<nettime> The $100bn Facebook question: Will capitalism survive 'value abundance'?

[Brian Holmes <bhcontinentaldrift@gmail.com>]

For years I have been dismayed by a very common refusal to think. The 
dismaying part is that it's based on the work of European history's 
greatest political philosopher, Karl Marx. It consists in the assertion 
that social media exploits you, that play is labor, and that Facebook is 
the new Ford Motor Co.
Now, there are all kinds of things wrong with social media, and I don't 
even use it. But even I can recognize that it doesn't exploit you the 
way a boss does. It emphatically _does_ sell statistics about the ways 
you and your friends and correspondents make use of your human faculties 
and desires, to nasty corporations that do attempt to capture your 
attention, condition your behavior and separate you from your money. In 
that sense, it does try to control you and you do create value for it. 
Yet that is not all that happens. Because you too do something with it, 
something of your own. The dismaying thing in the theories of playbour, 
etc, is that they refuse to recognize that all of us, in addition to 
being exploited and controlled, are overflowing sources of potentially 
autonomous productive energy. The refusal to think about this - a 
refusal which mostly circulates on the left, unfortunately - leaves that 
autonomous potential unexplored and partially unrealized.
Here, in an absolutely luminous text, Michel Bauwens shares liberating 
thoughts about what you might call a practical and present utopia.
If you want to read it with the multiple links included, just go to this 
location on one of my favorite global idea-aggregators, Al Jazeera:
http://www.aljazeera.com/indepth/opinion/2012/02/20122277438762233.html

Best to all, and thanks to Michel for a beautiful text. - BH

***

The $100bn Facebook question: Will capitalism survive 'value abundance'?

--Michel Bauwens

Does Facebook exploit its users? And where is the $100bn in the 
company's estimated value coming from?
This is not a new debate. It resurfaces regularly in the blogosphere and 
academic circles, ever since Tiziana Terranova coined the term "Free 
Labour" to indicate a new form of capitalist exploitation of unpaid 
labour - firstly referring to the viewers of classic broadcast media, 
and now to the new generation of social media participants on sites such 
as Facebook. The argument can be summarised very succinctly by the catch 
phrase: "If it's free, then you are the product being sold."
This term was recently relaunched in an article by University of Essex 
academics Christopher Land and Steffen Böhm, entitled "They are 
exploiting us! Why we all work for Facebook for free". In this 
mini-essay, they make a very strong claim that "we can certainly 
position the users of Facebook as labourers. If labour is understood as 
'value producing activity', then updating your status, liking a website, 
or 'friending' someone, creates Facebook's basic commodity."
This line of argument is misleading, however, because it conflates two 
types of value creation that were already recognised as distinct by 18th 
century political economists. The distinction is between use value and 
exchange value. For thousands of years, under conditions of 
non-capitalist production, the majority of the working population 
directly produced "use value" - either for themselves as subsistence 
farmers, or as tributes to the managerial class of the day. It is only 
under capitalism that a majority of the working population produces 
"exchange value" by selling their labour to firms. The difference 
between what we are paid and what the market pays for the products we 
are making is the "surplus value".
But Facebook users are not workers producing commodities for a wage, and 
Facebook is not selling these commodities on a market to create surplus 
value.
Indeed, Facebook users are not directly creating exchange value at all, 
but instead communicative use value. What Facebook does is to enable 
this pooling of sharing and collaboration around their platform - and by 
enabling, framing and "controlling" that activity, they create a pool of 
attention. It is this pool of attention which is sold to advertisers, 
for an estimated $3.2bn per year, which is barely $3.79 in ad revenue 
per user.
We can, of course, argue that Facebook does a lot more than just selling 
the attention. For instance, their knowledge of our social behaviour, 
down to the individual level, has undoubted strategic value - for 
political power players and commercial firms alike. But is this surplus 
value really worth $100bn? That remains a speculative bet. For the 
moment, it's likely that the nearly one billion users of Facebook do not 
find the $3.79 in ad revenue per user very exploitative, especially 
since they do not pay to use Facebook, and are using the website 
voluntarily. That said, there is a price to pay for not using Facebook, 
in terms of relative social isolation from their peers who are users.
Engineering scarcity

What is important, however, is that Facebook is not an isolated 
phenomenon, but part of a much larger trend in our society: an 
exponential rise in the creation of use value by productive publics, or 
"produsers", as Axel Bruns calls them. It is important to understand 
that this creates a huge problem for a capitalist system, but also for 
workers as we have traditionally conceived them. Markets are defined as 
ways to allocate scarce resources, and capitalism is in fact not just a 
scarcity "allocation" system but also a scarcity engineering system, 
which can only accumulate capital by constantly reproducing and 
expanding conditions of scarcity.
Where there is no tension between supply and demand, there can be no 
market and no capital accumulation. What peer producers are doing, for 
now mostly producing intangible entities such as knowledge, software and 
design, is to create an abundance of easily reproduced information and 
actionable knowledge.
This cannot be directly translated into market value, because it is not 
at all scarce - it's over-abundant. And this activity, moreover, is done 
by knowledge workers, whose ranks are steadily expanding. This 
over-supply threatens to make knowledge workers' jobs precarious. Hence, 
an increased exodus of productive capacities, in the form of direct use 
value production, outside the existing system of monetisation, which 
only operates at its margins. In the past, whenever such an exodus 
occurred - of slaves in the decaying Roman Empire, or of serfs in the 
waning Middle Ages - that is precisely the time when conditions were set 
for major societal and economic changes.
Indeed, without a core reliance on capital, commodities and labour, it 
is hard to imagine a continuation of the capitalist system.
The problem is this: internet collaboration has enabled the creation of 
use value in a way that totally bypasses the normal functioning of our 
economic system. Normally, increases in productivity are somehow 
rewarded, and these rewards enable consumers to derive an income and buy 
products.
But this is no longer happening. Facebook and Google users create 
commercial value for their platforms, but only very indirectly. And they 
are not at all rewarded for their own value creation. Since what they 
are creating is not what is commodified on the market for scarce goods, 
these value creators do not receive income. Social media platforms are 
exposing an important fault line in our economic system.
We have to link this emerging social economy, based on sharing creative 
expression, with the more authentic field of commons-oriented peer 
production, as expressed in the open-source and "fair use" open-content 
economy, which one estimate said made up one-sixth of US GDP. There is 
also no doubt that one of the key ingredients of China's success so far 
has been the combination of the open-source - such as the country's 
domestic "Shanzai" economy - together with the patent-free policies that 
are imposed on foreign investors. This has guaranteed an open, 
innovative commons for much of Chinese industry.
Even as the open-source economy becomes the default way to create 
software, and even as it creates companies that reach a revenue of more 
than $1bn, such as Red Hat, the overall effect is still deflationary. It 
has been estimated that open-source annually destroys $60bn in revenues 
for the proprietary sector.
Thus, the open-source economy destroys more proprietary software value 
than it replaces. Even as it creates an explosion of use value, its 
monetary value decreases.
Open-source manufacturing

The same effects occur when the shared innovation commons approach is 
used in physical production, where it combines an open-source approach 
with distributed machinery and capital allocation (using techniques such 
as crowd-funding and social lending platforms, like Kickstarter).
For example, the Wikispeed SGT01, a car that received a five-star 
security rating and can attain a fuel efficiency of 100 miles per gallon 
(roughly 42.5 kilometres per litre), was developed by a team of 
volunteers in just three months. The car is being sold for only $29,000, 
about a quarter of what a traditional industrial automobile firm would 
charge, and for which it would have needed at least five years of 
development and billions of dollars.
Local Motors, a rapidly growing crowd-sourced car company, claims to 
develop automobiles five times faster than Detroit, with 100 times less 
capital, but WikiSpeed has achieved even faster design and production 
times. The WikiSpeed car is designed for modularity, using sophisticated 
software development techniques (such as agile, scrum, and extreme 
programming), an open design, and local production by garages, using 
distributed manufacturing techniques.
And Arduino, an open-source electronics prototyping platform, works 
similarly to WikiSpeed and is driving prices down in its sector. If 
Marcin Jakubowsky's Open Source Ecology project is successful, this will 
happen for at least 40 different types of machinery. In every field 
where an open-source manufacturing alternative develops - and I predict 
that they will be developed in every single field - there will be 
similar pricing and income pressures on mainstream economic models.
'Collaborative consumption'

Another expression of the sharing economy is collaborative consumption. 
As Rachel Botsman and Lisa Gansky have demonstrated in their recent 
books - What's Mine is Yours and The Mesh, respectively - there is a 
rapidly growing sharing economy developing through product-service 
systems, sharing marketplaces and collaborative lifestyles.
For example, it's estimated that there are about 460 million homes in 
the developed world, and that each home has, on average, $3,000 worth of 
unused items available. There is clearly economic benefit to be had by 
using these idle resources. Much of it will not be rented, however, but 
swapped and bartered for free. Even the paid sharing economy will have a 
depressive effect on the buying of new products.
Such developments are good for the planet and good for humanity, but the 
larger question is: are they good for capitalism?
What will happen with capitalism given social media-based exchanges, 
commons-based production of software and hardware, and collaborative 
consumption, on an increasingly massive scale?
What happens if more and more of our time goes into producing use value 
- a fraction of which creates monetary value - but there is not a 
substantial return of income to the use value producers?
The financial crisis beginning in 2008, far from diminishing the 
enthusiasm for sharing and peer production, is in fact accelerating the 
adoption of such practices. This is not just a problem for the 
increasingly precarious working class, but also for capitalism itself, 
which is seeing its opportunities for accumulation and expansion dry up.
Not only is the world faced with a global resource crisis, it is also 
facing a crisis of intensive development, because value creators are 
increasingly income-less. The knowledge economy turns out to be a pipe 
dream, because what is abundant cannot sustain market dynamics.
Thus we have an exponential rise in the creation of use value, but only 
a linear increase in the creation of monetary value. If workers have 
less and less income, who can buy the commodities that are offered for 
sale by companies? This, in a nutshell, is the crisis of value that we 
are facing as humanity. It is a challenge just as big as climate change 
or increases in social inequality.
The meltdown of 2008 was a prefiguration of this crisis. Since the 
advent of neoliberalism, workers' wages have been stagnating and 
purchasing power was maintained only by an over-extension of credit 
throughout society. This was the first phase of the knowledge economy, 
in which only capital had access to networks, which it used to create 
globally coordinated multinationals.
As the knowledge society grew in size, more and more of businesses' 
value consisted of intangible, not physical, assets. The neoliberal 
stock market and its speculative excesses can be seen as a way to 
evaluate the amount of intangible value that is added to the stock's 
value by human co-operation. This bubble had to burst.
The second phase of the knowledge society, in which networks are 
diffused throughout society and allow productive publics to be directly 
engaged in peer production, creates an additional layer of problems. Add 
to the wage stagnation and the exodus out of wage labour that peer-based 
use value creation causes, and we can see that the problem is not 
solvable within the present paradigm. Is there a solution?
There is - but that is for the next installment. The solution involves 
an adaptation of capitalism to peer production, but also opens up the 
avenues for a transcendence of capitalism.

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