Adam Arvidsson: The monetary economy vs. the ethical economy

Adam Arvidsson has just sent me his latest essay, and I have no hesitation to call it a landmark essay because it is the very first really cogent analysis of the emerging Crisis of Value which is affecting the present market economy model.

In short, a new second economy is arising, which he calls the Ethical Economy, which does not run according to monetary exchange, and can only be very partially monetized and controlled by the market. There is a crisis of value he says, because this new economy cannot be measured, either because the right metrics are not yet in place, but perhaps more fundamentally, because it is largely beyond measure, and even what can be measured of it, cannot be directly related to the monetary economy.

This essay is as yet unpublished, but I want to publish some key excerpts, followed by my own response.

Excerpt: the impending crisis of value

“It is becoming ever more obvious, even the mainstream business press is acknowledging this, that the information economy is split in two; we have two economies rather than one (or three, if we include the growing criminal or informal economy which we will not treat in this paper). On the one hand, there is the traditional capitalist economy that works with monetary incentives. This economy still handles the main part of material production: the production of cars, shoes, computer chips, as well as the transportation and maintenance of these goods. But immaterial production- the production of the ideas, innovations, experiences and other intangibles that virtually everybody agrees to be the most important source of value and development- is increasingly performed by another economy that does not primarily move according to monetary incentives. Most people who participate in creating the enormous wealth of content that give MySpace or YouTube their market values are not in it for the money. Instead they want to build networks, make friends, show off, be cool or what have you. The same thing goes for the users who participate in the multitude of smaller, less famous sites that make up the new productive developments known as Web 2.0. Neither are the people who participate in the many business initiated user-led innovation initiatives that now proliferate, like the Nokia Concept Lounge (450.000 visitors, 4.500 Ideas submitted) or user generated advertising campaigns like Heinz tv-challenge, primarily there for the money. Indeed the very business sense behind such initiatives is that they give access to an enormous resevoir of free creativity that needs not be paid for (to be deployed either in the actual design of products or advertisements, or, more importantly perhaps, in brand building, von Hippel, 2006).

The importance of such non-monetary production is however not limited to the world of on-line initiatives or web 2.0. Within companies it has long been recognized that the prime source of productivity is not what people get paid for, but what is more difficult to include in a job description: their ability to network, share knowledge and support each other, to co-create a good working environment, a marketable service or a flexible organization. Managers recognize that the best way to foster such forms of cooperation is not through monetary incentives, but rather by fostering a solid corporate culture with strong values, a strong sense of solidarity or commitment, a particular ‘mood’ or ‘vibe’ (cf. Brian & Joyce, 2006). Similarly marketers have discovered that the autonomous cooperation among consumers is an important source of brand value (Holt. 2002, Arvidsson, 2006). Finally, the ‘creative economy’ of the urban music, arts and fashion scenes, which is growing in importance as a productive externality for the creative industries proper, is not primarily motivated by monetary incentives. Most members of the ‘creative class’ do not live off their creative labour, but rather accept poor or precarious economic conditions as a (temporary, they hope) trade off for the ability to realize themselves or pursue their dreams (Florida, 2002, cf. Arvidsson, 2007).

We have chosen to call this emerging non-monetary economy an ‘ethical’ economy. Not because we necessarily believe that it is inherently better or nicer than the mainstream corporate economy. Instead, our choice of the term ‘ethical’ refers to the fact that this economy is largely coordinated by respect, peer-status, networks, friendships and other forms of inter-personal recognition. It is geared towards the accumulation of such forms of interpersonal recognition, what sociologists would call ‘social capital’. “

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