Capitalist Value Is Losing Its Value
Some ideas before I get into Capital, Piketty, and Carney
An Overly Simple Look At Why We Have Economies
Everyone knows the classic adage about how the economy was born and expanded. People didn't all have the same goods or skills, so they started trading goods with each other. Different things had different values, so people found ways to work with differing values. One way was a single currency in which all goods could be traded, and voila, you now have some version of a working economy. Now, people can specialize and everyone in the community can benefit.
Later, things became bigger. Completely different regions of the world had completely different resources, methods of production, and finished goods. These goods could be traded too, but having multiple currencies makes things a little more confusing. In comes a global currency and exchange! Now, things can be traded everywhere more easily. The economy has now surpassed the community and is now, in some way or another, global, The global economy being built up of many smaller economies. Different places are able to produce different goods significantly more efficiently. If each place produces the goods it is most efficient at and trades with all other places in the global economy, everyone should be able to have their needs met in the most efficient manner. Similar to how on a local level all community members could benefit, now all communities globally could benefit from each other. That's the theory.
This story presumes that the expansion of this “economy” was to help out as many people as possible. Why have a larger economy if it won't help everyone out? If everyone works together, we can all live a better life by doing what we do best. This idea has become global, and we are way more efficient than ever before. Why do we still have to work so much? With all these gains in productivity, why do most people seem to just get the minimum? How are there rich countries with massive sections of the population who are barely able to sustain their own survival?
Looking to the future, we have many problems on the horizon. One of these is climate change. Currently, capital believes that this will be solved by growth because that is how issues have historically been solved. Overpopulation used to be a very daunting issue, many major economists thought we would not be able to generate enough food to sustain ourselves. Luckily, we innovated our way out of it with the green revolution. Now, the issue of overpopulation is rarely thought of at all. Climate change may take a similar course, but it is not guaranteed. While there may be technological breaks that allow us to ignore the problem, relying on that doesn't seem like a real plan, but rather a comforting phrase to maintain current slow progress. We know certain “tipping points” and slowly fail to divert our course away from them, but these current limits are only what we directly know. It seems incredibly likely that there are different tipping points which we do not know. We may pass these tipping points because having specific limits seems like a promise to investors that we can make it to that limit but stop there. To stop first is to be the first one leaving the growth, which means you lose profit. Others will still chase the profit. It is a goal to work asymptotically towards, not something to avoid at all costs. These limits are incredibly important, holding countless lives at stake, but the system does not know how to hold any value in the potential for human life.
It would seem the goal of an economy should be ensuring that humans live the best lives possible, but it would seem to me that the capitalist system the world runs by is incapable of achieving this goal. This isn't because the goal is unachievable, but rather that the way the system goes about theoretically achieving this goal does not actually achieve this goal. The system isn't broken at its core, it is rather efficient to the point of dominating the world. It is just the focus of the global economic structure that is not actually helping everyone in the way they may expect. In other words, capitalism creates value in a global economy but fails at utilizing that value to actually make everyone's life better. Instead of making everyone's lives better, all of the better goes to those who dominate in the system: capital. If the value of an economy was being able to make everyone's lives better, it is safe to draw the conclusion that capitalism is starting to fail at its own understanding of value.
Value Systems And Value
There are purchases which provide a solution to a problem a person may have, and there are purchases that are frivolous. I feel it would be safe to say that balancing these two types of consumption is at the heart of most economic debate. When it comes to necessities, those on the left may argue that we need to collectively change focus to providing for everyone's needs. Those on the right may argue that when certain people have more money, they are more capable of investing than those without, and thus giving them the means to invest will lead to the best outcome for the vast majority of people. When it comes to frivolous purchases, those on the left may say anything like we don't need it at all or we should allow some regulated markets. Those on the right more or less just go with the idea that if someone bought it, it must have value to them, and therefore is valuable and should be produced.
This debate extends beyond how things work and is not just a debate on what people should or should not buy. It is often tied to a fundamental argument over what it means for something to have value at all. There are objective theories of value which tie the idea of value to that of an item, like the labour theory of value, which argues the socially necessary labour power that goes into an item creates its true value. There are also theories of value that tie value not to the item but to the consumer, like the subjective theory of value, which argues that whatever someone is willing to pay for an item is the true value of that item to them.
Right now, we live in a world based on that last idea: the subjective theory of value. Value is in the eye of the person who wants to purchase, and if they consider something to be worth it, they will buy it. Trying to actually conceptualize this is extremely messy at best, and funnily enough, often necessitates creating some form of objective theory of value which the subjective theory of value can use as a basis to function. From an intuitive standpoint, this is already extremely messy. It seems that people want the labour theory of value to be wrong so bad that they created a model of “anything goes” and decided that having no actual working definition of value was just as good as trying to find what creates value.
One of the core features of the subjective theory of value is that it blurs what value actually is. For two objects, the price of purchase can be an extremely poor indicator of the use of an item. Washing machines may trade at a comparable price to a designer belt. One of these is a revolutionary item that has permanently changed the dynamics of labour and sanitation, allowing women to enter the workforce at a much greater rate. The other does about the same thing as a cheaper belt. The main difference is that one of these is optimized for use value while the other is optimized for exchange value. One will be purchased because to live without it would be such a handicap that you likely would struggle to navigate modern life. The other will likely be purchased to show off the fact that the purchaser can purchase it.
The conflict between use optimization and exchange optimization is not just something that can display wealth. It manages to create contradictions which can lead to crises. The housing crisis of 2008 demonstrates this well. Houses are lived in and provide us, alongside appliances within, with immense use-value. Through investment and speculation, there appeared a bubble. Houses were not being bought for their use-value, but rather their exchange values. Houses were being bought up not to be lived in, but as a speculative asset to derive profits. As housing was going up, it seemed a sure investment to make more money based on its historical reliability built on its massive use-value. When the exchange value rose too high above the use value, the “true” value of the houses was nowhere close to the price they were being exchanged at. The price faltered. Houses were bought and not even filled. The price started decreasing. Being over their heads in loans to buy houses at an ever-increasing price to sell later, this decrease caused loans to default, and a crisis occurred.
Modern technology has effectively solved necessary uses. A new toaster has nothing new to add that old toasters can't do, but that doesn't allow growth, so other features are added to increase the exchange value. Aesthetics are crafted and emotional attachments are given to items to encourage consumption far beyond the actual necessities of the consumer. It also allows people to buy items which have no real use value at all, but are instead based completely on exchange values. Imaginary uses are created for items like fidget toys in order to sell them. Similar to the housing market before 2008, a bubble of exchange values is added on top of the use values, which creates a race to the top for how much exchange value one can get out of a simple item. Eventually, as the contradiction realizes its absurdity, the crisis emerges.
Major crises tend to bottom out as low as if not lower than the previous. This would make sense if people needed to reel in their spending to the core use values of an item instead of spending more money for aesthetic purposes. The use value is actually real, and with the uses being solved, it makes sense that an approximate return to this value may be a more solid foundation than any amount of exchange value built up on top of it. But why do people buy into this if they could simply satisfy their needs and stop consuming? Capitalism has adapted itself to create a new mentality which demands further consumption. It ties items to aesthetics and emotions, which unlike needs are inherently elastic. This elasticity allows for added stresses to draw re-consumption where it is not necessary but rather liked. These likes can be shaped by slow-changing trends or influenced through the digital consumption of ideal spaces apparently used by others in a way that seems more appealing than the current. There is always someone on social media with a nicer environment that helps with their better workflow. Frustrated? swap it all out. Stressed? Buy something to relieve it. Constant consumption and viewing of better things make the reality of what you have feel inadequate. Buying it might just help that. Until it is real at least, where the next aesthetic will present itself.
If the use value is real value, it would make sense to maximize the use value and then allow for more human activity on top of that, activity that need not be monetized. Instead, capitalism opts to maximize the not-so-solid exchange value on top of the use value in order to drive further consumption and growth, which helps to create the conditions for crisis. Goods are produced faster as the economy grows. Goods are produced at a rate faster than they can be consumed. A crisis of overproduction occurs. Companies contract, people lose their jobs, and wages are depressed. These crises are extremely bad for the population, but also a core feature of the capitalist business cycle. It would make sense that an economy that works for the people would try to minimize this, but that would stifle the market, so it cannot happen. The value that helps people has been lost. It has been replaced with a new one which seems to shift focus in the opposite direction.
The Internal Dilemma
The profit motive is at the core of capitalism, and by extension, liberalism. Capitalists are left to be the implement used to create change through their desire to expand markets and find more value. This may work when there is very little to start with. Resources must be harvested: labour harvesting produces value in the now-harvested goods. Those resources then must be shaped into something usable in some way, which provides more value. As resources in the immediate area are capitalized on and processed, there is more value in resources lying beyond the immediate area. Through population growth and expansion of the scope of the total system, the system can grow through harvesting and producing more, and produce and harvest more by growing. This recipe for growth was a massive success.
Globalism has reached almost the entire world now, with only a couple of population sites being not completely integrated in Asia and Africa. Outward expansion is no longer possible. Population growth is also slowing. With no more external expansion readily available, growth must now come from inside the system. Internal growth, however, is a confusing idea. If it does not produce more and more people do not come out of it, what is growing? Capitalism is about the profit motive, so the profits must grow.
This means internal expansion is effectively just increasing inequality. Capitalists try to grow their value further, constantly demanding growth. That growth is no longer available through external sources. It must come from more intense extraction of the sources it already has access to. Industries which are expanding can use new technologies to increase the rate of production without increasing labour costs. Machines are expensive, but far less expensive than the cost of significantly increasing a labour force. By introducing new technologies, tasks can also be deskilled, which may serve to reduce the cost of the current workforce as well. In saturated markets, technology can be used to allow layoffs to keep production constant while reducing the labour force, enabling more room for profit.
While external growth is available, these strategies can be used to drive up production for expanding markets, but internal growth drives directly into a contradiction. Employers want to lay off as many people as possible, while still demanding that those people buy their products to drive further growth. There are no new people being added to the system to remedy the contradiction. The workers, the ones who do the actual production, get squeezed. Rising costs, lowering wages, and reduced political power drive them to a point where they effectively become punching bags for the political-economic system in which they reside. Their lowered wages mean they can't afford as much. Having less being purchased means profit margins will be increased per product to continue growth under less volume. Higher profit margins mean increased costs. Lower political power means depressed wages. This seems to be a mirror of the commonly talked about wage-price spiral constantly touted by mainstream economists, but instead of inflation, it seems to better resemble stagflation: stagnant growth, high inflation, and decreasing employment.
Capitalism, while growing, was able to produce more for more people, creating an economic system that was able to out-compete anything before it. The growth effectively increased living standards everywhere (when regulated), and the system worked well for an increasing number of people. Global capitalism seems to run directly into a contradiction. If the value of the global capitalist economy is to ensure better wealth for everyone, global capitalism seems incapable of providing it. The mechanism that drives the system is the same mechanism that ensures that the system will not be able to achieve its apparent goal.
The Digital Ownership Paradox
Rejection of usefulness stems from this. Continuing to grow under a global capitalist system requires less efficiency. Solving problems is a bad business strategy. Satisfying all needs would prevent consumption if needs were the priority of the economy. Since just about all major needs for the maintenance of regular human life are solved, the system needs to find ways to allow increases in efficiency in production in a system that does not demand them. The solution is manufactured inefficiencies in consumption. Appliances that serve multiple real and necessary uses become multiple appliances that serve real uses alongside many functions that are completely unnecessary. Additionally, appliances that solve a problem will now be driven to act in a way to un-solve the problem which was solved. Planned obsolescence un-solves the problem through the manufactured breaking of the appliance. Emotional capitalism can un-solve the problem by attaching the solution to personal aesthetics, then using changing aesthetics to demand re-consumption even though the appliance is still functionally fine. The usefulness is removed from being the core of an appliance.
Another tenant of this inefficiency in consumption is the introduction of middlemen to a system. A business no longer has decisions made by a CEO with a vision, but rather has a board with consultants who advise on how decisions are made. The product doesn't get sold to a customer, but rather to platforms for resale. A product is often not sold at all, but rented perpetually, allowing the same product to be sold to many customers. This may be sequentially or at the same time, or rented to one until the amount paid is greater than if it was outright purchased. This vertical integration of indecisiveness to avoid private responsibility simply balloons bureaucracy in the process of failing to actually deliver any ownership of items to end consumers. This is contradictory to some of the core ideas of capitalism: the idea that markets will create more efficiency and reduce bureaucracy, and the idea that private ownership is freedom in the sense that it allows people to own. These ideas have struck a middle-ground of less efficiency, more bureaucracy, and preventing ownership, all in the name of bolstering profits.
The gig economy is a prime example of this middleman ballooning in what were traditionally already services. Unable to come up with new ideas, which would require creativity alongside risky investment, the easier and more reliable method is to simply undercut a service that has been regulated and insert yourself as a middleman to deregulated micro business owners. Platform people who will take on the burden of risk, atomize them as much as possible, and take a cut of all services they provide. Each of these atomized workers is responsible for themself. They are also able to take advantage of different sections of labour law, which tends to be more lenient on tiny businesses. Individuals doing work by themselves are not nearly as regulated as larger models, and thus a large model of individuals does not need to abide by all those labour laws as they stand.
Platform companies are an example of bloat for functions that exist in real space. Software does not exist in real space but can be replicated practically indefinitely for almost no cost. Creating a post-scarcity space should be a marvel of human progress. Instead, it has become a hunting ground for rent-seekers and middlemen to create scarcity where it does not exist. Digital rights management and non-fungible tokens are examples of people trying to create scarcity. The value of a post-scarcity information-sharing environment should be unimaginable, but to capitalism, its value only exists insofar as that value can be realized through extraction to a private owner. The value for humanity has been completely lost by the new value it could pose to investors who know how to take advantage of it.
Digitally, innovation has also seemed to lose the core of what people imagine value to be. Most innovation over the last years has simply been deskilling, moving from purchasing to subscriptions, and optimization of monetization models. All of these only derive further purchasing if other ways to consume are eliminated, like piracy or third-party purchasing. Thus, in order for the “free market” to thrive in this space, IP law needed to be put in place so that the state could enforce private companies' artificial mini-monopolies over digital assets. When this enforcement is put in place, private companies no longer have to sell some complete version of software, but instead are able to continuously rent it. They are able to manipulate the supply and demand of their products at will, and then speculate on what their manipulations will do to the resulting value of their products.
This not only is generally anti-consumer but also exposes further contradictions in how capitalism attempts to find its value. The free market is thought of as acting as an alternative to the state, but the state and legal enforcement is the only reason that their digital assets have any value. Without the state, everyone would simply be able to copy the information effortlessly and acquire a free copy of the software. If this were to happen now, there would be legal repercussions, a form of political violence, against those copying the game. The freedom of the market acts in opposition to the freedom of end users. Political domination demands market freedom, which only exists in a roundabout near nonsensical way from that domination.
A third direct contradiction here is that the capitalists are only able to give the ability to use software by restricting the ability to use the software. It exists and is infinitely replicable, but that isn't profitable, so restrictions like digital rights management are used to stop it from being used so that the ability to use it can be graciously given in exchange for money. The value of the software cannot come from the code or software as it exists, but only as its non-existence can be enforced against those who wish to acquire it without paying.
A Look Forward
The growth of the global market was supposed to provide more freedom and better lives for all. For a long time, it was successful in this endeavour. For some, this still may be the case. In the future, it is clear that the weight of the systemic contradictions in capitalism means it will likely be unable to do this on a global scale. It has lost sight of the human aim for human benefit and has replaced it with an infinite demand for growth. Even technological marvels such as a post-scarcity information-sharing environment must be shuttered just to bend to this will. Capitalism simply cannot understand what is actually valuable and what is not.
All systems come to an end when what is valued under the system comes into too much conflict with what is valued by people. Eventually, when the contradictions become too strong, a new paradigm forms to bring us into the future. The next system, to replace the current, must not only be global but also a compelling alternative. It must be able to value that which is made more valuable by not having its value extracted. It must be a more human approach in a system that enables the human approach. It must upend the class-based system where success and freedom are dictated by the ability to dominate others and restrict their success and freedom. It must allow growth as well as degrowth. I believe to achieve this, it must be planned and thoroughly democratic in its planning. We can rebuild it. We have the technology.
Fuck getting money for real Get freedom If I run out of shots I'm going out poking
Oncle Spencer