Capitalism Without Capital - Article
Capitalism Without Capital - Article
John Harris
As descriptions of capitalism go, it’s surely one of the best ever written: poetic,
urgent, and as much to do with metaphysics as economics. According to the
Communist Manifesto: “Constant revolutionising of production, uninterrupted
disturbance of all social conditions, everlasting uncertainty and agitation
distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations,
with their train of ancient and venerable prejudices and opinions, are swept away,
all new-formed ones become antiquated before they can ossify.” And then the kicker:
“All that is solid melts into air.”
Such are the strange ways of what is becoming known as platform capitalism: a
model which took a shift that had been under way since the 1970s to its logical
conclusion. Cutting-edge capitalism is increasingly weightless. What makes
the difference between winners and losers is not physical things, but such quicksilver
commodities as ideas, knowledge, research, software, brands, networks and
relationships.
Haskel and Westlake centre their story on a shift in investment, away from “tangible”
assets to these “intangible” items. In the United States, the share of GDP devoted to
the latter is reckoned to have overtaken the former in the mid-1990s; in the UK, the
watershed was reached towards the end of that decade. In other countries – Italy and
Spain, for instance – investing in old-fashioned kit and plant still takes precedence.
But in all the statistics there is a clear implication: that as we head into the future,
intangibles will rule.
This cuts across many of the usual laws and expectations of economics. Physical
assets, in any crude understanding, can be bought and sold. But intangibles are much
more difficult entities. As the authors say: “Toyota invests millions in its lean
production systems, but it would be impossible to separate these investments from
their factories and somehow sell them off.”
Intangible assets are open to “spillovers”: the tendency of ideas and innovations to
spread, often way beyond the intentions of their inventors. As part of the same
process, they tend to have synergies with each other, often unexpectedly: “The MP3
protocol, combined with the miniaturised hard disk and Apple’s design skills, created
the iPod, a very valuable innovation.”
And, liberated from any dependence on a fixed stock of machinery, the creations of
these intangible assets can spread at speed, and quickly dominate their field – which
is why Uber has become inescapable in less than a decade and 13 years after
Facebook’s launch, Mark Zuckerberg’s social network is central to the lives of a
quarter of humanity.
The world, then, changes quickly. The physical production that companies still need
is increasingly both outsourced to distant, low-wage countries and automated. Even
employment in what we think of as “services” is looking alarmingly vulnerable to
robotics and artificial intelligence. Meanwhile, intangibles dominate not just the
business world but our everyday lives. From music through books to cars, the
centrality of physical stuff is dwindling away.
As Haskel and Westlake see it, the future belongs to people who can thrive in an
ethereal, unpredictable world, and endlessly adapt – “product managers, lawyers,
business development people, design engineers, marketers, head-hunters, and so
forth”. Or, put another way, “people who combine decent data-analytical skills with
the soft skills needed to broker relationships inside and outside their own company”.
The old world is a factory canteen in a company town, full of harried workers keeping
their heads down before they graft on a production line; the new reality is symbolised
by a street-corner coffee shop full of people answerable to a mixture of employers,
who may be either working or socialising, or both.
I know this tribe of people increasingly well. Around a month ago, I spent an
afternoon at the tech division of the insurance giant Aviva, housed in what it calls a
“digital garage”. The first person I met was the twentysomething who had recently
designed all the visual aspects of its websites and apps, and came not from the world
of financial services, but the games company Activision.
A few yards away, some of his colleagues were working on a classic example of
spillover and synergy, perfecting software that will allow people to access spoken
financial advice via the Amazon Echo. That week, they were working in insurance.
The next, they might be bringing their talents to a completely different part of the
economy.
Obviously, not everybody is like that. And as consistent work involving physical stuff
increasingly falls away, it seems the clash between two very different kinds of people
will characterise the painful birth pangs of a new reality.
In a frustratingly brief section of the book, Haskel and Westlake tentatively put Brexit
and the election of Donald Trump in this context, which seems absolutely right.
Indeed, extend the notion of intangibles beyond assets and into questions of culture,
and you have a key to what is so unsettling many western societies: on one side sit
social forces loyal to such ideas as place, vocation and family; on the other is a cluster
of people happy to accede to the modern economy’s demands and reinvent
themselves whenever required, and be free of such quaint baggage.
“The history of all hitherto existing society is the history of class struggles,” says the
Communist Manifesto. The future will be too, with the kind of ironic twist that those
two 19th-century Germans would have found delicious: that taking capital out of
capitalism will probably spread uncertainty and agitation as never before.
https://www.mckinsey.com/industries/financial-services/our-insights/the-
new-dynamics-of-financial-globalization?cid=soc-web
Where Uber and Amazon rule: welcome to
the world of the platform
Powerful tech firms are altering not just the way we buy things, but could
sweep away an entire economic model
Evgeny Morozov
Sunday 7 June 2015 00.05 BST
Hardly a day goes by without some tech company proclaiming that it wants to
reinvent itself as a platform. Back in March, when South Korea banned Uber, the
company promised to let local taxi drivers use its platform – along with its matching
services.
Facebook pulled a similar trick in early May: having run into trouble with its
pseudo-humanitarian effort to provide free internet access via a project called
internet.org, it, too, promised to turn it into a platform. Now, internet.org users, most
of them in the developing world, could also enjoy free access to apps other than those
developed by Facebook.
Instead of the tired conventional model, with individual firms competing for
customers, we are witnessing the emergence of a new, seemingly flatter and more
participatory model, whereby customers engage directly with each other. With a
smartphone in their pocket, individuals can suddenly do things that previously
required an array of institutions.
Such is the transformation we are witnessing across many sectors of the economy:
taxi companies used to transport passengers, but Uber just connects drivers with
passengers. Hotels used to offer hospitality services; Airbnb just connects hosts with
guests. And this list goes on: even Amazon connects booksellers with buyers of used
books.
The differences from the old, pre-platform model are easy to spot. First, these
companies have extraordinary valuations but suspiciously light balance sheets: Uber
doesn’t need to employ drivers and Airbnb doesn’t need to own houses. Second,
instead of adhering to a precise and rigorous code that spells out the rights of
customers and the obligations of service providers – the cornerstone of the modern
regulatory state – platform operators rely on the widely distributed knowledge of
participants in a service, hoping that the market will eventually punish those who
misbehave.
In the free-market utopia of thinkers such as Friedrich Hayek – the true patron saint
of the sharing economy – your reputation would also reflect what other market
participants know about you. Thus, if you are a nasty customer or an ill-mannered
driver, everybody else will soon discover this, and specific laws to police your
behavior are rendered unnecessary.
The good news, according to Hayek, is that once our norms change – what was
considered nasty 50 years ago might be perfectly acceptable today – our reputations
would reflect these changes immediately. Laws, on the other hand, would take quite
some time to be altered.
While Uber uses its platform status as a shield against lawsuits, Facebook uses it as a
publicity gimmick. Thus, it has recently argued that “internet.org” is an “open
platform”. In reality, though, it’s anything but open: Facebook still decides what
apps to accept and what conditions they should meet (no video or file transfer, high-
resolution photos).
But Uber’s offer to drivers in Seoul does raise some genuinely interesting questions.
What is it that Uber’s platform offers that traditional cabs can’t get elsewhere? It’s
mostly three things: payment infrastructure to make transactions smoother; identity
infrastructure to screen out any unwanted passengers; and sensor infrastructure,
present on our smartphones, which traces the location of the car and the customer in
real time. This list has hardly anything to do with transport; they are the kind of
peripheral activity that traditional taxi companies have always ignored.
There’s a good reason why so many platforms are based in Silicon Valley: the main
peripherals today are data, algorithms and server power. And this explains why so
many renowned publishers would team up with Facebook to have their stories
published there in a new feature called Instant Articles. Most of them simply do
not have the know-how and the infrastructure to be as nimble, resourceful and
impressive as Facebook when it comes to presenting the right articles to the right
people at the right time – and doing it faster than any other platform.
Few industries could remain unaffected by the platform fever. The unspoken truth,
though, is that most of the current big-name platforms are monopolies, riding on the
network effects of operating a service that becomes more valuable as more people
join it. This is why they can muster so much power; Amazon is in constant power
struggles with publishers – but there is no second Amazon they can turn to.
Venture capitalists such as Peter Thiel want us to believe that this monopoly status is
a feature, not a bug: if these companies weren’t monopolies, they would never have so
much cash to spend on innovation.
This, however, still doesn’t address the question of just how much power we should
surrender to these companies. A publishing industry ruled by Amazon and Facebook
might produce lots of innovations – but is there any guarantee that it would actually
produce any significant articles or books?
One sure way to keep the platforms in check is to prevent them from appropriating all
the adjacent peripherals. Making sure that we can move our reputation – as well as
our browsing history and a map of our social connections – between platforms would
be a good start. It’s also important to treat other, more technical parts of the
emerging platform landscape – from services that can verify our identity to new
payment systems to geolocational sensors – as actual infrastructure (and thus
ensuring that everybody can access it on the same, nondiscriminatory terms) is also
badly needed.
Most platforms are parasitic: feeding off existing social and economic relations. They
don’t produce anything on their own – they only rearrange bits and pieces developed
by someone else. Given the enormous – and mostly untaxed – profits made by such
corporations, the world of “platform capitalism”, for all its heady rhetoric, is not so
different from its predecessor. The only thing that’s changed is who pockets the
money.
El
Cronista
04/12/2017
https://www.cronista.com/financialtimes/Una-‐economia-‐intangible-‐requiere-‐un-‐nuevo-‐
planteo-‐de-‐la-‐politica-‐publica-‐20171204-‐0004.html
Una
economía
intangible
requiere
un
nuevo
planteo
de
la
política
pública
La novedad de la economía actual es que muchas de nuestras mejores ideas son
inmateriales. La idea de hecho es valiosa, pero no toma forma física. Y eso cambia
casi todo
¿Qué
tiene
de
nuevo
la
economía
actual?
No
es
el
rol
que
cumplen
las
ideas
mismas.
Las
tecnologías
que
subestimamos
la
rueda,
la
cerámica
cocida
en
horno,
el
arado
o
la
máquina
de
vapor
fueron
alguna
vez
brillantes
ideas
nuevas.
La
novedad
de
la
economía
actual
es
que
un
sinnúmero
de
nuestras
mejores
ideas
siguen
siendo
inmateriales.
La
idea
de
hecho
es
valiosa,
pero
no
toma
forma
física.
Y
eso
cambia
casi
todo.
Tal
vez
el
hecho
más
sorprendente
de
este
libro
lleno
de
sorpresas
es
lo
grandes
que
son
hoy
las
inversiones
en
activos
intangibles:
en
investigación
y
desarrollo
(I+D),
en
software,
en
bases
de
datos,
en
creaciones
artísticas,
en
diseños,
en
desarrollo
de
marca
(branding)
y
en
procesos
comerciales.
Medir
esto
se
ha
convertido
en
una
actividad
intelectual
importante.
En
EE.UU.
y
en
el
Reino
Unido,
la
inversión
en
activos
intangibles
actualmente
supera
la
de
los
activos
tangibles.
Esto
también
sucede
en
Suecia,
pero
no
en
Alemania,
en
Italia
ni
en
España.
Los
autores
explican
las
características
de
los
activos
intangibles
al
referirse
a
cuatro
factores:
escalabilidad,
irrecuperabilidad,
derrames
y
sinergias.
Juntas,
estas
características
trastocan
el
habitual
funcionamiento
de
una
economía
de
mercado
competitiva.
"Escalabilidad"
significa
que
una
persona
puede
disfrutar
de
un
bien
intangible
sin
privar
a
otro
de
sus
beneficios.
Los
economistas
lo
llaman
un
bien
"no
rival".
Tú
no
puedes
comerte
el
mismo
sándwich
que
yo.
Pero
un
activo
intangible
se
puede
usar
repetidas
veces.
En
una
economía
donde
la
escalabilidad
frecuentemente
turboalimentada
por
los
efectos
de
red
es
importante,
algunas
empresas
rápidamente
se
volverán
enormes.
Estos
ganadores
tal
vez
también
disfruten
de
las
grandes
ventajas
de
la
incumbencia.
"Irrecuperabilidad"
se
refiere
al
hecho
de
que
los
activos
intangibles
tienden
a
tener
poco
o
ningún
valor
de
mercado,
a
diferencia
de,
digamos,
un
terreno
o
una
fábrica.
Tales
activos
tienen
valor
como
parte
de
la
empresa
de
su
propietario,
y
para
nadie
más.
Esto
significa
que
la
inversión
en
activos
intangibles
es
arriesgada.
El
hecho
de
que
las
expectativas
no
están
fuertemente
ancladas
podría
también
generar
burbujas
en
los
precios
de
los
activos,
según
los
autores.
"Derrames"
significa
que
una
gran
parte
de
los
beneficios
de
una
inversión
puede
recaer
sobre
otros.
Incluso
con
la
protección
de
la
propiedad
intelectual,
gran
parte
del
beneficio
de
la
inversión
en
una
idea
probablemente
le
llegue
a
personas
que
no
son
los
descubridores.
La
imitación
(y
el
robo)
es
una
forma
gratificante
de
halago.
La
presencia
de
tales
derrames
debilita
el
incentivo
para
invertir.
La
respuesta
radica
en
los
derechos
de
propiedad
intelectual,
pero
éstos
son
inherentemente
arbitrarios
y
económicamente
costosos.
Por
último,
los
activos
intangibles
exponen
"sinergias".
Esto
va
en
contra
de
los
derrames.
Las
sinergias
fomentan
la
cooperación
entre
empresas
(o
las
fusiones
directas),
mientras
que
los
derrames
pueden
desalentarla.
¿Quién
realmente
quiere
darle
algo
gratis
a
la
competencia?
Juntas,
estas
características
explican
otras
dos
características
centrales
de
la
economía
intangible:
la
incertidumbre
y
las
disputas.
La
economía
de
mercado
deja
de
funcionar
de
la
manera
habitual.
Esta
transformación
de
la
economía
exige
un
nuevo
planteo
de
la
política
pública.
A
continuación,
expongo
cinco
desafíos.