<nettime> Finance and Social Production

[Adam Arvidsson <adam.arvidsson@unimi.it>]

Full reference at
http://blog.p2pfoundation.net/finance-and-social-production/2008/11/25

Finance and Social Production,

I'd like to expand a bit on a number of ideas that came out of a discussion
with Christian Marazzi on the financial crisis, organized by the student
movement at the University of Milano, last Friday. Marazzi has done a lot of
innovative and thought-provoking work on the role of finance within the
post-Fordist economy and the deep structural roots of the financial
expansion that has marked the last two decades (or since 1979 and Paul
Volker's monetarist turn at the Fed). Indeed, the growing size and
importance of financial markets is one of the two important structural
trends that have marked the transition away from industrial Fordism (to an
'information economy' a 'knowledge economy' an 'ethical economy' or simply
'post-Fordism' the exact denomination is not an issue here). Indeed, with
Geroge Soros, we can argue that the current crisis is the end of a financial
'super bubble' that has run its course since the early 1980s. This has built
on a continuous expansion of credit (refinanced by a massive inflow of cash
from emerging economies like China). The consequence has been a substitution
of credit and financial rent for wages as the source of income of the US
(and Western European) middle class. The most visible structural consequence
of this financial expansion have been  a financialization of a number of
services related to the reproduction of everyday life: credit card debt,
housing and mortages, pensions, insurance, health care and education. To
this transfer of the responsibility for the reproduction of life from the
public sector and the welfare state to financial markets has corresponded a
massive securitization of life conduct, that is; the invention of a number
of often very complex financial instruments, the risks of which are are in
the end related to the life conduct of human subjects (their liability to
pay their mortages, to get sick and so on). Indeed Christian Marazzi argues
convincingly that this link between finance and life conduct is one of the
defining elements of the neoliberal political order, tracing it back to the
New York City bancrupcy in 1975. At that point, the City relied heavily on
the issue of municipal bonds. In turn, its ability to repay those bonds was
contingent on its ability to reduce costs for social services and crime.
This way, the financial rent that the middle class (that had purchased the
bonds through, mainly pension funds) could receive, came to rely on the life
conduct of the underclass (who were the main recipients of costly social
services) and, consequently, policing the latter became a way of securing
the income of the former.

The second deep structural tendency of post-Fordism is the massive flight of
value from the mechanisms of capture that were established with the Fordist
industrial economy. We discuss this at length in the forthcoming second
chapter of the Ethical Economy book, but to reassume the argument in a
nutshell: Social production, the production of (mostly but not exclusively)
immaterial wealth outside of the capitalist economy has increased massively
with the diffusion of information and communications technologies. Companies
increasingly rely on what they see as the 'free lunch' of social production
by institutionalizing various forms of 'prosumerism': brand management and
marketing where consumers play an active part, user- led innovation schemes,
customer co-produciton of goods (Ikea) and services (McDonalds) and the
cultivation of reputation and public opinion through Corporate Social
Responsibility Schemes. Furthermore, social production has become an
important element within the capitalist production process itself. Knowledge
workers create value by using their social and communicative capacities to
organize processes of cooperation and collective intelligence. Complex
global production chains (or networks) thrive of meaningful relations of
trust and cooperation between supplier and other partners. These are all
forms of wealth that are produced outside the capitalist economy proper:
that is they are generally not motivated by monetary gains, and they cannot
be commanded or sanctioned by bureaucratic power. Indeed, because such
socially produced wealth is generated outside the reach of the mechanisms of
capture and governance with which the capitalist economy works, they are not
easily measurable as valuable resources. Indeed, the products of such forms
of social production tend to figure on financial statements as 'intangibles'
for which there is no coherent method of measurement. In 2005, seven per
cent of US corporate investments were directed to building such intangible
resources, principally, trust, brand equity, corporate reputation and
'intellectual capital': that is, principally values that build on the
ability to establish meaningful and durable social relations, or what we
call 'ethical values'.

This massive recourse to social production has changed the situation of both
companies and workers. For companies, value is increasingly generated
outside of the wage relation, in diffuse practices of social production that
cannot be easily managed or measured. Success and profit becomes
increasingly contingent on the ability to capture such socially produced
wealth, and depend less on the direct contribution of salaried labour. For
workers, gainful employment tends to be configured less as a single wage
relation to one employer, and more as a multitude of income streams from
very diverse forms of practices: regular salaried employment, short term
work, consultancy, childrens work, unpaid forms of social production that
can be monetized in different ways, entrepreneurship, engagements with the
growing informal economy, financial or real estate speculation etc. This
way, both the appropriation of value on the part of companies and the
generation of income on the part of workers tend to move outside the once
dominant wage relation. Present phenomena like the neonomads who launch
start-ups out of Starbucks caf?s with wifi connectivity or the return of the
'sublimes' testify to these tendencies.


Since the wage relation looses its centrality as a way of distributing
social wealth, it also looses it centrality as a way of appropriating
surplus value and profits. This way the enormous expansion of personal debt
as a the source of the new kinds of securitized value streams that underpin
new financial instruments could simply be seen as the establishment of an
alternative to salaried labour as an instrument for the capture of value.
In the fordist model the extraction of surplus value relied on the
exploitation of salaried labour. This way the labour contract guaranteed
both the worker a secure long term access to the means for the reproduction
of life, and for the capitalist, a secure long term and predictable stream
of surplus labour ( in the form of the productivity of the working day that
exceeded the cost of labour). In the post-Fordist model the financial system
anticipates necessities for the reproduction of life (a house, health
insurance etc.) and receives in turn a long term and (relatively, or at
least calculably) secure value stream in the form of interest payments. The
interest payments become a direct extraction of surplus from the whole life
practice, and not just from the working day.  This happens in a situation
where the wage relation is becoming less representative of the real process
of wealth creation. The sources of this surplus, just like the sources of
the 'living wage' can , and increasingly do, drive form a multitude of
diverse sources of income. What is more, the value of these activities is
set outside of the wage relation controlled by capital. As a free lance
worker, entrepreneur, or member of the 'precariat'  the value of my products
is generally determined by my networks of friends, colleagues and clients.
They are the ones who determine how much I work, when and what I get paid.
Even i forms of regular employment- like many forms of knowledge work,
productive agency engages a number of activities that lie outside of the
wage relation (free time, contacts, networks etc.)

The parallel rise of, on the one hand such 'anomalous forms' of employment
and the importance of social production in general,  where the determination
of value is increasingly autonomous vis a vis capitalist government, and, on
the other hand the direct financialization of life conduct, would suggest a
general shift in the modality of extraction of surplus value: from the wage
relation and its dependency on discipline and controlled time, to the
debt/finanace relation where the comprehensive surplus generated by the
multitude of productive practices that make up he life process is directly
captured by means of interest payments. Correspondingly, the modality of
government shifts from discipline, from imposing a certain form of conduct,
to control, form making calculable the risk arising form a multitude of
forms of conduct that  evolve autonomously.  Class distinctions are
configured around the access to such financial rent. Who has the capital and
ability to benefit from rising real estate markets, in which the social
production of the metropolis is monetized, and who does not. The terrain of
social movements shift from the factory  to the city and the banlieus.


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