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Re: <nettime> Nobel laureate in economics aged 102 endorses the human ec
Brian Holmes on Mon, 21 Jan 2013 04:23:58 +0100 (CET)

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

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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