Thursday 6 December 2012

Marx and Digital Goods

Is Marx still useful for understanding those sectors of the economy that are entirely digital. i.e. Focused on the production, exchange and consumption of virtual goods? It's been niggling me since hearing a paper that touched on the subject at this event four years ago, but more about that in a moment.

In this empiricist critical appreciation of Marx, John Lanchester suggests digital goods present a difficulty. For Marx, the different values commodities possess comes down to the quantities of socially necessary labour congealed inside them. The bottle of vitamins I have on my table has painstaking lab work, the cost of trials, the ingredients, and the mass production process in the backstory behind every sugar-coated pill. And because the amount of socially necessary labour time it consumed is greater than the Che Guevara mug to my left, its value is greater.

John goes on to suggest that "one of [Marx's difficulties] is that so many of the contemporary world’s goods and commodities are now virtual (in the digital-oriented sense) that it’s not easy to see where the accumulated labour in them is." I don't see what the problem is. You can buy skins and accessories for your Xbox Live avatar, or purchase all manner of digital commodities in World of Warcraft and Second Life (does anyone still use SL?). Their lack of corporeality makes no difference as far as Marx is concerned. They remain commodities with a certain quantity of socially necessary labour time embodied within them. They do not spring fully formed from a set of chips.

A place like Facebook does not present many difficulties either. To maintain the network, Lanchester points to the hidden, poorly-paid labour in 3rd world IT centres that keeps the show on the road. Furthermore, in a comment on the piece an Edward Robinson notes:
I wonder, though, if Marx would have seen Facebook’s owners more as landowners or ‘rentiers’ than as capitalists. Websites don’t create any value, but by exploiting their property rights in highly sophisticated advertising space they allow capitalists to compete with each other in exchange for a slice of the heightened surplus value. Facebook’s appearance as a (free) leisure good is supported by its essence as prime retail space.
This rentier model isn't peculiar to social media. It's the hegemonic business model (albeit with varying degrees of sophistication) operating across all sites attempting to make money from online activities.

With all this in mind, it's time to return to a four year old problem. Lisa Adkins argued that capitalism is creating new opportunities and strategies for capital accumulation. Taking freelance web designers as an example, Adkins argued they build websites and charge according to the number of potential hits it would likely generate. In the old terms, the designer is not exploiting their labour power as would a self-employed small business owner. Instead earnings are entirely future-oriented, based on time that does not yet exist.

I was sceptical then and I remain doubly so now. I think Adkins here confuses abstract socially necessary labour with the concrete actuality of a particular kind of a digital labour process. Unlike workers who are directly involved in the production of surplus value, a freelance worker has a greater degree of freedom. Whereas someone working for an employer is contractually obliged to perform a certain set of hours over and above the work necessary to generate enough value for material and cultural subsistence, a freelancer can choose to put in enough labour time to meet the cost pressures of their self-reproduction and that's it, or work more hours (provided the market allows for it) to accumulate more capital for expansion, or more cash for personal consumption.

This in mind, the freelancer - whether an IT specialist, a consultant, a painter and decorator - bills on the basis of time required (a matter usually related to the complexity of the task), the money needed for themselves and the cost pressures bearing down on their business, materials required, and, of course, at all times these are conditioned by the prices offered by competitors on the open market.

Turning to Adkins' scenario, freelance web designers may charge on the basis of the likely number of hits a website will generate. But stepping back from the detail, this is just another way of talking about the complexity of the labour required and hence, the amount of time it will take. The language of the sales pitch does not mean that value is being quarried out of a future that does not yet exist, it is derived from the concrete keyboard-based labour of the web designer. Unfortunately, it would appear Adkins has fallen for the stories freebooting tech geeks tell themselves over and above an analysis of their labour process.

If digital goods do present a challenge to Marx's critique of political economy, the examples here demonstrate that Marx can still be used to make sense of them. After all, a digital commodity is part and parcel of the system of generalised commodity production. They are produced for profit. As long as that economic logic persists Marx will always be in the wings, ready and able to unravel it all.


Anonymous said...

Freelance Web designers probably currently enjoy a monopoly situation but as China develops you may find this monopoly faces stiff competition and the price ends up going down.

The rentier bit, I think, relates to internet service providers, or Microsoft. Again monopoly is a feature of rentier sectors.

My problem with the whole economic calculation is this:

Say an economy stops employing a postman and he becomes a web designer. The Web designer makes more money than the postman. So is more value being created and how? Where is this so called value coming from, how can it appear when basically effective demand at the aggregate level hasn't changed? How does the surplus come about?


Phil said...

I'll have a go, though Boffy will be able to confirm whether I'm right or not.

Abstract socially necessary labour is measured in terms of simple labour. i.e. Unskilled work. It follows that semi-skilled, skilled, and professional labour costs more because they in turn have congealed within them quantities of socially necessary labour to provide them with skills and specialist knowledge. If you like, complex labour such as web design congeals within it x quantity of simple labour. It is a multiplication of it.

Using your postie and web designer example, the specialist skills required to acquit the latter at a level that can compete in the market place is greater than that required to work in your local sorting office. It's not that one creates more value than the other - in fact, I would expect a postie generates more over their working life than a web designer. It comes down to the character of the labour required.

If our web designer has a tough time finding contracts and has to get seasonal work at their local mail centre, Royal Mail does not require their specialist skills. The labour power sold by the web designer is, to all intents and purposes, the same as everyone else at that workplace without their techie knowledge.

Boffy said...


I'll give a fuller response later. Have to go do some "concrete labour" because our washing machine has packed in, and so we are just about to go to the launderatte!

From what I scanned most of what you said in your article is correct. Anonymous is doing what Adam Smith and others did in confusing Labour Power with Labour.

It is not the fact that the web designer gets paid more than the postie that makes the product of their Labour more valuable. The product of their Labour is more valuable because consumers deem it to be so. In other words, 1 hour of their concrete labour-time is worth a multiple of 1 hour of Abstract Labour-time.

To complicate matters, though, labour that is more valuable can enable Capital to provide the workers who supply their labour-power with a higher price for it, whether the Value of that Labour Power justifies it or not.

For example, the Value of David beckham's Labour Power may be no more than that of a pottery labourer i.e. it requires no greater labour time to produce. But, the product of Beckham's 1 hour of Labour time may be 1000 times that of a pottery labourer. That plus the monopoly position of a Beckham, means the Capitalist can pay him a price for his labour way above its Value

Boffy said...


A further reply.

I don't think digital production poses any problems for Marx’s theory. But, you do have to bear in mind that market prices and values are not anything like the same thing. Values go through a series of processes before they take the appearance of market prices. So, values are transformed first into prices of production i.e. a cost price plus the average rate of profit. This is brought about because Capital moves out of low profit areas and into high profit areas. The consequent alterations of the relations of Supply and Demand raise prices and profits where they were below average, and lower them where they were above average. Secondly, under Capitalism, Supply and Demand never equate anyway, so market prices are always higher or lower than even this Price of Production. Finally, firms can only every make estimations, and frictions within the market, for example situations of monopoly or simply difficulty in moving capital, mean that prices do not adjust or reflect any of the above.

So, a web designer can only estimate how many hits a site may secure, for example. In setting a price, they will hope that this estimate, (if they are paid per hit) returns them a sufficient income to cover their costs plus average profit. Anything more than that will encourage other web designers to enter the field and force prices down, and vice versa.

In the past I've argued that technology and the web could be creating a form of technological feudalism. So, ISP's, and providers of web tools etc. could act like Landlords, extracting Rent for providing cyber space in which the peasant producer works. Many of these individuals are operating as peasant producers, as artisans. What they are selling is not their Labour power as a commodity, but the product of their labour, just as an artisan carpenter sells a chair or whatever. Just as someone might be prepared to pay more for a Chippendale chair than a chair produced by an average village craftsmen, so someone might be prepared to pay more for a web design from one person than from another. Even if both take the same amount of concrete labour-time to produce, it simply means the product of an hour of a Chippendale's labour has more value, represents a greater amount of abstract labour time. It does not change the fact that the Value of each is determined by the amount of Abstract Labour-time they contain.


Boffy said...


As I said before this may be related to, but is not determined by or the same as, the difference in the Value of the Labour Power in each case. The value of Chippendale's labour is likely to be exactly the same as that of the average village carpenter, for example. If both were employed, and paid the Value of their Labour power, the employer of Chippendale would make more profit. Normally, you would expect competition to mean that capitalists would try to produce more Chippendale's, but by their nature they are limited in supply, so you would then expect Chippendale to use their monopoly position to obtain a wage above the value of their Labour Power. That would remove the surplus profit, but would give the capitalist incentive to try to reproduce Chippendale's labour more cheaply, for example by introducing a machine. That is what is happening with the introduction of surgical robots to replace surgeons, or at least undermine their monopoly.

I did misspeak in my previous reply. I said “labour that is more valuable”. What I should have said was the product of labour is more valuable, or labour that is a multiple of abstract labour. Labour has no value. Labour is the measure of value. The same as a foot has no length, it is the measure of length. To answer anonymous question about where the additional value comes from is interesting.

Suppose, there are 6 people in an economy. They all produce enough means of subsistence to reproduce their labour power. Then one becomes a singer. How does this singer survive, and sell their product? Answer, on current conditions they can't. Only if the other five increased their productivity/output by 20% could they do so. Then the five would each consume 80% of their output to reproduce their labour power as before, and each could pay the remaining 20% to the singer, providing them with sufficient means to reproduce their labour-power. Similarly, if they were a good singer, the other five might be prepared to pay double what they previously paid. But, then they would need to produce even more, so that they could make this double payment i.e. 1 hour of the singer's labour would be equal to 2 hour's of abstract labour.

In modern society its possible to value the output of some workers at what appear to be ridiculously high multiples of abstract labour (Beckham, Robbie Williams etc) because productivity has risen so phenomenally in the economy, and the output of millions of abstract labour hours can be given in exchange for it, whilst still allowing the workers who produced it, to reproduce their labour power.

Anonymous said...


I think your last point has answered my query.

Just one more stream of consciousness, as this question was prompted by sitting down in my girlfriends house and looking at the xmas decorations she had put up:

So isn’t the perfect product one that costs very little to make but is deemed by the consumer to be highly valued? I was thinking this because my girlfriend bought some gold coloured metal sculpture xmas tree type things that cost a couple of quid. Clearly they must have cost no more than 20p to make. But because these look good on the mantelpiece at xmas time she thought nothing of buying them. So isn’t the value here in the ‘eye of the beholder’ rather than the actual labour content. What I am saying is that if complexity of labour comes into it then it isn’t necessarily the labour that gives it value but the consumers perception of value and if value perception moves away from how many hours are embodied in product x, then whatever the new perception is, becomes the basis of value?

FlipC said...

Reading Boffy's most interesting replies and trying to order them in my mind, therefore please excuse any reiteration I use.

In terms of the designer charging by hits time/effort/complexity required must be the overarching factor. A simple page allowing status updates for a person's cat is far less complex than a site that allows them and only their friends to post such updates despite only attracting the same amount of hits. A cost would be levied accordingly.

Hit-rate as a measure is likely only to matter within a large organisation; in which case the opinion of the perfect selfish creator is "How much can I get them to pay?" which in turn is of course based on factors such as scarcity.

In terms of the postman becoming a designer. Value is set less on the skill acquired, but on the demand of the market for such skill. A skilled seal maker is not demanded compared to an unskilled hauler therefore the latter has more value than the former. In Boffy's example it could be argued that Beckham was born with such talent/skill (and despite practice etc.) acquired nothing; yet as such skill is in high demand his value is greater than that who has acquired a skill over many years.

In terms of digital transactions once the initial value of the creation has been recouped value lies within both demand and the requirement to maintain its virtual presence. Without the market demand logically the value of goods contained within a large collection of such reduces to zero.

Yet in this instance with the cost to the maintainer approaching zero there is little incentive to reduce the price of digital goods providing there is at least some demand for them. A cost to maintain of one item of a 1p per year at a selling price of £5.99 will maintain that item for 599 years with a single sale and can maintain the price of those items that fail to sell.

This seems to be the real-world case. Bar sales to attract buyers the prices of purely digital goods do not seem to fluctuate despite their apparent low market appeal.

I think this is where the conventional market 'rules' start to break down. Your thought/opinions?

Phil said...

I'll have a go, Anon.

It's a question of abstraction, or, the level of analysis you look at things at (post on that topic here).

The subjective theory of value, which is what your argument is, remains the cornerstone of neoclassical economics. It holds that millions of individuals buy things that are of value to them, and that the economy arises from the 'invisible hand' that is the aggregate of those transactions.

At one level, that is true. But it is a small part of the story. It does not explain why commodities that have gone through more complicated labour processes and have greater amounts of socially necessary labour accumulated in them are of greater value. It does not explain why everyday staples, like food, are relatively inexpensive despite the high demand for them.

The argument Marx uses remains, to my mind, the best starting point for unraveling the question of value.

Anonymous said...

I have thought about this in the meantime and reckon competition must have something to do with it also. I.e. If a business is making loads of profit from xmas tree decorations other businesses will move in to make a killing to, so the price will move toward how much it cost to make. This brings us to another question, if competition plays this role, why doesn't competition eradicate the surplus value. i.e. if comany x is making profit by not paying the worker the full exchange value of the product, why doesn't company Y take less surplus and sell the product for less?

Incidentally I am totally unconvinced by subjective value theory also.

I think Marx was onto something, it is just that I can't quite nail him down, he is like a chicken in a farmyard.