The article that I wrote for Al Jazeera is really making the waves and bringing the p2p-theoretical ideas of the value crisis (i.e. “abundance doesn’t work well with markets”) to a more mainstream audience. Thanks to editor Sam Bollier for this opportunity!
Here is an amendment to the value crisis debate, from the partitaimaginaria blog :
“Much post-war growth was generated on the supply-side of the economy by technological catch-up. According to Moses Abramowitz, “…the countries of the industrialized west were able to bring into production a large backlog of unexploited technology …the principal part of this backlog …consisted of methods of production and of commercial and industrial organisation already in use in the United States.” This was most obviously the case for Italy, France and Japan and is now abundantly evident for the BRICS (except Russia) and the tailing ‘Next 11’.
The opportunities for technological catch up gave capital a high marginal productivity, leading to high levels of private-investment demand. Such private-investment demand in catch-up technologies was most notable in Italy and Japan – two of the countries with the world’s highest recorded economic growth between 1950-73.
More recently, however, it seems that private investment in fixed capital assets is increasingly undermining profits, not catalysing them. The major variable is what Marx called ‘moral depreciation’,
“…in addition to the material wear and tear, a machine also undergoes what we might call a moral depreciation. It loses exchange-value, either because machines of the same sort are being produced more cheaply than it was or because better machines are entering into competition with it.”
Between 1990 and 2009 the costs of moral depreciation averaged 27 percent of after-tax profits in the US, up from less then 5% in 1961 and 10% in the mid-70’s. This means that very large shares of surplus value have not been realised as profit because of losses stemming from moral deterioration in the last three decades. This is an increasing trend for corporations in advanced economies that does not seem to be stopping anytime soon.
While many see the IT revolution as both a product and a catalyst of capitalism and post-war growth, there is evidence that IT and its rapid pace of obsolescence is contributing to the destruction of value (and subsequently profits) through ‘moral depreciation’. A paper published in 2003 by Tevlin and Whelan argued that the IT revolution is constantly depreciating the value of existing fixed assets through the speed of technical innovation. This helps the profits of no-one but corporations in the IT industry and a clutch of venture capitalists. Unlike the period 1950-73 the costs of private investment demand in new technologies will increasingly destroy not catalyse profits.”