[Renewable] Fwd: M.Bauwens. The $100bn Facebook question: Will capitalism survive 'value abundance'?

Rasa Smite 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  

/ Rasa

-------- 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'?

--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  

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  

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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