The Post-Scarcity Economy (Posted by Jim) by der Augenblick

There's a fascinating article in the Spring 2009 issues of h+ Magazine (link takes you to the online version—the article starts on page 37).

The author, Jason Stoddard, claims the current financial crisis is the first step on the way toward a post-scarcity economy in which our notion of value is overturned.

But what if advances in manufacturing efficiencies make it possible to live well, simply by interacting with friends and going about your life? What if below-replacement-level birth rates and advances in biotechnology meant you could check out of the system by claiming a piece of unused desert and planting a house? This surveillance economy might be a very easy place to live.

Stoddard is raising a possibility I raised in my earlier post on automation and capitalism, namely that advances in our current social networking technologies, combined with the seamless interface between computing and reality that will come with the internet of things (listen to this talk for more information), will revolutionize the way we both produce and distribute surplus-value. This will happen before we reach a post-scarcity economy.

The possibilities once we reach a post-scarcity economy (through nanotechnology or something else) are almost limitless. What few people are saying—Stoddard stops short of saying this, too—is that capitalism is unintelligible under such circumstances. If necessary labor consists in—to put it bluntly—screwing around with your friends and having a good time, if that's the way we acquire our means of subsistence, then there effectively is no barrier between ourselves and social wealth. If one can take the current emerging paradigm of decentralization emerging now and extrapolate it a decade or two into the future, a paradigm of radical democracy and effortless participation takes shape. It would be a self-sustaining, self-growing, undirected, democratic and organic communist system.

Timeline for Accelerating Political/Social Change (Jim) by der Augenblick

It's a lot of fun reading timelines for things like the technological singularity or even just the implementation of robots in our economy. But have you ever wondered what a political/economic/social timeline would look like? I decided to put a short one together, just for fun.

2010 - We show signs of emerging from the recession we're currently in, but the rate of job growth is less than what it was at the beginning of the recession, i.e., another "jobless recovery".

2013 - We begin to enter another recession, deeper and longer than the one we're currently in. Tremendous job loss forces the federal government to take larger role in ensuring people have necessities, though relative weakness of the government compared with social democracies makes this difficult and somewhat inefficient. Still, we get by.

2017 - Again we recover from the recession, but recovery is again less than it was last time. This is owing to the vast number of jobs that have been automated. New jobs in the information technology sector are not sufficient to make up for it.

2019 - The economy enters recession again. Unprecedented job losses seizing the entire world. Unprecedented interventions from world governments manage to keep the economy going, though they are incredibly inefficient compared with the market forces they are attempting to replace.

2020 - Period of perpetual economic crisis begins. Permanent recession. Internet 3.0, the "internet of things", is ubiquitous. Production processes increasingly automated but also democratized through the next generation of social/material networking technologies.

Mid 20s - Capitalism is in severe crisis. It can't prop itself up anymore by means of market forces alone. The state can no longer prop it up in a way that is profitable. This is not localized either but is global. Growing demand for the basic necessities of life, but a smaller and smaller role left for the state. Needs are increasingly met through an organized though decentralized process which takes place over the "internet".

2025-2030 - Drastic fall in the cost of means of subsistence. Large portions of the means of subsistence are removed from the value-form all together. By the 30s food, housing, and medicine are free due to the ease with which they're produced by automated labor. Due to exponential increases in information technology and robot design, work becomes obsolete. "Unemployment" nearing 85% of the global population makes the category almost meaningless.

2030 - Though there are perhaps isolated markets, capitalism as a world system no longer exists. Neither markets nor state control of production even approached the efficiency with which the fully automated, open source economy operates. The state still exists, though it is more and more restricted to policing information, protecting against identity theft, etc.

2040 and beyond - There is no longer any state or economy as we understand them now. Society is fully "online", though the distinction between the internet and the world (and indeed machine and person) no longer exists. Flow of information and personal identity completely impossible to protect or regulate from the outside. World intelligence system totally self-regulating and communistic.

Obviously I'm just making this up—even Marshall Brain doesn't think we'd have that much automation that early. But I really haven't seen a lot of timelines like this alongside the technological ones. People seem to assume that capitalism will coexist indefinitely with this kind of explosion, and that just seems preposterous to me. But I think this is something we need to start thinking about. We need to extrapolate political, social, and economic change into the future just like we do with technology.

What's your timeline look like? Post it here.

Automation and the End of Capitalism (Jim) by der Augenblick

I wanted to write a quick addendum to Rob's post on Marshall Brain's talk about robotics and employment.

At the end of his talk Brain says the only logical plan of action given the inevitability of the massive unemployment (50 million people) and concentration of wealth that will result from full automation of labor in the next decade is to "restructure the economy" or "redesign society". Brain summarizes the way we should redesign society in four points:

• Spread the benefits of productivity increases to everyone



• Break the concentration of wealth



• Increase pay



• Reduce the work week

Brain doesn't provide a lot of details for what these actions would involve, though of the last one, reducing the work week, he says we should reduce it from 40 hrs to 30 hrs to three days to two days—until we are all "perpetually on vacation".

To put the point bluntly, Brain describes communism. Notwithstanding some of the particularities given by various thinkers—Marx even remarks at one point that we will enjoy work under communism—communism has always involved two things: (1) the distribution of labor and the distribution of the product of labor is planned and not determined by the market, and (2) we are freed of the compulsory aspect of labor. The struggle against capitalism is a struggle against the imposition of labor. It is in most cases a struggle to get more use-values for less exchange-value or to get use-values without any exchange-value attached to them.

Same thing without the jargon: communism means everyone gets as much as possible by working as little as possible.

Clearly this was impossible under conditions of scarcity. Yet technologists, engineers, scientists, and inventors all seem to agree that we are fast approaching the point where scarcity will end—if we're not there already. The question is whether the scarcity we experience now and will experience in the future is the result of nature or whether it is the result of the unplanned system we live in. Brain argues that if we continue down the current path—letting market forces stand in for conscious decisions—this technology will hurt humanity, not benefit it. But if we make conscious, rational choices about how society as a whole ought to proceed with the implementation of this technology, it can benefit everyone. In fact, it is the only way it can benefit everyone and not hurt them. That is the first way in which Brain's solution negates the fundamentals of capitalism: he says we ought to bypass the market and make conscious, direct choices about the distribution of labor and the distribution of the fruits of labor in our society.

What he does not mention—and what I would emphasize—is that the ubiquity and growth of social networking technologies lays the foundation for total, conscious, decentralized, and democratic planning of the production process and the democratic distribution of the surplus-product. Communist planning in a technologically advanced world will neither resemble "administered", Soviet-style economies, nor will it reflect market forces. The current trajectory of the development of the productive forces makes this both possible and necessary.

The second way in which he bypasses capitalism is by raising the demand that we be "perpetually on vacation". He claims the only solution to the looming crisis—a crisis which we see now only in miniature—is to demand an end to the condition of forced labor. While it may appear as though capitalism is a system in which workers individually and voluntarily contract out their labor in exchange for a wage, the fact of the matter is that the working class as a whole is enslaved by the capitalist class as a whole. Every product of labor takes the commodity form. Unlike past civilizations, we do not even keep the means of subsistence. Therefore, in order to acquire access to the means of subsistence, we must work in exchange for a wage, and we exchange that wage for the means of subsistence. Money stands as the barrier between us and what we create. It is an indirect, abstract form of slavery, but it is a form of slavery nevertheless. We are not enslaved to any one particular individual; however, we are enslaved to the value-form itself. We cannot live except by working for another person, and our share of the product of labor is determined by unconscious, unplanned market forces.

But the demand for communism is the demand that we workers as a whole, rather than having to access the product of our labor only to the extent that the non-workers want us to, instead collectively have direct control over the product of our labor. This means that, as a society, we give of ourselves what we consent to give, and we take what it is reasonable to take. Given the inevitable conditions of superabundance of products approaching, the extent to which we can take approaches infinity. Given the inevitable, exponential rise in the productivity of labor, the amount of our labor we can consent to give approaches a value of zero.

We are fast approaching the point where if we do not meet anti-capitalist demands, the vast part of humanity will sink into misery. Brain demonstrates this in his talk. Yet we are approaching a point—just behind the first point—where the conditions that make capitalism possible will no longer exist. Moreover, we are creating the point where access to social wealth is necessarily decoupled from exertion. We are making necessary a transition from a liberal democratic society to a revolutionary democratic one.

Paul Volcker: Capitalism will survive, but not all of it (Jim) by der Augenblick

Reply to the David Graeber article Brian posted (Jim) by der Augenblick

I thought Graeber made an interesting point in the article Brian posted yesterday:

For at least 5,000 years, before capitalism even existed, popular movements have tended to center on struggles over debt. There is a reason for this. Debt is the most efficient means ever created to make relations fundamentally based on violence and inequality seem morally upright. When this trick no longer works everything explodes, as it is now. Debt has revealed itself as the greatest weakness of the system, the point where it spirals out of control. But debt also allows endless opportunities for organizing.

This is absolutely right. The trick with debt is that it’s made to appear as a function of personal responsibility. Those who are responsible don’t get into debt they can’t pay back. If you’re in debt now and can’t pay it back, that’s your problem. You shouldn’t have borrowed the money in the first place.

The problem with this appeal to personal responsibility is twofold. First, if it’s an individual problem, they how can the problem be so general? According to this article “There were 145,000 home foreclosures last year -- a 21 percent increase from 2007 and a 108 percent increase from 2006. Another 11,000 families lost their homes in January alone.” The problem isn’t one of personal responsibility. It’s a systemic problem. Something went wrong beyond people’s personal choices. Choices don't exist in a vacuum. Holes are dug, and people are pushed toward them.

That brings us to the second problem: even if this couldn’t have happened without individuals making bad personal choices about their own money, it’s definitely a general, societal problem now when you consider how things have spiraled out of control as a result of it. The point has already long past where we can sanctify debt. What we need now is for companies like Countrywide to be forced by the government to get off of people’s backs and let them keep their homes. And if the government won’t force them to do it, we need to form a debtors’ union and collectively negate our debts.

Graeber sounds lukewarm on this proposal though. See what he says next:

Some speak of a debtors’ strike or debtors’ cartel. Perhaps so, but at the very least we can start with a pledge against evictions. Neighborhood by neighborhood we can pledge to support each other if we are driven from our homes. This power does not solely challenge regimes of debt, it challenges the moral foundation of capitalism.This power creates a new regime.

I mean, I guess. To respond to the idea of government intervention in the debt crisis or worse, to respond to the idea of a debtors’ union with a “perhaps”, in favor of a “moral” challenge to capital seems hopelessly perfectionistic and idealistic to me. While I'm not intimately familiar with Graeber's line, I suspect it comes from this general view that the only institutions that have the moral right to challenge capital are those that reflect the will of the people in a direct, almost mystically immediate way. A lot of leftists are skeptical of a debtors' union because they're skeptical of unions in general. They’re skeptical of the “traditional” organs of working class struggle, the ones that don’t really end up representing the people, after all.

Surely we need both. We need to turn around the moral logic of personal responsibility and constantly point out the ways in which capitalism is a system of slavery and theft, even in the relatively affluent United States. We need to mediate so-called personal problems with general categories and concepts, showing how what appears to be personal in fact exemplifies class antagonisms fundamental to the capitalist mode of production. But we also need to take a practical point of view with regard to these criticisms, and that means utilizing to the greatest degree possible all the institutions and organizing technologies at our disposal, not just the sexy, radically decentered ones. Our orientation should not just be moral or practical. It should be political. That means creating new institutions that adequately express working class power, but it also means seizing power from the hands of our masters, taking over their institutions, and wielding that power against them with impunity.

Bank of America - Class Action Lawsuit (Jim) by der Augenblick

Bank of America has settled a class action lawsuit over its dirty overdraft trick: things like approving transactions that generate overdraft fees, for example, or clearing transactions in high-to-low order to increase the number of overdrafts. If you're a former customer of BoA, Fleet, LaSalle Bank or United Trust Company, you can claim your part of the settlement fund.

Here's a direct link to the lawsuit website where you can register. If the class action lawsuit is approved over the summer, you could receive $78.

Folks, we take too much of the shitty treatment of these institutions for granted. It's bad enough that we're forced to work for the capitalist class in order to acquire the money to purchase the means of subsistence. It's bad enough that they steal wealth from us left and right. And on top of this, they also charge us to use our own money and utilize every sneaky, underhanded practice they can to steal from us in addition to that.

Overdraft fees are not a punishment for irresponsible consumption. They are a hole the finance capitalist class digs for us and toward which they push us. It's not the principal way they make their money. It's just a gratuitous way they can laugh in our faces while they keep their feet on our throats.

We need not only to demand they end these degrading, humiliating practices. We need to demand these people, this class, no longer exist. They produce nothing. They only take. They get bailed out at our expense. They have no right to exist. They should not only not be bailed out. They should be eliminated. They infuriate me. I hate them.

P.S. - If you have an account with them, you get to go to museums for free the first weekend of every month. Milk em for it. But what we really need is a Museum of the Past, a museum where children and adults can go and look at dioramas of bank lobbies, where they can press buttons and hear recordings of frustrating phone conversations between patients and HMOs, and where they can look in glass cases and see greasy samples of the worthless pieces of metal and paper that once stood as a barrier between whole of humanity and the product of its blood and sweat.

What is the tendency of the rate of profit to fall? (Jim) by der Augenblick

There's been some mention on this blog and on the list of the "tendency of the rate of profit to fall" over the past few months. For those who lack of the benefit of a comprehensive grasp of Marx's critique of political economy, I thought I would provide a brief, easy-to-understand explanation of this phenomenon and the argument Marx gives for it.

The law of the tendency of the rate of profit to fall concerns the rate of profit, so that's the first thing we need to define. Marx defines the rate of profit as:

s /(c + v)

"s" is defined as the value of surplus-labor, "c" is defined as the value of constant capital, and "v" is defined as the value of variable capital. Your work day is divided into labor you're compensated for in the form of a wage and labor you're not compensated for but which you perform gratis for the capitalist. Marx calls the value of the labor you're compensated for "variable capital" (represented by "v" in the equation). Marx calls the value of the labor you perform for free "surplus-value" or "s". The value of constant capital - "c" - is the value laid out for the means of production: things like heavy machinery and the building the labor takes place in, but also computers and whatever other labor-saving techniques the capitalist can use.

Imagine the capitalist starts with a lump sum of money, say, $100, and he spends $20 of that on labor and $80 on means of production. The $20 represents the value of labor, or "v", and the $80 represents the value of the means of production, or "c". Whatever the capitalist gets out of the production process over and above what he lays out is his profit, represented here by "s". So you can see the rate of profit is nothing other than the ratio of the value of his profit to the value of what he starts with.

An increase in productivity lowers v toward 0. This is because an increase in productivity (via scientific labor management techniques, introduction of machinery, etc.) makes the worker generate more value in less time, so a fortiori he produces his means of subsistence in less time. This means necessary labor is finished in less time. Variable capital is what is paid out as the equivalent of necessary labor. Therefore, increased productivity lowers v toward 0.

Consider the ratio of surplus-value ("profit") to variable capital ("wages"), or s/v. If v goes toward zero, the value represented by s/v goes toward infinity. (You divide a given quantity, s, by an infinitely shrinking quantity, v.) But even if this is the case, there is still a limit on how high s can rise, since s is still determined by things like the number of workers you have, the length of the working day (which can't approach 24 hours), and the upper limit on the intensity of physical and mental endurance. So in fact, even if you increase the number of workers, the length of the working day, and the intensity of work, the rate of profit
(s/(c+v)) tends not toward infinity but rather to s*/(c+v), where s* is the upper limit determined by the number of workers you can have, the length of the work day (limited to less than 24 hrs), and the intensity a human can possibly stand even with the aid of machines or computers. This is the case even as v approaches zero.

What raises the productivity of the worker, thus reducing v, is the "relative surplus strategy": introduction of machinery, increasing the intensity of work, utilizing scientific management of labor, etc. This raises what Marx calls the "organic composition of capital", which is nothing but the ratio of the means of production utilized and the labor power utilized in any operation. Increasing the organic composition of a particular capital means you use more machinery, more computers, more technology, more "dead labor" for each living, present worker you employ. But there is no theoretical limit to the rise in the organic composition of capital the way there is a limit to the other things. Therefore, in s*/c, the c (the value of the means of production you can employ) can rise continually. s* is in fact limited, but c is not, so the value s*/c will fall, i.e., its value
will diminish.

The tendency of the organic composition of capital to rise means that it becomes harder and harder to extract surplus-value. As you use more machinery and make the worker more productive, you need to invest larger and larger sums of money to get the same profit back.

Does that make sense?

Marx believes the tendency of the rate of profit to fall is a cause of crisis. It is inherent in the process of capitalist accumulation, and it leads one part of that process—namely, the production process—to "seize up".

However, you should note that the accumulation process is more than the production process. It also includes the process of purchasing labor-power and the means of production on the market. It also includes selling the product of labor. According to Marx, each step of the accumulation process is fraught with the potential for crisis, because capitalism is an unplanned system of production and circulation of the product of labor. While the tendency of the rate of profit to fall explains crisis arising from the labor process, it does not explain crises in other portions of the accumulation process. In order to explain those potentials for crises, Marx utilizes theories of overproduction and underconsumption.

You can read a short, accessible account of these theories in Robert Tucker's (ed) The Marx-Engels Reader. The essay is called "Crisis Theory (from Theories of Surplus-Value)".

Legacy of communism: MOAR COMMUNISM?? (Jim) by der Augenblick

Meanwhile, the collapse of communism may turn out to have been an essential contributor to the collapse of the world capitalist system:

The world capitalist economy is collapsing. The rightist pro-capitalist regimes that have been ruling these countries since the early 1990s are imposing severe cuts on the remaining social safety-net programs. As a result, workers are rising up in protest.

And workers are occupying factories in Ukraine:

Workers have occupied an engineering plant in Ukraine demanding payment of owed wages, nationalisation of the plant, and production of socially useful machinery. Today at 9.30am more than 300 workers occupied the administrative building of Kherson Engineering Plant. The workers are demanding payment of wages, nationalization of the plant without compensation to its owner and have declared their intention to occupy the building until their demands are fulfilled in full.

Factory guards did not resist seriously, and no workers were hurt. A council of workers elected the previous day is in charge of the building.

Obama on Nationalization (Jim) by der Augenblick

Looks like Treasury overpaid last fall when buying up troubled assets under TARP.

Elizabeth Warren, chairwoman of the Congressional Oversight Panel for the bailout funds, told the Senate Banking Committee on Thursday that Treasury in 2008 paid $254 billion and received assets worth about $176 billion.

This is bad, but what's worse is that the bad banks plan will probably repeat the mistake.

A lot of people hoped Obama would be a super-star coming right in, and there'd be quick, correct, decisive action that would produce real results. Unfortunately the reality is that there's a learning curve—a collective learning curve that involves shifting the political-economic paradigm in the United States step by step, out of necessity. You can think of it as a Bildungsroman with your retirement, livelihood, and, uhhh, food and water supply playing a supporting role.

The question right now is, how long until nationalization? Roubini, as quoted on Calculated Risk, says:

So, the current strategy – Plan A - may not work and the Plan B (or better Plan N for nationalization) may end up the way to go later this year. Wasting another 6-12 months to do the right thing may be a mistake but the political constrains facing the new administration – and the remaining small probability that the current strategy may by some miracle or luck work – suggest that Plan A should be first exhausted before there is a move to Plan N. Wasting another 6-12 months may risk turning a U-shaped recession into an L-shaped near depression but currently Plan N is not yet politically feasible.

This basically fits with my understanding of what's going on right now. There are political barriers right now—barriers reinforced by the "culture" in America—but necessity is going to remove them. And very shortly.

ETA: Roubini and Taleb discuss the crisis:



I think what Roubini and Taleb are saying represents the next "stage" in the development of the mainstream's attitude toward the crisis. It's the logical continuation of the outrage at the mismanagement and greed, coupled with the inability of the current managers of finance capital to do their jobs. There's a general feeling that we need to move away from the debt-centered economy to something more "robust", and Taleb reflects that attitude here. Of course it's going to turn out that "robust" means moving toward a system the sole focus of which is not the valorization of value but rather the delivery of the means of subsistence to people in general. That may seem modest, but it will in fact require a massive overhaul—a revolution—of the current way we organize and carry out the production of our lives.

Class struggle developing in the White House? (Jim) by der Augenblick

Article in the New York Times today: Geithner Said to Have Prevailed on the Bailout. And over whom has Geithner prevailed? Dissenting voices in his own administration:

In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.

Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid.

He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid.

Yves Smith at Naked Capitalism is calling the Geithner plan a fiasco:

In other words, Geithner followed the Paulson script of pushing hard to make the bailout industry friendly, to the extent of compromising the effort to get the plan fleshed out in adequate detail.

Smith is probably right that the plan won’t be much better than the one we got last fall from Paulson, though I think her general pessimism is misplaced. Geithner’s plan prevailed over countervailing opposition from David Axelrod and others within the Obama administration pushing for far more radical control over the banks we’re bailing out. It makes sense that the Obama administration would divide internally over how to deal with this problem and many others. Obama wasn’t elected by the left on a platform of social-democracy. He was elected by a coalition of students, white collar workers, blacks, and disaffected Republicans. The economy is the issue where mainstream American politicians tend to be the most conservative. The fact that the Obama administration is governing from the center and even from the same position as Bush on these issues at the moment shouldn’t come as a surprise.

Nevertheless, due to the severity of the situation we’re facing—the worst economic disaster of a generation, possibly a century—I expect the tone coming out of the White House to change rapidly. If this banking bill doesn’t sufficiently turn things around, it’s going to strengthen voices of opposition within the Obama administration, and we can expect even a drastic push to the left: not just caps on executive pay but also greater control over what institutions can do with bailout money. Geithner could easily be gone in a year.

The problem with Smith’s analysis and the analysis of those who take a “screw the Democrats” line isn’t that their criticisms of the plan are flawed but rather that they don’t take a nuanced-enough attitude toward politics in general. The Obama administration is hardly a homogenous body—to say nothing of the Democratic Party as a whole. The diverse interests present in the administration reflect the diverse class interests that brought Obama to power. While the interests present in the Bush Administration were uniform by comparison—representing a Dukes of Hazard mentality toward the world—one can begin to see the rudiments of actual class struggle playing out in the White House. I say “rudiments”, because there is hardly an open struggle right now between the interests of the people and the interests of the bourgeoisie. But it’s going to be impossible for Obama to continue to govern in the interests of a portion of his constituency which is growing in power while at the same time catering to the received wisdom of the financial markets that got us where we are. People are really fed up not just with the greed but with the seeming arbitrariness of the whole system, they want substantive change, and they’re not going to be able to get it so long as the Obama administration keeps one foot in the policies of the Bush administration. The class conflict we see playing out in the open is going to push him further to the left.