While digital capitalism may appear to be an affective form of capitalism, and to a certain extent it does deploy affective measures to achieve its ends, a more correct designation is agnotologic capitalism: a capitalism systemically based on the production and maintenance of ignorance. The accusations of fraud against banks such as Goldman Sachs for creating derivatives “designed to fail” and then claiming that these commodities are of the highest value demonstrates this process of misinformation designed to obfuscate, confuse and confound.
A very interesting, though jargon-rich, analysis of the contemporary crisis of financial capitalism, was recently published by C-Theory, which echoes Adam Arvidsson’s and my own take on the crisis of value, but takes it into another direction.
Whereas the crisis of value thesis stresses that the increasing post-commoditification and post-monetarisation resulting of use value creation in digital networks, creates increasing difficulties in realizing value for capital, Michael Betancourt stresses that semiotic capitalism creates an overflow of claims to future value creation, that cannot be honoured either through material or immaterial production.
Excerpt from Michael Betancourt:
“Scarcity of capital within this construction becomes apparent via the inherent imbalance emergent in the breach between existing values and the number of potential future claims posed by a derivatives market whose value is significantly larger than the quantity of immanent labor (physical, automated and immaterial) available to produce new physical values to match those claims; however, it is not a question of commodity values vs. speculative values, but between rentier claims (titles to production values) and production capacity. It is this mismatch between capital and rentier claims that was exposed by the collapse of the 2008 “Housing Bubble” and that became apparent as the “Credit Crisis” of 2009. Bank insolvency, for example, emerges precisely because they hold more claims on value-to-be-produced than there are available values to be claimed. This type of failure is a feature of how semiotic transactions develop values independently of physical assets.
The illusion of production without consumption that produced these crises is central to my conception of the digital proposed in the article “Aura of the Digital.” The digital is a symptom of a larger shift from considerations and valuations based in physical processes towards immaterial processes; hence, “digital capitalism” refers to the transfer of this immateriality to the larger capitalist superstructure. Because the digital is a semiotic realm where the meaning present in a work is separated from the physical representation of that work, the “aura of the digital” describes an ideology that claims a transformation of objects into that semiotically-based immateriality. At the same time, the digital appears as a naturalization of the concentration of capital, since the digital itself poses as a magical resource that can be used without consumption or diminishment, leading to a belief in accumulation without production. This shift from a basis in limiting factors and scarcity is inherent to the immaterial form posed by the digital; at the same time, it denies how scarcity of capital is imposed by the dual forms of interest and profit on capital expenditures.
The force that is evident as the immaterial form of digital capitalism is a transformation of the underlying relationship between the universal equivalent, based in the physical commodity-form, in its role as currency in Marx’s formulation, and its valuation, independent from its role as marker-of-exchange, as physical commodity. Gold and silver are no longer intrinsically valuable, but rather exhibit a fluctuating value relative to the socially produced fiat currency. The change in the US Dollar from its historical basis as a currency “backed” by a precious commodity (such as gold or silver) to one without such a basis marks the change from exchange via the physical commodity-form to an immaterial exchange whose basis is purely social rather than physical (the fiat currency); this shift demonstrates an extension of immateriality into the political economy as a whole. (It is less a radical change than an incremental transition that emerged in the abandonment of the Bretton Woods agreements, and consequently in the role adopted by the US Dollar as the global reserve currency in the 1970s.)
While the underlying structural logic that precipitated the economic crisis of 2008 has its foundations in the same ideology of immateriality that is apparent in the aura of the digital’s denial of physical reality, the factors that produced this immateriality are evident in the internal structure of how this semiotic system drives its participants towards immaterial values. At the same time, those semiotic structures of financialization, exchange of titles to future production, and ideology of rupture between physical and immaterial values leads recursively to a debt cycle emergent in the large-scale bubbles of the “Housing Bubble” (2000s), the “Dot.Com Boom” (1990s), and the “Savings & Loan Collapse” (1980s) in the United States; similar bubbles have emerged internationally in Japan and Europe over the same period, revealing the escalation of values apparent in the semiotic, immaterial production of digital capitalism is both internationally systemic, unsustainable, and unavoidable.
This new immaterial basis contributes to other shifts in production and labor. Semiotic manipulation replaces physical asset-basis reality (in the physical commodity form), and immaterial labor replaces physical production, revealing the process of reification that legitimates immateriality as a vehicle for wealth production: the reason the Federal Reserve and Troubled Asset Relief Program bailouts in the “Housing Bubble” of 2008 focused on the liquidity of the banks, and were concerned with the flow of credit, [8] lies with this market-based semiosis generating wealth without expenditure via a spontaneous creation of exchange value sans labor or consumption of resources (it is transactional rather than productive). This fantasy is a fundamental condition of digital capitalism. It is a system attempting to expand without limit, but inevitably encountering physical constraints imposed by the scarcity of capital, which precipitates the recognition of a collapsing “bubble,” thus, crisis.
An accelerating shift towards immaterialism — values created without productive action — is apparent in the historical rise of the digital in the United States: the issuing of a rentier currency based on debt (on December 23, 1913 with the Federal Reserve Act, which created the Federal Reserve Note); the shift from currency based in the universal equivalent commodity, the “gold standard,” to a fiat currency (on August 15, 1971); the transition to a financial economy focused on immaterial labor (the trend of manufacturing to shift to Asia during the 1980s, and the rise of globalization in the 1990s); and finally with the emergence of the aura of the digital (with the widespread adoption of digital communication technology at the heart of the semiotic financialization that enables these asset bubbles, a trend starting in the 1970s, and accelerating in the 1980s and fully emergent in the 1990s with the initial Dot.Com boom). In all cases, these transformations describe a fundamental social shift from concerns with physical, tangible equivalency to an immateriality described by the aura of the digital — the illusion of an infinite domain capable of producing value without expenditure, coupled with a denial of physical costs and limited resources — as it merges with the systems of value production and exchange.”
And from the conclusion:
“Within the rentier/fiat currency system is the action of the digital aura both as expansive procedure and as immaterial ‘production’ via the commodification of virtual “assets” without relationship to physical commodities; it makes the capitalist paradox of escalating value reveal the systemic paradox of rentier/fiat currency through the inability to meet the fiscal demands imposed through the twin forms of interest on investment (ground rent) and the need to produce profit on capital expenditures to provide social reproduction. The scarcity of capital within this construction becomes apparent via the inherent imbalance between the number of potential future claims (infinite) and the quantity of immanent labor (physical, automated and immaterial) available (finite). This contradiction manifests itself as a systemic failure in the system of exchange: what is called a “freeze on credit” precisely because the rentier/fiat currency’s expansion of value depends on generating greater numbers of debits against future production, (i.e. the extension of “credits”). As the claims on labor exceed the ability to meet those claims, rentier/fiat currency reveals itself as futurity, rendered visible by the cessation of exchange: no exchange is possible when all labor is already allocated.”
2. Second Article
There is also a quite similar, if less analytical article in Mute, by “Sander”, on “Artificial Scarcity in a World of Overproduction”:
“At the centre of the trend towards an economy based on artificial scarcity, stands IT, which has driven capitalism’s tendency to lower the value of commodities to its most extreme point. Since it costs next to nothing to reproduce digital goods, their social value, in Marxist terms, is also next to nothing. They are in effect abundant and can only be made profitable by sabotaging the law of value, by limiting competition to prevent the market from establishing their prices freely. Other companies that base their profit strategies on artificial scarcity express the same tendency. Their actual production costs are usually very low but their profits are not. But what is the source of these profits? Since it requires ever less labour time to reproduce their commodities (the cost of R&D may be high but has no bearing on the cost of reproduction), the part of it that is unpaid, surplus value, must fall too and thus cannot explain the rise of their profits. The profit is surplus value but it comes from elsewhere: it is paid by the customers.
That’s why it is a fallacy to think that a global advanced economy based on artificial scarcity could function on a parallel level, sheltered from the general crisis. It sucks value from elsewhere and thus effectively taxes the rest of the economy. The more it takes in, the heavier the tax. It is therefore dependent on the capacity of the rest of the economy to pay that tax, and thus on its ability to create new value. That doesn’t look good.
So despite the desire of capitals based on artificial scarcity to extricate themselves from the mess (highlighted by Germany’s reaction to the debt crisis in Greece), there’s no way out. On the contrary, by siphoning off capital to production with relatively little value creation, it aggravates the general problem. However it is to be expected that capitals geared towards artificial scarcity will continue to reap higher than average profits, even when the average rate of profit continues to decline. Thus production of these commodities will attract more than its share of capital. That makes it a prime candidate for the formation of new bubbles (as they have been before), heralding new shocks for a system desperately clinging to scarcity.”