This post was written in reaction to an interview given by McKenzie Wark about their book General Intellects: 21 Thinkers for the 21st Century.  In the interview, she talks about the way universities fit into a larger sort of information economy, an economy which doesn’t seem to fit neatly into a normal Marxian analysis.  At the end of the interview, she discusses a project that she is working on called Capital is Dead, which argues that we might be living in something different from capitalism, based more on the value of intangible information. Wark asks, “[H]ow would you generate concepts to describe a mode of production where asymmetries of information control the whole value chain and it’s not just that information became a commodity—the commodity became information...? [Y]ou need an intervention in language to sort of start even thinking about that, so that we don’t keep thinking that capitalism is eternal, that we can put modifiers in front of it....” (59:58)

Has capitalism transformed into something new? Do modifiers like late capitalism or neoliberal capitalism fail to describe our present moment?  When we discuss inequality and injustice, should we put less emphasis on asymmetries of private ownership, and more emphasis on imbalances of information and knowledge?

Information/knowledge/ideas—these all affect the modes of production, but in a different manner than physical capital does.  We hear talk of ‘social capital’ in business, economics, and social sciences as an investment for individuals.  People go into debt at universities to learn marketable skills.  ‘Intellectual property’ is consistently vital in the largest disputes in modern capitalism.  Massive tech companies sue over intellectual property rights, or buy other companies for their institutional and technical knowledge and their IP.  China is accused of stealing intellectual property from the United States in its mission to become a tech powerhouse, and people have even theorized that this will spark a war between the two nations.

‘Social Capital’ and ‘Intellectual Property’

Social capital and intellectual property (IP) are different from what we consider physical capital, not just in their intangibility, but in their abstract relations to the market.

Social capital cannot be marketed; you cannot easily give away your skills or deep holistic understanding of a field in exchange for money.  Capitalists cannot purchase raw skill, they can only purchase skilled labor. The skill of your labor comes from your experience in the field, going to school to learn, and/or the people you know. Social capital is the information a worker possess which makes their labor more profitable.  Information—in terms of one’s social capital—becomes a commodity when the basic knowledge required to effectively do a specific job becomes too expensive for companies to profitably provide in internal training.  Learning marketable skills—accruing social capital—is then pushed out and deferred to schools, public education, and unpaid internships. Workers compete on their résumés to show to employers that they have the social capital to increase profit margins.

Intellectual property lies on the other side of the marketable scale.  Large corporations have wrestled it into something highly marketable by the construction of laws to protect ideas for owners via trademarks, restrictions, copyrights, digital rights management, and patents.  Intellectual property doesn’t always require a deep understanding: they are usually singular ideas that range from being ‘understandable and accessible to most people’ to being ‘accessible only to those with an understanding of a broader field’.  When Wark says that the commodity form is increasingly becoming that of information, I think she is referring to the propertization of ideas through IP law.

IP, social capital, and physical property are all distinct from each other in their relation to the market.  Intellectual property is unlike physical capital because it cannot be stolen, only shared: when someone learns my idea, I do not automatically forget my idea, but if someone takes the physical property that is my wallet, I have no wallet.  This is why private IP must rely so heavily on state enforcement to define stealing in a way beneficial for the propertied class.  IP is unlike social capital because it is possible to share it: I can explain the idea of a specific patent to anyone with the requisite background knowledge to understand it, but I cannot easily share my social capital because it is the collection of knowledge learned over a long period of study and practice.  For the same reasons as it cannot be shared, social capital is unlike physical capital because it cannot be bought/sold between persons.

There is a caveat in that social capital and IP don’t seem to be so distinguishable by nature of them both being knowledge.  Social capital seems to be an individual’s understanding of many individual ideas, and how they relate and are used in a broader field.  Several of these ideas would meet the requirements to be filed as intellectual property—if they weren’t already in the public domain.  That is to say, if IP law had been thoroughly established earlier, we could imagine basic foundations of chemistry or material sciences to have become gatekept by massive corporations claiming intellectual ownership.  Any new field’s ideas will likely be largely privately owned from its inception, as we might already observe in the design of computer chips, or in the social sciences research done by social network companies.

The Problem of Oligopolies of Intellectual Property

Asymmetric information produces economic power in a sector of the economy which has risen in importance over the past century. The newly important sector is a second-tier, desire-based economy which exists beyond capitalism’s physical economy (the physical economy sells us our basic needs for survival and social functioning). Target consumers of this secondary economy already comfortably have the money and means for survival and satisfaction—the economy of desire instead sells meaning, purpose, and entertainment.  The capitalist of this fickle economy must cater to consumers’ shifting desires, invent products which elicit desire, and compete with other capitalists who conjure desire and capture attention.  To grow profits in this desire-economy, the capitalist must have more than just a successful product at a single moment of time, they must build a monopoly on how the secondary economy will change over time to meet the shifting desires of consumers.  They build this monopoly by establishing asymmetries in knowledge and information that favors themselves over their potential competitors—now we begin to see the importance of intellectual property.

Ideas, precisely because they work differently from physical goods, have value in the secondary market.  Ideas have become defined as something that someone might “own” in a way that prevents the idea’s use by others, and in doing so, information enters the market with legally constructed scarcity.  But while ownership of ideas legally attempts to mirror ownership of other private property, intellectual property differs in the way it is profitable and in the way it is produced. It seems like IP has shifted the purpose of means of production away from the primary goal of physically producing goods. Now, the goal is to capture the creative forces that invent and describe potentially profitable ventures.  Ideas and intellectual laborers don’t simply manufacture goods, as is mostly the case with physical capital—ideas and intellectual laborers help generate new ideas for products and production.  Those new ideas then themselves become intellectual property of the owner class.

Companies and their investors buy up companies and talented intellectuals.  They also keep their ideas and information internal to their company through trade secrets and IP law.  With those two techniques, a company may grow into a monopoly on the basis of intellectual property law alone.  Google (Alphabet) and Facebook do this to a remarkable extent, hiring talented individuals and maintaining treasure troves of internal social science data.  Medical companies have IP ownership over the production of crucial drugs like Insulin.  Amazon, to give another example, pays their software employees a salary instead of paying by hours that someone can clock in and clock out.  This means that the work Amazon coders do in their “leisure” time is still considered work that is paid for by Amazon, and if any of an employee’s ideas touch the work computer, by Amazon’s contract, it is the intellectual property of Amazon.

Having a monopoly on certain ideas and the production of knowledge allows companies to feel secure in an environment where competition would otherwise be a greater threat.  When the internet democratizes knowledge and the desires of consumers shift, we still see older companies surviving and suppressing competition through their wielding of intellectual property.

The Problem of Social Capital and Universities

In the desire-driven sector of the economy, companies must reinvent themselves at the pace of their consumer’s whims.  The monopolization of information is useful in staving off competitors, but not as good as changing to meet customers’ demands.  The shifting sands of the desire-economy has thus made raw accumulation increasingly important for eking out profits wherever possible.  Anything public or personal that isn’t yet producing profit gets swept up in the process.  Companies would much prefer to opportunistically lay claim on unclaimed resources than invest and build their own private infrastructure.  One, because it’s far cheaper to simply co-opt resources.  And two, because the market might shift, and the infrastructure they built have been a waste of money.  Capitalists baptize what was once outside of the market into tools for private profit.  I ought to give clear examples of what I mean.

Unused cars and unused leisure time are turned into profit by app developers at Uber and Lyft.  Other companies pop up to profit from selling people’s attention, fighting over it with addictive dopamine loops (e.g. Facebook notifications) and with algorithms designed to keep you watching more and more YouTube or Netflix.  An important example of private exploitation of non-private resources is how universities have been transformed from places of ‘education for education’s sake’ into unofficial centers for job training.  Coders, medical technicians, business managers, mechanical engineers, et al. are pumped out in ways that make universities seem more like vocational schools, while the Arts and Humanities appear less profitable/important and thus fall to the wayside.

It makes sense economically: schools will be considered bad if they don’t prepare students for getting a job, and companies want to spend less money on internal company training.  Therefore, companies increasingly encourage universities to take up that role of job-training.  The only reason that companies don’t make the universities take up all the responsibility of training you for your job is that they have intellectual property that they don’t want to share in the public sphere.

Universities are a public resource, but schooling benefits the profits of companies that needs an educated/trained workforce.  As more knowledge of how to manipulate the world has been generated, more training is required for laborers to be at the cutting edge of the intangible ideas industry.  Universities, once conceived with romantic notions of educating the populous with broad, foundational knowledge of the world, have become wrapped up in the production of capital, churning out laborers for the production of Intellectual Property for the oligarchs.  When universities are branches of the private sector’s job-training programs, our universities are “public” in name only.

When we speak of social capital, we are speaking of the outsourcing of job training to internet courses, universities, and internships.

What It Might Take to Solve the Problem of Social Capital

I would like to say that we need to revalue education for itself, as a basic human need that is necessary for being a whole person, and that we must separate it from the demands of a growth-at-any-cost economy.  I think these sentiments are good ideals, but even if a large majority of our country held these beliefs, it wouldn’t be enough to dislodge education from its current role in the private economy.  The way in which education and knowledge has been transformed by worries of the job-market—the anxious need to make oneself appear appealing and employable to the private owners of physical and intellectual property—mirrors how everything has become swept up in the neoliberal wave of privatization.  Practically reaffirming education as a humanist project is tied up with our other struggles in areas of labor, mental health, and basic needs.  A society that focuses more on providing fulfilling jobs and taking care of basic human needs—and less on accumulating marketable skills and social capital—would produce far fewer anxious students with the flat view of education as an accreditation process for their future career.

We should also try to limit inequalities that result from unequal skill.  Some people might be born with physical or mental impairments, but their lowered output shouldn’t affect their pay when they are putting in as much effort as the average worker.  Furthermore, we might reduce competition between laborers by guaranteeing paid job training to those who want it. Separating professional education from humanist education in such a way would reduce the perverse incentive to rack up student-loan debt in order to look attractive to the owner-class. This is only me riffing on an idea, but if we want to protect the humanism of education, it seems necessary to create clear boundaries between humanist education and the perversions of economic rationality. Ultimately, that boundary may wither away as our economy is folded into the humanist project.

What It Might Take to Solve the Problem of Intellectual Property

How do we break up the modern monopolies of the Information Age?  The brute-force answer seems to be to outlaw intellectual property, or at least to only protect IP for a very short time before it becomes publicly available. Additionally, to battle trade secrets, we might require that all research, schematics, and/or information that results in the production of profit are made publicly available. If necessary, information would be anonymized for the public, and specific to the individual if that individual requests the information that a corporation keeps on them.  These solutions alone won’t solve everything: If everyone who can understand complex ideas are all on the payroll of very few companies, then we haven’t really broken up the concentration of company power.  It would, however, seem to open the gate up to new companies competing with the legacy companies that have so far survived by protecting their IP.

Ultimately, we would want a democratization of both IP and the social capital necessary to understand and utilize it.  For much of the computer programs we use, we might want to replace large companies with not-for profit open-source projects that are maintained by very loose worker cooperatives. They would be democratically managed and would democratically decide how revenue should be split among the contributors.

This is a very rough hint at a decentralized, democratic method for technology advancement, but I hope my reasoning is clear.  Open-source creation is promising in how it is antithetical to IP law and monopolies on knowledge.  If we want to avoid the imbalances of power caused by asymmetric information “ownership”, then open-source development might be the inevitable result.  From there, it seems that we might want some sort of democratic management to (1) set rules to ensure people are paid fairly for their work, and (2) give some structure and consistency to the open-source development process.

There are important questions about the incentives necessary for innovation when everything is in the public domain, but these must be saved for another blog post.

Conclusion: Is the ‘Asymmetry of Information’ Characteristic of Something Worse than Capitalism?

I don’t think the change in commodity form from ‘tangible goods’ to ‘information’ means the logic of capitalism has shifted into something unrecognizably new.

Here, I’ve focused mostly on how IP affects the technology sector—Amazon, Google, Apple, Uber, Facebook, Microsoft—and the transformation of universities into a place to gain social capital.  Admittedly, there are other areas that I didn’t touch on, like finance, which are heavily dependent on asymmetries of information to make profit, and which also interacts with intellectual property in unique ways. I also didn’t discuss the consequences of ‘big data’, the collection and categorization of an incredible amount of information, or how it’s now finding its use as neural networks provide a way to parse all this information into actionable suggestions and predictions. I should have also spent more time discussing how stealing intellectual property is one of the best ways for a country to become a economic powerhouse; USA “stole” textile knowledge from the British, and now China is “stealing” technological knowledge from the USA.  Asymmetries of information and knowledge are reflected at the scale of countries’ GDPs.

I nonetheless am hesitant to agree with McKenzie Wark that this “new” economy of information and economic power is so different from what we had before. Marxian analysis focuses on the value we give to labor, which is then represented in commodities. Intellectual labor is necessary to produce useful, commodifiable information.  (I am open to changing my mind on this, but that’s my current stance!)

Charitably, there are two ways I might distinguish the information economy from the capitalist economy.

The first distinction focuses on the highly legal construction of information as property. Because information is so easily shared and reproduced, it seems to reject “ownership” in the ways our laws are currently meant to protect. Forcing information into the shape of a commodity to be bought and sold is like pushing a circle though a square hole. Imagine: if we could duplicate healthy food and clean water as easily as we can “duplicate” an idea by explaining it to another person, nobody would need to go hungry or thirsty again. And yet, with all the good that information could achieve if it flowed freely and democratically, capitalists have established intellectual property law to try to restrict ideas in the same way that physics restricts the duplication of food and water. That might be what separates the information economy from the traditional capitalist one: the fact that it is socially constructed to such an egregious degree, by and for the wealthy. Then again, all private property is somewhat legally constructed, so it might not matter that intellectual property doesn’t naturally fit into the legal parameters of ownership.

The second distinction was described in the Problem of Oligopolies section. It is that intellectual property and informational social capital are prone to generating more intellectual property, as ideas are iterated upon, developed, combined, and repurposed. This type of information can even exist as part of a meta-economy, wherein privately-owned information directs how companies interact with the “regular” economy (the economy that trades consumables and commodities). This meta-economy also reflexively affects itself: Because private information is sometimes legally constructed into commodities, ‘ideas that guide the economy’ can themselves be bought and sold.

The second difference is more substantial than the first. The degree to which private information commodities can directly influence the economy at the meta level seems to be a more recent development, and may signal the beginning of a new era.

Since writing this article…

…I have started reading into Economics for the Common Good by Jean Tirole, and have learned that “asymmetries of information” is one of the more recent (and very important) fields within economics. I look forward to learning more about Information Economics and Information Asymmetry. (January, 2019)

…I have updated the article to more explicitly handle the distinction between trade secrets and intellectual property (patents/copyrights/etc.). (February 9, 2019)

…And I have come across a part of anti-trust law which is focused on updating how we can speak of monopolies in response to some of the problems I bring up in the Oligopolies and Intellectual Property section. Presently, anti-trust is such that monopolies are mostly acted upon when prices rise for consumers. However, for sellers like Amazon, the information of what people buy is a trade-secret, and can Amazon can find ways to undercut prices through that and stifle competition. If you want more on this, by someone who knows what they’re talking about, check out this interview. (February 9, 2019)