[Renewable] Fwd: M.Bauwens. The $100bn Facebook question: Will capitalism survive 'value abundance'?
rasa at rixc.lv
Fri Mar 23 22:06:05 EET 2012
Hello on Renewable list,
i am forwarding text by Michel Bauwens on Facebook,
it was recently posted on nettime,
and i think it important also for this list,
as it on Facebook, yes, but also about 'free labour', open-source
manufacturing, 'collaborative consumption', capitalism and peer
-------- Original Message --------
Subject: <nettime> The $100bn Facebook question: Will capitalism
survive 'value abundance'?
Date: Thu, 01 Mar 2012 11:27:38 -0600
From: Brian Holmes <bhcontinentaldrift at gmail.com>
Here, in an absolutely luminous text, Michel Bauwens shares liberating
thoughts about what you might call a practical and present utopia.
Best to all, and thanks to Michel for a beautiful text. - BH
The $100bn Facebook question: Will capitalism survive 'value abundance'?
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
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
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
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
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.
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.
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
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
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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