by Michael Roberts
There is a new book out called Capitalism without capital – the rise of the intangible economy.
The authors, Jonathan Haskel of Imperial College and Stian Westlake
of Nesta, are out to emphasise a big change in the nature of modern
capital accumulation – namely that increasingly investment by large and
small companies is not in what are called tangible assets, machines,
factories, offices etc but in ‘intangibles’, research and development,
software, databases, branding and design. This is where investment is
rising fast relative to investment in material items.
The authors call this capitalism without capital. But of course,
this is using ‘capital’ in its physicalist sense, not as a mode of
production and social relation, as Marxist theory uses the word. For
Marxist theory what matters is the exploitive relation between the
owners of the means of production (tangible and intangible) and the
producers of value, whether they are manual or ‘mental’ workers.
As G Carchedi has explained,
there is no fundamental distinction between manual and mental labour in
explaining exploitation under capitalism. Capitalism cannot be without
capital in that sense.
Knowledge is produced by mental labour but this is not ultimately
different from manual labour. Both entail expenditure of human energy.
The human brain, we are told, consumes 20% of all the energy we derive
from nourishment and the development of knowledge in the brain produces
material changes in the nervous system and synaptic changes which can be
measured. Once the material nature of knowledge is established, the
material nature of mental work follows. Productive labour (whether
manual or mental) transforms existing use-values into new use-values
(realised in exchange value). Mental labour is labour transforming
mental use values into new mental use values. Manual labour consists of
objective transformations of the world outside us; mental labour of
transformations of our perception and knowledge of that world. But both
are material.
The point is that discoveries, generally now made by teams of mental
workers, are appropriated by capital and controlled by patents, by
intellectual property or similar means. Production of knowledge is
directed towards profit. Medical research, for example, is directed
towards developing medicines to treat disease, not preventing disease,
agricultural research is directed to developing plant types which
capital can own and control, rather than relieving starvation.
What Haskell and Westlake find is that investment in intangible assets now exceeds that in tangible assets.
And they reckon this is changing the nature of modern capitalism.
Indeed, it could expose the uselessness of the so-called market
economy. The argument is that an intangible asset (like a piece of
software) can be used over and over again at low cost and allow a
business to grow very fast. That’s an exaggeration, of course, because
tangible assets like machines can also be used over again, but it’s true
that they have ‘wear and tear’ and depreciation. But then software
also gets out of date and also becomes ‘tired’ for the continually
changing purposes required.
Indeed, the ‘moral depreciation’ of intangibles is probably even
greater than tangibles and so increases the contradictions of capitalist
accumulation. For an individual capitalist, protecting profit gained
from a new piece of research or software, or the branding of a company,
becomes much more difficult when software can easily be replicated and
brands copied.
Brett Christophers showed in his book, The Great Leveller, capitalism is continually facing a dynamic tension between the underlying forces of competition and monopoly. “Monopoly produces competition, competition produces monopoly” (Marx).
That’s why companies are keen on intellectual property rights (IPR).
But IPR is actually inefficient in developing production. ‘Spillover’,
as the authors call it, where the benefit of any new discovery is
shared in the community, is more productive, but by definition almost,
is only possible outside capitalism and private profit – in other words
rather than capitalism without capital; it becomes capital without
capitalism.
As Martin Wolf of the FT concludes in his analysis of the rise of ‘intangibles’, “intangibles
exhibit synergies. This goes against the spillovers. Synergies
encourage inter-firm co-operation (or outright mergers), while
spillovers are likely to discourage it. Who really wants to give a free
lunch to competitors?” So “Taken together, these features
explain two other core features of the intangible economy: uncertainty
and contestedness. The market economy ceases to function in the familiar
ways.”
Under capitalism, the rise of intangible investment is leading to
increased inequality between capitalists. The leading companies are
controlling the development of ideas, research and design and blocking
‘spillover’ to others. The FANGs are gaining monopoly rents as a
result, but at the expense of the profitability of others, reducing them to zombie status (just covering their debts without the ability to expand or invest).
Indeed, the control of intangibles by a small number of mega
companies could well be weakening the ability to find new ideas and
develop them. Research productivity is declining at a rate of about 6.8
per cent per year in the semiconductor industry. In other words, we’re
running out of ideas. That’s the conclusion of economic researchers from Stanford University and the Massachusetts Institute of Technology Innovation.
They reckon that in order to maintain Moore’s Law – by which transistor
density doubles every two years or so – it now takes 18 times as many
scientists as it did in the 1970s. That means each researcher’s output
today is 18 times less effective in terms of generating economic value
than it was several decades ago.
Thus we have the position where the new leading sectors are
increasingly investing in intangibles while investment overall falls
along with productivity and profitability. Marx’s law of profitability
is not modified but intensified.
The rise of intangibles means the increased concentration and
centralisation of capital. Capital without capitalism becomes a
socialist imperative.
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