Finance and Social Production

Post-autonomists on the financial crisis - didn't financialisation begin in the 1970's?? I seem to remember hearing one Detroit auto-worker rap lyrical about this in the film Finally Got the News The theorists are late as usual...    Finance and Social Production* - *To*: nettime-l {AT} kein.org - *Subject*: <nettime> Finance and Social Production - *From*: Adam Arvidsson <adam.arvidsson {AT} unimi.it> - *Date*: Tue, 25 Nov 2008 16:45:08 +0100------------------------------*Full reference athttp://blog.p2pfoundation.net/finance-and-social-production/2008/11/25Finance and Social Production,I'd like to expand a bit on a number of ideas that came out of a discussionwith Christian Marazzi on the financial crisis, organized by the studentmovement at the University of Milano, last Friday. Marazzi has done a lot ofinnovative and thought-provoking work on the role of finance within thepost-Fordist economy and the deep structural roots of the financialexpansion that has marked the last two decades (or since 1979 and PaulVolker's monetarist turn at the Fed). Indeed, the growing size andimportance of financial markets is one of the two important structuraltrends 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, withGeroge 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 builton a continuous expansion of credit (refinanced by a massive inflow of cashfrom emerging economies like China). The consequence has been a substitutionof credit and financial rent for wages as the source of income of the US(and Western European) middle class. The most visible structural consequenceof this financial expansion have been a financialization of a number ofservices related to the reproduction of everyday life: credit card debt,housing and mortages, pensions, insurance, health care and education. Tothis transfer of the responsibility for the reproduction of life from thepublic sector and the welfare state to financial markets has corresponded amassive securitization of life conduct, that is; the invention of a numberof often very complex financial instruments, the risks of which are are inthe end related to the life conduct of human subjects (their liability topay their mortages, to get sick and so on). Indeed Christian Marazzi arguesconvincingly that this link between finance and life conduct is one of thedefining elements of the neoliberal political order, tracing it back to theNew York City bancrupcy in 1975. At that point, the City relied heavily onthe issue of municipal bonds. In turn, its ability to repay those bonds wascontingent on its ability to reduce costs for social services and crime.This way, the financial rent that the middle class (that had purchased thebonds through, mainly pension funds) could receive, came to rely on the lifeconduct of the underclass (who were the main recipients of costly socialservices) and, consequently, policing the latter became a way of securingthe income of the former.The second deep structural tendency of post-Fordism is the massive flight ofvalue from the mechanisms of capture that were established with the Fordistindustrial economy. We discuss this at length in the forthcoming secondchapter of the Ethical Economy book, but to reassume the argument in anutshell: Social production, the production of (mostly but not exclusively)immaterial wealth outside of the capitalist economy has increased massivelywith the diffusion of information and communications technologies. Companiesincreasingly rely on what they see as the 'free lunch' of social productionby institutionalizing various forms of 'prosumerism': brand management andmarketing where consumers play an active part, user- led innovation schemes,customer co-produciton of goods (Ikea) and services (McDonalds) and thecultivation of reputation and public opinion through Corporate SocialResponsibility Schemes. Furthermore, social production has become animportant element within the capitalist production process itself. Knowledgeworkers create value by using their social and communicative capacities toorganize processes of cooperation and collective intelligence. Complexglobal production chains (or networks) thrive of meaningful relations oftrust and cooperation between supplier and other partners. These are allforms of wealth that are produced outside the capitalist economy proper:that is they are generally not motivated by monetary gains, and they cannotbe commanded or sanctioned by bureaucratic power. Indeed, because suchsocially produced wealth is generated outside the reach of the mechanisms ofcapture and governance with which the capitalist economy works, they are noteasily measurable as valuable resources. Indeed, the products of such formsof social production tend to figure on financial statements as 'intangibles'for which there is no coherent method of measurement. In 2005, seven percent of US corporate investments were directed to building such intangibleresources, principally, trust, brand equity, corporate reputation and'intellectual capital': that is, principally values that build on theability to establish meaningful and durable social relations, or what wecall 'ethical values'.This massive recourse to social production has changed the situation of bothcompanies and workers. For companies, value is increasingly generatedoutside of the wage relation, in diffuse practices of social production thatcannot be easily managed or measured. Success and profit becomesincreasingly contingent on the ability to capture such socially producedwealth, and depend less on the direct contribution of salaried labour. Forworkers, gainful employment tends to be configured less as a single wagerelation to one employer, and more as a multitude of income streams fromvery diverse forms of practices: regular salaried employment, short termwork, consultancy, childrens work, unpaid forms of social production thatcan be monetized in different ways, entrepreneurship, engagements with thegrowing informal economy, financial or real estate speculation etc. Thisway, both the appropriation of value on the part of companies and thegeneration of income on the part of workers tend to move outside the oncedominant wage relation. Present phenomena like the neonomads who launchstart-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 distributingsocial wealth, it also looses it centrality as a way of appropriatingsurplus value and profits. This way the enormous expansion of personal debtas a the source of the new kinds of securitized value streams that underpinnew financial instruments could simply be seen as the establishment of analternative to salaried labour as an instrument for the capture of value.In the fordist model the extraction of surplus value relied on theexploitation of salaried labour. This way the labour contract guaranteedboth the worker a secure long term access to the means for the reproductionof life, and for the capitalist, a secure long term and predictable streamof surplus labour ( in the form of the productivity of the working day thatexceeded the cost of labour). In the post-Fordist model the financial systemanticipates necessities for the reproduction of life (a house, healthinsurance etc.) and receives in turn a long term and (relatively, or atleast calculably) secure value stream in the form of interest payments. Theinterest payments become a direct extraction of surplus from the whole lifepractice, and not just from the working day. This happens in a situationwhere the wage relation is becoming less representative of the real processof wealth creation. The sources of this surplus, just like the sources ofthe 'living wage' can , and increasingly do, drive form a multitude ofdiverse sources of income. What is more, the value of these activities isset outside of the wage relation controlled by capital. As a free lanceworker, entrepreneur, or member of the 'precariat' the value of my productsis 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 thewage relation (free time, contacts, networks etc.)The parallel rise of, on the one hand such 'anomalous forms' of employmentand the importance of social production in general, where the determinationof value is increasingly autonomous vis a vis capitalist government, and, onthe other hand the direct financialization of life conduct, would suggest ageneral shift in the modality of extraction of surplus value: from the wagerelation and its dependency on discipline and controlled time, to thedebt/finanace relation where the comprehensive surplus generated by themultitude of productive practices that make up he life process is directlycaptured by means of interest payments. Correspondingly, the modality ofgovernment shifts from discipline, from imposing a certain form of conduct,to control, form making calculable the risk arising form a multitude offorms of conduct that evolve autonomously. Class distinctions areconfigured around the access to such financial rent. Who has the capital andability to benefit from rising real estate markets, in which the socialproduction of the metropolis is monetized, and who does not. The terrain ofsocial movements shift from the factory to the city and the banlieus.*# distributed via <nettime>: no commercial use without permission# <nettime> is a moderated mailing list for net criticism,# collaborative text filtering and cultural politics of the nets# more info: http://mail.kein.org/mailman/listinfo/nettime-l# archive: http://www.nettime.org contact: nettime {AT} kein.org