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Homebrew Industrial Revolution, Chapter Three: Babylon is Fallen (third installment)

photo of Kevin Carson

Kevin Carson
17th December 2010


[Michel Bauwens has kindly invited me to serialize excerpts from my recently published book The Homebrew Industrial Revolution:  A Low-Overhead Manifesto.  Over the next several weeks, I will post two excerpts from each chapter.  In this case I'm posting a third excerpt from Chapter Three, which is unusually long, and will post only one excerpt from Chapter Four.]

Failure to Counteract Limits to Capture of Value by Enclosure of the Digital Commons. As Michel Bauwens describes it, it is becoming increasingly impossible to capture value from the ownership of ideas, designs, and technique—all the “ephemera” and “intellect” that Tom Peters writes about as a component of the price of manufactured goods—leading to a crisis of sustainability for capitalism.  “Cognitive capitalism” is capital’s attempt to adjust to the shift from physical to human capital, and to capture value from the immaterial realm.  Bauwens cites McKenzie Wark’s theory that a new “vectoralist” class “has arisen which controls the vectors of information, i.e. the means through which information and creative products have to pass, for them to realize their exchange value.” ….

Cognitive capitalism arose as a solution to the unsustainability of the older pattern of capitalist growth, based on extensive addition of physical inputs and expansion into new geographical areas.  Bauwens uses the analogy of the ancient slave economy, which became untenable when avenues of extensive development (i.e. expansion into new territory, and acquisition of new slaves) were closed off.  When the slave system reached its limits of external expansion, it turned to intensive development via the feudal manor system, transforming the slave into a peasant who had an incentive to work the land more efficiently.

The alternative to extensive development is intensive development, as happened in the transition from slavery to feudalism. But notice that to do this, the system had to change, the core logic was no longer the same. The dream of our current economy is therefore one of intensive development, to grow in the immaterial field, and this is basically what the experience economy means. The hope that it expresses is that business can simply continue to grow in the immaterial field of experience.

And the state, as enforcer of the total surveillance society and copyright lockdown, is central to this  business model….

The ability to capture value from efficiency increases, through artificial scarcity and artificial property rights, is central to the New Growth Theory of Paul Romer.  Consider his remarks in an interview with Reason’s Ron Bailey:

…To the extent that you’re using the market system to refine and bring ideas into practical application, we have to create some kind of control over the idea. That could be through patents. It could be through copyright. It might even be through secrecy. A firm can keep secret a lot of what it knows how to do…. So for relying on the market—and we do have to rely on the market to develop a lot of ideas—you have to have some mechanisms of control and some opportunities for people to make a profit developing those ideas….

And Romer makes it clear that what he means by “growth” is economic growth, in the sense of monetized exchange value…

Romer’s thought is another version of Daniel Bell’s post-industrialism thesis.  As summarized by Manuel Castells, that thesis held that:

(1) The source of productivity and growth lies in the generation of knowledge, extended to all realms of economic activity through information processing.

(2) Economic activity would shift from goods production to services delivery….

(3) The new economy would increase the importance of occupations with a high informational and knowledge content in their activity.  Managerial, professional, and technical occupations would grow faster than any other occupational position and would constitute the core of the new social structure. [Rise of the Network Society]

The problem is that post-industrialism is self-liquidating:  technological progress destroys the conditions necessary for capturing value from technological progress.

By their nature technological innovation and increased efficiency destroy growth.  Anything that lowers the cost of inputs to produce a given output, in a free market with competition unfettered by entry barriers, will result in the reduction of exchange value (i.e. price).  And since GDP is an accounting mechanism that measures the total value of inputs consumed, increased efficiency will reduce the size of “the economy.”….

Jeff Jarvis sparked a long chain of discussions by arguing that innovation, by increasing efficiency, results in “shrinkage” rather than growth….

[Eric] Reasons built on this idea, massive deflation resulting from increased efficiency, in a subsequent blog post….

And the issue is clearly shrinkage, not just a shift of superfluous capital and purchasing power to new objects.   Craigslist employs fewer people than the industries it destroyed, for example.  The ideal, Reasons argued, is for unproductive activity to be eliminated, but for falling work hours to be offset by lower prices, so that workers experience the deflation as a reduction in the ratio of effort to consumption:

Given the amount of current consumption of intellectual property (copyrighted material like music, software, and newsprint; patented goods like just about everything else), couldn’t we take advantage of this deflation to help cushion the blow of falling wages? How much of our income is dedicated to intellectual property, and its derived products? If wages decrease at the same time as cost-of-living decreases, are we really that bad off? Deflation moves in both directions, as it were….

Every bit of economic policy coming out of Washington is based on trying to maintain a status quo that can not be maintained in a global marketplace. This can temporarily inflate some sectors of our economy, but ultimately will leave us with nothing but companies that make the wrong things, and people who perform the wrong jobs. You know what they say: “As GM goes, so goes the country.”

Contrary to “Free” optimists like Chris Anderson and Kevin Kelley, Reasons suspects that reduced rents on proprietary content cannot be replaced by monetization in other areas.  The shrinkage of proprietary content industries will not be replaced by growth elsewhere, or the reduced prices offset by a shift of demand elsewhere, on a one-to-one basis….

He stated this assessment in even sharper terms in a comment under Michel Bauwens’s blog post…:

…Of course there’s money to be made in the knowledge economy—ask Google or Craigslist—but by introducing such profound efficiencies, they deflate the markets they touch at a rate far faster than the human capital can redeploy itself in other markets. Since so much capital is dependent upon consumerism generated by that idled human capital, deflation follows.

These shortcomings of Romer’s New Growth apply, more particularly, to the “progressive” and “green” strands of cognitive capitalism.  Bill Gates and Richard Florida are typical of this tendency.  Florida specifically refers to Romer’s New Growth Theory, “which assigns a central role to creativity or idea generation.”  But he never directly addresses the question of just how such “idea generation” can be the source of economic growth, unless it is capitalized as the source of rents through artificial property rights…. [The Rise of the Creative Class]

But this approach is now failing in the face of the increasing inability to capture value from the immaterial realm.  The strategy of shifting the burden of realization onto the state is untenable.  Strong encryption, coupled with the proliferation of bittorrent and episodes like the DeCSS uprising (see later in this chapter), have shown that “intellectual property” is ultimately unenforceable.

The rapid development of circumvention technology intersects—powerfully so—with the cultural attitudes of a generation for which industry “anti-songlifting” propaganda is as gut-bustingly hilariously as Reefer Madness….

Cory Doctorow, not overly fond of the more ideologically driven wing of the open-source movement (or as he calls them, “patchouli-scented info-hippies”), says it isn’t about whether “information wants to be free.”  Rather, the simple fact of the matter is “that computers are machines for copying bits and that once you… turn something into bits, they will get copied….  [I]f your business model is based on bits not getting copied you are screwed.”

The proliferation of peer production and the open-source model, and the growing unenforceability of the “intellectual property” rules on which the capture of value depends, is creating “a vast new information commons…, which is increasingly out of the control of cognitive capitalism.”  Capital, as a result, is incapable of realizing returns on ownership in the cognitive realm.  As Bauwens explains it:

1) The creation of non-monetary value is exponential
2) The monetization of such value is linear

In other words, we have a growing discrepancy between the direct creation of use value through social relationships and collective intelligence…, [and the fact that] only a fraction of that value can actually be captured by business and money. Innovation is becoming… an emergent property of the networks rather than an internal R & D affair within corporations; capital is becoming an a posteriori intervention in the realization of innovation, rather than a condition for its occurrence….

What this announces is a crisis of value…, but also essentially a crisis of accumulation of capital….

A good example is the way in which digital culture, according to Douglas Rushkoff, destroyed California’s economy:

The fact is, most Internet businesses don’t require venture capital. The beauty of these technologies is that they decentralize value creation. Anyone with a PC and bandwidth can program the next Twitter or Facebook plug-in, the next iPhone app, or even the next social network. While a few thousand dollars might be nice, the hundreds of millions that venture capitalists want to—need  to—invest, simply aren’t required….

The banking crisis began with the dot.com industry, because here was a business sector that did not require massive investments of capital in order to grow…. What’s a bank to do when its money is no longer needed?…

The actual physical capital outlays required for digital creation are simply unable to absorb anything like the amounts of surplus capital in search of a profitable investment outlet—unless artificial property rights and artificial scarcity can be used to exclude independent production by all but the corporate owners of “intellectual property,” and mandate outlays totally unrelated to the actual physical capital requirements for production.  Since such artificial property rights are, in fact, becoming increasingly unenforceable, corporate capital is unable either to combat the growing superfluity of its investment capital in the face of low-overhead production, or to capture value through artificial scarcity by suppressing low-cost competition….

This shows why the “cognitive capitalism” model  of Gates, Romer, etc. is untenable….

Networked Resistance, Netwar, and Asymmetric Warfare Against Corporate Management. We already mentioned the corporate governance issues caused by the growing importance of human relative to physical capital, and the untenability of “intellectual property” as a legal support for  corporate boundaries.  Closely related is the vulnerability of corporate hierarchies to asymmetric warfare by networked communities of consumers and their own employees.  Centralized, hierarchical institutions are increasingly vulnerable to open-source warfare.

Networked resistance is based on a principle known as stigmergy.  “Stigmergy” is a term coined by biologist Pierre-Paul Grasse in the 1950s to describe the process by which termites coordinated their activity.  Social insects like termites and ants coordinate their efforts through the independent responses of individuals to environmental triggers like chemical trails, without any need for a central coordinating authority.

Applied by way of analogy to human society, it refers primarily to the kinds of networked organization associated with wikis, group blogs, and “leaderless” organizations organized along the lines of networked cells.

Matthew Elliott contrasts stigmergic coordination with social negotiation. Social negotiation is the traditional method of organizing collaborative group efforts, through agreements and compromise mediated by discussions between individuals.  The exponential growth in the number of communications with the size of the group, obviously, imposes constraints on the feasible size of a collaborative group, before coordination must be achieved by hierarchy and top-down authority.  Stigmergy, on the other hand, permits collaboration on an unlimited scale by individuals acting independently.  This distinction between social negotiation and stigmergy is illustrated, in particular, by the contrast between traditional models of co-authoring and collaboration in a wiki.  Individuals communicate indirectly, “via the stigmergic medium.”

There is a wide body of literature on the emergence of networked modes of resistance in the 1990s, beginning with the Rand studies on netwar by David Ronfeldt, John Arquilla and other writers.

In The Zapatista “Social Netwar” in Mexico, Arquilla, Ronfeldt et al expressed grave concern over the possibilities of decentralized “netwar” techniques for destabilizing the political and economic order.  They saw ominous signs of such a movement in the global political support network for the Zapatistas. Loose, ad hoc coalitions of affinity groups, organizing through the Internet, could throw together large demonstrations at short notice, and “swarm” the government and mainstream media with phone calls, letters, and emails far beyond their capacity to cope….

The interesting thing about the Zapatista netwar, according to Ronfeldt and Arquilla, is that to all appearances it started out as a run-of-the-mill Third World army’s suppression of a run-of-the-mill local insurgency….  The Mexican government was blindsided by the global reaction. [In Athena's Camp]

Similarly, global corporations have been caught off guard when what once would have been isolated and easily managed conflicts become global political causes.

Natural-resource companies had grown accustomed to dealing with activists who could not escape the confines of their nationhood:  a pipeline or mine could spark a peasants’ revolt in the Philippines or the Congo, but it would remain contained, reported only by the local media and known only to people in the area.  But today, every time Shell sneezes, a report goes out on the hyperactive “shell-nigeria-action” listserve, bouncing into the in-boxes of all the far-flung organizers involved in the campaign, from Nigerian leaders living in exile to student activists around the world….

The Internet played a similar role during the McLibel Trial, catapulting London’s grassroots anti-McDonald’s movement into an arena as global as the one in which its multinational opponent operates…. [Naomi Klein, No Logo]

In “Swarming & the Future of Conflict,” Ronfeldt and Arquilla focused on swarming, in particular, as a technique that served the entire spectrum of networked conflict—including “civic-oriented actions.”….

A recent example of swarming can be found in Mexico, at the level of what we call activist “social netwar” (see Ronfeldt et al., 1998). Briefly, we see the Zapatista movement, begun in January 1994 and continuing today, as an effort to mobilize global civil society to exert pressure on the government of Mexico to accede to the demands of the Zapatista guerrilla army (EZLN) for land reform and more equitable treatment under the law. The EZLN has been successful in engaging the interest of hundreds of NGOs, who have repeatedly swarmed their media-oriented “fire” (i.e., sharp messages of reproach) against the government. The NGOs also swarmed in force—at least initially—by sending hundreds of activists into Chiapas to provide presence and additional pressure. The government was able to mount only a minimal counterswarming “fire” of its own, in terms of counterpropaganda. However, it did eventually succeed in curbing the movement of activists into Chiapas, and the Mexican military has engaged in the same kind of “blanketing” of force that U.S. troops employed in Haiti—with similar success….

Social swarming is especially on the rise among activists that oppose global trade and investment policies….

The violent street demonstrations in Seattle manifested all the conflict formations discussed earlier—the melee, massing, maneuver, and swarming. Moreover, the demonstrations showed that information-age networks (the NGOs) can prevail against hierarchies (the WTO and the Seattle police), at least for a while. The persistence of this “Seattle swarming” model in the April 16, 2000, demonstrations (known as A16) against the International Monetary Fund and the World Bank in Washington, D.C., suggests that it has proven effective enough to continue to be used.

Swarming—in particular the swarming of public pressure through letters, phone calls, emails, and public demonstrations, and the paralysis of communications networks by such swarms—is the direct descendant of the “overload of demands” Huntington wrote of in the 1970s.

Many open-source thinkers, going back to Eric Raymond in The Cathedral and the Bazaar, have pointed out the nature of open-source methods and network culture as force-multipliers.  Open-source design communities pick up the innovations of individual members and quickly distribute them wherever they are needed, with maximum economy.

Open-source insurgency follows a similar development model, with each individual innovation quickly becoming part of a common pool of intelligence.  John Robb writes:

The decentralized, and seemingly chaotic guerrilla war in Iraq demonstrates a pattern that will likely serve as a model for next generation terrorists. This pattern shows a level of learning, activity, and success similar to what we see in the open source software community. I call this pattern the bazaar. The bazaar solves the problem: how do small, potentially antagonistic networks combine to conduct war? Lessons from Eric Raymond’s “The Cathedral and the Bazaar” provides a starting point for further analysis. Here are the factors that apply (from the perspective of the guerrillas):

* Release early and often. Try new forms of attacks against different types of targets early and often. Don’t wait for a perfect plan.

* Given a large enough pool of co-developers, any difficult problem will be seen as obvious by someone, and solved. Eventually some participant of the bazaar will find a way to disrupt a particularly difficult target. All you need to do is copy the process they used.

* Your co-developers (beta-testers) are your most valuable resource. The other guerrilla networks in the bazaar are your most valuable allies. They will innovate on your plans, swarm on weaknesses you identify, and protect you by creating system noise….

One especially encouraging development is the stigmergic sharing of innovations in the technologies of resistance between movements around the world, aiding each other across national lines and bringing combined force to bear against common targets.  The Falun Gong has played a central role in this effort…

The concept of networked resistance is especially interesting, from our standpoint, as it relates to two things:   the kind of anti-corporate “culture jamming” Naomi Klein describes in No Logo, and to labor struggle as a form of asymmetric warfare.

In both cases, governments and corporations, hierarchies of all kinds, are learning to their dismay that, in a networked age, it’s impossible to suppress negative publicity….   It’s sometimes called the Streisand effect….    One of the earliest examples of the phenomenon was the McLibel case in Britain…  Two important examples in 2004, the Sinclair Media boycott and the Diebold corporate emails, both decisively demonstrated the impossibility of suppressing online information in an age of mirror sites….  An attempt to suppress information on the Wikileaks hosting site, in 2007, resulted in a similar disaster….  The so-called DeCSS uprising, in which corporate attempts to suppress publication of a code for cracking the DRM on DVDs failed in the face of widespread defiance, is one of the most inspiring episodes in the history of the free culture movement….  The Trafigura case probably represents a new speed record, in terms of the duration between initial thuggish attempts to silence criticism and the company lawyers’ final decision to cave.

Corporations are immensely vulnerable to informational warfare, both by consumers and by workers.  The last section of Naomi Klein’s No Logo discusses in depth the vulnerability of large corporations and brand name images to netwar campaigns.  She pays special attention to “culture jamming,” which involves riffing off of corporate logos and thereby “tapping into the vast resources spent to make [a] logo meaningful.”   A good example is the anti-sweatshop campaign by the National Labor Committee, headed by Charles Kernaghan.

Kernaghan’s formula is simple enough.  First, select America’s most cartoonish icons, from literal ones like Mickey Mouse to virtual ones like Kathie Lee Gifford.  Next, create head-on collisions between image and reality.  “They live by their image,” Kernaghan says of his corporate adversaries.  “That gives you a certain power over them… these companies are sitting ducks.”….

The Wobbly idea of “direct action on the job” was a classic example of asymmetric warfare.  And modern forms of networked resistance are ideally suited to labor struggle.  In particular, network technology creates previously unimaginable possibilities for the Wobbly tactic of “open-mouth sabotage.”   As described in “How to Fire Your Boss”:

Sometimes simply telling people the truth about what goes on at work can put a lot of pressure on the boss. Consumer industries like restaurants and packing plants are the most vulnerable. And again, as in the case of the Good Work Strike, you’ll be gaining the support of the public, whose patronage can make or break a business.

In an age when unions have virtually disappeared from the private sector workforce, and downsizings and speedups have become a normal expectation of working life, the vulnerability of employer’s public image may be the one bit of real leverage the worker has over him—and it’s a doozy….

Given the ease of setting up anonymous blogs and websites (just think of any company and then look up the URL employernamesucks.com), the potential for using comment threads and message boards, the possibility of anonymous saturation emailing of the company’s major suppliers and customers and advocacy groups concerned with that industry…. well, let’s just say the potential for “swarming” and “netwar” is corporate management’s worst nightmare….

For example, although Wal-Mart workers are not represented by NLRB-certified unions, in any bargaining unit in the United States, the “associates” have been quite successful at organized open-mouth sabotage through Wake Up Wal-Mart and similar activist organizations….

The Wal-Mart Workers’ Association acts as an unofficial union, and has repeatedly  obtained concessions from store management teams in several publicity campaigns designed to embarrass and pressure the company….

Charles Johnson points to the Coalition of Imolakee Workers as an example of an organizing campaign outside the Wagner framework, relying heavily on the open mouth…

In late 2004 and 2005, the phenomenon of “Doocing” (the firing of bloggers for negative commentary on their workplace, or for the expression of other non-approved opinions on their blogs) began to attract mainstream media attention, and exemplified a specialized case of the Streisand Effect.  Employers, who fired disgruntled workers out of fear for the bad publicity their blogs might attract, were blindsided by the far worse publicity–far, far worse–that resulted from news of the firing (the term “Doocing” itself comes from Dooce, the name of a blog whose owner was fired).  Rather than an insular blog audience of a few hundred reading that “it sucks to work at Employer X,” or “Employer X gets away with treating its customers like shit,” it became a case of tens of millions of readers of the major newspapers of record and wire services reading that “Employer X fires blogger for revealing how bad it sucks to work at Employer X.”  Again, the bosses are learning that, for the first time since the rise of the giant corporation and the broadcast culture, workers and consumers can talk back–and not only is there absolutely no way to shut us up, but we actually just keep making more and more noise the more they try to do so.

There’s a direct analogy between the Zapatista netwar and assymetrical warfare by labor and other anti-corporate activists.  The Zapatistas turned an obscure and low-level military confrontation within an isolated province into a global political struggle.  They waged their netwar with the Mexican government mostly outside Chiapas, isolating the authorities and pitting them against the force of world opinion.  Similarly, networked labor activists turn labor disputes within a corporation into society-wide economic, political and media struggle, isolating corporate management and exposing it to swarming from an unlimited number of directions.  Netwarriors choose their own battlefield….

Thanks to network culture, the cost of “manufacturing consent” is rising at an astronomical rate.  The communications system is no longer the one described by Edward Herman, with the state and its corporate media allies controlling a handful of expensive centralized hubs and talking to us via one-way broadcast links.  We can all talk directly to each other now, and virally circulate evidence that calls the state’s propaganda into doubt.  For an outlay of well under $1000, you can do what only the White House Press Secretary or a CBS news anchor could do forty years ago.  The forces of freedom will be able to contest the corporate state’s domination over public consciousness, for the first time in many decades, on even terms.

We have probably already passed a “singularity,” a point of no return, in the use of networked information warfare.  It took some time for employers to reach a consensus that the old corporate liberal labor regime no longer served their interests, and to take note of and fully exploit the union-busting potential of Taft-Hartley.  But once they began to do so, the implosion of Wagner-style unionism was preordained.  Likewise, it will take time for the realization to dawn on workers that things are only getting worse, that there’s no hope in traditional unionism, and that in a networked world they have the power to bring the employer to his knees by their own direct action.  But when they do, the outcome is also probably preordained.  The twentieth century was the era of the giant organization.  By the end of the twenty-first, there probably won’t be enough of them left to bury.

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2 Responses to “Homebrew Industrial Revolution, Chapter Three: Babylon is Fallen (third installment)”

  1. katie Says:

    quite an intriguing and rich analysis…however, IMHO, it suffers from the same analytic limitation that has ruined economics–a steady state is assumed, both dynamic and material.

    now, because humans hunger and thirst, *all* analyses must account on continuing basis for the effects of their projections within the stage/proscenium of physical human needs being met–or not.

    and the well written and exciting analysis above, neglects the unavoidable fact that the global locations where humans can live together without a state of internal war for subsistence, are shrinking, and the shrink is accelerating rapidly, e.g., the floods of pakistan, the killer heat waves, etc.

    so money, as we now know and use it, as both a store of value, and a transnational and local medium of exchange–as the ultimate arbiter–is coming to its last act on the current stage of human culture.

    and since money itself is devaluing vis a vis the value of one’s physical location, then the strategies to acquire more money, or to press the capital structure to give way–these strategies are largely futile.

    when the elephant is dying, the ants don’t need to keep biting it.

  2. Matthew Cooperrider Says:

    Great chapter. One correction: the work on stigmergy is by Mark Elliott.

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