The whole paper is available here.

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Lately the notion of ‘creative industries’ have had a certain salience in Thailand. In 2005, the  Thaksin government launched the first in a series of Thai fashion weeks and founded TCDC a government organization with the aim to further ‘creativity’ across various industries. In part this move was inspired by the contemporary Western craze about creativity. In part it was a reduction towards a tangible loss of productivity within the garment industry (threat china Vietnam, stats Thai garment industry). It was held that the promotion of creativity and in general, and of fashion in particular would help Thailand move up the textile value chain. The model of creative industry promoted by TCDC was more or less directly inspired by the prevailing (at the time) Western discourse on creative industries However, in 2005, Thailand already had a fashion industry, but it unfolded elsewhere, in chiefly on Bangkok’s endless street markets.

Thai Fashion- the preconditions

The garment industry has been a cornerstone of the Thai industrialization process. In the 1990s Thai garment production began to face serious competition for Cina and Vietnam.  As a consequence, overcapacity increased  lay-offs ensued. Export oriented garment producers resorted to putting out systems, de-localizing production to small sweatshops and domestic units, where wages could be pressed further down. This situation was further exacerbated by the Asian financial crisis of 1997 that hit Thailand particularly hard (the devaluation of the bath was, after all what triggered the crisis). In the wake of the garment industries, like most other industries faced massive lay-offs. And many of the skilled workers now laid off set up their own sewing shop at home. This means that there is a constant overcapacity within the garment industry and that consumers, and above all fashion designer can find ready and easy access to flexible material production capable of quickly producing short series of garments. This easy access to material production and its flexibility is, as we shall see a fundamental element behind the Thai fashion industry.

In addition the modernization of Thai society has seen a massive value shift in recent decades. Fostered by higher levels of material prosperity, longer education and easier access to university enrollment, the children of the middle classes increasingly opt out of the salariman career of their parents to seek self realization in more creative pursuits.  Like in the West this has resulted in a wave of symbolic experimentation, resulting in new aesthetics and lifestyles. Unlike in the west however this symbolic experimentation has been virtually de-linked from any  experimentation with alternative social models or political visions. Rather the wish to autonomy and self- expression is mainly channeled into entrepreneurship. To put it a bit stereotypically: while Western middle class youth might express their wish for creativity and self-expression by engaging in activities that maintain a high counter cultural orientation, even if this is a matter something as technical and mundane as producing computer code in Free Software networks, Thai middle class youth set up a business, alone or with their friends. This is no doubt facilitated by the ease with which this can be done. Bangkok is full of markets and other kinds of commercial space, access to material production is relatively simple and regulation is low or non-existent. (In our  survey of small fashion designers selling their wares on the enormous Chatuchak market, ‘creativity’ and ‘business success’ were roughly equally popular as motivations to set up shop, 60 and 40 per cent respectively).   In addition, most middle class families probably have some experience with selling on markets and with entrepreneurship in general (65 per cent of the respondents to our survey replied that their parents were merchants or sellers of some sort, indeed Thailand has the highest level of self-employment in the world). It seems that to set up a business of one’s own is a frequent answer to a difficult labor market (50 per cent of the graduates from Ranghsit University’s fashion program set up their own business) or a compliment to an ordinary job (43 per cent of the designers that we asked had ordinary jobs as well), whether because of economic reasons or because that other job did not offer sufficient venues for creative self expression (56 per cent of those who did have another job worked in advertising, design, fashion- in the creative industries.) In short there seems to be very little in terms of the classic contradiction between business and creativity that is a cornerstone of Western creative ‘scenes’.

And a large share of such entrepreneurial self expression is channeled into fashion. Like music in the West, fashion is the ‘natural choice’ for a young person embarking on a creative careers. (as one of our interviewees stated: ‘Everybody wants to be a designer’) In the last couple of years newly opened fashion schools have seen a boom in applications. The reasons for this are several and highly interlinked. Fist of all, Thai middle class culture has traditionally been marked by a strong emphasis on the visual and on appearance, and to be well dressed has been understood as an important social grace. This emphasis on visual self-presentation has arguably been exacerbated by the status confusion resulting from the Thai modernization process . Pre-modern Thai society was structured in four neatly separated social classes, with strictly defined ways of dress or behavior. In the process of modernization these classes has been dissolved. The result is a constant ‘status anxiety’ experienced in particular by young members of the Thai middle class.

Secondly, the hegemonic role of consumer culture in the Thai modernization process has meant that creativity and self expression almost inevitably becomes consumerist self expression. At a first level this stems form the fact that there is very little place for such self expression outside of consumer culture. Thai society remains strongly segregated along class lines, and the middle class public sphere is almost exclusively made up of shopping malls, markets and similar commercial spaces.  And where there are non-consumerist subcultures, like for example the biker culture, these are generally associated with working class status and, as such, marginal to or even actively shunned by middle class youth.  Consequently, in Bangkok the shopping mall or the market is the natural place for middle class sociality and for the exhibition and circulation of stylistic innovation. Even those subcultures that in the West are frequently associated with anti-consumerist orientations, like punks, are here, as in for example Japan, easily integrated within mainstream consumer culture and translated in to a fashion statement. This way the stylistic creativity of sub-cultural resistance directly becomes expressions of diverse fashion styles, without the need for any appropriation or commodification on the part of the culture industries, and young people see no contradiction in the consumerist channeling of sub-cultural statements. Indeed the recent indie wave that has hit Bangkok, to a large extent as a result of the city becoming a hub for Asian indie music, mainly resulted in an invasion of university campuses with a multitude of market sellers, peddling indie fashion garments, t-shirts as well as boot leg CDs.  (inteview). The result is a highly mobile young consumer demand for fashion garments. The students and office workers that frequent Siam square regularly buy new garments weekly, and many take on high levels of dept to sustain such varied consumer styles.

However, this intensive consumer activity is not simply ‘co-opted’ by large  multinational companies. It is true that elite Western consumer brands, and in particular fashion brands like Gucci, Prada and Hermes exercise a deep fascination on Thai consumers. However, most of their purchases come from a different  market segment. Our interviews report that while Thai middle class consumers, and in particular women will invest massive amounts in the purchase of one or two expensive branded accessories (like a Chanel bag or  a pair of Hermes shoes- many of which will subsequently be exchanged in the second hand brand exchanges that proliferate around Siam square). Mostly consumers will purchase cheap and relatively low quality fashion garments from small stores  around Siam Square or on the JJ weekend market. Such garment will subsequently be used one or two times, and then thrown away (or recycled on the massive market for second hand garments that exists at a lower segment). To satisfy this demand for ‘fast fashion’ there is a virtual army of small independent fashion designers, many operating in operation so three or less, and selling mainly out of the cities many markets.

Innovation, Imitation and the Hierarchy of Markets

The Thai fashion system is strongly spatially segregated. At the very top en are the Western brand stores that populate exclusive shopping malls like Siam Paragon or the Emporium. These stores are usually empty (because of their restricted clientele) and their  emptiness set them off from the bustle of the street outside and contribute to enhance the brands that they represent with an aura of exclusivity and aloofness. At the second level there are a number of self consciously ‘creative’ sectors, like K Village on Sukhumvit Soi 26 or Soi Thonglor. Once again these areas are high class ( or Hi-So to use the Thai expression), part of exclusive condominium developments and showcased by TCDC and other official agencies as examples of Thai creativity. The designers that exhibit there   have often studied design in Europe (and hence generally come from an upper class background), and nurture a conception of fashion design as the expression of inner creativity. This individualistic outlook make them look down on the next level, the small design shops that make up the participatory fast fashion that we have studied.

The upper level of the fast fashion system is structured around Siam Square and JJ market. Siam square, the youthful part of the Siam commercial complex hosts a couple of hundred small fashion stores run by mostly young designers. Often these designers will have market stalls at the JJ weekend market as well. This enormous markets comprises some 10.000 stalls, about a tenth of which are garment stalls. Out of the garment stores we identified some 400 that satisfied our criteria of ‘designer-operated’. By this we meant that the products sold were also designed by the person operating the stall, and not simply re-sold or imported in bulk from China, and that there would be an element of self-conscious identity, such as mostly a brand. Generally designers will start out on JJ market, where the rents for a market stall are significantly, to then move up, if successful to Siam Square.  The designers are generally young (in their twenties) and middle class, culturally and socially they belong more or less to the same social group as their consumers. These designers seem also to be heavy consumers of the garments produced by other designers on the market. Indeed a significant proportion of the designers that we surveyed indicated claimed that they had chosen to start designing clothes because they had a ‘passion for fashion’ (40 per cent) , or even because they could not find clothes that suited them on the market (17 per cent). The stories told by the people we interviewed indicate that a common start is to begin to design clothes for oneself- a practice that is rendered simple by easy access to tailors (until recently it was common for middle class families to tailor make their clothes, the older generation still do this. Tailors are cheap and cloth is easily available on the city’s many garment markets.) In short the designers belong to the same age group, social class and cultural universe as the consumers, and the two categories are interacting closely to the point of overlapping.

This fashion culture is kept together by magazines and online resources that distribute Western and Asian brand and consumer fashions. Japan used to be the main source of inspiration here, but in recent years Korea ha risen to prominence, in particular in relation to fashion. Korean and Japanese fashions are subsequently embraced by movie stars and other celebrities, to which a number of widely circulating publications are dedicated. And it is first when a particular garment or style is embraced by such a celebrity that it begins to acquire widespread diffusion. (Indeed many of the more successful designers in Siam square will actively woe celebrities to wear their collections, to subsequently exhibit pictures of their successes in this endeavor in their shops). Once a garment is embraced by a celebrity it is copied (or interpreted) by a designer. If successful, such an imitation/innovation spreads fast among the designers in the market (79 per cent of our survey claimed to be ‘copied often’ by other designers). Once such a design element achieves sufficient popularity it moves one step down in the fashion chain, to be imitated by the mass producers who sell whole sale at the Pratunam and Bo-Bai markets. These garment markets serve as sources for street market vendors that operate throughout the city of Bangkok, and the provinces, as well as in India, Africa and the Middle east (where ‘Bangkok fashions’ has a certain reputation for style and quality). For the middle class designers and consumers at JJ market and Siam Square, the fact that an innovation has been adopted by the whole sale vendors at Pratunam, who, via the street market vendors cater to a working class public, signifies two things. For the original innovator (or the original imitator, to use a term inspired by the Asian concept of the ‘original copy’) this might mean an increase in fame and status. The density of interaction on the markets means that everybody knows from where a particular innovation has originated.  Usually however, it triggers stylistic innovation.  And the velocity of innovation is very high. Most of the designers that we surveyed (60 per cent) claimed to ‘add new items to their collection’ once a week, and that their consumer and a distinct stylistic innovation can travel from JJ market to the whole sellers at Pratunam in a month or even in weeks.

At a first look the Thai fashion system seems to be hierarchically structured, along the lines of those theorized by European 19^th century observers like Veblen or Simmel. Innovation happens at the top, by an elite of made up of celebrities and movie stars and is diffused throughout the system, from the designers at JJ market and Siam Square down onto the wholesale markets at Pratunam and Bo Bai. In reality however the situation is more complex. And even though there are a number of magazines dedicated to street fashion, the designers that we interviewed denied being inspired by ‘the street’. However, the explanation for this statement might be that in a certain sense they are ‘the street’. The celebrities that show case new fashions are comparatively close to the consumers, minor starlets that rise from the local music and fashion scenes to a brief period of fame on television, or even on the cover of a magazine. Consumers do their part in demanding continuous innovation on the part of designers, and in diffusion new ideas throughout the market though the very density of social interaction. Even the working class consumers that purchase imitations of fashion items that have trickled down to the Pratunam market can be said to do their part by pushing status conscious middle class consumers to crave something radically different. The story of hip hop is be illustrative in this respect. Above all, a simple distinction between imitation and innovation does not describe the Thai fashion system very well. (nor perhaps the Western system). In Thai culture this can be said to be particularly pronounced. On the one hand this is because of a tendency to mixing and sampling that is obvious in a range of other cultural expressions  where diverse ingredients are mixed up in innovative and diverse ways by individual actors. This means that even at the bottom, wholesale end, it is common to see knock offs and copied where a small detail has been added or changed. On the fashion markets most designers entertain a strong ethos of self-expression and will make some minimal addition to a garment that is copied. If nothing else this is necessary to maintain a distinct identity in the face of massive competition. In a situation where 400 designers with their own distinct brand identity operate in intense spatial proximity, to straightforwardly copy is simply not a viable business strategy, designers need to innovate, while imitating the general trend, if nothing else in order to set themselves off from the garment sellers who share the market with them, but who’s garments retail for half the price. Rather, the density of social interaction that characterizes the fast fashion system and the social proximity between designers, consumers and even producers  means that the fast fashion system is best viewed as a system of collective innovation, where rapid stylistic innovation results from intensified flows of objects, symbols and discourses among participants.

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Kevin Carsons hypothesis about of the end of the New Work boom focuses on an oversupply of capital:

“The problem with his “straining a billion bits of krill” investment model is that those hundreds of thousands and even millions of ventures, cumulatively, weren’t enough to soak up even a large fraction of all the capital lying around waiting to be invested. So the overwhelming majority of available capital still sat idle without any productive outlet. “

However an oversupply of capital is only that in relation to an insufficient demand. The reason why hundreds of thousands or even millions of ventures can not prosper is that there is insufficient demand for their products. This suggests that an economy of abundance (also a relative concept- the old industrial economy was surely an economy of abundance in relation to the old artisanal economy) needs a Keynesian regime of regulation. That is, the state or some other state-like actor must install a mechanism for the redistribution of value that guarantees a sustained demand for new products. To accomplish this entails two things. First, to redistribute the new value that is generated away from the restricted flows of corporate and financial rent that circulate among Kettlewell and his investors and to larger swats of the population (thus activating the multiplier effect !). Since the Maker boom builds on highly socialized, or even ubiquitous productivity, it seems logical that such a redistribution takes the form of some kind of guaranteed minimum income. Second, the state (or state-like actor) must guarantee a direction of market expansion that is sustainable in the future. In our present situation that would probably mean to offer incentives to channel the productivity of a new maker culture intoproviding solutions to the problem of transitioning to sustainability within energy, transport and food production systems. This would, no boubt open up new sources of demand that would be able to sustain the new economy of abundance for a long time, and after that we can go into space ! Without such a Keynesian governance, a future economy of abundance is doomed to collapse, just like the industrial economy of abundance collapsedin 1929.

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Cory Doctorow, The Makers, San Francisco; Tor books, 2009, pp. 416, also available at http://www.tor.com/index.php?option=com_content&view=blog&id=38507

What is a viable business model for the two-thousand-teens? What can a large, rich and half fossilized corporation with an outdated product do? In his new novel, The Makers, Cory Doctorow starts off with Kodak and Duracell, both makers of obsolete products that merge to form Kodacell. Under the leadership of dynamic ex-venture capitalist Kettelwell, endowed with the corporate version of a surfer’s good looks, Kodacell embarks on a wave of micro financing: identifying small teams of innovators across the country and providing them with the backing and managerial skills needed to take their bright ideas to market. The result is the New Work Movement, a sort of dot.com boom 3.0, but this time based on material production. Building on new radical technologies like 3 D printers; on the abundance of scrap technology available for recycling; on Open standard for designs and other kind of intellectual property and on the innate skills of a by-now wide spread ‘maker’ culture of tinkerers, recyclers and hardware hackers, the New Work movement generates a plethora of innovations- from robotic dolls (The Boogie Woogie Elmos) synchronized to team-drive a car, via multifunctional Garden Gnomes, to RFID tagging systems that help keep order, and hence, peace, in the kinds of overflowing multiperson households that have become the standard as the nuclear family has collapsed as a social as well as economic unit. We get to follow the New Work movement through the eyes of Suzanne, a silicon valley journalist who quits a by now underfunded San Jose Mercury, and moves out of the valley just before house prices implode, to become the main blogger of the movement, Tian, the business manager , and Perry and Lester two genius hardware hackers who work out of an abandoned strip mall in Florida and specialize in robotic sculptures made out of recycled techno junk, like the toast robot built from souvenir seashells or Lester’s mechanical computers. (In the end of the book, before dying form complications resulting from his St. Petersburg treatment for obesity- a cocktail of appetite-suppressing hormones, stem cells and genomic therapy and that makes his body consume 10.000 calories a day just sitting down, thus becoming a ‘fatskin’ a skinny fat person who devotes most of his energy to making up for missed sexual occasions- Lester succeeds in building an ‘ Apple clone running entirely on physical gates made out of extruded plastic skulls. It takes up an entire building out on one of the lots and when you play Pong on it, the sound of the jaws clacking is like listening to corpse beetles skeletonizing an elephant.’, ‘I think I’d like to see that,” Perry said, laughing a little‘ , p. ..). When the New Work movement collapses- we are never really told how, just that the astute Kettelwell got out in time to make a comfortable fortune- Lester and Perry are left in a Florida marked by social disintegration, gangs, urban squalor and overall pessimism (‘nobody wants to make anything anymore‘). They cling on to the squatter community that once organized around their workshop as a sort of living lab for their effort to produce cheap high tech gear for he world’s growing population of homeless and squatters, and dedicate their efforts to maintaining a nostalgic, Disney-like ride that features the treasures of the now defunct New Work Movement, and that changes everyday, by means of 3 D printers and rapid prototyping, according to input supplied by users, in true peer-to-peer fashion. The ride leads them into a a number of legal battles with Disney (and Kettelwell makes a comeback inventing the long term litigation investment vehicle, a truly Schumpeterian instrument where investors provide the juice necessary to brake the back of a corporate behemoths like Disney and capture their assets), ending in the pair and their rides eventually being bough out. Lester goes to work for Disney, and Perry hits the road, working for the many self organized work crews that now spring up in the wasteland of a US in rapid decline.

Like Doctorow’s previous work the novel is a great read an quite an eye opener to future scenarios. (After all, Doctorow should know, being the founder and editor of the influential tech blog BoingBoing.com). The story is darker this time though. Maybe because his last novel, Down and Out in the Magic Kingdom (always maintaining an ironic fascination with Disney that looks like something of a geeky in-joke) was set in the distant future, and maybe because his ‘Californian Ideology’ tainted optimism has taken a understandable hit or two in recent years. ⁱ

Down and Out …. described a future economy of abundance governed by a fully functioning reputation economy, where the accumulation of Whuffie, or social recognition for one’s genuine contribution to the common cause, determined access to scarce resources. In The Makers, we are still in an abundance economy, albeit contained within a, however struggling, capitalist value form. This abundance comes from the radical oversupply of stuff produced by our present consumerist paradigm, and thrown away long before its natural obsolescence to be recycled at will. Add to this the integration between a booming Open Design movement, 3 D printers and other kinds of rapid prototyping and new computerized precision tools. As Lester answers the question ‘why build a toast robot out of sea shells?’:

‘It’s like this, engineering is all about constraint […] but these days, there’s not much traditional constraint. I’ve got an engineers most dangerous luxury: plenty. All the computational cycles I’ll ever need, easy and rapid prototyping. Precision tools. What I’ve got here are my own constraints. I’m challenging myself, using found objects and making stuff that throws all this computational capacity at, you know, trivial problems, like car- driving Elmo clusters and seashell toaster robots’. (p. 20).

And we can see this not-so-distant future economy of abundance coming: Within the industrial economy the tendency has been long under way. Already now, productive capacity for most commoditized industrial components has been generalized to the extent of pushing profit margins close to zero ⁱⁱ Today we see how this new ability to make things is spreading out of the sweatshop districts of the South East. Driven by the share availability of techno-junk to recycle, and empowered by a booming open design movements, and new hot technologies like the rep rap 3 D printer or the Fab Lab system, hardware hacking spaces are proliferating everywhere, and we can see the beginnings of a new Maker culture that attracts (mostly) young people into a kind of neo-artisan, high tech version of material production. (But we don’t even need this scenario, Alibaba.com and a number of similar sites offer rapid access to Chinese producers willing to make and ship your designs in small series. You can pay by pay pal and even chat with their technicians via a Mandarin-English translation interface.)

As Doctorow suggests, it is just a matter of time before capital, corporate or venture, discovers this potential new boom, just as it built the dot.com boom of the 1990s on an existing hacker and new Media art culture. So, yes, we are likely to see things like Kodacell in the future. After all what else should big corporations do. If the Maker revolution that Doctorow envisions is true, then large corporations are set to loose their monopoly over material production (again, this is already happening), just as already now they are losing their power over innovation and brand.

The question is rather, can a corporate-funded New Work movement be sustainable. In the second part of the novel New Work is over, but we are never told why. At the same time Lester and Perry tinker away within a rapidly deteriorating urban wasteland where homelessness, squatting, and petty crime has become the norm, and where a growing majority of the population are excluded from the value flows of the corporate economy (sounds familiar?). The problem is off course that to the extent that material production becomes generalized, then the ability to create value comes to reside either with the ability to erect and maintain artificial monopolies, like in the case of intellectual property rights, or with the ability to organize complex flows, which is the privilege of the managerial class. Even if he never makes this point explicitly, Doctorow seems to suggest that a capitalist economy of abundance is unsustainable precisely because it tends to restrict the reach of its value flows to a privileged managerial elite, thus not only leaving everybody else without access to the goods, but also effectively undermining the kind of effective demand that could sustain New Work as an ongoing reality. In the Makers the state is absent, we don’t have a new New Deal, there is no intervention that drives this new productivity in a direction where it can address the problems connected with a transition to sustainable systems, and thus open up a plethora of new markets. And eventually it collapses for lack of demand. Instead we are left in a post-capitalistic wasteland where itinerant work crews address basic needs on a local, self-organized basis, and perhaps build the first foundations of the post-capitalist economy of abundance that Doctorow described in his previous novel, Down and Out in the Magic Kingdom. So to put itin really crass terms: a maker culture can not survive without guaranteed minimal income ! (Both books can be freely downloaded online.)

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With a  bit of delay, here is the second instalment of my analysis
of the current crisis from the point of view of  ‘the ethical economy’

I. First Idea Our crisis is a crisis of transition.
The present financial crisis is not the first to hit us. Rather, the period of relative financial calm that marked the persistence of the Bretton Woods accord (1947-1971) has been succeeded by a series of financial boom and bust cycles, the stock market in the 1980s, the dot.com boom in the 1990s and now the sub-prime/real estate bubble. The reasons behind this recent volatility are many ad interconnected in complex ways.  First, the collapse of the Bretton Woods system itself created higher levels of volatility (in particular in currency markets) and greater scope for speculation. Second, the computerization, networking and technological refinement of financial markets have vastly increased their speed and scope. Third, deregulation and other policy decisions has further accelerated the process (like Margaret Thatcher’s decision to systematically transform the British economy from one centred on industry to one centred on finance and corporate services).
However, at the heart of the expansion of financial markets and, as a consequence, of financial speculation, there has been a constant and growing over-supply of capital, driven by a persistent decline in the rates of profit of virtually all non-financial sectors of the US economy. This tendency has  accelerated in the 1990s . Tendencies are the same for Western Europe and, not least, China. The result is that capital finds declining opportunities for profitable investments in the productive economy, and tends to migrate to financial markets where gains can be much higher, at least in the short run. Again this has been particularly true for China where industrial profits and private savings have been massively channelled into the US economy (partly for geopolitical reasons), where they have fuelled the recent waves of debt-driven private and public consumer bonanza. The flight of capital away from the productive economy and into the financial economy is a manifestation of the inability of the present economic regime to put the wealth it produces to productive use. This is an important point. It is not that there are no more needs to be met in the world. It is simply that the prevailing techno-political paradigm is unable to open up the markets by means of which capital could be productively deployed in meeting such needs. Although there are a number of attempts in this direction, like venture capital investing in alternative energy systems, or companies cultivating the ‘bottom of the pyramid’, the market of the global poor, these are the isolated results of mostly private enterprise, and not the coordinated outcome of systemic initiatives. Such a co-existence of unmet needs and excess capital, and the financial expansion that results from this combination is a classic symptom of the immanent transition form one system to another. Similar things have happened before, for example in the financial boom of the 1920s that marked the transition from a 19th century English-style industrial capitalism to an American-style consumer capitalism. Then the resolution of the crisis consisted in a series of systemic measures- the New Deal and resulting welfare systems- that not only managed to realize a more democratic mass consumer society thus opening up a range of new markets where capital could be deployed to meet hitherto unmet needs and desires, but de facto institutionalized a new, Fordist, paradigm of capitalist development. Indeed in his masterful  history of the ‘long twentieth century’ Giovanni Arrighi argues that periods of financialization of the economy, like ours, usually constitute the last phase of a ‘systemic cycle of accumulation’ and signal the emergence of another one.
The reason behind the declining profitability of investment in the productive economy is the growing productivity of labour across most sectors of the economy (excluding some kinds of personal services). In part, this growing productivity depends on what Marxists call the rising ‘organic composition of capital’, that is, the rate of machines and other ‘stuff’ to workers. In particular robots and information technology has rendered workers in factories and offices immensely more productive, drastically reducing the time needed to produce stuff or do things. The result is a supply of ‘more stuff’ and declining prices, which reduces levels of profits. However, the rising organic composition of capital is per se not the only factor behind the recent profit squeeze (after all this has been going on for a long time). Rather, the rising ‘organic composition of capital’  has also caused the emergence of a new mode of production within the capitalist economy itself. This new mode of production has a shadowy presence on the balance sheets of companies, where it figures as what is known as ‘intangible assets’.
full text, as always, here

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We are, it would seem, in the midst of a historical crisis of the capitalist system. As the dynamo effects of the sub-prime collapse ripple through the economy, from financial markets to consumer spending and industrial production, it has become common to point at how our present capitalist system lacks long-term sustainability. If this used to be the privilege of a handful of left-leaning economists like André Gunder Frank (2005) or Robert Brenner (2004), economists, politicians and business leaders who used to be more than happy with the existing order of things have now joined the ranks. Even Richard Florida, whose theories of the ‘creative class’ stood at the heart of the gentrification-driven real estate boom that preceded the present crisis now proclaims that'[t]he housing bubble was the ultimate expression, and perhaps the last gasp, of an economic system some 80 years in the making, and now well past its “sell-by date” (Florida, 2009:9).
However, in order to understand why the ‘system is past its “sell-by date”‘ and, by implication, what can be done about this, it is not enough to go beyond populist cries of managerial greed and corrupt banks. We need to move even deeper into the heart of the matter, beyond even most current explanations that focus on the perversities of advanced financial instruments and the need for tighter regulation of financial markets; we need to ‘descend into the depths of production‘ to quote (an increasingly popular) Marx (1939[1973]:105) once more, and engage with the fundamental concept of any economic analysis: value.

This article will attempt a couple of moves in that direction. It will argue that we are witnessing a fundamental re-configuration of the very core logic of value with which our economy works: We are moving from a capitalist economy where value is directly related to investments in productive time, to an ever more influential ‘ethical economy’ where value is related to the quality of social relations. I will develop this argument by presenting five (interconnected) ideas: One, that our crisis is a crisis of transition from one system, industrial capitalism, to another economy that has yet to find its political, juridical and ideological form, its ‘superstructure’ to keep using Marxist terms. Two, that this crisis of transition is driven by the emergence, within the institutional framework of capitalism itself of a new mode of production that works according to a logic of value that is different from that of industrial capitalism. Consequently a lot of the wealth actually produced by the economy cannot be adequately valued and, by implication, managed within existing structures of accounting, control and measurement. Seen this way, the crisis we are now living through is essentially a value crisis, where, as the opening quote claims, exchange value no longer adequately reflects use value, or, to put it in less cryptic terms, there is a general sensation that a lot of the real values that circulate in our economy cannot be adequately represented. Three, that the emerging ‘new economy’ has a distinct value-logic of its own. It is an economy where value is related not to productive time as in the capitalist economy, but to the ability to build ethically binding relations: it is, in this sense and ‘ethical economy’. Four, that the emergence of such an ethical economy is the outcome of a dialectic that has been immanent to the very development of the capitalist economy, and in particular to its post-War globalization- phase. Five, that since, as recent economic sociology would argue,’value’ is essentially a shared convention as to the representation of economic processes (cf. Barry & Slater, 2005, Chiapello, 2008), the solution to the present ‘value crisis’ is contingent on the establishment of a new shared convention. Given the nature of the ethical economy, such a convention must be centred on a transparent and systematic measure of the social impact of companies and organizations.
I am aware that a bold statements like these are risky in an academic setting, particularly when expressed in the condensed format imposed by the medium of the journal article. (This article is in fact an attempt to summarize the ideas behind an ongoing book project.[ii]) As a sort of pre-emptive defence against the (legitimate) criticism that this article will no doubt produce,I want to remind the reader that its purpose suggest ideas that can guide our interpretation of current events. Although such theoretical work needs to proceed in close dialogue with the available facts, it stands no chance of even approaching the empirical rigour needed for a thorough substantiation of the hypotheses proposed. All this article aims to do is to present a number of ideas that can serve as heuristic devices, that may be, hopefully, developed, corroborated, criticized or refuted by others.

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Shell has pulled out completely. Centrica, E.ON and BT are reviewing their plans. Sun Microsystems has suspended its projects. The Spanish company Iberdrola is cutting its investment in the UK by 40%. Scores of smaller firms are going bust.

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This chapter analyses a number of pertinent contemporary phenomena, like knowledge and brand management, the problem of ‘intangibles’ and the increasing recourse to user led innovation and other forms of Open Business, to argue that, at least in this cutting edge manifestations, the contemporary information economy is no longer ‘capitalist’ in the strict sense of that term . Instead corporations depend ever more on a different economy, an ‘ethical economy’ that depends on a different value logic. In this ‘ethical economy’ what creates value is not primarily investments of scarce productive resources (like labour and machines) but the ability to construct durable and significant social relations: strong links in a world of abundant weak links. Ethics in this sense creates value in three ways: by reducing the complexity of hyper-complex global value chains; by attracting ‘free labour’ from actors external to the firm, like consumers and other stakeholders and by offering an immaterial extra that sets of products form competitors with virtually indistinguishable offers of price and quality. In conclusion, the chapter suggests that the current financial crisis can be traced to an inability to correctly value the presence of such ethical values within the monetary economy.

Download it at www.ethicaleconomy.com

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The second deep structural tendency of post-Fordism is the massive flight of value from the mechanisms of capture that were established with the Fordist industrial economy. We discuss this at length in the forthcoming second chapter of the Ethical Economy book, but to reassume the argument in a nutshell: Social production, the production of (mostly but not exclusively) immaterial wealth outside of the capitalist economy has increased massively with the diffusion of information and communications technologies. Companies increasingly rely on what they see as the ‘free lunch’ of social production by institutionalizing various forms of ‘prosumerism’: brand management and marketing where consumers play an active part, user- led innovation schemes, customer co-produciton of goods (Ikea) and services (McDonalds) and the cultivation of reputation and public opinion through Corporate Social Responsibility Schemes. Furthermore, social production has become an important element within the capitalist production process itself. Knowledge workers create value by using their social and communicative capacities to organize processes of cooperation and collective intelligence. Complex global production chains (or networks) thrive of meaningful relations of trust and cooperation between supplier and other partners. These are all forms of wealth that are produced outside the capitalist economy proper: that is they are generally not motivated by monetary gains, and they cannot be commanded or sanctioned by bureaucratic power. Indeed, because such socially produced wealth is generated outside the reach of the mechanisms of capture and governance with which the capitalist economy works, they are not easily measurable as valuable resources. Indeed, the products of such forms of social production tend to figure on financial statements as ‘intangibles’ for which there is no coherent method of measurement. In 2005, seven per cent of US corporate investments were directed to building such intangible resources, principally, trust, brand equity, corporate reputation and ‘intellectual capital’: that is, principally values that build on the ability to establish meaningful and durable social relations, or what we call ‘ethical values’.

This massive recourse to social production has changed the situation of both companies and workers. For companies, value is increasingly generated outside of the wage relation, in diffuse practices of social production that cannot be easily managed or measured. Success and profit becomes increasingly contingent on the ability to capture such socially produced wealth, and depend less on the direct contribution of salaried labour. For workers, gainful employment tends to be configured less as a single wage relation to one employer, and more as a multitude of income streams from very diverse forms of practices: regular salaried employment, short term work, consultancy, childrens work, unpaid forms of social production that can be monetized in different ways, entrepreneurship, engagements with the growing informal economy, financial or real estate speculation etc. This way, both the appropriation of value on the part of companies and the generation of income on the part of workers tend to move outside the once dominant wage relation. Present phenomena like the neonomads who launch start-ups out of Starbucks cafés with wifi connectivity or the return of the ‘sublimes’ testify to these tendencies.

Since the wage relation looses its centrality as a way of distributing social wealth, it also looses it centrality as a way of appropriating surplus value and profits. This way the enormous expansion of personal debt as a the source of the new kinds of securitized value streams that underpin new financial instruments could simply be seen as the establishment of an alternative to salaried labour as an instrument for the capture of value.  In the fordist model the extraction of surplus value relied on the exploitation of salaried labour. This way the labour contract guaranteed both the worker a secure long term access to the means for the reproduction of life, and for the capitalist, a secure long term and predictable stream of surplus labour ( in the form of the productivity of the working day that exceeded the cost of labour). In the post-Fordist model the financial system anticipates necessities for the reproduction of life (a house, health insurance etc.) and receives in turn a long term and (relatively) secure value stream in the form of interest payments. The interest payments become a direct extraction of surplus from the whole life practice, and not just from the working day.  This happens in a situation where the wage relation is becoming less representative of the real process of wealth creation. The sources of this surplus, just like the sources of the ‘living wage’ can , and increasingly do, drive form a multitude of diverse sources of income. What is more, the value of these activities is set outside of the wage relation controlled by capital. As a free lance worker, entrepreneur, or member of the ‘precariat’  the value of my products is generally determined by my networks of friends, colleagues and clients. They are the ones who determine how much I work, when and what I get paid. Even i forms of regular employment- like many forms of knowledge work, productive agency engages a number of activities that lie outside of the wage relation (free time, contacts, networks etc.)

The parallel rise of, on the one hand such ‘anomalous forms’ of employment and the importance of social production in general,  where the determination of value is increasingly autonomous vis a vis capitalist government, and, on the other hand the direct financialization of life conduct, would suggest a general shift in the modality of extraction of surplus value: from the wage relation and its dependency on discipline and controlled time, to the debt/finance relation where the comprehensive surplus generated by the multitude of productive practices that make up he life process is directly captured by means of interest payments. Correspondingly, the modality of government shifts from discipline, from imposing a certain form of conduct, to control, form making calculable the risk arising form a multitude of forms of conduct that  evolve autonomously.  Class distinctions are configured around the access to such financial rent. Who has the capital and ability to benefit from rising real estate markets, in which the social production of the metropolis is monetized, and who does not. The terrain of social movements shift from the factory  to the city and the banlieus.

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