This is an article review of Paul Mason, PostCapitalism. A Guide to Our Future.1
1 I would like to thank Edward Fullbrook and Grazia Ietto-Gillies, who made comments on an earlier draft, which led to several revisions and improvements.
The book is a complicated one, containing discussions of quite intricate theoretical matters, such as the Russian economist Kondratieff’s theory of long waves in capitalist development.
However, in this review, I will concentrate only on what I take to be the central thesis of the book. I will try to state this thesis and the main arguments for it as clearly as I can, and also to add one or two extra considerations of my own – particularly as regards the political consequences of this view. The central thesis of the book is that because of new technologies (the internet and associated developments), capitalism is in decline and is likely to be replaced within a few decades by an entirely new socio-economic system – PostCapitalism. As Paul Mason himself says (p. xiii):
“…the technologies we’ve created are not compatible with capitalism … Once capitalism can no longer adapt to technological change, PostCapitalism becomes necessary... That, in short, is the argument of this book: that capitalism is a complex, adaptive system which has reached the limits of its capacity to adapt.”
Now this thesis is a very surprising one. Most people have an exactly opposite view, namely that capitalism is triumphant and irresistible. According to this more usual opinion, capitalism in the last few decades has overcome its traditional enemies. Communism has collapsed in Russia and Eastern Europe, and in China has been transformed into a kind of capitalism. Even in Western Europe, traditional social democracy has been undermined, and replaced by a more unbridled form of capitalism. It would seem then that capitalism is here to stay, and indeed is “the only game in town”. To think anything else seems to be mere wish fulfilment on the part of the old left. Indeed Paul Mason himself says that, for some people, (p. 250): “it is easier to imagine the end of the world than to imagine a non-market … economy.”
Still, strange and surprising views sometimes turn out to be correct, as Copernicus showed. Could it be that the successes of capitalism in the last few decades are a last flowering rather than a final triumph? In fact it is the opinion of the present reviewer that the central thesis of Paul Mason’s book is indeed correct. The main argument for his view can be made explicit by stating what I will call: The Principle underlying the Decline of Capitalism. Once this principle is formulated it will be seen to be plausible and indeed compelling. Before coming to this, however, it is worth saying something about the current crisis of capitalism.
1. The current crisis of capitalism
Here and in what follows I will confine myself to capitalism in the developed world, that is Japan, the USA, and Western Europe. Now in the developed world, capitalism has been in a critical state since the collapse of Lehman Brothers in 2008. Many countries have had recessions, and even the more successful have experienced only anaemic levels of growth with high levels of unemployment.
However, a defender of capitalism could argue that this by no means shows that capitalism is becoming moribund. In fact capitalism has experienced similar periods of crisis and depression in the past only to emerge reinvigorated. For example there was a difficult period of depression for capitalism in the 1930s following the Wall Street crash of 1929. Yet in 1945, capitalism revived and began to enjoy a long period of full employment with high growth rates. Indeed this Post-War boom was the longest and had the best growth rates relative to any previous period in the history of capitalism. Let us compare the collapse of Lehman Brothers in 2008 to the Wall Street crash of 1929. If history repeats itself, then from 2024 on, there might be more than 25 years of capitalist boom with high growth rates and near full employment.
However, according to Paul Mason, history is not going to repeat itself. There is a key difference between the 1930s and the present, and that is the rise of the digital economy on the basis of the internet and the associated new technologies. It is specifically the rise of the new digital economy, which is bringing about the decline of capitalism.
2. The digital economy creates difficulties for capitalism
It will be convenient for investigating this question to begin with a definition of a digital product (or good). A digital product (or good) is one which can be placed on a public website, and, if it is so placed, can be downloaded by any of those connected to the website. The digital economy is concerned with the production and distribution of digital goods.
Let us now survey some digital products. The outputs of any kind of research in the natural sciences, social sciences, technology, the humanities etc. are books and papers, which give the results of the research. These are all digital products nowadays. Musical scores or recordings of performances are all digital products. Photographs, films, television programmes, newspaper or magazine articles are all digital products. So are reproductions of works of art, and indeed many actual works of art. So is literature. So is software. Indeed the digital economy is very extensive. It contains the whole world of research, and more specifically of software production. It also contains all the media, literature, music, and a good deal of the visual arts.
Here then we come to the central problem, for it is very difficult, if not almost impossible, to produce digital products under capitalism. The reason for this is easy enough to see. Let us compare the production of a digital good, e.g. software, with the production of a traditional material good such as a car. Capitalist manufacturers of cars have first to design and test a new model. This model is then put into production, and the cars are sold at a price, which enables the manufacturers to recoup their costs (the original design and testing costs, the cost of the machinery, and the wages of the workers involved) and still make a profit. The problem with a digital product is that once the product has been designed, and a single example put into the public domain, then anyone can reproduce it at zero cost. Thus becomes very difficult to sell the large number of copies, which will enable the capitalist manufacturers to recoup their costs and make a profit. Who wants to pay for something, which, with a little know-how, can be obtained free?
Paul Mason explains this central difficulty in the following interesting passage (p. 163):
“The rise of information goods challenges marginalism at its very foundations because its basic assumption was scarcity, and information is abundant. Walras, for example, was categoric: ‘There are no products that can be multiplied without limit. All things which form part of social wealth … exist only in limited quantities.’
Tell that to the makers of Game of Thrones: the pirated version of Episode 2 of its 2014 series was illegally downloaded by 1.5 million people in the first twenty-four hours.
Information goods exist in potentially unlimited quantities and, when that is the case, their true marginal production cost is zero.”
Walras was one of the founding fathers of neo-classical economics, the approach to economics, which is used by mainstream economists to justify capitalism. What this passage shows is that this justification fails for digital products, so that even right wing economists have to admit that digital products are not suited to capitalist production.
The problem of illegal downloads arises in other areas as well, such as academic publishing. Academic publishers used to produce editions of technical research books in traditional material form. These would then be sold to university libraries and students for sums, which were often well over £100 a copy. Now apparently there are pirate websites where such books can be downloaded free.
The problem is complicated by the fact that such websites can be located anywhere in the world, including in countries which are hostile to the West, but want to gain knowledge of the West’s latest research for as low a cost as possible. Indeed I was told by a professor from Paris that the students he teaches now rarely go to the library because they can download all the material they need, including the latest books, from a particular foreign website. In the face of all this, one cannot help thinking that the capitalist firms, which once made such large profits by publishing academic books, are now doomed to extinction. As far as the authors of such books are concerned, they earned very low royalties anyway. So many of them would be quite happy to produce their books in digital form and place them on a public website where anyone can download them free. This strategy might indeed ensure a much wider circulation.
This raises the question of the extent to which capitalism has been damaged by the development of the digital economy so far. Generally speaking what are now digital products are updated versions of products, which were formerly distributed by some material carrier. This material carrier could be produced and distributed in traditional capitalist fashion, and so the product posed no problem for capitalism. An obvious example is recorded music. During the Post-War boom this was distributed in records, and so fortunes were made by for the Beatles and for capitalist music companies in the 1960s. The World Wide Web was invented in 1990, and the internet then developed rapidly to become a significant force by the end of the 1990s. We can date the onset of the digital economy about then. So it has been in existence for only about 15 years. The first consumer industry to be effected was music.
In June 1999 the first peer-to-peer file sharing system (Napster) was created, and this in effect allowed recorded music to be downloaded free. Naturally the lawyers got to work and Napster was closed down in 2001. However, further websites sprang up from which music could be downloaded free, and legal battles continue to this day. Despite all the activities of lawyers, more and more music, which was once purchased, is now downloaded free, and capitalist music businesses are in steady decline.
An interesting view of the present situation can be had by reading an interview in the Guardian of 16 November 2015 2 with a famous musician Steve Goodman, known as Kode9. Kode9 is very much an intellectual. He was a graduate in the Department of Philosophy at the University of Warwick, UK, and took part in the secessionist movement within the department known as Cybernetic Culture Research Unit.
He was a lecturer at the University of East London for almost ten years before becoming a full-time musician. His latest album entitled: Nothing is the result of reading about the history of zeros in mathematics, about vacuums and voids in quantum mechanics, and also chapter 10 (Project Zero) of Paul Mason’s book PostCapitalism. What particularly impressed Kode9 was Paul Mason’s claim that “when production costs are reduced to zero, this has a massive impact on the whole system.” It is not surprising that this point struck Kode9 so forcefully, since, despite his fame, he earns nothing from his recorded music, and his income comes exclusively from his work as a DJ. What a difference this is from the 1960s when the sale of records made substantial sums for any well-known musician.
2 http://www.theguardian.com/music/2015/nov/16/kode9-nothing-album-steve-goodman-hyperdub-interview I was given this reference by my son Mark Gillies.
Books and publishing remained more or less intact for a little longer than music. However in 2007 the Kindle was launched, and in 2010 the iPad. These devices enabled books in electronic form to be read easily, and naturally the negative effects on publishers began straightaway. Steady profits used to be made on the sale of classics of literature, but these can now be downloaded free and legally since they are out of copyright.
As we have seen, academic book publishing, once the most profitable sector of the industry, has been particularly hard hit. In many ways it is more convenient to read an academic paper or book on an iPad than in a paper version. This is because notes can be made on the text and these can then be transmitted electronically. It is difficult to see how all the rest of the media (films, television programmes, newspapers, etc.) can avoid going the way of music and books. As for software, it was affected even before the internet. Richard Stallman founded the free software foundation (FSF) in October 1985, and free software has become ever more common.3
3 See Sam Williams (2002) Free as in Freedom. Richard Stallman’s Crusade for Free Software, O’Reilly; and Steven Weber (2004) The Success of Open Source, Harvard University Press.
What is interesting to note is that the areas of capitalism now being eroded are precisely the ones in which great capitalist fortunes were made in the 1980s and 1990s. Those two decades saw the rise of firms selling software, which made their owners millionaires or billionaires. The same decades also saw the emergence of the famous media tycoons. This suggests that it may indeed be more accurate to view this period as the last flowering of capitalism view rather than its final triumph.
So capitalism is being hit hard by the rise of the digital economy. Let us now consider whether there are any ways out for capitalism. There seem to be only two possibilities here.
The first is to accept that the digital goods have to be given away free, and to finance the capitalist business by advertising. This is the model adopted by Google, but it has obvious limitations. There is a limited pool of advertising expenditure, and so a limit to the number of companies that can finance themselves in this way. In fact the transfer of advertising to the internet has hit commercial television channels. Moreover who pays for the advertising? It can only be traditional capitalist firms. Thus the new digital economy, on this model, becomes parasitic on old traditional firms. This constitutes an obvious limitation.
The second approach is to get the lawyers to work, and try to enforce copyright and intellectual property. However, as we have seen, this is fraught with difficulties. If millions are already downloading free, how can draconian copyright laws be enforced? If North Korea (say) were to decide to create websites where all the products of western media companies are available for free download, what could be done about this?
So if there is little future for capitalist production of digital goods, and yet such goods are clearly much in demand, how can they be produced? This is the next question to which we must turn.
3. How can digital goods be produced? The example of Wikipedia.
If a new mode of production is really going to supersede capitalism, then it is likely that we can find examples of this way of producing already coming into existence, though perhaps not yet in fully developed form. Paul Mason draws attention to a striking example, namely Wikipedia. This is what he says (p. 128):
“Wikipedia is the best example. Founded in 2001, the collaboratively written encyclopaedia has, at the time of writing, 26 million pages and 24 million people registered to contribute and edit – with about 12,000 people regularly editing and 140,000 people vaguely taking part.
Wikipedia has 208 employees. The thousands who edit it do so for free. … With 8.5 billion page views per month the Wikipedia site is the sixth most popular in the world – just above Amazon the most successful e-commerce company on earth. By one estimate, if it were run as a commercial site, Wikipedia’s revenue could be $2.8 billion a year.
Yet Wikipedia makes no profit. And in doing so it makes it impossible for anybody else to make a profit in the same space.”
Paul Mason goes on to say that Wikipedia is organized (p. 129): “in a decentralized and collaborative way, utilizing neither the market nor management hierarchy.” This really is a new way of organizing production, which is at the same time much more efficient than more standard systems. Paul Mason emphasizes this by the following thought experiment (p. 129):
“… imagine if Amazon, Toyota or Boeing tried to create Wikipedia.
Without collaborative production and Open Source there would be only two ways to do so: by using either the market or the command structures of a corporation. Since there are maybe 12,000 active writers and editors of Wikipedia, you could hire that number, and maybe get away with some of them being outworkers in the sweatshop economies of the world, controlled by a better-paid managerial layer in the American sun-belt. Then you could incentivize them to write the best possible encyclopaedia on the web.
You could give them targets, bonuses, promote teamwork through quality circles, etc. But you could not produce anything as dynamic as Wikipedia. Getting a 12,000-strong corporation to produce 26 million pages of Wikipedia would be… pointless… A 208-strong foundation would always do it better. And even if you could produce something just as good as Wikipedia, you would face a massive problem: Wikipedia itself, your major competitor, doing it all for free.”
This is a very forceful argument. Big capitalist organisations are bureaucratic and authoritarian. A hierarchy of managers, leading up to the CEO, plan what is to be done, and assign tasks to the workers. Interestingly, hitherto existing forms of socialism have also had this bureaucratic, authoritarian and hierarchical character. This is obviously true of communism, but also holds of the productive organisations of social democracy. For example, a nationalized industry, such as the former coal industry in Britain, was run by a bureaucratic hierarchy of managers.
The appearance of these bureaucratic forms in both capitalism and socialism shows that they were indeed suited to production, given the then development of the productive forces and the type of good being produced.
However, Paul Mason’s thought experiment shows that these bureaucratic forms are not suitable for the production of digital goods in the era of the internet. For the production of such goods, as the example of Wikipedia shows, we need a networked, collaborative group of workers who agree among themselves what is to be done and by whom, without the intervention of any managerial hierarchy or bureaucracy. The same message comes out clearly from other examples such as the free software movement.
Here then we have in embryo the PostCapitalist mode of production. However, there is one feature of the Wikipedia and free software examples, which must be removed if this type of production is to become general. Those who contribute to Wikipedia and free software projects are not paid, and so have to do this work in their spare time, while earning their livings in some other activity. It is remarkable that such numbers of skilled people are willing to do this, but the lack of pay sets a limit on the extent to which this mode of production can become general, since obviously most people have to earn their living in some way. The question then arises: if groups of workers are going to be paid to produce digital goods, who is going to pay them? Clearly no one in the private sector is going to pay them, because of the difficulty of producing digital goods under capitalism. It follows therefore that they must be paid by the state.
This leads me to a conclusion, with which Paul Mason might not perhaps agree, namely that the PostCapitalist mode of production will turn out to be a form of socialism, but one which differs from the earlier forms of bureaucratic socialism by being more egalitarian and libertarian. This type of socialism I think could be called networked socialism. Paul Mason writes (p. xvii): “info-capitalism has created a new agent of change in history: the educated and connected human being.” Of course the overwhelming majority of educated and connected human beings are white-collar workers. So networked socialism is based on white-collar workers in contrast to earlier forms of socialism, which were based on manual (blue-collar) workers.
Another feature of networked socialism is that it is international. In the networks, which produce Wikipedia, free software etc., there are members from all over the world. What is important is whether someone is good at doing the job. Where they happen to live is an irrelevance. Capitalism too has gone international with the rise of the multi-national (or transnational) corporations. All this shows that the economic foundations of nationalism are being eroded.
But can the state simply take over the production of digital goods, paying the researchers, journalists, film directors, actors, artists, musicians, etc. who are needed to produce these goods? Of course it can, and the simplest proof that this is possible is that the state already pays for the production of many digital goods. In fact almost all scientific research is carried out already by workers in universities and research institutes who are paid by the state. This system has simply to be extended to other areas.
The fact that the products of these workers are given away free is no problem. They are being produced for the benefit of society. So it is right that they should be freely available to anyone in society. While attempts to preserve capitalist production of digital goods involve trying to strengthen copyright laws, the socialist production of these goods involves the total abolition of these laws. Musicians, writers etc. may no longer receive royalties, but they will instead be paid salaries4 by the state for what they produce, just as most researchers are at present.
4 Actually such salaries could easily be linked to the number of downloads of an individual’s products, thereby giving a kind of substitute for royalties.
Altogether then the difficulties associated with trying to produce digital goods under capitalism disappear once these goods are produced under socialism. Only one problem remains. The type of socialism needed is networked socialism. However, governments, if they tolerate socialism at all, much prefer bureaucratic socialism. This is for obvious reasons. Bureaucratic socialism gives governments much more control. They appoint the top managers of the bureaucratic hierarchy and through them can have a say in what goes on in the organisation. With networked socialism things are different.
The government has to pay a group of workers, assign them a task, and then leave them to get on with it without interference. Such a hands-off, libertarian approach is not very appealing to governments, as is clearly shown by the case of scientific (and other) research, which is already financed by the state. Governments have tried to re-organise research on a more managerial model using such devices as research assessment systems. The results have been very unsatisfactory. The costs of research have been increased while the results have got worse with the stifling of new ideas and other undesirable consequences.5
The promised principle underlying the decline of capitalism can now be formulated. It runs as follows. It is very difficult, if not almost impossible, to produce digital goods under capitalism, but very easy to do so under socialism.
5 For more a more detailed account of this, see my book: Donald Gillies (2008) How Should Research be Organised? College Publications. Some information about the content of this book is to be found on my website: www.ucl.ac.uk/sts/gillies.
4. Will the digital economy become the dominant branch of the economy?
We are used to think of industrial manufacturing as being the dominant branch of the economy. However, Paul Mason gives some statistics which show that this sector does not in fact employ a very high percentage of the work force – even in the industrial powerhouses of Asia. Paul Mason writes (p. 208):
“Only in the export giants – Germany, South Korea and Japan – does the industrial workforce come close to 20 percent of the whole; for the rest of the economically advanced countries it is between 10 percent and 20 percent.
In the developing world too, only around 20 percent of the workforce is industrial.”
In many ways this is not surprising. Industrial production is now increasingly carried out by robots. A striking example is the contemporary Australian industry for extracting iron ore. For centuries, ore was extracted by miners working underground. In this Australian industry, there is not a single human miner who works underground. The world of D.H.Lawrence has disappeared. The extraction is all done by robots. Not only that, but the resultant ore is automatically loaded onto driverless trains which take it off for automatic processing and then delivery to its destination. The whole of this operation, which takes place in the remote outback, is controlled from centres in the major Australian cities by experts in the design and functioning of the various robotic and automatic systems. These experts are of course educated and connected white-collar workers.
This sort of example raises the question of whether the production of digital goods will become the dominant sector of the economy. Let us look at this from a historical point of view. With the invention of settled agriculture, humans were able to develop cities and civilisation. The economies of these states were, for thousands of years, based on agriculture. Food production was the dominant branch of the economy and usually as much as 90% of the population worked in this sector. Since food is so necessary for humans, it is doubtful whether anyone living in these agrarian states could have imagined that things might one day be different.
Yet with the rise of capitalism and the industrial revolution, things did change, and it was not long before industrial manufacturing rose to become the dominant branch of the economy. The reason for this was that the industrial sector provided inputs for agriculture, such as machinery, fertilizers, etc. which increased agricultural output, while diminishing the number of people needed to produce that output. Once a nation started industrialising, it was not long before the industrial workforce greatly exceeded the agricultural workforce. It is also worth noting that capitalist relations, which had first established themselves in the manufacturing sector, quickly spread to the agricultural sector, so that capitalist farming replaced the various forms of pre-capitalist agriculture.
If now we look at the rise of the digital economy in relation to traditional capitalist industry, the parallel with the rise of capitalist industry in relation to traditional agriculture becomes immediately apparent. The digital economy produces inputs to industry such as new scientific and technological knowledge, software in general, and artificial intelligence programs in particular, and so on. These inputs increase industrial output, while diminishing the number of people needed to produce that output.
Probably already in the advanced economies the percentage of workers in the digital economy exceeds the percentage in traditional industrial manufacturing. Moreover the digital sector plays the dominant and controlling role in relation to industrial manufacture. If therefore networked socialism becomes the standard mode of production in the digital sector, it will probably spread to the industrial sector as well, just as capitalist farming replaced earlier pre-capitalist modes of agricultural production.
5. Political changes in the transition to PostCapitalism
In this review I have supported Paul Mason’s thesis that capitalism is declining because of the rise of the digital economy, and that we are entering a period in which capitalism will be transformed into a new mode of production: PostCapitalism. I have also suggested that PostCapitalism will be a form of socialism (networked socialism) which, however, will differ from earlier forms of socialism which have been bureaucratic in character. I will now add a few points of my own regarding possible political implications of this situation.
At the moment the overwhelming majority of the political class in the developed world are committed to preserving, and, if possible, extending capitalism. We can hardly expect this class to devote state funding to the production of digital goods by networked socialism, although this is quite a practical policy which would be easy to implement, and would, almost certainly, benefit the economy as a whole.
What becomes necessary for the economy cannot, however, be long resisted by politicians, and so changes in politics are very likely. Of course when such changes will happen, and what form they will take, is impossible to predict. Political developments are always dependent on contingent circumstances, irregular, and often surprising. Still an analysis of underlying economic trends is often helpful for understanding political developments, as we can show by considering a recent surprising event in British politics, namely Jeremy Corbyn’s election to the leadership of the Labour Party in September this year. Under current rules, the election of the leader is carried out by all members of the Labour Party and not just by the Labour MPs in parliament.
For readers outside Britain, I had better explain the background to this event. In Britain there are two major parties: the Conservative (or Tory) Party on the right, and the Labour Party on the left. In the 1970s and 1980s the Labour Party swung to the left, but this had disastrous consequences for its ability to win elections. Thatcher, the leader of the Conservative Party came to power in 1979, and the Conservative Party remained in power for 18 years, with the Labour Party losing election after election. It was Tony Blair who was able to alter the situation. After his election as leader of the Labour Party, he managed, despite considerable opposition, to move the Party to the right and to rebrand it as “New Labour”. Under his leadership the party won the election of 1997 and the next two elections, remaining in power until 2010.
After this experience, it seemed that the old left of the Labour Party was doomed to extinction. However, there was still a very small group of Labour MPs in parliament who had remained committed to left wing policies while the Labour Party as a whole swung to the right. When there was an election for the leadership of the Labour Party this year, one of these, Jeremy Corbyn, stood as a candidate for the leadership, not because he had any real hope of winning, but merely to show that the left had not quite disappeared. Contrary to everyone’s expectations, Jeremy Corbyn won by a huge margin. The votes for him exceeded those for the other 3 candidates put together. This result took everyone by surprise, including Jeremy Corbyn himself. It is not too much to say that the political commentators were dumbfounded.
During the election, Tony Blair returned to the British political arena by urging members of the Labour Party not to vote for Corbyn. Interestingly he did not argue against the policies proposed by Corbyn, or claim that these would have a negative effect on the economy and the country. His argument was that if the Labour Party elected Corbyn as its leader and swung to the left, they would become unelectable, and the result would simply be a long period of Tory rule, exactly as had happened in the 1980s. Now this argument of Tony Blair’s is certainly a powerful one. To rebut it two things have to be demonstrated. (1) It has to be shown that British society has changed in some fundamental ways from how it was in the 1980s. (2) It has then to be shown that these changes favour the left in politics. The analysis given in this review shows that both these conditions are in fact satisfied.
First there has indeed been a very big change in society since the 1980s. In the 1980s, the internet had not been invented, while nowadays the internet is ubiquitous. With the internet as the necessary infrastructure, there has been the creation and rise of the new digital economy. Secondly the rise of the digital economy has brought about a decline of capitalism, and so clearly favours the left in politics. All this shows that Tony Blair’s argument, plausible though it sounds, is not in fact valid.
I will conclude with the following quotation from Machiavelli:6
“…we see that some princes flourish one day and come to grief the next, without appearing to have changed in character or any other way. …I… believe that the one who adapts his policy to the times prospers, and likewise that the one whose policy clashes with the demands of the times does not… I conclude, therefore, that as fortune is changeable whereas men are obstinate in their ways, men prosper so long as fortune and policy are in accord, and when there is a clash they fail.”
Review of Paul Mason’s book, PostCapitalism. A Guide to Our Future, (2015), Allen Lane. 368 pages. ISBN 9781846147388 (Hardback), 9780141975306 (ePub, eBook).
Donald Gillies [University College London, UK]
Copyright: Donald Gillies, 2015
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