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Archive for 'Cognitive Capitalism'

Interview: Andy Goldring on Time in Permaculture Economies

photo of Michel Bauwens

Michel Bauwens
16th September 2014

Read the interview of Andy Goldring by Michelle Bastian here.

Michelle Bastian explains:

“One of the aims of the Sustaining Time project is to provide materials that can open up discussions around the relationship between time and attempts to move towards more sustainable economic models. As part of this interviews were conducted with a range of people involved in thinking economies differently, including Katherine Gibson (Community Economies Collective), Anna Coote (nef), Sam Alexander (Simplicity Institute) and more. These will be published as part of the Temporal Belongings Interview series which looks at the realtionship between time and community from a number of different angles.

In the first of the series, I talk with Andy Goldring, CEO of the Permaculture Association about the relationship between permaculture, economies and time. He makes the case for why permaculture practitioners should move towards becoming economists. He also gives a inspiring account of how to work for the long term, developing more poetic ways of living, valuing play and why we need to take back the calendar.”


Posted in Cognitive Capitalism, Culture & Ideas, P2P Epistemology, P2P Spirituality, P2P Subjectivity | No Comments »

From global value chains to modes of production

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Orsan Senalp
12th September 2014

In the recent article, Theorising and analysing digital labour: From global value chains to modes of production, Christian Fuchs provides an compelling critic and overview of what he calls ‘Informational and Transnational Capitalism’. Identfyiny the role of ICTs  in the re-design of the globa production and value networks, his argument helps us to see through which nodes industrial, knowledge,  digital and agrarian forms of labour are interconnected in an hierarchically designed networks of global capitalist valorization.


This paper considers the following question—where do computers, laptops and mobile phones come from and who produced them? Specific cases of digital labour are examined—the extraction of minerals in African mines under slave-like conditions; ICT manufacturing and assemblage in China (Foxconn); software engineering in India; call centre service work; software engineering at Google within Silicon Valley; and the digital labour of internet prosumers/users. Empirical data and empirical studies concerning these cases are systematically analysed and theoretically interpreted. The theoretical interpretations are grounded in Marxist political economy. The term ‘global value chain’ is criticised in favour of a complex and multidimensional understanding of Marx’s ‘mode of production’ for the purposes of conceptualizing digital labour. This kind of labour is transnational and involves various modes of production, relations of production and organisational forms (in the context of the productive forces). There is a complex global division of digital labour that connects and articulates various forms of productive forces, exploitation, modes of production, and variations within the dominant capitalist mode of production.

Full Text via Theorising and analysing digital labour: From global value chains to modes of production | Fuchs | The Political Economy of Communication.


Posted in Cognitive Capitalism, P2P Labor, Peer Production | No Comments »

Essay of the Day: Metaprogramming and the Labour of Code

photo of Michel Bauwens

Michel Bauwens
4th September 2014

* Article: Cultural Techniques of Cognitive Capitalism: Metaprogramming and the Labour of Code. Jussi Parikka. Cultural Studies Review, VOL 20, NO 1 (2014). (UTS ePress)

From the abstract:

“This article addresses cultural techniques of cognitive capitalism. The author argues that to understand the full implications of the notion of cognitive capitalism we need to address the media and cultural techniques which conditions its range and applications. The article offers an expanded understanding of the labour of code and programming through a case study of ‘metaprogramming’, a software related organisation practice that offered a way to think of software creativity and programming in organisations. The ideas from the 1970s that are discussed offer a different way to approach creativity and collaborative and post-Fordist capitalism. The author brings together different theoretical perspectives, including German media theory and Yann Moulier Boutang’s thesis about cognitive capitalism. The wider argument is that we should pay more attention to the media archaeological conditions of practices of labour and value appropriation of contemporary technological capitalism as well as the cultural techniques which include ‘ontological and aesthetic operations’ that produce cultural, material situations.”


Posted in Cognitive Capitalism, Featured Essay | No Comments »

Sut Jhally on The Factory in your Living Room!

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Michel Bauwens
2nd September 2014

The Factory in the Living Room from Sut Jhally on Vimeo.

Commentary below by David Week.

” In a traditional capitalist society, labour creates value, and capital captures that value: workers in a factory produce a car, and the surplus value of the car is captured by the factory owner. Unions (where they still exist) may help the workers get a share of some of that value.

But in a company like Google or FB, the value does not lie directly in the work being done by the workers (e.g. me). I’m not producing text which they can sell, as a newspaper might employ a journalist. Rather, the value to them comes from my very presence, and my attention on this page. This is what they sell to advertisers, like the ones in my peripheral vision, off to my right.

They operate not as traditional manufacturers, but in the mode of media companies, which is brilliantly dissected in this talk by Sut Jhally: The Factory in the Living Room.

There’s a wonderful reflexivity in watching that video on Vimeo, where you can see being played out exactly what describes, in the situation in which you find yourself.

Here’s an urban metaphor. There’s a public square in the town, in which occasionally people congregate to talk and to dance. I come along and I buy all the buildings around the square, so that though the square is open, I have captured the container. I then lease this out to restaurants and cafés, who make good money from the dancers and the talkers. The restaurants and cafés attract more dancers and talkers, and in fact the general “buzz” attracts people, who in turn by more food and coffee: the fortunes of my tenants increase, and I can continuously raise the rent.

Nor is it necessarily just chatter and dancing in the square. Some of those discussions lead to books and businesses. The musicians become popular and create albums. Whether socially or commercially, the people in the square are enriching themselves. But their very presence is the value which generates the income for the owner of the container.

This metaphor explains a few things about Facebook, for instance. The first is why it paid $16bn or so for WhatsApp. According to analysts, it was the rapid rise in WhatsApp’s popularity. The owner of the shops around square 1 is always aware that the crowd is fickle, and today’s Facebook Plaza may become tomorrow’s Piazza Myspace. The other is that the cafés and restaurants get their business by using touts and waiters to interrupt the users of the square, and if allowed to so too aggressively, they might actually drive them away. So this explains the extraordinary care with which ad placement is introduced in sites like FB.

So: not saying it’s not capitalism. But it does not follow the same model as manufacturing. The value captured is not the value being produced, but something else altogether.”


Posted in Cognitive Capitalism, Social Media, Videos | No Comments »

The sharing economy is a ploy for the commodification of everything

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Michel Bauwens
31st August 2014

Some technology critics, with their laments of cultural decline enabled by Twitter and e-books, are partly to blame. Instead of engaging with attention and distraction socio-economically — as was done with earlier media by Walter Benjamin and Sigfried Kracauer — we get Nicholas Carr, with his embrace of neuroscience, or Douglas Rushkoff, with his biophysiological critique of acceleration (8). Whatever the salience of such interventions, they end up decoupling the technological from the economic, so that we end up debating how the screens of our iPads condition the cognition of our brains — instead of debating how the information gathered by our iPhones conditions the austerity measures of our governments. To be critical of technology today should mean questioning how it and its boosters let the current system buy more time, and stave off an even more existential crisis.

Excerpted from Evgeny Morozov:

“Several recent books — Social Physics by Sandy Pentland, Who Owns the Future by Jaron Lanier (1) — endorse this agenda. They promise the seemingly impossible — economic security and a future of privacy. If data is treated as property, strong property rights and modern enforcement technologies should ensure that no third party gets a free ride. Thanks to the Internet of Things and the proliferation of smart devices, our every act can be observed, and monetised: there’s someone, somewhere, willing to pay for knowing what song we whistle in the shower. The only reason it hasn’t happened yet is because our shower doesn’t have sensors and isn’t connected to the net.

The battle lines are clear. If Google fills our houses with smart thermostats like Nest, then Google will monetise our shower whistling. Google integrates data from different streams — self-driving cars, smart glasses, email — and its helpfulness is a function of its ubiquity. To get the best from it, we should let Google’s services fill in all the vacant areas of our digitised everyday existence. The size of Google’s data reservoirs makes competition unrealistic, a point not lost on smaller companies. The other option is to follow the populist calls of Pentland and Lanier and thwart Google’s ambitions by insisting that data automatically belongs to the users, or demanding that they at least share in Google’s profits.

Both of these positions, for all their apparent differences, belong to one political programme, representing two intellectual traditions. As the British sociologist Will Davies shows in his new book, The Limits of Neoliberalism (2), the future offered to us by Lanier and Pentland fits into the German “ordoliberal” tradition, which sees the preservation of market competition as a moral project, and treats all monopolies as dangerous. The Google approach fits better with the American school of neoliberalism that developed at the University of Chicago. Its adherents are mostly focused on efficiency and consumer welfare, not morality; and monopolies are never assumed to be evil just because they are monopolies — some might be socially beneficial.

For all its claims to innovation and disruption, the contemporary technology debate neither innovates nor disrupts: in assuming that information is a commodity, it operates firmly within a sole neoliberal paradigm.

While an alternative view of information would require grounding it in the non-economic realm — around the idea of the common, beloved by radical democrats, or something else — we might ask why the commodity status of information is accepted so uncritically. The current moment provides the answer: technology today is a deus ex machina, which can create jobs, stimulate the economy, and make up for taxes lost to the offshoring schemes of wealthy elites and corporations. Not to treat information as a commodity would mean closing the only untainted avenue open to policymakers.

This deus ex machina aspect of modern technology is poorly understood, even by perceptive observers of the financial crisis. In his 2013 book Buying Time (3), the German sociologist Wolfgang Streeck argues that, from the early 1970s, when the first signs showed of the impending collapse of the welfare model secured by the post-war compromise, western governments used tricks to buy more time and avoid overdue structural transformations: rampant inflation, public debt and, eventually, tacit encouragement of the private sector to provide cheap debt to households. The austerity agenda that followed was a moralistic response that punished ordinary citizens for sins they hadn’t committed.

Streeck does not mention information technology but its time-buying function is obvious. It produces new, entrepreneurial jobs — once everyone learns how to code and build their own apps — and unlocks immense economic value. The British government grasped this early on, embarking on ambitious, if controversial, schemes to sell patient data to insurance companies (popular protest forced a backtrack) and student admissions data to mobile operators and energy drink companies. A recent report on personal data and the British economy, supported in part by Vodafone (4), holds that more than £16.5bn could be made if it were easier for consumers to manage — sell — their personal data. The government’s task is to ensure that new data management intermediaries can legally insert themselves between consumers and service providers.

These government-led efforts to buy time from above are supplemented by efforts — mostly by Silicon Valley start-ups — to buy time from below. The hope is that services like Uber (for cars) and Airbnb (for apartments) can turn analogue assets into profitable services, supplementing their owners’ income. As Brian Chesky, CEO of Airbnb, puts it, “Now with record unemployment, massive income equality, we actually have this gold mine under our feet. It used to be [that] we lived in a world where people created their own content, but now we can now create our own jobs and maybe even our own industries” (5). Indeed.

Silicon Valley, always quick to capitalise on counterculture, appropriated the communal gift-oriented rhetoric of earlier efforts to transcend the neoliberal agenda, presenting start-ups like Uber and Airbnb as part of the “sharing economy” — the utopian future beloved by anarchists and libertarians, where individuals can deal with each other directly, bypassing large intermediaries. What we are witnessing, however, is the replacement of service intermediaries, like taxi companies, with information intermediaries like Uber — which is backed by those admirers of anarchy, Goldman Sachs.

Since established taxi and hotel industries are detested, the public debate has been framed as a brave innovator taking on sluggish, monopolistic incumbents. Such skewed presentation, while not inaccurate in all cases, glosses over the fact that the start-ups of the “sharing economy” operate on the pre-welfare model: social protections for workers are minimal, they have to take on risks previously assumed by their employers, and there are almost no possibilities for collective bargaining.

The proponents of the “sharing economy” justify such precariousness with rhetoric worthy of Friedrich Hayek: once we replace laws with feedback mechanisms — so the market attests to the quality of the driver or the host — we can dispense with pre-emptive regulation. As Fred Wilson, a prominent venture capitalist, put it recently, “when we reach a place where systems are truly self-governing and self-regulating, we will not need regulators” (6). Ubiquitous feedback loops — in reality, just quality signals provided by market participants — would get us there.

The digitisation of everyday life and the rapaciousness of financialisation risk turning everything — genome to bedroom — into a productive asset. As Esther Dyson, a board member of 23andme, the leader in personalised genomics, said the company is “like the ATM that gives you access to the wealth locked within your genes” (7). This is the future that Silicon Valley expects us to embrace: given enough sensors and net connections, our entire life becomes a giant ATM. Those refusing this would have only themselves to blame. Opting out from the “sharing economy” would come to be seen as economic sabotage and wasteful squandering of precious resources that could accelerate growth. Eventually, the refusal to “share” becomes tinged with as much guilt as the refusal to save or work or pay debts, with a veneer of morality covering up — once again — exploitation.

It’s only natural that the less fortunate, under the burden of austerity, are turning their kitchens into restaurants, their cars into taxis, and their personal data into financial assets. What else can they do? For Silicon Valley, this is a triumph of entrepreneurship — a spontaneous technological development, unrelated to the financial crisis. But it is only as entrepreneurial as those who are driven — by the need to pay rent — into prostitution or selling their body parts. Governments might resist this tide but they have budgets to balance: Uber and Airbnb will eventually be allowed to exploit this “gold mine” as they please, boosting tax revenues and helping citizens make ends meet.

The “sharing economy” won’t supplant the debt economy; they will coexist.”


Posted in Cognitive Capitalism, P2P Technology, P2P Theory | 1 Comment »

Video: Wallerstein vs. Rifkin, against the zero marginal cost thesis ?

photo of Michel Bauwens

Michel Bauwens
22nd August 2014

Well not really, though the title points to one possible way to interpret this interview with Immanuel Wallerstein.

Wallterstein argues that historically, despite oscillations, the price of inputs in labor, material/energy and taxation, have gone up, leading to a systemic crisis for capital.

Rifkin, in his last book, makes a different hypothetis, but focusing on the output. Even giving rising input costs, there is a revolution in output, that with one initial input, it is now possible to produce ever more output, reaching a level that is also problematic for the accumulation of capital.

I strongly recommend watching the video in full.

Watch the video here:


Posted in Cognitive Capitalism, Economy and Business, P2P Theory, Videos | No Comments »

The use of cult techniques by sharing economy brands and platforms

photo of Michel Bauwens

Michel Bauwens
15th August 2014

When marketing executives at “values-led” companies try to cultivate communities around ethical consumerism, it creates a new class of problems. Much like religious cults, cult brands manipulate their customers’ emotional and psychological needs and encourage them to construct their identities and lives around the brand. The collapse of the ideal would be felt as a personal catastrophe for its community, so the brand becomes practically immune to criticism.

Excerpted from a long and stimulating essay by “Mr. Teacup”.

A must-read for all sharing economy advocates with crucial background information on the creation of the Peers advocacy organisation:

“What role does marketing play in the construction of communities around a business? For a new breed of advertisers like Chuck Brymer, CEO of leading agency DDB Worldwide, the answer is a great deal. Brymer believes that with the rise of the internet, advertising is moving away from the traditional propaganda model of influenced rooted in broadcast media, and becoming a dialogue with consumers and among consumers. Generating buzz, facilitating interactions among consumers, reaching influencers and turning them into brand ambassadors becomes key to successful marketing. Their Twitter bio says it all: “Connecting people with people, not just people with brands.“ In the end, says Brymer, the Chief Marketing Officer role will evolve into Chief Community Officer.

Aligning with this philosophy is a book published in 2004 titled The Culting of Brands: Turn Your Customers Into True Believers. It was written by a former advertising executive who studied how real cults recruit and maintain members hoping to teach the tricks to marketers to inspire the same kind of fierce loyalty, religious devotion and vibrant community around their brands. The book is a manual for achieving corporate goals by exploiting consumers’ emotions and need for belonging, meaning and purpose.

It achieved only modest reach, but the book is important to understanding sharing economy marketing strategies because the author is Douglas Atkin. Since 2013, Atkin has been Global Head of Community and Mobilization at Airbnb, and Co-Founder and Board Chairman at Peers. Already in 2009, Atkin began to apply his cult-branding techniques to the political problems facing his clients, co-founding Purpose, a consultancy which uses the viral tools of digital marketing to launch social and political movements on behalf of paying clients.

If we want to understand the ideas and strategy behind Airbnb’s and Peers’ marketing, there’s no better place to start than by reading the book written by the mastermind behind it all. And it is vital that we do understand it, because Atkin’s method is a dangerous new tool that can be used by elites to undermine democracy and manufacture public support for their interests.
The book begins in a defense posture. Atkin, well aware that his premise is highly contentious and potentially unethical, asks “Aren’t cults manipulative, evil organizations intent on exploiting the gullible? Should they be a source of insight for commercial gain?”

His book aims to show that brands satisfy important human desires in the same way that cults and religions do, meeting needs of belonging, making meaning and making sense of the world. But he sidesteps the ethical question in troubling ways. His position is that cults are a good thing. They’re normal and people join for good reasons, and that we should suspend our prejudice. The popular stereotype of cults as manipulative, dangerous and even suicidal is true to a certain extent, says Atkin, but that’s only because only the dangerous ones get all the press. All religions began as cults, and contrary to popular belief, most cult members are normal, psychologically healthy, intelligent well-educated and socially adjusted individuals.

This is the full extent of Atkin’s confrontation with the ethics of applying cult techniques, breezing past the most troubling aspects of the thesis in less than two pages. His point, such that it is, is well-taken. Mainstream society unfairly stigmatizes former and current cult members, treating them as damaged goods. But the truth of this insight obscures a subtle deflection of our concerns about cults. We worry about authoritarian tendencies, manipulation and exploitation by the cult leader, his ability to persuade his members to act against their best interests. Atkin reframes this as a prejudice against cult members, waving away legitimate ethical concerns as if they are all simply narrow-mindedness about how unorthodox people choose to live their lives.

We don’t need to claim that all cults are bad to ask if it is wise to use them as a model for corporate marketing. Cults may be harmless in many cases, but when they aren’t, the results can be catastrophic. They seem to be uniquely vulnerable to corrupt and exploitative people who put themselves in leadership positions.

Atkin is fascinated by why people join cults and what inspires their intense loyalty. “Why do they throw time, money, sometimes their careers, the regard of their peers, and even their families on the cult of belonging?” He interviews a fanatical Apple fan who often couldn’t afford lunch but always upgraded to their latest computer model because he wanted to support the company.

In the popular imagination, cult members are believed to be mindless conformists, but Atkins says nothing could be further from the truth. The real key to creating a cult (and a cult brand) begins with individuals who feel a sense of alienation. The feeling that they don’t fit in with society leads them to seek alternatives, a place that they can truly call home, until they stumble upon a welcoming group that understands them, supports them and celebrates their difference instead of rejecting it. This sets the stage for the cult member’s self-actualization. Interviewing cult members and brand devotees alike, Atkin found they express the same feeling of becoming more coherent and whole as individuals, true to who they really are and more in touch with themselves.

Cults will flatter you. They will make you feel special and individual in a way that you are unlikely to have felt before. They will celebrate the very things that make you feel different from everyone else; the members will get to know you deep down, and they will love you for what they find you. And you will love them.

So the key to attracting cult-like devotion is healing potential recruits’ sense of alienation. Although cults are often perceived to be taking from their members while giving little in return, cult members do receive something of value from the cult, meeting some of their deepest desires to become their authentic selves.

Having determined what motivates cult members, Atkin delivers a strategy for brand managers. To attract people who feel different, cult brands also have to be different. It’s a four step process.

First, determine your brand’s sense of difference. The motorcycle brand Harley Davidson cultivates an image of individualism, rebelliousness, adventure and a willingness to throw off the constraints of conventional suburban life. The brand’s official guidelines state: “Harley Truth#1: Harley is not for everyone.”

Second, declare your difference, the belief system that set you apart. “Framing a clear system of ideas that depart from cultural norms provides the sharpest delineation between the organization and the rest of the world. And it provides a beacon for the disenfranchised,” says Atkin. At the same time, cult members must feel a sense of ownership over the ideology, it can’t just come from the top down.

Third, demarcate the cult from the status quo by creating symbols, rituals, jargon, texts, clothing—a tangible way for cult members to live their difference, to mark themselves as apart from the mainstream. For Harley Davidson, there is the uniform of the riders, the leather jacker; slang; the brand’s and Hell’s Angels logos; and so on. For Atkin, this is the same as Hare Krishnas who avoid eating meat and chant mantras, or Mormons who have exclusive access to parts of their temple and wear spiritual garments underneath their clothes.

The final step is demonize the other. For Steve Jobs and the Apple cult, it was Microsoft and IBM. For Richard Branson’s Virgin Airlines, it was British Airways and American Airlines.

But according to Atkin, establishing a cult brand’s beliefs and sensibility are not enough. People don’t really buy into the ideology anyway. As much as brand managers think that projecting a compelling system of values to consumers, human interaction is what really gets people in the door and makes them stick around. One cult brand, JetBlue, obsesses over every interaction that customers have with gate agents, check-in personnel, telephone agents and flight attendants, ensuring that the brand values of bringing humanity, caring and fun back into air travel are reinforced at every point of contact.

Atkin cites academic studies that support his point of view. Sociologists who study the Unification Church discovered that most people were brought into the church by forming relationships with individuals in the church. New recruits first buy into those relationships—the ideology comes later. Research into the Mormon church confirms this pattern, showing that individuals with more in-group ties to individual church members become more devoted to the church and its belief system.”

2. The political manipulation by sharing economy players

“The various startups, investment funds, media outlets and nonprofit advocacy organizations shout from the rooftops that their new, improved version of communitarian capitalism will heal what ails us. Although they couch the message in terms designed to appeal to political progressives, there’s nothing about the services themselves that prevents them from being attached to a completely different set of values. For example, John Stossel, a noted libertarian and TV host on Fox News, has championed Airbnb’s fight against what he believes is big government regulation keeping the little guy down.

The conservative news sites Human Events published a column praising the sharing economy for relieving the burden of following employment laws:

it’s an end-run around the increasingly expensive, heavily mandated and regulated business of hiring employees. As the burden on labor increases, creative fee-for-service arrangements become appealing alternatives to expensive, traditional “jobs.” It’s the next logical step after the large-scale transition of the American workforce to part-time status.

A senior fellow at the right-wing Cato Institute voiced his support for Airbnb in their battle to roll back New York City hotel tax, rent control and zoning laws:

New York State Attorney General Eric Schneiderman, however, is challenging the entrepreneurial innovation—probably under pressure from special interests who would like the government to stifle their competition. This is crony capitalism as usual… Cato has long supported free markets, entrepreneurship, and innovations to make goods and services more affordable. Government overreach like [Attorney] General Schneiderman’s campaign punishes not only AirBnB hosts and travelers, but also the New York economy…

Another senior fellow at Cato argued that the sharing economy’s use of reviews to control service quality means that the rationale for government regulation disappears. The following comment was made in the context of the limo service Uber, but could apply to many other startups:

“The app’s review system makes it easy for the company to monitor driver quality without demanding too much effort from passengers… Which means the question isn’t whether the regulations need to be updated to accommodate a new kind of cab service: It’s why this kind of service needs a regulator at all.

The well-known Republican operative and future Burning Man attendee Grover Norquist recently weighed in, arguing that progressive’s ideological confusion over the regulatory issues facing the sharing economy is an opportunity for Republicans to take back control over major cities which are traditional Democratic strongholds.

The existing sharing economy values are designed to appeal to progressive liberals. It seems that there are very few “values-led” businesses which are designed to appeal to conservative values, suggesting that progressives are uniquely seduced by the view that capitalism is an effective tool for promoting their values and effecting political change. But it wouldn’t be difficult to invent a much more Republican-friendly brand for the sharing economy. In his speech at LeWeb before a group of investors and internet entrepreneurs quoted above, Atkin leaned in that direction, departing just slightly from the values of caring and connection that usually dominates and also stressing the values of autonomy: independence, individualism and entrepreneurialism.

We could move even further in this direction, rebranding the sharing economy as new movement that liberates individuals from the tyranny of the collectivism found in regular work, freeing them to become captains of their own destiny so they can pursue their self-interest by becoming small-scale entrepreneurs all while thumbing their nose at big government regulation. Brian Chesky, CEO of Airbnb alluded to this potential when he said to a group of Airbnb hosts, “There are laws for people and laws for business, but you are new category: people as businesses.

3. Negative consequences for workers

What would happen if the dreams of the investors and executives at these startups came true, and large parts of the economy became dominated by their business models? Employers that hire full- or part-time workers today—paying them minimum wage, overtime and unemployment, disability and social security taxes, and unable to discriminate against them—would switch to a cheaper, less regulated and more vulnerable workforce to do those same jobs. Having lowered their labor costs, they’re able to offer lower prices to consumers, forcing their slower competitors who rely on regular wage labor to adopt the same practices or go out of business.

But beyond the marketing, if people like Douglas Atkin, Brian Chesky and Rachel Botsman get their way, and the sharing economy as it is currently constituted expands dramatically to where a significant fraction of services are delivered using their business models, it will have serious negative long-term consequences for the people in their communities, and for all workers.

Sharing economy companies most often classify the people who provide services on their platforms as independent contractors—they are considered to be self-employed, not regular employees. At the end of each year, thousands of these contractors receive a 1099 form and their income is reported to the IRS. Since navigating the rules for filing self-employment taxes is not very straightforward, Rachel Botsman’s Collaborative Fund created 1099.is to help contractors understand their obligations. They say that the purpose of the site is “to try and help you to understand your taxes in the Sharing Economy.”

It turns out that employee classification is an important issue, and has some significant implications for both employers and employees.

The Department of Labor runs a program to go after companies who practice employee misclassification, a term used to describe companies who misrepresent their full-time employees as self-employed independent contractors. Because companies must pay more taxes for employees than contractors, the IRS and state tax agencies crack down aggressively on employee misclassification, treating it as a form of corporate tax evasion. To get a sense of the scale of the problem, the Government Accountability Office estimated that in 2006, $2.72 billion in federal taxes was lost by misclassifying employees.

The Department of Labor is also involved in investigating these cases because some employers try to avoid compliance with the provisions of the Fair Labor Standards Act and the National Labor Relations Act by misclassifying their workers. These laws give workers a host of benefits: the right to be covered by minimum wage laws, the right to overtime pay, the right to have employers pay social security, disability and unemployment insurance taxes, the right to family and medical leave, workers’ compensation protection, sick pay, retirement benefits, profit sharing plans, protection from discrimination on the basis of race, color, religion, sex, age or national origin, or wrongful termination for becoming pregnant, or reporting sexual harassment or other types of employer wrongdoing.

Workers classified as independent contractors are entitled to none of these benefits.

On it’s website, the Department of Labor says that “Business models that attempt to change or obscure the employment relationship through the use of independent contractors are not inherently illegal, but they may not be used to evade compliance with federal labor law.” That could mean that sharing economy startups are legal, but one former Lyft driver has filed a class action lawsuit against the company charging them with employee misclassification.

Whether the suit succeeds or not, the phenomenon of employee misclassification indicates that employers have strong financial incentives to use independent contractors, even when it is illegal. A study showed that on average, misclassification allows employers to save $3,710 in taxes for workers who earn $40,000 a year, and witnesses testified to Congress that the labor savings of misclassification have allowed federal contractors to lower their bids by 20-30%.

The Obama Whitehouse has moved aggressively to combat this form of corporate misconduct, endorsing the Fair Playing Field Act and the Employee Misclassification Prevention Act, laws that require employers to inform independent contractors that they have the right to contact the IRS to have their status reviewed if they believe they have been misclassified, increase penalties for violators, closes a tax loophole that allowed FedEx to dodge a $319 million bill for back-taxes owed when the IRS determined it had improperly classified some of its drivers, and makes infringement into a federal violation of labor laws. Obamacare also increases penalties for businesses who misclassify their employees to avoid triggering the requirement to provide health insurance if they have more than 50 employees.

When Human Events says that the sharing economy allows employers to do an “end-run around the increasingly expensive, heavily mandated and regulated business of hiring employees,” this is what they’re talking about.”


Posted in Cognitive Capitalism, Culture & Ideas, Sharing | No Comments »

Essay of the Day: Information Machine and the Society of Metadata

photo of Michel Bauwens

Michel Bauwens
21st July 2014

* Article: Italian Operaismo and the Information Machine. By Matteo Pasquinelli. Theory, Culture & Society February 2, 2014

From the Abstract:

“The political economy of the information machine is discussed within the Marxist tradition of Italian operaismo by posing the hypothesis of an informational turn already at work in the age of the industrial revolution. The idea of valorizing information introduced by Alquati (1963) in a pioneering Marxist approach to cybernetics is used to examine the paradigms of mass intellectuality, immaterial labour and cognitive capitalism developed by Lazzarato, Marazzi, Negri, Vercellone and Virno since the 1990s. The concept of machinic by Deleuze and Guattari (1972, 1980) is then adopted to extend Marx’s analysis of the industrial machine to the algorithms of digital machines. If the industrial machine can be described as a bifurcation of the domains of energy and information, this essay proposes to conceive the information machine itself as a further bifurcation between information and metadata. In conclusion, the hypothesis of the society of metadata is outlined as the current evolution of that society of control pictured by Deleuze (1990) in relation to the power embodied in databases.”


Posted in Cognitive Capitalism, Economy and Business, Featured Essay, P2P Movements | No Comments »

Save the Teatro Valle Commons in Rome!

photo of David Bollier

David Bollier
14th July 2014

The three-year occupation of Teatro Valle in Rome is now legendary:  a spontaneous response to the failures of conventional government in supporting a venerated public theater, and the conversion of the theater into a commons by countless ordinary citizens.  Now the mayor of Rome is threatening to end the occupation, evict the commoners and privatize the management of the facility.

It’s time for the international community of commoners to take a public stand against this very real threat. The mayor has summoned Italian law scholar Ugo Mattei to meet with him on Monday to negotiate a resolution. In advance of that meeting, Mattei and Salvatore Settis, President of the Advisory Board of the Louvre Museum in Paris, have prepared an international petition calling on the mayor to back away from his proposal and to allow this historic experiment in commoning to continue.

Below is a copy of the petition.  You can express your support by sending you name and affiliation to Ugo Mattei at matteiu /at/ uchastings.edu.

A number of human rights scholars around the world are keenly interested in Teatro Valle.  Noted human rights scholar Anna Grear alerted the Global Network for the Study of Human Rights and Environment that “the attempted denial of popular ‘ownership’ of ‘place’ is fundamental to the cultural and material enclosures enacted by privatising and controlling agendas.”  She added that “closing down an important, even iconic, example of a fundamentally vernacular, community-based engagement with place (a vibrant, evocative commons) is entirely consistent with the deeper logic visible in moves such as the attempt to control the world seed supplies and breeds, to extend the corporatisation of the social spheres, to privatise urban space in ways that shut ordinary human beings out of them in central and important respects.”

For more on the backstory of Teatro Valle, here is a previous blog post on the occupation from February 2013.  Below is the petition now circulating.  Sign it!

The commons “Italian Style” must continue their experimentation! An International call to protect the Teatro Valle Foundation from Eviction.

Since June 14 2011, a community of artists and militants has transformed the Teatro Valle, the oldest and most prestigious in Rome, then at high risk of privatization, into the “Teatro Valle Occupato,” one of the most advanced experiments of merger between political struggle and performing arts in the current world. A trust-like legal entity, the “Fondazione Teatro Valle Bene Comune,” was created in the interest of future generations, with a membership of almost 6,000 people by a genuinely new process of cooperation between some well-known jurists and the Assembly of the occupants. While a notary has recognized the Foundation, the Prefect of Rome has denied its moral personality on the assumption that possession was not a sufficient title on the Valle premises.

Nevertheless, in three years the occupation, though formally never authorized, has succeeded in becoming a new institution of the commons, studied by scholars worldwide and the object of many publications. Because no authority in Rome has ever asked the occupants to leave and the municipality has paid the energy bill (roughly 90,000 Euros per year), it would be difficult to deny that the occupation was largely tolerated (even by the previous post-fascist major). Certainly the occupants have taken very good care of the ancient Theater, including paying for small renovations, and have  generated three years of exceptionally interesting shows, performances, meeting, educational programs that the population could attend on the basis of a donation system according to the possibilities of each one. The Valle experience has also inspired similar actions to protect theaters and public spaces through Italy; it is promoting a nation-wide experiment of codification of commons institutions involving some twenty of the leading academic lawyers in Italy; it has produced its own shows performed Europe-wide and has attracted to the Valle some of the best-known artists and intellectuals in Europe.

The European Cultural Foundation, among others has granted the prestigious Princess Margritt Award to the Teatro Valle and the ZKM of Karsrhue has devoted to that experience a stand in a recent major International exhibition on social movements worldwide.

After the European Elections last May, possibly as a consequence of an ill-conceived legalistic stance by the new Government, early negotiations to settle the dispute concerning the title to the Theater have been suddenly terminated as the Assessor of Rome responsible for culture in Rome has been removed and not replaced. As a reply to the Foundation request to resume negotiations, the new major of Rome, a member of the ruling Democratic Party and a well-known academic doctor, has released two days ago a statement asking the occupants to leave, threatening police intervention and proposing a public auction to privatize the management of the space.

This cannot happen! The city of Rome, as a cultural center of the world deserves a better solution to the Valle issue. We strongly plea the Italian political authorities to look for a method which facilitates rather than repressing institutional and cultural experiments to run the commons.

Ugo Mattei, Professor, The University of California, Hastings and Università di Torino.

Salvatore Settis, President of the Advisory Board of the Louvre Museum, Paris.

Please sign this international petition with affiliation.

Originally posted at bollier.org


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David Harvey on Piketty’s “Capital”

photo of Stacco Troncoso

Stacco Troncoso
7th July 2014

There’s been plenty of talk about Thomas Piketty’s recent volume. While the attention and awareness it has generated is not a bad thing, it’s also worth exploring some constructive critiques of the book that go beyond mere defensive slander. Of these we feel that David Harvey’s review of Piketty’s study, originally published on his webpage, is specially relevant.

Thomas Piketty has written a book called Capital that has caused quite a stir. He advocates progressive taxation and a global wealth tax as the only way to counter the trend towards the creation of a “patrimonial” form of capitalism marked by what he dubs “terrifying” inequalities of wealth and income. He also documents in excruciating and hard to rebut detail how social inequality of both wealth and income has evolved over the last two centuries, with particular emphasis on the role of wealth. He demolishes the widely-held view that free market capitalism spreads the wealth around and that it is the great bulwark for the defense of individual liberties and freedoms. Free-market capitalism, in the absence of any major redistributive interventions on the part of the state, Piketty shows, produces anti-democratic oligarchies. This demonstration has given sustenance to liberal outrage as it drives the Wall Street Journal apoplectic.

The book has often been presented as a twenty-first century substitute for Karl Marx’s nineteenth century work of the same title. Piketty actually denies this was his intention, which is just as well since his is not a book about capital at all. It does not tell us why the crash of 2008 occurred and why it is taking so long for so many people to get out from under the dual burdens of prolonged unemployment and millions of houses lost to foreclosure. It does not help us understand why growth is currently so sluggish in the US as opposed to China and why Europe is locked down in a politics of austerity and an economy of stagnation. What Piketty does show statistically (and we should be indebted to him and his colleagues for this) is that capital has tended throughout its history to produce ever-greater levels of inequality. This is, for many of us, hardly news. It was, moreover, exactly Marx’s theoretical conclusion in Volume One of his version of Capital. Piketty fails to note this, which is not surprising since he has since claimed, in the face of accusations in the right wing press that he is a Marxist in disguise, not to have read Marx’s Capital.

Piketty assembles a lot of data to support his arguments. His account of the differences between income and wealth is persuasive and helpful. And he gives a thoughtful defense of inheritance taxes, progressive taxation and a global wealth tax as possible (though almost certainly not politically viable) antidotes to the further concentration of wealth and power.

But why does this trend towards greater inequality over time occur? From his data (spiced up with some neat literary allusions to Jane Austen and Balzac) he derives a mathematical law to explain what happens: the ever-increasing accumulation of wealth on the part of the famous one percent (a term popularized thanks of course to the “Occupy” movement) is due to the simple fact that the rate of return on capital (r) always exceeds the rate of growth of income (g). This, says Piketty, is and always has been “the central contradiction” of capital.

But a statistical regularity of this sort hardly constitutes an adequate explanation let alone a law. So what forces produce and sustain such a contradiction? Piketty does not say. The law is the law and that is that. Marx would obviously have attributed the existence of such a law to the imbalance of power between capital and labor. And that explanation still holds water. The steady decline in labor’s share of national income since the 1970s derived from the declining political and economic power of labor as capital mobilized technologies, unemployment, off-shoring and anti-labor politics (such as those of Margaret Thatcher and Ronald Reagan) to crush all opposition. As Alan Budd, an economic advisor to Margaret Thatcher confessed in an unguarded moment, anti-inflation policies of the 1980s turned out to be “a very good way to raise unemployment, and raising unemployment was an extremely desirable way of reducing the strength of the working classes…what was engineered there in Marxist terms was a crisis of capitalism which recreated a reserve army of labour and has allowed capitalists to make high profits ever since.” The disparity in remuneration between average workers and CEO’s stood at around thirty to one in 1970. It now is well above three hundred to one and in the case of MacDonalds about 1200 to one.

But in Volume 2 of Marx’s Capital (which Piketty also has not read even as he cheerfully dismisses it) Marx pointed out that capital’s penchant for driving wages down would at some point restrict the capacity of the market to absorb capital’s product. Henry Ford recognized this dilemma long ago when he mandated the $5 eight-hour day for his workers in order, he said, to boost consumer demand. Many thought that lack of effective demand underpinned the Great Depression of the 1930s. This inspired Keynesian expansionary policies after World War Two and resulted in some reductions in inequalities of incomes (though not so much of wealth) in the midst of strong demand led growth. But this solution rested on the relative empowerment of labor and the construction of the “social state” (Piketty’s term) funded by progressive taxation. “All told,” he writes, “over the period 1932-1980, nearly half a century, the top federal income tax in the United States averaged 81 percent.” And this did not in any way dampen growth (another piece of Piketty’s evidence that rebuts right wing beliefs).

By the end of the 1960s it became clear to many capitalists that they needed to do something about the excessive power of labor. Hence the demotion of Keynes from the pantheon of respectable economists, the switch to the supply side thinking of Milton Friedman, the crusade to stabilize if not reduce taxation, to deconstruct the social state and to discipline the forces of labor. After 1980 top tax rates came down and capital gains – a major source of income for the ultra-wealthy – were taxed at a much lower rate in the US, hugely boosting the flow of wealth to the top one percent. But the impact on growth, Piketty shows, was negligible. So “trickle down” of benefits from the rich to the rest (another right wing favorite belief) does not work. None of this was dictated by any mathematical law. It was all about politics.

But then the wheel turned full circle and the more pressing question became: where is the demand? Piketty systematically ignores this question. The 1990s fudged the answer by a vast expansion of credit, including the extension of mortgage finance into sub-prime markets. But the resultant asset bubble was bound to go pop as it did in 2007-8 bringing down Lehman Brothers and the credit system with it. However, profit rates and the further concentration of private wealth recovered very quickly after 2009 while everything and everyone else did badly. Profit rates of businesses are now as high as they have ever been in the US. Businesses are sitting on oodles of cash and refuse to spend it because market conditions are not robust.

Piketty’s formulation of the mathematical law disguises more than it reveals about the class politics involved. As Warren Buffett has noted, “sure there is class war, and it is my class, the rich, who are making it and we are winning.” One key measure of their victory is the growing disparities in wealth and income of the top one percent relative to everyone else.

There is, however, a central difficulty with Piketty’s argument. It rests on a mistaken definition of capital. Capital is a process not a thing. It is a process of circulation in which money is used to make more money often, but not exclusively through the exploitation of labor power. Piketty defines capital as the stock of all assets held by private individuals, corporations and governments that can be traded in the market no matter whether these assets are being used or not. This includes land, real estate and intellectual property rights as well as my art and jewelry collection. How to determine the value of all of these things is a difficult technical problem that has no agreed upon solution. In order to calculate a meaningful rate of return, r, we have to have some way of valuing the initial capital. Unfortunately there is no way to value it independently of the value of the goods and services it is used to produce or how much it can be sold for in the market. The whole of neo-classical economic thought (which is the basis of Piketty’s thinking) is founded on a tautology. The rate of return on capital depends crucially on the rate of growth because capital is valued by way of that which it produces and not by what went into its production. Its value is heavily influenced by speculative conditions and can be seriously warped by the famous “irrational exuberance” that Greenspan spotted as characteristic of stock and housing markets. If we subtract housing and real estate – to say nothing of the value of the art collections of the hedge funders – from the definition of capital (and the rationale for their inclusion is rather weak) then Piketty’s explanation for increasing disparities in wealth and income would fall flat on its face, though his descriptions of the state of past and present inequalities would still stand.

Money, land, real estate and plant and equipment that are not being used productively are not capital. If the rate of return on the capital that is being used is high then this is because a part of capital is withdrawn from circulation and in effect goes on strike. Restricting the supply of capital to new investment (a phenomena we are now witnessing) ensures a high rate of return on that capital which is in circulation. The creation of such artificial scarcity is not only what the oil companies do to ensure their high rate of return: it is what all capital does when given the chance. This is what underpins the tendency for the rate of return on capital (no matter how it is defined and measured) to always exceed the rate of growth of income. This is how capital ensures its own reproduction, no matter how uncomfortable the consequences are for the rest of us. And this is how the capitalist class lives.

There is much that is valuable in Piketty’s data sets. But his explanation as to why the inequalities and oligarchic tendencies arise is seriously flawed. His proposals as to the remedies for the inequalities are naïve if not utopian. And he has certainly not produced a working model for capital of the twenty-first century. For that we still need Marx or his modern-day equivalent.


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