[p2p-research] Fwd: Missing Productivity and the Rise of Social Production

[Kevin Carson]

---------- Forwarded message ----------
From: Kevin Carson <free.market.anticapitalist at gmail.com>
Date: Mar 5, 2009 8:57 PM
Subject: Missing Productivity and the Rise of Social Production
To: free.market.anticapitalist at gmail.com





Sent to you by Kevin Carson via Google Reader:


Missing Productivity and the Rise of Social
Production<http://feeds.feedburner.com/%7Er/matthewyglesias/%7E3/549168002/missing_productivity_and_the_rise_of_social_production.php>
via Matthew Yglesias <http://yglesias.thinkprogress.org> by myglesias on
3/5/09

[image: pajamas_blogger_1.jpg]

A couple of days ago, I was discussing Michael Mandel’s Fake Productivity
Hypothesis<http://yglesias.thinkprogress.org/archives/2009/03/michael_mandel_recent_productivity_growth_is_a_myth.php>.
In response to this, Tyler Cowen countered with the No Profits Here
Hypothesis<http://www.marginalrevolution.com/marginalrevolution/2009/03/was-recent-productivity-growth-an-illusion.html>holding
that:

[T]here was some productivity growth but much of it fell outside of the
usual cash and revenue-generating nexus. Maybe you will live until 83 rather
than 81.5 and your pain reliever will work better. In the meantime you will
read blogs and gaze upon beautiful people using your Facebook account. Those
are gains to consumer surplus, but they don’t prop up the revenue-generating
sectors of the economy as one might have expected.

Good examples of this would have to include Wikipedia (which is hugely
useful but doesn’t make anyone any money at all), Craigslist (which has
revolutionized the way people do a lot of things but has done far more to
destroy other firms’ revenue sources than to make money for itself), and
much open-source software (where the absence of copyright-enforced monopoly
profits make the product more useful, but less lucrative, than closed-source
products). John Quiggin has been pondering the rise of social production for
a while and has the following bullet
points<http://crookedtimber.org/2009/03/05/the-end-of-the-cash-nexus/>on
the implications:

   - If monetary returns are weakly, or even negatively correlated with the
   value of social production, *there’s no reason to expect capital markets
   to do a good job in allocating resources to supporting innovation*. (This
   point seems rather less controversial than when I made it in 2006.)
   - As a corollary, it seems unlikely that large inequalities in income are
   beneficial to anyone except the recipients of high incomes (this issue is
   being discussed, in a much more abstract setting, at Crooked Timber)
   - *If improvements in welfare are increasingly independent of the market,
   it would make sense to shift resources out of market production, for example
   by reducing working hours*. The financial crisis seems certain to produce
   at least a temporary drop in average hours, but the experience of the
   Depression and the Japanese slowdown of the 1990s suggest that the effect
   may be permanent.
   - Creativity, broadly defined, seems likely to become more important,
   while markets, particularly financial markets, become less so. Firms that
   want to survive and prosper will have to behave quite differently from the
   way the did in the past. Google is an obvious example of a firm that is
   trying to do this, if not always succeeding.

I see two clear areas where the rubber may hit the road on this. One is in
terms of working hours. Consider this
chart<http://www.sharedprosperity.org/bp189.html>
:

[image: figurea.jpg]

Clearly, we’re going to be able to produce more market-value of stuff than
the barely-working Dutch are. At the same time, if you visit the Netherlands
it’s not as if people are starving in the street. They have plenty of stuff.
And, obviously, they have more free time. That can be nice in its own terms,
or it might just mean more washing dishes by hand. But in the brave new
digital world where it’s possible to engage in endeavors that are useful to
other people on a pretty large scale on a hobbyist basis, it also means they
have more time to do non-market work—write open source code, record an album
and have people download it on BitTorrent, improve Wikipedia entries, etc.
Obviously, you couldn’t base an entire economy on this kind of thing, since
you can’t produce any tangible goods this way. But 1,357 hours per year
isn’t nothing, it’s just a lot less than 1,824 hours per years. And these
days, more-and-more of what people are interested in are non-tangible goods.


It’s a bit of a cliché in politics to talk about the need to move from an
“industrial age economy” to an “information age economy” but there’s
relatively little thought given to what this might actually entail. But it
might entail a lot! Among other things, it might entail that certain
economic metrics developed for the industrial age are less-relevant, and
therefore that appropriate tradeoffs aren’t what they once were. A friend of
mine just twittered:

tinyurl is down. these URL shorteners are a real problem: essential but not
a viable business, it’s a surefire recipe for tons of lost data.

The real “problem,” though, is broader than TinyURL. And the solution may be
hoping that people have free time and, if bored, will be inspired to do
something useful. It’s the vision of Marx’s early thought, or *Star Trek*.

A potentially related issue has to do with broadband infrastructure. My
understanding is that the internet is radically faster in some Asian
countries, notably South Korea and Japan, than it is here in part because
the state has intervened in a more heavy-handed way to ensure that this is
the case. Clearly, though, South Korea and Japan are not crushing the United
States economically. One potential explanation for this is that all this
talk about the Internet is way off-base, and digital communication isn’t
actually all that important to the modern economy. I don’t find that
especially plausible. Another explanation is the Cowen/Quiggen
explanation—the consumer surplus associated with digital communication is
only very partially captured as profits. That will predict that absent
heavy-handed government intervention, capital markets will underfund
broadband infrastructure and you’ll have less of it than would be socially
optimal. This is, I think, a fairly reasonable interpretation of the
broadband gap.

All that’s very left-wing, but there are also less left-wing implications
for fiscal stimulus and the like. Although in either case “be more like
Western Europe” turns out to be the prescription.
 <http://feeds.feedburner.com/%7Ef/matthewyglesias?a=TtsHNc.R>



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-- 
Kevin Carson
Mutualist Blog:  Free Market Anti-Capitalism
http://mutualist.blogspot.com
Studies in Mutualist Political Economy
http://www.mutualist.org/id47.html
Anarchist Organization Theory Project
http://mutualist.blogspot.com/2005/12/studies-in-anarchist-theory-of.html
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