Re: <nettime> Nobel laureate in economics aged 102 endorses the human economy approach

[Brian Holmes <bhcontinentaldrift@gmail.com>]

Hello Keith, hello everyone -

On 01/19/2013 12:48 PM, Keith Hart wrote:

> I believe we are witnessing a drive for corporate home rule which would
> leave them the only citizens in a world society made to suit their
> interests. This is the logical conclusion of the collapse of the
> difference between real and artificial persons in law, since how could
> mere human beings compete with organizations of their size, wealth and
> longevity?
>
> The left has been effectively blindsided by this development because our
> models of what is happening are more rigid and old-fashioned. We talk
> about capital as if it is a static phenomenon that we know about better
> than the fat cats, whereas Coase/Williamson underpins a fast-moving
> evolution that we lack the intellectual equipment and experience to
> understand.

I quite agree with you. Marx's brilliant insights into the dynamics of 
capital have been taken as dogma fixed in stone, whereas on the other 
side, neoliberal mainstays like Schumpeter long ago absorbed key ideas 
from Marx into their systems and used them to complexify the world 
around us, not always for the better...

I first came across Coase and Williamson maybe ten years ago, while 
looking into the development of what was being called "the networked 
firm" way back in the early Nineties. The author I was reading (Walter 
Powell, "Neither Market nor Hierarchy") tried to go beyond 
Coase/Williamson and develop a new model of cooperation between firms 
based on reciprocity and mutual benefit in a communicational 
environment. One of his key examples was a study of Japanese firms. 
According to him, the sharing of knowledge made such firms better at 
innovation. I had this in the back of my mind while writing.

Now, maybe this makes me an older leftist than you (I'm tossing you a 
flower, dear Keith) but I still like Arrighi very much. He credits Coase 
with identifying the key trait (internalization of transaction costs) 
that explains the productivity and profitability of American 
multinationals, going back to the late 19th century and particularly the 
first two decades of the 20th, when DuPont became so powerful and 
basically took over GM, installing Sloan as president. For Arrighi, the 
form of the vertically integrated corporation and its capacity to 
internalize transaction costs is exactly what distinguishes American 
capitalism from the more commerical, trade- and therefore market-based 
British world-system of the 18th and 19th centuries. This corporate form 
(as distinguished from the British trading house) tells you a lot about 
bureaucracy and authority in postwar US culture: the Organization Man 
and so forth. The golden age of GM and the other major US multinationals 
was also that of American neo-imperialism (1945-73). However, falling 
Kondratiev wave or not, I think Arrighi correctly identifies the crisis 
of the 70s as the beginning of American decline, under the pressure of 
the Japanese challenge (now replaced by the Chinese one).

People underestimate the influence that Japanese methods (basically, 
just-in-time production) have had on contemporary corporations. The new 
ability for extremely concentrated, quasi-monopolistic firms like Apple 
or Walmart to take advantage of and tightly control what are nonetheless 
market-based relations with suppliers actually derives from Eiji Toyoda 
and his engineer Taichi Ohno, who went together to Detroit sometime in 
the Fifties, visited the River Rouge plant and decided Fordism was too 
crude a system for them. By opening up two-way information flows with 
their parts suppliers, they were able to create a very sophisticated and 
responsive industrial system (not to mention some beautiful ergonomic 
design). The Japanese approach spread around Asia as a networked 
production complex extending from port to port, under conditions where 
the Japanese firms had all the capital but could never claim to impose 
their will, because of the extremely negative memories left by the 
Thirties and WWII. Instead of dominating they cooperated and fostered 
win-win situations. As they were very keen on miniaturization, they also 
contributed a lot to the popularity of the laptop computer. All this was 
in the air when the Internet started to come on the scene, particularly 
from '94 onward.

At that time, some people here on Nettime made pretty extensive efforts 
to identify new forms of social cooperation that could breathe life back 
into the old ideals and desires of the Left. For a while there was some 
uncertainty as to whether the new boom of capitalism would not involve 
some kind of qualitative mutation toward a "co-opetitive economy" where 
you could not distinguish capitalism from something more like anarchist 
free association. Alas, Anglo-American capitalism responded to the 
Japanese challenge with a kind of one-two punch, developing its networks 
for the needs of computerized finance and also for a quite savage 
version of just-in-time production. While the former concentrates wealth 
at the top, the latter is particularly devastating in terms of the human 
ecology, because it enforces a very alienating and also highly polluting 
global division of labor. As I wrote in my text on just-in-time 
production, "What emerged from the open markets of neoliberalism was a 
vast *delivery system* commanded by retailers engaged in a vicious 
search for the best possible price. And that turned out to be the 'China 
price': the lowest number on the planet for any category of basic 
manufactured goods." Instead of creating something original, China has 
so far developed under the American shadow, with its vast manufacturing 
capacities artificially prolonging the lives of our monstruous 
multinational corporations.

So in my view, what we got in the end was a totally sad, distorted and 
destructive version of what could, for a time, have represented a 
metamorphosis of the whole capitalist system. This metamorphosis, toward 
a full-fledged *knowledge society*, would have integrated and 
transformed all those sophisticated understandings of social evolution 
that you mention. Instead they are now being folded back into corporate 
home rule.

The case of Arrighi is really interesting. As you know, his theory of 
history (based especially on Braudel) led him to expect a shift of 
global hegemony to the new productive centers of Asia. He never thought 
this would happen in the same way as it did in the past, because the US 
even in its decline retains such overwhelming military power; but he 
thought some kind of major change in the capitalist system was underway, 
from the 70s onward and especially from 2001 onward. Because he was a 
leftist and he believed in social cooperation, he looked for strands in 
Japanese and Chinese historiography that might indicate a positive path 
forward. He found it particularly in the work of the Japanese historian 
Kauro Sugihara on the concept of the "Industrious Revolution" - as 
distinguished from the industrial one. As he wrote in his last book, 
Adam Smith in Beijing:

"Sugihara... conceives of the Industrious Revolution, not as a preamble 
to the Industrial Revolution, but as a market-based devel­opment that 
had no inherent tendency to generate the capital- and energy-intensive 
developmental path opened up by Britain and carried to its ultimate 
destination by the United States. Nevertheless, Sugi­hara's central 
claim is that the instrumentalities and outcomes of the East Asian 
Industrious Revolution established a distinctive techno­logical and 
institutional path which has played a crucial role in shaping East Asian 
responses to the challenges and opportunities created by the Western 
Industrial Revolution. Particularly significant in this respect was the 
development of a labor-absorbing institutional framework centered on the 
household (often, though not always, the family) and, to a lesser 
extent, the village community. Against the traditional view that 
small-scale production lacks internal forces for economic improvement, 
Sugihara underscores important advantages of this institutional 
framework in comparison with the class-based, large-scale production 
that was becoming dominant in England. While in England workers were 
deprived of the opportunity to share in managerial concerns and to 
develop interpersonal skills needed for flexible specialization, in East 
Asia [quoting Sugihara now] 'an ability to perform multiple tasks well, 
rather than specialization in a particular task, was preferred, and a 
will to cooperate with other members of the family rather than the 
furthering of individual talent was encouraged. Above all, it was 
important for every member of the family to try to fit into the work 
pattern of the farm, respond flexibly to extra or emergency needs, 
sympathize with the problems relating to the management of production, 
and anticipate and prevent potential problems. Managerial skill, with a 
general background of technical skill, was an ability which was actively 
sought after at the family level.'"

Now, both Sugihara and Arrighi are clearly idealizing the Industrious 
Revolution, and I am not so sure (at all) that you would find these good 
things happening in the factories and supply-chains of Sony or the 
Toyota Motor Company! But when I read your post, and when I read about 
old Coase and his young Chinese collaborator dreaming about something 
like a human economy, I thought of the paragraph above and of the 
curious, arrested metamorphosis of capitalism that so many of us 
imagined ourselves to be living through a few years back. All of this, 
it seems to me, has a lot to do with your notion of markets and indeed, 
of multiple forms of money as being crucial to the flowering of human 
potentials. Indeed, Braudel as you know conceived of capitalism as the 
anti-market, because it installs monopolies under military cover. Again, 
this was a big idea during the utopian phase of Nettime, because of 
Manuel DeLanda's pamphlet on Markets and Anti-Markets, inspired by 
Braudel. We thought (and some of us still think) that the Net might help 
to develop a much more open, horizontal, human-to-human production and 
trading system... just as you thought in your book on The Memory Bank.

In short, a whole range of attempts to reformulate the Left around the 
turn of the century were overwhelmed by the rollout of Neoliberal 
Informationalism, as a mode of production and maybe more importantly, as 
a form of financialized population management. But now all those things 
have entered into a serious crisis, and the US seems finally to be on 
the decline as the hegemonic power (not to mention Europe). Can we try 
again, with greater attention to what's going on in other parts of the 
world?

So anyway, just some ideas on a winter afternoon, in Chicago where 
Milton Friedman did his thing.

best, Brian


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