Is the end of capitalism near & new ways of value exchange emerging?
Like you probably are, I’m trying to fathom the depth of the global financial crisis and ultimately what it means for my family and I. Unless you are a hedge fund manager who successfully shorted companies and are now sitting on a pile of cash, you probably are worried and fearful too.
We’ll eventually get out of this mess, but it’s brought to the forefront something I’ve been thinking about for a long, long time: that peer-to-peer production (think Wikipedia, crowdsourcing, et al) is fundamentally changing how we create and exchange value in the world.
Huh? Isn’t that socialism or at least communism Borsch? No, I don’t think so and many others don’t either. In many discussions with people much smarter than me (with advanced degrees in economics or folks like Peter Drucker who wrote Post Capitalist Society in the early 1990’s), I’m pleased and a bit surprised that more of them also recognize that we are right-smack-dab in the middle of a shift in value creation, distribution of value, and the beginnings of the end of scarcity.
First an anecdote: on a Star Trek Next Generation episode, the Enterprise comes across a ship with most people dead, but there are three survivors in suspended animation. They awaken these three who’ve been like this for 300 years. The woman in the group is stunned and sad she’ll never see her son again, but the Enterprise crew has discovered his descendants. One guy was a country singer who gets Picard to use the replicator and get him a famous Gibson guitar. The last guy is SO EXCITED at the prospect of getting back to Earth so he can see how compounding has worked on his investments. “I’ll be extremely wealthy,” he cries out.
This brings to a head something about Picard’s century and material value. Picard tries to get him to understand that “there is no more ‘want’ in the world” since they can make anything instantly and money is no longer an exchange of value (though it’s never exactly clear how economics work in their time and how people are incented and motivated). This guy finally realizes that he is going to have to adapt to a world and time where anything material can be created at the touch of a button, and he’ll have to find other motivators.
Aren’t we there in some ways right now?
When you think of anything and everything being delivered digitally — every website, social network, hosted application or text message sent — none of it really exists save for intellectual value manifested in 1’s and 0’s in computers. Whatever is created is but a representation of something tangible but is as ethereal as smoke.
Though I’m not a philosopher or poet, I have searched for a deeper understanding of how value is created, shared, and how each of us has been motivated by Adam Smith’s “Wealth of Nations“, as that last guy on Star Trek was (and most Wall Streeter’s today). In Smith’s book, he talked about society’s benefits from the “invisible hand” of each of us working in our self-interests, now a mantra for purely free market devotees.
Early this morning, in the usual time pre-dawn that I take for a cup of coffee and reading of RSS feeds from the 170 bloggers and 60 publications I follow, I came across this P2P interview with Michael Bauwens (and then one from late 2007) by one blogger I follow, the “where the hell does his energy come from” new media maven, Robin Good.
I don’t have time right now to absorb this entire discussion on Good’s fabulous suite of websites and articles, but I’ve added Bauwen’s blog to my “must follow” RSS list (and he’s now in my “Above the Fold” folder, a reference to the front page of a newspaper, reserved for my most important thought leading blogs).
Here’s a taste of how Bauwens views a post-capitalist, new value world:
I think if you want to know what is wrong with capitalism and how peer-to-peer is an improvement over it, you have to look at the history of motivation and cooperation. Pre-modern societies were based on coercion/force — a slave had to give everything and serf had to give half or more of what was produced.
The dream of capitalism said that instead of forcing you, why don’t we create mutual self interest, so we will just exchange things of equal value with each other. In a way that is great progress because we go from external negative motivation (fear) to external positive motivation (money). The problem with that is that if you don’t have money – if you don’t have positive motivation on the outside, you don’t do it. Also the problem is if you have a system based on self interest then no one looks at the other consequences. No one looks at pollution. And no one wants to do anything that is not paid.
Furthermore if you look at the way innovation works in a company you want to innovate and improve because you don’t want to be buried under competition. If you don’t have competition because it’s a monopoly for example, then you don’t improve. Look at Microsoft’s Internet Explorer: nothing really moved for 5-7 years because Netscape was dead.
Great food for thought as we watch how (tens of? hundreds of?) millions of us in the world — most of whom worked our butts off to build monetary value for our families, our old age and our philanthropy — and are watching the value of that asset base dwindle or vanish.
We know that any system, especially one promoted as “the free market will work everything out” as capitalism is by conservatives, isn’t realistic. Though I am a staunch believer in capitalism (until a better system appears) and the motivation that comes from self-interest, a purely free market, pure self-interest, and the use of power to collate, aggregate and fight over scarce resources, doesn’t build roads, schools, water treatment plants, and all the other things a civilized society requires. Capitalism and the free market requires some regulation to ensure that those that don’t understand (or don’t care) about anything but their own self-interest don’t do what the laissez faire policies of Bush have brought us all.
How will value be exchanged in the future? What systems are emerging as more and more of us contribute (for no monetary exchange), value to such things as open source software projects? How will P2P help us help one another collaboratively, and yet extract some value so we can eat, buy clothes and send our kids to college?
Whatever it is, it can’t be a purely altruistic system of economics, socialism or communism, but there is a shift going on and it is affecting the foundations of capitalism, which has been shaken to its core and will end up disillusioning most of us who’ve believed and fully invested ourselves and our resources in this economic philosophy.
About Steve Borsch
Connecting the Dots Podcast
Podcasting hit the mainstream in July of 2005 when Apple added podcast show support within iTunes. I'd seen this coming so started podcasting in May of 2005 and kept going until August of 2007. Unfortunately was never 'discovered' by national broadcasters, but made a delightfully large number of connections with people all over the world because of these shows. Click here to view the archive of my podcast posts.