribes’ in marketing demographics than a unified proletariat.
For cognitive capital theorists – as for Drucker – the primary activity of the new workforce is ‘the production of knowledge by means of knowledge’.51

However, the cognitive capitalism theory contains a major flaw. It would be one thing to say ‘a new kind of info-capitalism has been born within late industrial capitalism’.
But the key cognitive capitalism theorists say the opposite: many of them believe cognitive capitalism to be a fully functioning system already. Factories in Shenzhen, slums in
Manila, metal-bashing shops in Wolverhampton may look just as they did ten years ago – but to these theorists their economic functions are already transformed.

This is a technique common in European speculative thought: to invent a category and apply it to everything, thus reclassifying all existing things as

130


130

sub-categories of your new idea. It saves you the trouble of analysing complex and contradictory realities.

It leads cognitive capitalism theorists to underestimate the importance of the rise of old-style industrial production in the BRIC (Brazil, Russia,
India and China) countries, and for some to downplay the significance of the post-2008 financial crisis, or to see it as merely the teething troubles of the newborn system.

In fact, the system we live in is not a new, coherent and functioning form of capitalism. It is incoherent.
Its tense, febrile and unstable character comes from the fact that we’re living in an age of the network alongside the hierarchy, the slum alongside the web café – and to understand the situation we have to see it as an incomplete transition, not a finished model.

POSTCAPITALISM: A HYPOTHESIS

The debate on postcapitalism has come a long way since Peter Drucker, yet in another sense it has gone nowhere. It has been marked by speculative thinking, technobabble and a tendency to declare the existence of new systems rather than to explore their relationship to old realities.

Benkler, Kelly and Drucker each declared something


akin to a ‘new mode of production’, but none advanced an explanation of what its dynamics might be.
The
Ontario-based economist
Nick
DyerWitheford, in his 1999 book Cyber-Marx, produced a decent speculative account of what informationbased communism might look like.52 But the debate on this has rarely achieved the status of economics.

Jeremy Rifkin, an influential management consultant, came closest to describing current reality in his 2014 book The Zero Marginal Cost Society.53 Rifkin argues that peer-production and capitalism are two different systems; currently they coexist and even gain energy from each other, but ultimately peerproduction will reduce the capitalist sector of the economy to a few niches.

Rifkin’s most radical insight was to understand the potential of the Internet of Things. The most enthusiastic consultancies – for example McKinsey – have valued the impact of this process as up to $6 trillion a year, mainly in healthcare and manufacturing. But the vast majority of that $6 trillion is in reduced cost and increased efficiency: that is, it contributes to reducing the marginal cost of physical goods and services in the same way as copy and paste reduces the cost of information goods.

Rifkin points out that the impact of wiring every person and every object into an intelligent network

131


131

could in fact be exponential. It could rapidly reduce the marginal cost of energy and physical goods in the same way as the internet does for digital products.

Like all books destined for the business shelves at airports, though, Rifkin’s is light on the social dimension. He understands that a world of free stuff cannot be capitalist; that the free stuff is beginning to pervade the physical as well as the digital world, but the struggle between the two systems is reduced to a struggle between business models and good ideas.

Conducted among social theorists, lawyers and tech visionaries, the postcapitalism debate exists in a parallel universe to the debate among economists about the crisis of neoliberalism, and the debate among historians about the problematic takeoff of the fifth long wave. To move forward, we need to understand how the new economics of info-tech, the post-2008 crisis and the long-cycle pattern fit together. What follows below is a first attempt to do that. It’s a hypothesis – but it is based on evidence and can be tested against reality.

Since the mid-1990s, a revolution in the way we process, store and communicate information has created the beginnings of a network economy. This has started to corrode the traditional property relations of capitalism in the following ways.


It corrodes the price mechanism for digital goods, as understood by mainstream economics, by pushing the cost of reproducing information goods towards zero.

It adds a high information content to physical goods, sucking them into the same zero-price vortex as pure information goods – and often, as with the trainers, making their value dependent more on socially created ideas (the brand) rather than the physical cost of production.

It makes financialization necessary, creating two streams of profit flowing to capital from the general population: as workers producing goods, services and knowledge; and as borrowers generating interest payments. So, while it’s true to say ‘the whole of society has become a factory’, the mechanisms of exploitation are still first of all wages, then credit and only finally our mental collusion in the creation of brand value, or the giveaway of externalities to tech companies.

It is in the process of revolutionizing the productivity of physical things, processes and energy grids, as machine-to-machine internet connections begin to outnumber person-to-person links.

If information corrodes value, then corporations are

132


132

responding with three types of survival strategy: the creation of monopolies on information and the vigorous defence of intellectual property; the
‘skating to the edge of chaos’ approach, trying to live within the gap between expanded supply and falling prices; and the attempt to capture and exploit socially produced information such as consumer data, or by imposing contracts on programmers that say the company owns code they write in their free time.

However, alongside the corporate response, we are seeing the rise of non-market production: horizontally distributed peer-production networks that are not centrally managed, producing goods that are either completely free, or which – being Open
Source – have very limited commercial value.

Peer-produced free stuff drives out commercially produced commodities. Wikipedia is a space in which commerce cannot operate; with Linux or Android there is clearly commercial exploitation, but at the edges – not based on ownership of the main product.
It is becoming possible to be both producer and consumer in the same process.

In response, capitalism is beginning to reshape itself as a defence mechanism against peer-production, through info-monopolies, through allowing the wage relationship to weaken and through the irrational


pursuit of high-carbon business models.

Non-market forms of production and exchange exploit the basic human tendency to collaborate – to exchange gifts of intangible value – which has always existed but at the margins of economic life. This is more than simply a rebalancing between public goods and private goods: it is a whole new and revolutionary thing. The proliferation of these nonmarket economic activities is making it possible for a cooperative, socially just society to emerge.

The rapid change in technology is altering the nature of work, blurring the distinction between work and leisure and requiring us to participate in the creation of value across our whole lives, not just in the workplace.
This gives us multiple economic personalities, which is the economic base on which a new kind of person, with multiple selves, has emerged.54 It is this new kind of person, the networked individual, who is the bearer of the postcapitalist society that could now emerge.

The technological direction of this revolution is at odds with its social direction. Technologically, we are headed for zero-price goods, unmeasurable work, an exponential takeoff in productivity and the extensive automation of physical processes. Socially, we are trapped in a world of monopolies, inefficiency, the ruins of a finance-dominated free market and a

133


133

proliferation of ‘bullshit jobs’.

Today, the main contradiction in modern capitalism is between the possibility of free, abundant socially produced goods, and a system of monopolies, banks and governments struggling
 to
 maintain
 control
 over
 power
 and
 information. That is, everything is pervaded by a fight between network and hierarchy.

It’s happening now because the rise of neoliberalism disrupted the normal fifty-year patterns of capitalism. And that’s another way of saying that the
240-year lifecycle of industrial capitalism may be nearing its end.

So there are two basic possibilities ahead of us. Either a new form of cognitive capitalism does emerge and stabilize – based on a new mix of firms, markets and networked collaboration – and the remnants of the industrial system find an orderly place within this third capitalism. Or the network erodes both the working and the legitimacy of the market system. If so, a conflict will take place that results in the abolition of the market system and its replacement by postcapitalism.

Postcapitalism could take many different forms. We’ll know it’s happened if a large number of goods become cheap or free, but people go on producing them irrespective of market forces. We’ll know it’s


underway once the blurred relationship between work and leisure, and between hours and wages, becomes institutionalized.

Because its precondition is abundance, postcapitalism will deliver some form of social justice spontaneously – but the forms and priorities of social justice will be negotiable. Whereas capitalist societies always had to worry about ‘guns vs butter’, postcapitalist societies might fight over growth vs sustainability – or the timeframe for delivery of basic social goals, or challenges like migration, women’s liberation and demographic ageing.

So we have to design the transition to postcapitalism.
Because most theorists of postcapitalism either just declared it to exist, or predicted it as an inevitability, few considered the problems of transition. So one of the first tasks is to outline and test a range of models showing how such a transitional economy might work.

Today we are used to hearing the word ‘transition’ to describe tentative local attempts to build a lowcarbon economy; local currencies, time banks,
‘transition towns’ and the like. But transition, here, is a bigger project.

To make it happen we need to learn the negative lessons of failed transition in the USSR. After 1928,

134


134

the Soviet Union tried to force a route through to socialism via centralized planning. This produced something worse than capitalism, but among the modern left there is a strong aversion to discussing it.

If we want to create a postcapitalist society, we have to know in detail what went wrong, and to understand the fundamental difference between the spontaneous non-market forms that I’ve been describing here and the Five Year Plans of Stalinism.

To go forward, we need to know how, exactly, information goods corrode the market mechanism; what might happen if this tendency was being promoted instead of restrained; and what social group has the interest to make the transition happen.
We need, in short, a better definition of value and a more detailed history of work. What follows is an attempt to provide them.

135


135

6 Towards the Free Machine

There was a tent camp, a noisy crowd, the drift of tear gas and a small pile of free stuff: this was Gezi
Park during the 2013 protest in Istanbul. The tent camp allowed people to live for a few days just how they wanted to; the free stuff was the ultimate gesture of hope.

On the first day the pile was small: packets of salami, cartons of juice, some cigarettes and aspirins. By the last day it had become a toppling pyramid of everything: food, clothes, medicines and tobacco.
Young people would pick up armfuls of it and walk round the park in groups, insisting you take some. Of course none of the stuff was really free. It had been bought and donated. But it symbolized a desire to live in a society where some basic things are shared.

And that’s an old desire. During the first decades of the nineteenth century, surrounded by a system determined to put a price on everything, the left formed utopian communities based on sharing, cooperation and collaborative work. They were mostly failures, for the ultimate reason that everything was scarce.

Today, not so many things are scarce. The ability of people in a city like Istanbul to build a mountain of free food testifies to that. The recycling dumps in


European cities show it too: as well as outright rubbish, you will find people dumping wearable clothes, spotless books, usable electronics – items that once had value now have no selling price and are given away to be recycled or shared. Energy, of course, remains scarce – or rather the carbon-based energy we’re addicted to does. But the most critical commodity of twenty-first-century life is not scarce at all. Information is abundant.

This advance from scarcity towards abundance is a significant development in the history of humanity, and the great achievement of fourth-wave capitalism.
But it’s a major challenge for economic theory.
Capitalism made us see the price mechanism as the most organic, spontaneous, granular thing in economic life. Now we need a theory of its disappearance.

We need to start by getting past the issue of supply and demand. Supply-and-demand clearly works: if more garment factories open in Bangladesh, cheap clothes get cheaper. And if the cops arrest drug dealers just before the clubs open, ecstasy becomes more expensive. But supply and demand explains only why prices fluctuate. When supply and demand are equal, why isn’t the price zero? Obviously it can’t be. In a normal capitalist economy, based on scarce goods and labour, there has to be a more intrinsic price around which the selling price moves up or

136


136

down. So what determines that?

Over the past 200 years, two completely different answers have been put forward. Only one of them can be right. Unfortunately it is not the one taught in economics courses.

In this chapter I am going to mount a sustained defence of something called the ‘labour theory of value’. It’s not popular because it’s not very useful for calculating and predicting movements within a functioning and stable market system. But faced with the rise of info-capitalism, which is corroding price mechanisms, ownership and the connection between work and wages, the labour-theory is the only explanation that does not collapse. It is the only theory that allows us to properly model where value is created in a knowledge economy, and where it ends up. The labour-theory tells us how to measure value in an economy where machines can be built for free and last for ever.

WORK IS THE SOURCE OF VALUE

Amid the empty shops in the run-down high street of
Kirkcaldy, Scotland, there is a branch of Gregg’s.
Gregg’s sells high-fat food at low prices and is one of the few places busy at lunchtime. A glance at
Scotland’s poverty map gives the context: the town is dotted with areas of extreme deprivation and ill


health.1

On the wall outside Gregg’s is a plaque marking the house where Adam Smith wrote The Wealth of Nations.
Nobody takes much notice. But this is where, in 1776, the economic principles of capitalism were first laid out. I’m not sure Smith would like the look of his home town today, blighted by de-industrialization, low pay and chronic sickness. But he would have understood the cause. The source of all wealth, said
Smith, is work.

‘It was not by gold or by silver but by labour that all the wealth of the world was originally purchased,’
Smith wrote; ‘and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.’2 This is the classic labour theory of value: it says the work needed to make something determines how much it’s worth.

There is a raw logic to this. If you watch a waterwheel long enough, it helps you understand physics.
If you witness workers sweating thirteen hours a day in a machine workshop, as Smith did, you will understand that it is the workers, not the machines, that produce the added value.3

Standard textbooks will tell you Smith thought the

137


137

labour-theory was valid only for primitive societies, and that when it came to capitalism, ‘value’ was the combined product of wages, capital and land. This is incorrect.4 Smith’s labour theory of value was inconsistent, but on a detailed reading of The Wealth of Nations the argument is clear: labour is the source of value but the market can only reflect this roughly, through what Smith calls ‘higgling and bargaining’.
So the law operates beneath the surface in a full capitalist economy. Profits and rents are deductions from the value produced by labour.5

David Ricardo, the most influential economist of the early nineteenth century, created a more developed model. Published in 1817, it established the labourtheory as firmly in the public mind as supply and demand is now. Ricardo, who had witnessed the great upsurge of the factory system, ridiculed the idea that machines were the source of increased wealth.
Machines merely transfer their value to the product; only labour adds new value, he said.

The
 magic
 of
 machinery
 lay
 in
 increased
 productivity.6 If you can use less labour in making something, it should be cheaper and more profitable.
If you cut the amount of labour needed to produce hats, he wrote, ‘their price will ultimately fall to their new natural price, although demand should be doubled, trebled, or quadrupled’.7


After
Ricardo, the labour-theory became the signature idea of industrial capitalism. It was used to justify profits, which rewarded the work of the mill owner; it was used to attack the landed aristocracy, who were living off rents instead of working; and it was used to resist workers’ demands for shorter hours and union rights, which would hike the price of labour to ‘artificial’ levels, ie. above the minimum needed to feed, clothe and house a working family.

However, despite its ultra-capitalist rationale, the labour-theory proved subversive. It created an argument about who gets what, which the factory owners immediately started to lose. Amid the candlelight of the pubs where the early trade unions met, David Ricardo suddenly had a whole new set of followers.

The worker-intellectuals of the 1820s understood the revolutionary implication of the labour-theory: if the source of all wealth is work, then there’s a legitimate question
 about
 how
 that
 wealth
 should
 be
 distributed. Just as a rent-seeking aristocracy can be shown to be parasites on the productive economy, so too can capitalists be seen as parasites on the work of others. Their work is needed – but the factory system looks as if it is structured to deliver them excess rewards.

‘There is nothing more than the knowledge, skill and

138


138

labour requisite [to set up a factory] on which the capitalist can found a claim to any share of the produce,’ wrote Thomas Hodgskin, a naval lieutenant turned socialist, in 1825.8

As illegal trade unions spread the doctrine of
‘Ricardian socialism’, the factory owners’ enthusiasm for the labour-theory waned. By the time the British middle classes won the vote, in 1832, their need to justify capitalism with any kind of theory had vanished. Wages, prices and profits were no longer things to be investigated by social science, they were just there, to be described and counted. Ricardo was out, but all that replaced him was theoretical confusion.9

If, as a result, mid-nineteenth-century economics was reduced to ‘describing and counting’, there is a parallel with natural science. Charles Darwin formulated the theory of natural selection in 1844 and Alfred Russel Wallace three years later. Yet such were its implications – chiefly, rubbishing the
Creation myth – that both men resorted to a routine of ‘collecting, naming and categorizing’ their specimens until 1858, when they both suddenly rushed to publication with an earth-shaking theory.

In economics, the earth-shaking theory arrives with
Marx. It’s often claimed that Marx built on the theories of Smith and Ricardo. In fact he demolished


them. He described his project as a critique of political economy: of Smith, Ricardo, the Ricardian socialists, the liberal moralists and the bean counters. He said – long before mainstream economists did so in the 1870s – that Ricardo’s version of the labour-theory was a mess. It would have to be rewritten from scratch.

Marx recognized in the labour-theory, despite all its flaws, something that could explain both how capitalism worked and why it might one day cease to work. The version he produced is coherent and has stood the test of time. There are thousands of tenured academics – including some of the world’s most cited scholars – who teach that it is correct. The problem is, very few of them are allowed to teach economics.

THE LABOUR-THEORY BY NUMBERS

When a buyer from Primark signs a contract for
100,000 T-shirts with a factory in Bangladesh, that is a transaction. When a Bangladeshi worker arrives at the factory each morning, expecting the equivalent of $68 a month in return, that is also a transaction.10
When she spends a fifth of her daily wage to buy 1kg of rice, that too is a transaction.11

When we make transactions, we have in our minds a rough idea of what the thing we’re buying is worth. If

139


139

the labour-theory is right, we are unconsciously judging its value against the amount of other people’s work that thing, or service, contains.

What follows is a brief, simple explanation of the labour theory of value. Long, complicated versions are available but for the purpose of understanding how postcapitalism might work, only the basics are needed.

A commodity’s value is determined by the average amount of labour hours needed to produce it.12 It is not the actual number of hours worked that sets the value but the ‘socially necessary’ hours of work established across each industry or economy. So the basic unit of account here can be summed up as
‘hours of socially necessary labour time’. If we know what an hour of basic labour costs – in Bangladesh the minimum wage pays about 28 US cents an hour – we can express it in money. Here I will just stick to hours.

Two things contribute to the value of a commodity:
(a) the work done in the production process (which includes marketing, research, design, etc.) and (b) everything else (machinery, plant, raw materials, etc.). Both can be measured in terms of the amount of labour time they contain.

The labour-theory treats machines, energy and raw


materials as ‘finished labour’ – transferring their value to the new product. So if the cotton for one garment took altogether thirty minutes average labour to grow, spin, weave and transport, it will transfer that value to the final shirt. But with machines and other big capital goods the process takes time; they transfer their value in small chunks.
So if a machine took a million hours’ worth of labour to make, and over its lifetime it makes one million objects, each object will carry a single hour of the machine’s value into its final value.

Meanwhile, we treat the actual labour expended within the firm’s production process as new value, added by what Marx called ‘living labour’.

This underlying process – labour time determines the amount of new value – operates at a deep level, behind the backs of workers, managers, wholesale buyers and Primark shoppers. When we negotiate a price, it can be influenced by many other things – supply, demand, short-term usefulness, the lost opportunity if we don’t buy, the cost of spending instead of saving – everything Adam Smith summed up in the evocative word ‘higgling’. But at an aggregate level, the price of all the goods and services sold in a given economy is just a monetary expression of how much labour it took to produce them.

140


140

The problem is, we only know if we paid the right price after the event. The market acts like a giant calculating machine, rewarding those who guessed correctly what the socially necessary cost was, and penalizing those who used too much labour.

So prices always diverge from the underlying value of things, but they are ultimately determined by it. And value is determined by the amount of necessary labour it took to make the commodity.

But what determines the value of labour? Consistent with everything else, the answer is: other people’s labour – the average amount of labour it takes to present each worker at the factory gate, ready for work. This includes the work that went into producing the food they consume, the electricity they use, the clothes a worker wears and – as society develops – the average amount of education, training, healthcare and leisure consumption needed for the worker to do their job.

Of course, the average cost of an hour’s labour changes from one country to another. These differences are one of the reasons firms move production offshore. Childcare at a subsidized workplace nursery in
Bangladesh costs the equivalent of 38 US cents a day, while in New York
City a nanny costs $15 an hour.13 In the past decade, global production chains have moved work from


China to Bangladesh as workers in China achieved better pay rates, even though
Bangladeshi productivity is lower. Bangladeshi labour was so cheap for a time that it offset the inefficiencies.14

So where does profit come from? In the labourtheory, profit is not theft – as in a rip-off. On average, a worker’s monthly salary will reflect the amount of labour by others needed to produce their food, their energy needs, their clothes, etc. But the employer comes away with something more. My boss can pay me the true value of the eight hours work I just did.
But that true value might be just four hours.

This mismatch between the inputs and outputs of human labour is the kernel of the theory, so let’s look at an example.

Nazma at the Bangladeshi shirt factory agrees to work for a wage that seems roughly enough to pay for a month’s food, rent, leisure, transport, energy and so on, plus a bit on top to put by as savings. She would like to earn more, but there’s a relatively narrow range of wages for factory work, so she has a very clear implicit grasp of the average hourly wage possible with her skills.

But her employer is not buying her work per se: he is buying her ability to work.

141


141

If we forget money and measure everything in ‘hours of necessary work’, we can see how profit is generated. If the cost of putting Nazma at the factory gate six days a week is thirty hours work by other people spread across the whole of society (to produce her food, clothing, energy, childcare, housing and so on), and she then works sixty hours a week, her work is providing double the amount of output for the inputs. All the upside goes to the employer. Out of an entirely fair transaction comes an unfair result. This is what Marx calls ‘surplus value’, and is the ultimate source of profit.

Another way of putting this is to say: labour is unique. Of all the things we buy and sell, labour alone has the ability to add value. Work is not just the measure of value but the motherlode from which profit is mined.

One clue as to the truth of this is that wherever they can get labour for free – as in the American prison system or Nazi death camps – capitalists immediately take advantage of it. Another clue lies in the fact that, wherever they need to pay labour below its average value, as during the rise of the Chinese export industry, managers resort to providing the inputs collectively: dorms, uniforms and canteens.
The labour of a dormitory workforce is much cheaper than the social average, which is based on the living costs of a family in a home – and of course dormitory


workers can be disciplined more easily.

But why, if the real weekly value of my labour is thirty hours of other people’s work, would I ever work sixty hours? The answer is: the labour market is never free. It was created through coercion and is recreated every day by laws, regulations, prohibitions, fines and the fear of unemployment.

At the dawn of capitalism, average working days of fourteen hours or more were imposed – not just on adults but on children as young as eight. A rigid system of timekeeping was implemented: rationed toilet time, fines for lateness, product defects or talking, enforced start times; and immovable deadlines. Wherever we see the factory system created afresh – whether in Lancashire in the 1790s or Bangladesh in the last twenty years – we see these rules enforced.

Even in advanced countries the labour market is built overtly on coercion. Just listen to any politician make a speech about welfare: cutting unemployment and disability benefits is designed to force people to take jobs at wages they can’t live on. In no other aspect of the market does the government coerce us to take part; nobody says ‘You must go ice skating or society will collapse.’

Work for a salary is the bedrock of the system. We

142


142

accept it because, as our ancestors learned the hard way, if you don’t obey, you don’t eat.

So our work is precious. If you ever doubt this, study what happens in the fulfilment centre of an ecommerce retailer, or a call centre, or in the work schedule of a home-care worker. You will see work timed and targeted as if the minutes were gold dust.
Which, to the employer, they are. Of course at the high-skill, high-wage end of the labour market it is not time or discipline, but targets and quality control that are the instruments of coercion.

There is more to explore about the labour theory of value but let’s pause. We already know enough to start attacking it with the tools that are to hand in every economics department.

SOME VALID OBJECTIONS …

Here’s why I like the labour theory of value. It treats profit as if it were made somewhere central within capitalism: the workplace, not the marketplace. And it treats one of the most basic things we do every day
– work – as if it were important to economics. But there is also a long list of valid objections to the labour-theory:

Q: Why do we need a ‘theory’ at all? Why not just the facts
– as in the GDP figures, company accounts, the stock


markets, etc.?

A: Because we want to explain change. In science we want to go beyond a neat row of butterflies pinned under glass; we need a theory of why each subspecies looks slightly different. We want to know why, during a million repetitions of their normal lifecycles, small variations can emerge and then, suddenly, massive change.

Theories allow us to describe the reality we can’t see.
And they allow us to predict. All forms of economics accept the need for theory. But the difficulty of finding one, and confronting its implications, led economics in the late nineteenth century to retreat from the scientific method.

Q: Why can’t I ‘see’ value, surplus value and labour time?
If they don’t show up in the accounts of companies, and professional economists don’t acknowledge them, aren’t they just a mental construct?

A: A more sophisticated way of putting it would be to say, as the Cambridge economist Joan Robinson did in the 1960s, that the labour-theory is ‘metaphysical’ – a mental construct whose existence could never be disproved. For good measure she said the same about
‘utility’ – the key idea in mainstream economics – but accepted that metaphysics was better than nothing.15

143


143

Yet the labour-theory is more than metaphysics. Of course it works at a certain level of abstraction: that is, parts of reality are filtered out. For example, it is a model of a pure capitalism, in which everybody works for wages; there are no slaves, peasants, mobsters or beggars. It describes a process that works ‘behind the backs’ of economic agents: nobody can calculate whether they are spending more or less than the necessary labour time – though making a decent guess at it has become crucial to productivity management.

In the labour-theory, the market is the transmission mechanism between this deep, unknowable process and the surface outcome. Only the market can mediate the individual choices into an aggregate effect; only the market can tell us what the socially necessary labour time is. In this sense, the labourtheory is the greatest theory of the market ever written. It ascribes to the market, and only the market, the mechanism of making concrete the reality beneath.

So, yes, it is abstract – but no more abstract than
Adam Smith’s concept of the ‘hidden hand’ or
Einstein’s general theory of relativity, proposed in
1916 but not proved empirically until the 1960s.

The question remains: is it provable? Would it be possible to challenge the labour-theory in its own


terms with evidence? Does it pass the test, laid down by philosopher Karl Popper, that if a single contrary fact were true, the theory would be false?

The answer is yes – once we understand the full theory. If you could say ‘capitalism is crisis-free’, the labour-theory
 would
 be
 false.
 If
 you
 could
 demonstrate that capitalism lasts for ever, it would also be false. Because, as we’re about to see, the labour-theory describes at the same time both a regular cyclical process and one that leads eventually to long-term breakdown.

Q: Why do we need this level of abstraction? Why can’t the theory be constructed by collecting data and crunching it?
Why leave the concrete world to mainstream economics?

A: In answer to the last of these, you shouldn’t. Marx recognized that to be rigorous the labour-theory should explain reality at the concrete level. He set about trying to build out the abstract model into a more concrete description of the real economy. This involved introducing a two-sector model of the economy (consumption and production) in the second volume of Capital, and a banking system in the third. Alongside this, he tried to show how the underlying values get transformed into prices at the concrete level.

There are inconsistencies in the way he worked out

144


144

this so-called ‘transformation problem’, which led to a 100-year-long debate over whether the theory is inconsistent. Since this is an attempt to apply the whole theory to a specific issue, not a textbook on
Marxism, I will avoid that debate here, saying simply that the ‘transformation debate’ has been resolved
(to my satisfaction) by a group of academics known as the ‘temporal single system’ school
.

The point is that, even in its most consistent form, the labour-theory is not going to be a practical tool for measuring and predicting price movements. It is a mental tool for understanding what price movements are. It belongs to a class of ideas that Einstein described as ‘principle theories’: theories whose aim is to capture the essence of reality in a simple proposition, which may be removed from everyday experience. Einstein wrote that the aim of science is to capture the connection between all experiential data ‘in their totality’ – and to do this ‘by use of a minimum of primary concepts and relations’. He pointed out that the more clear and logically unified these primary concepts were, the more divorced they would be from data.16

Einstein believed the truth of a theory is, for certain,

 They show that the alleged logical inconsistencies in Marx’s calculations disappear once you understand this process takes place over time, not simultaneously as if in a single column of a spreadsheet.


borne out by whether it successfully predicts experience. But the relationship between the theory and the experience can only be grasped intuitively.

For reasons we discuss below mainstream economics evolved into a pseudo-science that can only allow for statements obtained through crunching the data. The result is a neat set of textbooks, which are internally coherent but which continually fail to predict and describe reality.

Q: Isn’t this too ideological? Isn’t the labour-theory too tainted with hostility to capitalism to be of any use?

A: Yes, this is a problem. As a result of the ideological battles in economics since the 1870s, there’s been a dialogue of the deaf. The outcomes, which we have to overcome today, were the inconsistency of mainstream economics and Marxism’s lack of concreteness.

You’ll often hear left-wing economists decry mainstream economics as ‘useless’ – but it is not. In fact, once you understand its limitations, most of mainstream price theory maps very well on to the surface end of the labour-theory.

The problem is, mainstream economics does not understand its own limitations. The more complete it became as an academic discipline describing an

145


145

abstract, static and immutable reality, the less it understood change. To see why, we will now consider the main source of change in capitalism – the force that makes expensive things cheaper and which has now begun to make some things free: productivity.

PRODUCTIVITY IN THE LABOUR-THEORY

According to the labour-theory, there are two kinds of productivity gain possible. First, the workers become more skilled. So the work of a trained metal press operator has more value than the work of someone who just arrived off the dole queue; either because they make an ordinary thing faster and with fewer defects, or because of their ability to make an extraordinary thing that the less well-trained worker could not.

But the cost of training skilled workers is usually higher by a proportional amount: their labour is worth more because it took more labour to produce and maintain. For example, the average earnings of graduates across the OECD countries are more than double those of people with only a basic education, and 60 per cent higher than of those who completed only ‘upper secondary’ education.17

The second kind of productivity gain is driven by new machinery, or a reorganization of the production process, or a new invention. This is the most common


case and Marx deals with it as follows.

One hour of labour always adds one hour’s worth of value to the products made. So the impact of rising productivity is to reduce the amount of value embodied in each product.

Suppose a factory produces 10,000 garments a day.
Let’s say the workforce is 1,000 people with average ability working ten hours each. So 10,000 hours of
‘living’ labour are going into the daily output. Let’s assume that on top of that there are 10,000 hours of
‘finished’ labour going into each day’s output as well
– in the form of wear and tear to machinery, energy used, fabrics and other raw materials, transport costs, etc. The total daily output of the factory, as measured in labour time, therefore consumes 20,000 hours of labour, half living and half finished. So each garment contains two hours of labour time. On the market, it should exchange for the money equivalent of two hours’ labour time.

Now, suppose a process is introduced that doubles labour productivity. For each batch of 10,000 garments you’ve still got roughly the same amount of finished labour going in (10,000 hours in this example). But the living labour component is cut to
5,000 hours. Now each garment contains ninety minutes’ labour time.

146


146

Here’s how the market rewards you. If your factory is the first to make the change, the garments go into a market where socially necessary labour time to make them is still 20,000 hours. That’s the price you should get in the market. But you only needed 15,000 hours.
So the factory reaps the productivity gain in the form of increased profit. The factory boss can cut prices and increase market share or take the above-average profit represented by the difference between two hours and ninety minutes. Eventually the whole industry will copy the innovation and the new normal price per garment will be ninety minutes’ labour time
.*

This brings us to the main point. To increase productivity, we increase the proportion of ‘machine value’ to the living human labour employed. We drive human beings out of the production process and in the short term – at the level of the firm or sector – profits rise. But since labour is the only source of extra value, once an innovation has been rolled out across the whole sector, and a new, lower social average set, there’s less labour and more machine; the part of the operation producing the added value has got smaller; and if unchecked that would place downward pressure on the profit rate of the sector.

 Labour, Jevons mused, is probably a mixture of pleasure and pain, but the fear of a bigger pain – hunger – drives us to work each day.


Innovation, which is driven by the need to minimize costs, maximize output and utilize resources, does bring rising material wealth. And it can lead to a rise in profits. But once it has been rolled out, it creates an inbuilt and perennial ‘tendency for the rate of profit to fall’ – if not offset by other factors.

Despite the doom-laden aura of this Marxist phrase
‘tendency of the profit rate to fall’, it is no real catastrophe for capitalism. As we saw in chapter 3, these offsetting factors are usually strong enough to balance out the effects of the falling labour content – above all, through the creation of new sectors which require higher-value inputs – either in the form of higher-value physical commodities or by the creation of service sectors.

So in the classic model of capitalism outlined by
Marx, the pursuit of productivity drives material wealth higher but causes repeated short-term crises and then forces big mutations, whereby the system has to voluntarily raise the cost of labour. If it can’t make workers rich enough to buy all the goods, or it can’t find new consumers in new markets, this piling up of machine value versus labour value leads to a fall in the rate of profit.

And that was how all crises looked in the era of scarcity: mass unemployment and idle plant caused by a collapse in profitability, and all explicable using

147


147

the labour theory of value.

But the labour-theory can also be used to explain something else, namely what happens when products and new processes can be made without any labour going into them at all.

Before we explore that, however, we have to deal with the alternative theory of price proposed by mainstream economics, known as ‘marginal utility’.

THE AVOIDANCE OF ‘FUTURE THINGS’

Like Marx, the founders of mainstream economics started by tearing holes in Ricardo. His explanation of profit was inconsistent, they said; nothing could be done to make it work. Their response was to move economics on to different terrain – that of observable movements in prices, supply and demand, rent, taxation and interest rates.

What they produced was the theory of marginal utility: that there is no intrinsic value to anything, except what a buyer will pay for it at a given moment. Léon Walras, one of the founders of marginalism, insisted: ‘The selling prices of products are determined in the market … by reason of their utility and their quantity. There are no other conditions to consider for these are the necessary and sufficient conditions.’18


This ‘usefulness theory’ of value had been deemed archaic since the days of Adam Smith. The crucial factor in its revival was the addition of the concept of marginality. ‘The amount of value is determined not by average but by final or marginal utility,’ wrote
William Smart, an English popularizer of the theory.19
Marginal simply means all the value is in the ‘extra bit’ you want to buy, not in the whole product. So the value of the last ecstasy tablet in the nightclub is higher than all the others.

For marginalists, the key psychological judgements we make when we buy things are reducible to the following question: ‘Do I need to buy this next thing – glass of beer, cigarette, condom, lipstick, minicab ride – more than I need to keep this last €10 note in my pocket?’

William Stanley Jevons, the English pioneer of marginalism, demonstrated that in principle these fine judgements about utility – which he understood as choices between pleasure and pain – could be modelled using calculus. This sliding scale of momentary prices was the only thing needed to calibrate supply and demand. The only consistent meaning to value was ‘ratio of exchange’; he proposed scrapping the term ‘value’ altogether.

On the face of it, the marginalists were trying to free

148


148

economics from philosophy. You can’t defend capitalism on the grounds that it is ‘natural’, said
Walras, the only justification should be that it is efficient and increases wealth.

But there is a crucial piece of ideology built into marginalism: the assertion that the market is
‘rational’. Walras was revolted by the idea that economic laws work independently of human willpower. This amounted to treating economics like zoology and the human race as animals. ‘Alongside the many blind and ineluctable forces of the universe,’ he wrote, ‘there exists a force which is self conscious and independent, namely the will of man.’20 The new science of economics should assume the market is an expression of our collective rational will, Walras argued. But it should be mathematical, making a one-time leap out of its ethical and philosophical roots by using abstract models and considering all cases in idealized form.

The achievement of marginalism was to show that markets governed by free and perfect competition must achieve ‘equilibrium’. It was Walras who worked this into a demonstrable law: since all prices are the result of a choice by a rational individual (buy the lipstick or keep the €10 bill?), once the supply runs out the rational choice is to stop trying to buy it.
Conversely, if the supply of something increases, it becomes rational for people to start wanting it, and


to decide what price they will pay for it. Supply creates its own demand, says the theory; a freely operating market will ‘clear’ until demand matches supply, with prices changing in response.

Like Marx, Walras was working at a high level of abstraction. His model assumes that all agents have perfect information, that there is no uncertainty about the future and no extraneous factors influencing the market (such as monopolies, trade unions, import tariffs, etc.). These abstractions are not invalid, as long as we do not suggest that they represent reality. The question is: was marginal utility the right abstraction?

An early hint that it was not came in the marginalists’ attitude to crisis. They were so convinced of capitalism’s inner tendency towards equilibrium that they assumed crises must be produced by non-economic factors. Jevons, in all seriousness, suggested the
Long
Depression, beginning in 1873, was simply the latest in a series of regular fluctuations caused by ‘some great and widespread meteorological influence recurring at like periods’ – that is, by sun-spots.21

Textbook economics is today built on marginalism’s discoveries. But in the pursuit of maths over ‘political economy’, the marginalists created a discipline which ignored the production process; reduced the

149


149

psychology of the deal to a two-dimensional balance between pleasure and pain; saw no special role for labour
; discounted the possibility of economic laws acting at a deep, unobservable level, independent of the rational will of human beings; and reduced all economic agents to traders, abstracting away from class and other power relationships.

In its purest form, marginalism denied not only the possibility of exploitation, but of profit as a specific phenomenon. Profit was just the reward for the utility of something the capitalist was selling: their expertise or, in later forms of the theory, their abstinence – that is, the ‘pain’ they suffered during the act of accumulating their capital. Marginalism was, in short, highly ideological. It introduced a blindness to the problems of distribution and class that still blights professional economics, and a profound lack of interest in what goes on in a workplace.

Marginalism emerged because managers and policymakers alike needed a form of economics that

 One aspect of Marx’s theory is counterintuitive. Surely increased productivity must increase the ‘quality’ of the labour? Almost all new machines and workplace reorganizations bring new qualities to our work. But insisting that the value of the labour remains unchanged by productivity gains is just a way of saying that it is machines, management technique, and knowledge that bring the productivity gain, not a change in the quality of labour itself. They become a ‘force multiplier’ for human labour, which remains the same basic thing.


was bigger than accountancy but smaller than a theory of history; it had to describe in detail the way the price system worked – and in a way that took no interest in class dynamics or social justice.

Carl Menger, the Austrian economist, summed up the inner psychological motivation for marginalism in a famous attack on Smith and Ricardo. They were obsessed with ‘the welfare of man in the abstract, about remote things, about things which did not yet exist, about future things. In this effort [they] … overlooked the living, justified interests of the present.’ The aim of economics, according to Menger, should be to study the reality that capitalism produces spontaneously, and to defend it against the
‘one-sidedly rationalistic mania for innovation’ which
‘contrary to the intention of its representatives inexorably leads to socialism’.22

Marginalism’s obsession with the continuous present, its hostility to future things, made it a brilliant model for understanding forms of capitalism that do not change, mutate or die.

Unfortunately these do not exist.

WHY IT MATTERS …

Why, in the era of big data, Spotify and highfrequency trading, should we be raking over a debate

150


150

from the mid-nineteenth century?

For one thing, because it explains the pig-headedness of present-day economics in the face of systemic risk.
Economics professor Steve Keen points out that present-day marginalism – by reducing everything to the doctrine of ‘efficient markets’ – actually contributed to the collapse. Mainstream economists made ‘an already troubled society worse: more unequal, more unstable and less ‘efficient’.23

But there is a second reason, to do with how we describe the dynamics of info-capitalism. 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.’24

Tell that to the makers of Game of Thrones: the pirated version of Episode 2 of its 2014 series was illegally downloaded by 1.5 million people in the first twentyfour hours.25

Information goods exist in potentially unlimited quantities and, when that is the case, their true marginal production cost is zero. On top of this, the marginal cost of some physical info-tech (memory


storage and wireless bandwidth) is also collapsing towards zero. Meanwhile, the information content of other physical goods is rising, exposing more commodities to the possibility that their production costs begin to plummet too. All this is eroding the very price mechanism that marginalism describes so perfectly.

The economy at present, consists both of scarce and abundant goods; our behaviour is a mixture of the old pleasure-vs-pain choices, made in our own selfinterest, alongside sharing and cooperation, which seem to the marginalists like sabotage.

But in a full information economy – where much of the utility was provided through information and physical goods were relatively abundant – the price mechanism as described by marginalism would fall apart. Because marginalism was a theory of prices and prices only, it cannot comprehend a world of zero-priced goods, shared economic space, nonmarket organizations and non-ownable products.

But the labour-theory can. The labour-theory actually predicts and calibrates its own demise. That is, it predicts a clash between the social forms driving productivity and productivity itself.

The labour-theory, as outlined by Marx, predicts that automation can reduce necessary labour to amounts

151


151

so small that work would become optional. Useful stuff that can be made with tiny amounts of human labour is probably going to end up being free, shared and commonly owned, says the theory. And it is right.

KARL MARX AND THE INFO-MACHINES

Let’s restate what Marx called the ‘law of value’. The price of everything in the economy reflects the total amount of labour used to make it. Productivity gains derive from new processes, machines, reorganizations – and each of these comes at a cost, in terms of the amount of labour it took to create it.
In practice, capitalism escapes the tendency of innovation to shrink the labour content of the economy, and thus shrink the ultimate source of profit, because it creates new needs, new markets and new industries where labour costs are high, so there are more wages to drive consumption.

Info-tech is just the latest outcome of an innovation process lasting 250 years. But information injects a new dynamic. Because with info-tech you can have machines that cost nothing, last for ever and do not break down.

If somebody tried to sell the Bangladeshi factory boss a sewing machine that lasts for ever he would probably choke on his breakfast. However, he is quite


happy to buy software. Software is a machine that, once built, will last for ever. Sure, it can be made obsolete by newer software, but the world is full of old software that – if the right hardware could be found to run it – could run for ever.

Once the design cost is incurred, the cost of producing software is reduced to the cost of the media it is stored on or flows through: the hard drive or the fibre network. That, plus upgrading it and maintaining it.

And these costs are plummeting exponentially. The cost of printing one million transistors on to a piece of silicon has fallen from a dollar to 6 cents in ten years. Over roughly the same period, the cost of one gigabyte of storage has fallen from a dollar to 3 cents; and the cost of a one megabit broadband connection has fallen from $1,000 in the year 2000 to $23 today.
Deloitte, who did these calculations, describes the falling price of basic info-tech as exponential: ‘The current
 pace
 of
 technological
 advance
 is
 unprecedented in history and shows no signs of stabilizing as other historical technological innovations, such as electricity, eventually did.’26

It has become commonplace to think of information as ‘immaterial’. Norbert Wiener, one of the founders of information theory once claimed: ‘Information is information, not matter or energy. No materialism

152


152

which does not admit this can survive at the present day.’27

But this is a fallacy. In 1961, IBM physicist Rolf
Landauer proved, logically, that information is physical.28
He
 wrote:
 ‘Information
 is
 not
 a
 disembodied abstract entity; it is always tied to a physical representation. This ties the handling of information to all the possibilities and restrictions of our real physical world, its laws of physics and its storehouse of available parts.’29

Specifically, he showed that information processing consumes energy and it should be possible to measure the amount of energy used in deleting one
‘bit’ of information. In 2012 a team of scientists built a tiny physical model demonstrating ‘Landauer’s
Rule’.30

So information is a product that costs energy to produce and exists as matter. Bits take up room in reality: they consume electricity, give off heat and have to be stored somewhere. Google’s famous Cloud is in fact acres of air-conditioned server farm space.

But Wiener was right to understand that the product of a computing process is qualitatively different from other physical products.

The real wonder of information is not that it is


immaterial but that it eradicates the need for labour on an incalculable scale. It does all the things a machine does: it substitutes cheap labour for skilled labour; it eradicates labour altogether for some operations, and it makes new operations possible that no previous forms of labour could have achieved. The new information produced by a computer has a use value, or utility, massively in excess of its component parts.

But the amounts of labour value embodied in information products can be negligible. And once knowledge becomes truly social – as Marx imagined with the concept of the ‘general intellect’ – some of the value is contributed for free, as follows:

Information goods naturally leverage general scientific knowledge

Their users feed back, in realtime, data that allows them to be improved, for free

Any improvement in knowledge somewhere can be implemented in every machine deployed everywhere, immediately.

For example, the internet protocol, invented in 1974 and published for free, is a ‘standard’, not a product.
But it is not the same as, say, the safety standard the garment factory is supposed to adhere to. It is more

153


153

like the electricity grid a factory draws power from: it is materially useful. And it is free.

What happens if you insert some of this free machinery into the labour theory of value? Marx, it turns out, had actually thought this through.

In the Grundrisse, Marx says: if a machine costs 100 days’ worth of labour power to make, and wears out in 100 days, it’s not improving productivity. Much better to have a machine that costs 100 days but wears out over 1,000. The more durable the machine, the smaller the amount of its value chipped off into each product. Taking this to its logical extreme, what you ideally want is a machine that never wears out, or one that costs nothing to replace. Marx understood that, in economic terms, they are the same thing: ‘If capital could obtain the instrument of production at no cost, for 0, what would be the consequence? Surplus value [would be increased], without the slightest cost to capital.’ He lists two ways in which, even in the nineteenth century, capitalism was getting just such a free hit: from the reorganization of workflow, and through scientific advances. Marx then writes: ‘If machinery lasted for ever, if it did not itself consist of transitory material which must be reproduced … then it would most completely correspond to its concept.’31

We should shudder in awe at this incredible insight,


written by gaslight in 1858: that the ideal form of a machine is one made of material that does not wear out, and which costs nothing. Marx is not here speaking about the immaterial but of non-transitory material: that is, something that does not degrade.

Machines where parts of the value are input for free by social knowledge and public science are not alien concepts for the labour-theory. They are central to it.
But Marx thought that if they existed in large numbers they would explode the system based on labour values – ‘blow it sky high’, as he says in the
Fragment on Machines.

The worked example Marx uses in the Grundrisse makes it clear: a machine that lasts for ever, or can be made with no labour, cannot add any labour hours to the value of the products it makes. If a machine lasts for ever, it transfers a near-zero amount of labour value to the product, from here to eternity, and the value of each product is thus reduced
.*

Of course, in reality, physical machines do not yet last for ever; but what we’ve seen in the past fifteen years are machines whose utility derives from the information used to run them, design them or make

 Marx writes: ‘Suppose a capitalist invests $1000, including $200 on machinery, and makes $50 a year. In four years the machine is paid for and thereafter, in value terms, it is as if the capital is only worth $800.’

154


154

them. And only the labour-theory can properly comprehend what it means economically, if the world of physical objects becomes alive with information.

WHEN MACHINES THINK

In 1981 I worked for a few months as a press operator in a small engineering factory next to the River
Mersey. The stamping press worked on a mixture of electricity and compressed air: when you pulled a lever, it hammered a machine tool down on to a metal disc, bending it into shape. My job was to put the disc on the die, pull the lever and get my fingers out of the way before the guard came down. It was unskilled work, about ten repetitions per minute, and there were always a huge number of defective discs.
There was no information feedback mechanism in the stamping press at all; and nothing was automated bar its single physical hammering motion.

Above me were two tool setters, semi-skilled men who fixed the tool in the machine and realigned it every few hours. In the next room were the skilled metalworkers who made the tools. They never spoke to us. However, what we all shared was this: without the skill of our fingers and a keen eye for defects, inherent danger and faulty processes, nothing in the factory worked.