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neri.baron — Mon, 10 Nov 2008 14:38:27 CST

ethicaleconomybook Home

AdamArvidsson — Thu, 06 Nov 2008 07:51:34 CST

Hi all,

this is the Ethical Economy wiki. There are two versions that you can read, improve and comment on. An Old version, completed (quickly) in the summer of 2008, and a New Version, which we are gradually publishing at ethicaleconomy.com over the fall of 2008 and winter of 2009.

If you do directly change the text, please leave an editing note so that we can identify changes more easily.

The main difference is cosmetic. The New Version has an improved language and structure, the Old version is ill written and reptetitive, but the ideas are basically the same.

adam & nicolai

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AdamArvidsson — Thu, 06 Nov 2008 07:48:42 CST

There is no abstract available for this page revision.

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AdamArvidsson — Thu, 06 Nov 2008 07:47:46 CST

There is no abstract available for this page revision.

NewVersionCH.I-nov.08

AdamArvidsson — Thu, 06 Nov 2008 07:46:22 CST

Preface

This book suggests that we are facing an epochal economic and social shift, perhaps of an importance unsurpassed since the bourgeois revolution that gave birth to the capitalist economy that we have today. The next economy will be an ethical economy where value is no longer based on labour as in the capitalist economy (nor on land as in the feudal economy that preceded it), but on the ability to construct ethically significant social relations. This is no utopia: the ethical economy is already here, in brand management, in advanced forms of knowledge work, on financial markets, and in the expanding range of autonomous forms of social production- ranging from P2P software, via fan communities to alternative forms of agriculture and food distribution- that have evolved around new information and communication technologies. And its impact is set to grow with the further diffusion and evolution of those technologies. This book offers a first coherent theory of the ethical economy, examining its origins, its present dynamics and its future potential. It draws out the implications of this epochal shift for business, politics and society.

Going to the bookstore has become a depressing experience. While television and the tabloids are busy with the usual; advertising, celebrity culture and home decoration, books seem to probe more deeply into our collective anxiety. At least in the UK, bookstores are bursting with titles that propose the end of something or other, oil, food, energy, credit, affluence, globalization, security, civilization or even human kind as such. (One of the most successful recent products in this genre is a combined book and documentary exploring what the world would look like if, or when- this was at least the implication- human beings had disappeared. ) Taken together with the rise of religious and secular doomsday prophets; eco-relativists pointing at our cosmic insignificance and Hollywood's enduring fixation with disaster and apocalypse -Disney's new cartoon features a cute robot who cleans up the debris left behind on a post-human planet- the abundance of such titles creates an enduring perception of looming disaster and overwhelming crisis, at least among those who have the time and energy to care. More dramatically, there is a shared perception that none of our existing political and economic systems or even ideas are able to redeem this threat. Instead they appear to be part of the problem. (Will existing political and economic systems manage even to reduce the speed of increase in global carbon emissions? Probably not.) It seems that civilization as we know it is going straight to hell (in 2012, perhaps!), and nobody knows how to stop, or even slow down the ride.

This crisis is real enough. Only twenty years ago global capitalism stood out as the only realistic alternative and promised wonders in alleviating poverty and democratizing the access to basic necessities, promoting double-digit growth rates across Asia and creating a new global middle class with identical tastes for McDonald's Hamburgers and Nike sneakers. With the exception of Africa and parts of the Middle East, this 'flat world' - to use New York Times columnist Thomas Friedman's influential expression- seemed to have the potential to involve everyone in a new affluent global ecumene of consumer culture, thus realizing the rosy predictions of global affluence and convergence on the part of the American 'Cold War Left' in an enduring pax americana Now it is clear that this last boom of global growth (the belle époque of the 1990s, as we now begin to call it) was living on borrowed time; that its fundamental productive synergies- global brands with global supply chains- depended on cheap fossil fuels that are both running out and creating an ever more tangible environmental disaster; and that its consumerist boom built on an ingenuous and hyper-complex but in the end unsustainable credit bubble. In fact, globalization is now slowing down; US steel production is increasing as transport costs make it to expensive to produce such basic commodities in China. And with the possible off-set of more rapid sea-passage enabled by an ice-free Arctic region, this slow-down is set to continue, and move up the value chain until nothing but very labour intensive goods can be profitably produced in Asia for the European and US markets. Combined with the long-term consequences of the present financial meltdown, this will spell disaster for consumer capitalism as we know it, and for associated political visions of democratic consumerism, the trickle down effect and 'a nation of homeowners'. In short, it is becoming ever more apparent that the social basis of the neo-liberal model are crumbling.

At the same time it is increasingly clear that beneath the shiny surface of shopping malls and global brands (that managed to blind intellectuals and have them obsess about 'postmodernism' or even the 'end of history' for more than a decade), global capitalism is far too locked into its oligarchic interests to alter its basic modus operandi. So it is unlikely that it will kick its addiction to fossil fuel, despite noble if vague pronouncements to the contrary. Instead, we can expect the most powerful players to continue to wage wars for control of oil access and push new exploration into as yet untouched areas, creating a hundred new Nigerias and Iraqs, and in the process further increase inequalities globally as well as nationally, to the point where the privileged elites have no choice but closing themselves off into gated islands of luxury in a sea of militarized slums- like a 1970s horror movie come true! This is already happening, in the US income inequality is at its highest level since 1928 (the year before the Great Depression), and the number of gated communities and private security firms is rising continuously: the poor and the rich become increasingly spatially segregated, inhabiting different worlds (and the tendencies are similar in developing economies like China or Turkey.) These discrepancies are set to increase in the after-match of the current financial crisis.

Figure I.

US income inequality as measured by the top 1 per cent's share of total pre-tax income, 1913-2005, including capital gains.

Even worse, perhaps, this situation seems to be thoroughly ungovernable. National and international politics is ever more blatantly a playground for elite and oligarchic interests and democracy a media-show to deceive the masses (Iraq docet!). This way the masses abandon politics and voting figures are steadily declining in the US and Western Europe, making 'democracy' but a shallow catchword to be used with the utmost cynicism (as in 'spreading democracy to Iraq'). Even sincere politicians are too tied up to old and ever more irrelevant ideologies that at best have nothing to say about today's realities and, at worst, turn into almost Orwellian variants of NewSpeak, like 'New Labour' or Silvio Berlusconi's constant invocations of 'freedom'. The only thing left are irrational and extreme populist movements, xenophobia, neo-nazism, religious bigotry like Muslim and Christian fundamentalism, with their various charismatic and apocalyptic manifestations and a wide-spread demoralization and cynicism. This move away from politics is understandable and entirely rational since states are less and less able to or even interested in doing something to benefit the average citizen, and in particular the poorer-than-average citizen.

The problem is that not much else seems to be able to offer anything in its place. Everyday life at the turn of the century is marked by a widespread social disintegration, anomie and loneliness, paired with a generalized existential anxiety and fear, manifest in mass prescriptions of anti-depressants, tranquilizers and other drugs (the prescription of anti-depressants in the UK more than doubled between 1991 and 2001) and wide-spread eating disorders and other forms of destructive behaviours. As John Hagedorn describes the cultural condition of the world of the people left behind by a retreating state and marginalized by an ever more unequal capitalist economy: a world that is growing and becoming ever more paradigmatic for the global condition as such: 'There is no passion or ideas. The hope of a better world has disappeared; all that is left is the sober nihilistic reality of a violent ghetto with no exit'. The most profound crisis perhaps is intellectual. Within an environment of trash culture intellectuals seem unable to rise above the fray. Instead they are either too overwhelmed with the general situation of despair, too disillusioned by the failure of their youthful political ideals, too corrupt or too locked into an ever more scholastic academia to be have anything to say about the world around them. Life at the turn of the century is lonely, insecure, anxiety ridden and devoid of any source of meaning or direction, apart from the shopping mall and the mega-church.

A New Enlightenment?
At the same time, however we are in the midst of what can very well be described as a new enlightenment. Like the diffusion of print media that began in earnest in the 16th century, the contemporary spread of networked information and communication technology (henceforth 'Ict') has produced a massive empowerment of collective intelligence on a planetary level. Millions of people contribute regularly to blogs and act as citizen journalists, and just as many produce and distribute their own music or video. Millions take part in discussion groups and online fora, exchanging ideas and building knowledge on everything from cake-design to alternative treatments for diabetes; and hundreds of thousands contribute to more specialized pursuits like writing Wikipedia articles or Linux code, or engage in enlightened debates on spirituality, environmental sustainability and the habits and intentions of space-aliens. Within this massive socialized productivity new kinds of social relations are forming: people travel and make friends through Couchsurfing, a site where people offer their hospitality all over the globe, organic farms recruit voluntary labour power on Wwoof; people keep in touch on Facebook, and lonely people find real partners on dating sites or virtual ones in artificial worlds like Second Life. The statistics clearly indicate that we are witnessing a massive spread of a new, participatory culture: in 2006, according to the Pew internet survey, 49 per cent of the American population had contributed to creating online content, and (in 2007) 64 per cent of all teenagers, today the figures are probably even higher as the participation rates and the productivity of this collective intelligence are increasing exponentially.

Figure II.
Exponential increase in the number of YouTube users during the first 16 months.

Exponential increase in the productivity of the Open Source movement

Like in the first enlightenment, this flowering of collective intelligence is linked to the arrival of a new medium. Then, mass printing enabled a (by then) large number of people to become authors, and an enormous number to become readers. This led to a growing production and circulation of literature and, more importantly perhaps, pamphlets and learned treatises on a multitude of subjects that led to a massive acceleration in scientific, technological and philosophical knowledge. But it was not just a matter of reading: this flowering of collective intelligence made possible by a new medium lead to a number of new social, economic and eventually political practices, that came to have a much wider significance: the coffeehouse with its free space for political and philosophical discussion, the large industrial firm with its precise bureaucratic systems of management, and eventually, nation states and democratic mass politics. Similarly today's enlightenment is not just a matter of online activities or 'cyberculture'. On the contrary we see how new media empower and accelerate the diffusion of a host of new social and economic practices with important significance in the 'offline' world: what we (using Yochlai Benkler's term) call 'social production'. Food production systems are being re-organized all around the world, taking advantage of new media to combine the quality and transparency of local production with the scale-economies of new computerized distribution systems. Community Supported Agriculture, the fastest growing element of the US food economy enables thousands of people to regularly receive fresh, high quality produce made in a sustainable way in exchange for a few hours of farm labour. In the poor 'South' new media are used in innovative ways to keep farmers abreast of world market prices for their produce and taking charge of marketing themselves, thus bypassing middlemen. Innovative systems like Prosper and Kiva coordinate the cash needs of poor entrepreneurs with thousands of micro-donors. This way you can pair up with 10 strangers to lend a Vietnamese small-scale pig farmer the cash needed to invest in a new fence! Along side a multitude of forms of cooperation are flowering, linking poor producers, rich consumers, social entrepreneurs and corporations in new and innovative ways. Designers and engineers are experimenting with Open Design systems making blueprints of complex machinery available for production by simple processes, and entrepreneurs are experimenting with new forms of peer finance. In big cities in the North there is a flowering of creative production as more and more young people chose artistic careers, using cheap and ubiquitous digital technologies to create music, design and art and distributing their works and coordinating their collective effort through the internet. All across the North, people are coming together in a multitude of self-organized productive activities like communal gardening, time-banks and reading groups, New Age and other spiritual pursuits, the realization of alternative sexualities, producing and circulating recipes, and improving on and altering sporting goods like skate-boards or Mountain bikes. Surveys show that between 58 and 83 per cent of the adult population of Western European cities take part in some such activity of social production. And they do it not only because of need or desire for a particular good or product (be this better skateboards or organic carrots), but also because taking part in such practices of social production is an excellent way to create networks and friendships in the face of the looming loneliness that has become an intrinsic feature of the modern world. (In our survey in the Swedish city of Malmö 83 per cent indicated that their main motivation for taking part in such forms of social production was 'to build networks and friendships' ) So as older forms of civic participation based on the political party, the labour union with its associated organizations like the evening school or cultural association are dwindling, a new civic culture based on self-organized forms of social production, enabled and empowered by new media, is emerging. People might 'bowl alone' but they socialize around the farmer's market and the online forum.

There are many similarities between the 17th century enlightenment and today's situation. In both periods a new medium facilitates a flowering of collective intelligence that gives rise to new social, economic and eventually political forms. But there are also a couple of important differences: The first enlightenment was a comparatively small affair. Books were expensive in early modern Europe and few people could afford to read (although literacy rates were on the rise). Jonathan Mokyr estimates that in its perhaps most intensive phase, the British 'Industrial Enlightenment' of the 19th century, this social effervescence involved a network of perhaps some 1000 people. Today active participants in new forms of social production number in the millions. Second, the first enlightenment was an exclusive affair. Membership was restricted to a small elite of white, male and mostly European bourgeois. Consequently it bred a limited social and political consciousness where the rights and status of women, workers and non-Whites were simply not considered. Today's enlightenment, on the contrary is planetary. It involves people form all across the world, and does not operate with any apriori criteria of exclusion. (Indeed that it does not yet involve everybody, and that a significant 'digital divide' persists is perceived as an important problem.) Consequently it breeds a planetary consciousness. Today, for the first time in human history a significant part of humankind routinely think about and evaluate their everyday life in terms of their planetary consequences. This has never been the case before.

Ethical Economy
The most important similarity between the early modern European enlightenment and today's global effervescence is perhaps that they are both intimately tied to the emergence of a new economic system. In the 16th century we saw the flourishing of modern capitalism, manufacture and eventually industrial production. Today we can sense the emergence of a new economy based on social production: what we call an 'Ethical Economy'.

Indeed it is important to underline that social production is not just a matter of alternative or anti-capitalist manifestations. Over the recent decade the business world has definitely recognized its potential. In fact social production has acquired a sizeable economic importance, as large companies like Nokia and Procter & Gamble tend to progressively include consumers in the processes that produce value. In the last decade these strategies have evolved from the indirect inclusion of consumers as co-producers of the symbolic and affective status that give value to brands, to their direct involvement in user-led innovation systems, 'crowdsourcing' and viral marketing. Procter & Gamble has allegedly improved the productivity of its Research and Development department by 30 per cent by systematically involving consumers in the development of new brands, packaging and even products. In Latin American and across Asia companies are involving poor people's social networks in co-producing services like insurance and banking for the enormous markets at the 'bottom of the pyramid'. Other companies like IBM has reorganized its entire business model around the provision of services open source software that is produced in autonomous networks of social production. So it seems like the value chain of capitalist production, that used to be restricted to the firm's own resources, its machines and its salaried personnel, has expanded to include a host of non-salaried processes of social production that run on machines- mostly networked PCs, or mobile phones in the South- that the firm does not own! Indeed it is possible to argue that the information economy itself revolves, not so much around information, as around participation. This is the case for the Web 2.0 economy where entire business models, like YouTube or Facebook build on the cultivation of user-generated content. Through the spread of contemporary convergence strategies such business models are becoming increasingly influential in the mainstream media industry as well. A successful reality show or computer game presupposes an active and participating fan community. Overall, marketing theorists are thinking ever more in terms of a fusion of the once neatly separated areas of consumption and production. People are becoming 'prosumers', 'prod-users', or 'professional amateurs' and they are contributing ever more to the production of the goods or brands that they consume. And marketing is becoming 'societing'; the construction of sustainable brand communities that act as both consumers and producers. As Chapter II will discuss in more detail, contemporary capitalism is becoming ever more dependent on social production, on what it sees as the free labour of a connected multitude of consumers. And the central productive activity of the information economy, knowledge work, tends to resemble social production, rather than capitalist production. With the spread of Icts, knowledge workers tend to work ever more with processes of collective intelligence: Their value depends less on their own private skills and more on their ability to organize and give shape to social processes of collective intelligence that can transpire inside as well as outside of the firm. As many gurus of knowledge management, starting with Peter Druckner, have stressed repeatedly: success in the knowledge economy rests ultimately on a firms' ability to appropriate and organize what is essentially generally available knowledge and information in agile and flexible ways. This is contingent on the ability of their employees to quickly create and recreate functioning relations of production, which in turn builds on their ability to create significant social relations.

This rise in the social and economic importance of social production has of course not passed unnoticed. Much has been written on social production from a business point of view, as well as from an anti-business, activist and a more neutral academic perspective (and a lot of this will be discussed in Chapter IV). The steady stream of such publications, confronting the phenomenon from different viewpoints, has generated a host of different insights, but they all agree on one thing: that social production is a non-capitalist mode of production- it does not follow the rules that we commonly associate with capitalist production. That said however, the existing literature on social production shares two important shortcomings. First, it tends towards a certain technological determinism where social production is viewed as a mere effect of the arrival and diffusion of Ict. It is true that such technologies have greatly strengthened this new mode of production, but it is important to understand the earlier history of social production and, in particular its emergence as a consequence of the long term, post-War transformation of the capitalist economy. Not taking this sociological perspective into account makes it easy to fall into digital utopianism, thinking that new technologies by themselves will save the world, and difficult to appreciate the likely outcomes of today's complex interconnections between social production and the capitalist economy. Second, and perhaps as a consequence of this overly technological perspective, most of the literature on social production has avoided the question of value. To the business writers, social production generally appears as a free resource, an externality in the form of user innovation and consumer cool that can be appropriated without the need to give much in return: an 'immense free lunch for business' to use Alvin and Heidi Toffler's term. The activists make a similar mistake in projecting a new society of 'commons' onto social production where each member will freely take what he needs and give what she can, to paraphrase Marx. Even accomplished academics like Yochlai Benkler refuse to confront this question. Benkler speaks of social production as 'subject to an increasingly robust ethic of open sharing, open for all others to build on, extend and make their own'.

However, and here is the core argument of this book, social production is not a free-for-all. These new productive practices come with a new logic of value. They have a way to evaluate the relative importance of people and products, and to distinguish between good and bad efforts and practices. This logic is different from that governing the capitalist economy, but it is nevertheless a coherent logic that is visible in a multitude of manifestations of social production: from knowledge work, via peer production to the dynamics of brand communities and urban creative scenes. It is not a monetary logic, but what we call a logic of direct, unmediated social impact, or what we call 'matter': people involved in social production, and the 'stuff' that they create are evaluated on the basis of how much they directly matter to other people's lives. A brand is considered valuable if it makes a difference in the life of its consumers; an open source programmer gains status through his or her ability to add to the productive community in ways that go beyond the actual production of code and involves the ability to give others the potential to grow and realise themselves; a knowledge worker rises in the ranks not only through her manifest productivity but also by her ability to contribute positively to the collective intelligence of the company; a DJ lives up her networks and reputation that in turn reflect her impact of the 'scene' of which she is part. This logic of matter is a reflection of a productive condition where labour time, technology and information - three important scarce resources for industrial capitalism- are becoming abundant, and where what determines the value of a product, person or organization, is its ability to connect and organize social processes in productive ways. Conversely people who participate in these activities are generally motivated by the possibility of having their contribution, and by implication their selves socially recognized by others with whom they have meaningful social relationships. As Yochlai Benkler convincingly argues, it is a matter of traditional social skills, decency and civic spirit, 'behaviours and motivation patterns familiar to us from social relations generally' that have now come to take on a direct productive importance. These values are not measured in monetary terms but in terms of peer-recognition, respect or esteem. Mostly such recognition is conferred informally, but the explosive growth of social media that make social networks visible and rating mechanisms where people can directly judge the impact of people and things, testify to the need and desire for mechanisms that can make this value logic explicit. There is, in other words, an emerging possibility that the value logic of social production becomes objectified, inscribed in the social institutions and frameworks that govern economic production and exchange on an everyday basis. Such an objectification of this logic of 'matter' would transform social production into something much more than a new mode of production: it would make it the basis for a new economic form: what we call an ethical economy.

The term 'economy' goes back to the Greek oikonomeia, which roughly meant 'government of the household' (fro oikos- 'household' and nomos-'law, rule'). This implies that an economy is something more than just a mode of production. It is a way of organizing the production and distribution of wealth. The central feature of an 'economy' is thus a socially institutionalized set of common criteria for this process of 'government': a common logic of value that is able to systematically determine the relative importance of its various components: different forms of labour, different kinds of produce etc. This way the capitalist economy encompasses many different modes of production- industrial production in the factory, feudal production in the home, slavery (that remains an important and growing component ), and social production in the creative industries and among co-producing-consumers- but its distinguishing factor, what makes it 'capitalist' is that all these productive processes are governed by a common logic of value that determines their relative importance by giving them a monetary price that is supposed to reflect their consumption of scarce, privately owned resources (like labour, machinery and raw materials), and that establishes continuous and endless accumulation as the overriding goal. This capitalist logic of value is nothing natural, it was imposed on European society in a 'monetary revolution' that accompanied the emergence of, first large scale manufacturing and then industrial production, and that was completed through the spread of consumer culture in the post World War II years. The consequence of this monetary revolution was that money penetrated the social fabric and established itself as the most important embodiment and measure of value, not just for strictly economic transactions, but also for personal relations. Indeed, as a medium of value, money is not neutral but comes with a bias towards particular kinds of actions. Since modern money is scarce it has a price. This creates a bias towards saving and hoarding (or accumulation) or productive investment (investing in generating more money) but against consumption and waste. Conversely time comes to be conceived as something best spent productively in putting ones' money to work. The result was that people increasingly gave monetary value to their time and their activities (time is money…) and they increasingly did things because there was money to be gained, or saved. According to German philosopher and sociologist George Simmel who wrote at the turn of the last century, the prevalence of money established a cold calculating attitude as the default option for social relations. Most importantly, it enwrapped society in what another German sociologist, Max Weber, called an 'iron cage'. The prevalence of money and the logic of value that it embodied, meant that at a certain point, capitalism no longer required cultural support or legitimacy. In his book on the Protestant Ethic and the Spirit of Capitalism, Weber showed how the first generation of capitalist entrepreneurs were driven by their fervent protestant faith: they worked hard to expand their businesses for the love of God, often in a social setting dominated by aristocratic values that were adverse to entrepreneurship and profits. They found legitimacy and moral support in the belief that building a business was the best way to serve as a Christian. However, the second or third generation worked even harder simply because they had to: if you did not accumulate you went bust! The value logic of capitalism had become institutionalized, inscribed in the framework of social institutions as the natural, even the necessary way to act and think: it was no longer enough just to make a comfortable living off your business, you had to expand, accumulate and grow. This way the persistence and expansion of the system was no longer dependent on individual motivations. Today this process has gone even further: in a consumer society it is obvious for us that the way to fulfil our motivations and desires- whatever they are- is to acquire monetary wealth that can be spent on a market.

We believe that the value logic of social production, what we call the logic of matter, will become more obvious and powerful as social production develops. It will eventually go through a process of objectification, similar to what happened with the capitalist logic of value beginning from the century and on. However it is likely that the medium that will establish itself as the objective measure and embodiment of this logic of value will be different from the kinds of money that we know from the capitalist economy. As Chapter V will show in more detail, the monetary revolution was contingent on printing that could multiply the amount of money in circulation far beyond the available stock of precious metals, and on the increasing power of the state and the emergence of central banks that could control the money supply. The process of objectivation that we see on the horizon will most likely build on peer-based estimates; and it will most likely be embodied in social media. This is already happening, networking and rating are two online activities that are rising quickly as we speak. The Pew Internet and American Life survey shows that in 2007, 32 per cent of American internet users had rated a person, product or service online, and 20 per cent had tagged content. A host of companies and organizations like Couchsurfing, Ebay, Amazon and other online retailers embody some kind of rating mechanism in their communication with customers. The actics.com platform - for which we both work- has taken this mechanism further to enable students to rate the performance of universities in both academic and sustainability terms, or even employees to rate each other. With the development of mobile internet and RFID tagging consumers will easily be able to rate products, stores, or personnel. It is easy to imagine sites that aggregate these peer ratings into quantitative indexes that are easily visible. Simply by sweeping you cell phone over the RFID tag of an object you can get a comprehensive, peer-based estimate of its social impact. (In his Down and Out in Disneyland, science -fiction writer Cory Doctorow depicts such an objective value logic at work. In a society of material abundance, people are obsessed with each others' 'Whuffie'- an quantitative indexation of the respect conferred onto them by others- which is permanently visible. Your Whuffie determines your social status, as well as your access to scarce quality goods and services, a nice house instead of a shack in the suburbs, a table at a street café instead of dinner at the local soup kitchen.)

Such an objectification of the value logic of matter will achieve three important things: First, it will make the elements social production tradable: It will become possible to capitalise on one's efforts as a blogger to gain entrance to a concert, a brand will be able to acquire a premium price or attract consumer innovation on the basis of its success in promoting sustainable production. Again these things are already emerging but in a haphazard and generally non-transparent way. Such tradability will significantly strengthen the potential and strength of the ethical economy. Second, an objective medium of value will make possible an objective and generally accepted measure of value. This will make it possible to allocate resources in a rational way without recurring to monetary mechanisms. It will also make it possible to translate social impact, or matter, into money in a rational and generally accepted way. This way companies will have ways to know what their brands and other intangibles are worth, and which programs of social responsibility actually make a difference. Finally, an 'ethical iron cage' force people to maximize their social impact simply to stay in business! This will radically enhance the social and political influence of the ethical economy.

If the combination of industrial production and a logic of endless accumulation was called a capitalist economy, we call a combination of social production and a logic of matter that privileges positive social impact rather than private accumulation, an 'ethical economy'. As Chapter II will show, this ethical economy is already here, if in an embryonic form. It is visible in many aspects of contemporary knowledge work; in the ongoing fusion of production and consumption that we can see in Web 2.0 and emerging practices of customer co-production; in the booming creative or 'experience economy' and finally; in the market for fair trade, ethical consumerism and socially responsible investment, and most importantly perhaps, in the growing financial importance of brands, 'intellectual capital' and other intangibles. Given its tangible, if shadowy, presence within the contemporary information economy, the ethical economy is not a utopian construct but a real possibility. Indeed it is plausible to suggest that the information economy is already split into two: It contains two economies. On the one hand there is the capitalist economy. This economy still handles the main part of material production: the production of cars, shoes, computer chips, and the transportation and maintenance of these goods. But immaterial production- the production of the ideas, innovations, experiences and other intangibles that virtually everybody agrees to be the most important source of value and development- is increasingly performed according to the principles of a different, ethical economy. This means that an understanding of the basic working of this ethical economy is crucial for managers, entrepreneurs and other who wish to navigate the difficult interface between profit and social impact, between money and matter. ¨ And such an understanding is bound to become even more important in the future, as the relative weight of the ethical economy is set to increase even further. We can see four reasons for this:

First, because its productivity in terms of immaterial production is higher. This is straight forward, since the logic of the ethical economy favours cooperation and sharing and there is no need to erect barriers in the form of artificial property rights. So to the extent that the economy of the future will be a knowledge economy (or an information economy, or an experience economy) it is bound to be ever more dependent on the ethical economy. Second, because the value logic of the ethical economy, the logic of matter is likely to become more manifest and tangible. As we argued above, this will significantly expand, strengthen and rationalise the ethical economy vis-a-vis capitalism. The third reason that the ethical economy is likely to prosper is that material production, the remaining power base of the capitalist economy, is rapidly becoming cheaper and more accessible. Developments in Open Design, cheap multi-purpose machinery and Open Manufacturing have the potential to decentralize the production of a vast amount of objects of everyday use. This leads to an undermining of the industrial monopoly on material production and to rapidly declining profit margins in this sector. As Chapter IV will show in more detail, similar scenarios are likely for energy and food production. This leaves pure financial speculation as the last bastion of capitalism, but given recent events, that sector does not seem to have much of a future. Finally, the overall social efficiency of the capitalist economy is declining, income inequalities are growing, its environmental record is becoming ever more evident, it begins to loose its ability to guarantee basic necessities even in the rich world, housing today, food and energy perhaps tomorrow. This will radically decrease its already staggering social legitimacy. Eventually states, corporations, cities and other political actors will start experimenting with the available alternatives: like the declining feudal class supported the rising merchant class in the late middle ages, today's powerful actors will have to switch their alliances to the ethical economy in order to guarantee their own survival.

This likely future importance of the ethical economy makes understanding its dynamics crucial also for people who think beyond business opportunities to ponder the future of our global society. Any such political perspective will have to take account of the fact that the affirmation of a new economic system completely shifts the stage of the political theatre. This is because the ways in which the production and distribution of wealth is organized has an enormous influence on the ways in which society in general is organized- how could it be otherwise? Now the capitalist economy imposed itself on society in an accelerating process that lasted from sometime in the 17th century to the post-War years, by making its logic of value the dominant logic of social organization in general. The primary value of the capitalist economy: endless accumulation of wealth and profit at the expense of everything else became the primary value of society, and 'economic growth' eventually emerged as the overriding principle of politics, everywhere, to the left as well as to the right. But social production comes with a different principle of value: positive social impact. What would a society where the ethical economy has become an important, or even a dominant political reality look like? We do not know that yet; we do not know what such a transition might look like, whether it will be violent of peaceful, whether states and corporations will take the lead or resist; whether it will involve the emergence of an autonomous ethical economy as an alternative to capitalism or a reform of global capitalism inspired by this new economic force- a sort of global New Deal organized around sustainability and social impact; or if we will just see a decline into chaos. Whatever the outcome politicians and activists need to consider the ethical economy and its potential to inspire the political strategies and new ideas that can lift us out of our present apathy. Companies need to realise that their new business opportunities lie with the growth of the ethical economy, and that this will entail a radical reform of their current practices. Ordinary people must realise that what we call the ethical economy is likely to be a significant factor in their lives and in the lives of their children. Whatever the position of interest, it is crucial to understand how the ethical economy works, and how it might work in the future. This book will offer the beginnings of such an understanding.

To summarize: We can already see how a new mode of production, social production is developing and becoming central to the information economy. We also see how the prevalence of this new mode of production is challenging the capitalist logic of value with which our economy still mainly works, as Chapters II and III will describe, this challenge is visible in wide range of phenomena that range from the shaky legitimacy of intellectual property rights, through the management and motivation of knowledge workers, to difficulties in measuring intangibles. Finally, we can sense the emergence of a new logic of value: a logic of 'matter', not money. At present this logic of 'matter' is mainly discernable in new forms of immaterial production, like creative scenes, customer co-production and Peer-to-peer systems. But present technological development gives reason to suppose that it will, within a not so distant future, begin to have an impact on material production as well. Our claim is that the combination of social production and a logic of matter forms the basis for a new economy: an ethical economy with a potential to become an important or even dominant to the economic ecology to the 21st century. (Just like the combination of industrial production and the logic of money created modern, industrial capitalism which still dominates the ways in which we act and think in economic terms.) This book will be dedicated to describing the emergence, present dynamics and possible futures of this ethical economy. Mostly, it will be an economic argument. But before we embark on that venture it might be useful to stop and ponder the other part of the term we have chosen to use: Why ethics? Why ethical economy?

Why Ethics?
Quite paradoxically, the concept of an 'ethical economy' feels both intuitively true and intuitively false. It feels true because the spectacular rise in ethical consumerism, corporate ethics and socially responsible investment that we have seen in recent years should convince anyone of the fact that business is no-longer a value neutral practice. On the contrary social impact has become a mayor concern. (According to the Cooperative Bank’s 2007 report, the UK ‘ethical sector’ was worth £ 29 billion, more than the markets for alcohol and tobacco together. And in 2003 38 per cent of the European population declared that 'ethical or political factors influence their consumer decisions' ) It is no longer possible to sustain the myth of the economic actor as a cold, calculating homo oeconomicus, or to claim, as Milton Friedman famously did in 1962, that the only social responsibility of business is to increase their own profits. Instead, to create 'ethical value'; to have a positive social impact is ever more crucial to commercial success in ever more sectors of the economy- not just consumer goods but in finance and the business-to-business sector as well. Conversely more and more people, as consumers, investors or co-workers, let ethical considerations weigh in on their economic decisions, to buy a product, to invest in or work for a company. The logic of 'matter' has established itself in business practice, alongside or, sometime even above, the logic of money. Along with this rise in ethical business concerns, ethics has become one of the hot themes for philosophers and sociologists since, at least, the 1980s. They tell us that the lack of stability and existential security that marks the contemporary global 'postmodern' condition, has made ethical decisions a necessary aspect of everyday life. It is no longer enough to do what one has always done, or to do what one has been told- it is no longer enough to follow rules- one needs to decide for oneself, to weight the pros and cons of each individual action. This way, ethics has taken the place of what supposedly was a solid morality.

However, the notion of an 'ethical economy' also feels intuitively wrong. This is because the main conclusions of this contemporary philosophical revival are that ethics has become an impossible pursuit. And the principle reasons for this are precisely linked to the growth and expansion of the economy at the expense of other social systems. Zygmunt Bauman summarizes this perspective in his recent lecture with the succinct title: 'Does Ethics Have a Chance in a World of Consumers?'. His answer is 'no', since, as a consequence of the expansion of consumerism and 'the market',
the grand social vision has been split into a multitude of individual and personal , strikingly similar but decidedly not complementary portmanteaus. Each one is made to the measure of consumers' bliss- meant, like al consumer joys, for utterly individual, lonely enjoyment even when relished in company

In short, the transition to a consumer society, and the expansion of the economy into all spheres of life that this has entailed, has created individualization and social fragmentation that makes almost impossible the experience of having something in common- of community- that is the foundation for all true ethical engagements. In this light, ethical consumerism or fair trade goods stand out as superficial substitutes for real engagements with actually existing other people and their concrete joys and sufferings. In arguing that consumerism has destroyed the possibility of a true ethics, Bauman builds on a long philosophical tradition that, with Martin Heidegger as a central figure, has constituted a persistent tragic vein within modern social thought. This narrative that has stressed alienation and social fragmentation as the consequences of the spread of modern technology and a market society, and argued that this transformation has destroyed the vary possibility of a true humanity. This case has perhaps been best argued by Alaistair MacIntyre, in his 1981 work After Virtue. MacIntyre opens up by arguing that today we are unable to even talk about ethics in a meaningful way: we lack even a conceptual scheme that allows us to make ethical judgements (and as a consequence, 'modern moral debates are interminable'). Examining the history of ethics MacIntyre goes on to show that the existence of such a conceptual scheme has been intimately bound to the permanence of a solid community to which such a set of standards can be anchored. For Aristoteles, with whom the philosophical reflection on ethics begins in earnest, ethics was about obtaining what we might call 'the good life' (or eudaimonia). Eudaimonia was more or less defined as the realization of the inherent tendencies within the individual towards wisdom and a balanced use of pleasures, and within the community towards friendship (philía) and justice. Indeed, the object of ethics for Aristoteles was the practical discipline of choosing the things that we want because they are good in themselves, and not, like in the case of other practical disciplines such as strategy or economics, of realizing goals that serve other, superior aims, like winning a war or getting food on the table. To act in an ethical way was thus to act in a way that realized the inherent nature of individuals: their inclination towards a naturally desirable good life. So Aristoteles never really discussed what the standards of ethical judgement would be, their inherent nature and its ability to realize itself as a 'good life' was simply taken for granted. Sociologically speaking, these standards could appear to be naturally given because they were firmly embedded in the life practice of the community of Athenian aristocrats for whom Aristotle philsophized. If the question of ethics was essentially that of wisely balancing ones inclinations against those of others, the question of the desirability of one's inclinations, or of the context in which they become possible, was never asked. (The question whether it is 'ethical' to have slaves is, for example, never raised.) It is only with Christianity that standards for the 'good life' are objectified and rendered explicit, and consequently the good life is presented as something different from the actually lived life- the City of God as opposed to the City of Men. For Thomas of Aquinas, ethics becomes not a matter of balancing one's 'natural' inclinations against those of others, but of subordinating those inclinations to a set of objective moral rules prescribed by God. Our modern conception of ethics- originating in Immanuel Kant's Critique of Practical Reason- maintains this format but substitutes Reason for God. To behave ethically is to subordinate one's inclinations to a rational ethical rule: to do what we would all agree would be desirable for the good of human kind. Sociologically speaking, again, this objectification of ethics- its transformation into an objective morality- has been driven by the development of ever larger, complex and differentiated societies, a process in which the emergence and rise of modern capitalism has played a crucial part. Behind the christian ethics of Aquinas we can find the growing power of a centralized church bureaucracy; and behind the practical reason of Kant stands the complex machinery of the modern state. The problem though is that those very same processes have also continuously undermined the lived communities in which those rules could find support and legitimacy. Aquinas' divine rule could work as long as the existence of God and the truth of his word were beyond doubt. Kant's belief in the possibility of reason could rest in place as long as the enlightenment ideal was embodied in dominant institutions and shared by everyone (or at least everyone that mattered). In today's global world, differentiated into an ever-expanding number of life-forms, each with their particular values, such universal standards are difficult to find. As French philosopher Alain Badiou observes, we are caught between impossible universalism and relativist multiculturalism. Indeed, to follow Bauman's and other contemporary sociologists' line of reasoning: the fragmented life of contemporary 'postmodern' individuals makes any standards that will stand up to the test of everyday existence rare. In line with this insight, Macintyre concludes that 'what matters at this stage is the construction of local forms of community within which civility and the intellectual and moral life can be sustained'

However, the paradox is that in the very time and place where MacIntyre was putting the final touches to his manuscript declaring, long before Bauman and the rest, the impossibility of ethics in the contemporary world and calling for community- the US in the late 1970s to be precise- such communities were arising all around him. Many observers, among them anther great mind of the 1980s social sciences, the political economist James O'Connor, saw the late 1970s and earl 1980s as marked by the widespread emergence of a host of new productive communities- the reconstituted household; the commune; cooperatives; the single-issue organization; the self-help clinic; the solidarity group- to accompany the growth in unemployment and the increasing inability of the state to provide basic services. This 'living economy' as O'Connor called it was based on 'new social relationships of production and alternative employment' it was, as Chapter III will argue, the beginnings of an ethical economy- a host of practices in which the economic goal of creating wealth (be this free visits to the clinic or a communal soup kitchen) and the ethical practice (in the classic, Aristotelian sense of that the term) of creating the social ties that make up a community, coincide.

Seen from this point of view, the ethical economy represents something quite singular and unprecedented in history: the convergence of ethics and economics. For Aristoteles, those two spheres were distinct and separate. Economics was about governing the production of material wealth that took place in the private sphere of the household. The household (oikos) was a private space in the classic sense of that term, it was closed off from the realm of the city (polis), and hence beyond the rule of law. In the private sphere of the oikos, the master of the house ruled with absolute power and most household members were his private property. (Indeed 'private' come the latin privare which means something close to 'deprive'. In Roman law privatus meant 'deprived from the common thing' the res pubblica.) Ethics (ethika) on the other hand belonged to the public sphere of the city (polis), and it was primarily about organizing the interaction between free actors (in his case, men), in the absence of any pre-established hierarchies. In the oikos this was not a problem, slaves simply had to obey, their relations with their Maters were not ethical in the strict sense of the term. But free men had a choice; there was an element of contingency. Hence for Aristoteles, ethics was not primarily about separating 'good' from 'bad'-the solution to that problem was in any case given by the inherent nature of individuals- it was about solving the difficult question of how free men could live together in the absence of established obligations: how they could construct significant relations and eventually a polis that would allow that inherent nature to realize itself. Indeed ethika is closely related to ethos, which means something like 'mood' or 'character'; and ethics was to a large extent about managing one's affective relations to others (like anger, desire, love and animosity) in ways that permitted a peaceful, balanced and harmonic co-existence in the polis. In the polis, ethics was primarily a matter of constructing the relations of friendship (philía) that made the community possible and sustainable.

With the development and institutionalization of a capitalist economy the separation of economics and ethics has grown even stronger. Capitalist development has meant both a privatization of economic affairs, and their subtraction from the field of public debate where ethics and values were articulated. The production of everyday necessities no longer unfolded within the ‘moral economy’ that had characterized pre-capitalist peasant society. Instead it took place in a privately owned factory where labour and machinery was subject to the owners personal control, and motivated by an overarching goal that was considered beyond ethical deliberation: the continuous accumulation of monetary wealth and capital. Economic life was ‘disenchanted’ stripped of its ethical context and guided only by the cold rationality of endless accumulation. In the post-War year most sociologists and moral philosophers agreed on this functional separation of economics from he sphere of ethics and politics. Socially concerned intellectuals argued that the growing influence of an a-moral economic ‘privatism’ meant that public and political life was crippled. Instead of using their capacity for ethical reflection and political action, people divided their lives between the equally ‘mindless’ activities of production: the everyday tedium of a standardized job motivated only by the need for money; and consumption: the private accumulation of mostly useless objects driven mainly by empty individual hedonism; non of which allowed for any reflection on the overall goals of life or the general direction of social development.

But in the ethical economy what creates value is precisely what Aristotles described as the essence of ethics: the construction of affectively significant ties (of philía) that make -a however temporary- productive community possible. The ties that bind the Open Source team together and that motivate its participants to freely give of their time and energy to the task; the community that confers respect and status as rewards for the DJ's night of free performance; the community recognition that falls on to the successful social entrepreneur. Indeed such ethical value forms are visible, if in a necessarily contorted way, in the manifestations in which the ethical economy takes on a capitalist form: the 'affective economics' that tie user to a brand or fans to a media product; the cultivated networks that enhance the status of a creative entrepreneur; the functioning social ties that make up an efficient corporate culture. The communities that MacIntyre asked for are already here but they are economic and business-driven, not religious or moral.

This convergence between ethics and economics has important consequences for how we think about ethics- and in particular business ethics- and by implication, politics for which ethics is the 'original aspect'. It means in fact that business is becoming a directly political practice. We are seeing this new directly political role of business both at the micro and at the macro level: both in the political constitution of a company as a branded community held together by a shared symbolic framework and common 'values', and in the growing geopolitical role of large transnational companies (that increasingly resort to employing private armies of mercenaries, thus threatening that 'monopoly on legitimate violence' that has traditionally been the foundation for the political power of the state). We are seeing the same tendency, albeit in a progressive direction, in the development of hybrid forms like social entrepreneurship and in the growing networks of cooperation between business and NGOs. In short, a new directly political role for business is part and parcel both of the existing neo-liberal order an of a possible new social order that we can see emerging as an integral part of the ethical economy. However, that order is based on a way of conceiving of politics that is different from what we are used to. Modern politics was based on the idea that a mediating institution, the state, the party or the intellectuals must intervene and tell the masses what they should do or really want. Today however, the masses have the means to now this themselves: they have all become intellectuals, or to use Italian philosopher Paolo Virno's terms, they live in a condition of 'mass intellectuality'. So there is no need for interpretation, ideological leadership or guidance. Everybody already knows what they want, sustainability, equality, freedom. In this sense we are back with Aristoteles: the problem is not to define what the good life is, but to realize an eudaimonia that we can all already imagine. Ethical practice is thus a matter of actually constructing this new order, here and now through a series of concrete solutions to practical problems. This way the ethical economy is bringing ethics back to its Aristotelian status as practical science. The ethical economy is not just a new way of producing wealth and of determining its value, it is also the concrete construction of a new political order, hic et nunc, form the bottom up, through the erection of new forms of productive cooperation. Social philosophers Michael Hardt and Antonio Negri call this the 'production of the common' and they claim that
' the production of the common tends today to be central to every form of social production, no matter how locally circumscribed, and it is, in fact the primary characteristic of the new dominant forms of labour today. Labour itself, in other words, tends through the transformations of the economy to create and be embedded in cooperative and communicative networks.

This, they argue forms the basis for a new and radically participatory democracy: an 'absolute democracy' in Baruch Spinoza's sense of the term.

In difference to the 20th century political scene dominated by parties, intellectuals and social movements, business has a direct and constructive role to play in this process (and not just an indirect corrupting function, as its influence was conceived in modern political theory). Indeed for business that follow the logic of 'matter' of the ethical economy, commercial value is founded on positive social impact, and by implication, the political pursuit of generating a new, and hopefully better society, becomes the same thing as the economic pursuit of generating wealth and eventually profits. As business thus becomes directly political, its political role needs to be evaluated on a case-by-case basis. There can be progressive as well as reactionary business practices, but 'business' cannot be apriori identified as the enemy of desirable social change. Social movements and other actors need to find way to work with business to realize their aims and projects (they already do, ncreasingly). Conversely, business needs to take its new political role seriously. It is no longer enough to conceive of ethics as a matter of complying with externally imposed standards or codes of conduct, ethics can no longer be treated as a negative restriction on business practice. Instead business needs to take responsibility for the constructive role that it plays within an emerging ethical economy and strive to maximize its social impact, its capacity to 'matter'.

We have argued that social production is in itself a practical ethics, in myriads of local manifestations, the central ethical problem of how to live together in a constructive way is solved on an everyday basis. The solutions that 'matter' and add value are those that prevail. This way the ethical economy creates a viable alternative to the philosophically founded moral systems that have dominated the modern approach to ethics. Moral philosophy has in any case become a sterile practice, locked into a conflict between two equally unsustainable positions: the 'modernists' who look for ever more abstract justifications for moral universalism, and the 'post-modernism' who keep pointing at the impossibility of that endeavour. None of this is of any practical relevance: it does not really matter. But even the ethical economy must have standards for what constitutes a positive social impact. We have argued that those standards, like the standards of eudaimonia in the case of the Athenian elites, are immanent to its practical operations, but what are they?

As philosophers have spent the last decades arguing about moral universalism, sociologists have identified a massive value shift all across the developed world. Centred on the educated middle classes in the most developed economies- what Paul Ray and Sherry Ruth Anderson have called 'the cultural creatives' this new value-structure combines what Ronal Inglehart first identified as 'post-materialism' a value structure that goes beyond material accumulation to emphasize self-realization, freedom, equality and respect for others, with a planetary consciousness. These values first emerged in the open with the social movement of the Sixities, and developed in the environmental movements and the consciousness movement of the following decade. Today they these movements are converging into a solid subculture that is making its presence felt on society, politics and the economy. (In Ray & Anderson's analysis the 'cultural creatives' are the second largest subculture in the US, after the Christian Fundamentalists; European surveys show similar results.) Now Ray & Anderson's 'cultural creatives' essentially the educated middle class of knowledge workers, are also the people who are most heavily engaged in practices of social production, on the job and in their leisure, as active consumers. Indeed, as Chapter V will further elaborate on, such a value structure results from (or in any case is strongly supported by) the experience of social production. (Just like the like the experience of working together with others in a factory, sharing the same condition of exploitation formed a basis for the emergence of a proletarian class consciousness.) Engagement in social production entails a constant engagement with others as equals, without any pre-existing hierarchies in a situation in which productive contribution and individual self realization tend to converge (because people generally chose what pursuits to engage in). What creates value, what matters, is the ethical ability to balance one's self-realization against that of others so that productive forms of cooperation emerge. At the same time such productive interaction occurs in the context of a global media culture where 'distant others' - are present with unprecedented immediacy. Indeed networks of social production often span the globe and involve direct interaction with such 'distant others' that one might never meet. This way social production develops the ability to create relations of affective proximity with and identify with the plight of people that one might never physically meet. (Arguably this happened already with television: According to media theorist Joshua Meyrowitz, one of the reasons that the Vietnam war was so unpopular in the US- compare to for example the war in Korea- was television: people could now directly observe the sufferings of war in their living room and identify with its victims. ) So the lived condition of social production- essentially maximizing the value of social relations in the context of a connected global media culture- naturally fosters a combination of post-materialist values and a planetary consciousness. It fulfils what Aristoteles identified as the important educational task of installing the habits that make people naturally desire what is virtuous. This way the ethical economy is not in need of any philosophical or ideological justification, it comes with a set of standards that are immanent to its productive condition; standards that are both ethical and economic at the same time. What it needs is a medium that can render these standards objective, make them part of the societal iron cage that guides our actions. Such an institutionalization is doubtless the next step in the history of the value shift that Ray & Anderson document. It needs to happen if this value structure is to accomplish something more than generating individual frustration, and instead become the standard for a new practical ethics, able to guide concrete social change.

Chapter Outline
The next chapter, entitled The Ethical Economy is Already Here! looks at manifestations of this new economic logic within contemporary capitalism. Examining important phenomena like brands, corporate ethics, knowledge management and financial markets the chapter argues that the contemporary capitalist economy already depends to a large extent on an ethical economy that it cannot entirely control or command. The chapter goes on to show how this perspective casts new light on the nature of intangibles: the ever more significant problem of intangibles within the information economy can in fact be understood as a reflection of the growing weight of an ethical economy that remains immeasurable. The second part of the chapter goes on to argue that the growing significance of the ethical economy within capitalism is a natural consequence of the expansion of the capitalist economy and the socialization of the production process that this has entailed. The more complex that global value chains become, and the more they rely on resources outside the direct control of the firm, the less money and bureaucratic power suffice as managerial instruments. The logical consequence of this is that ethically significant social relations that can generate trust and shared values become ever more valuable as direct factors of production.

Chapter III, The Neo-liberal Reaction, argues that Neo-liberalism, the dominant political form of the last three decades, can be understood as a response to the affirmation of social production in the post-War years. Examining its basic components, from value-based management strategies, ideas of citizens as entrepreneurs, the increase in surveillance and the growing link between finance and everyday life, the chapter shows how the neo-liberal project attempts to individualize the benefits of social production and contain this new mode of production within a capitalist value structure. Examining the discussions about Intellectual property rights, the management of 'creativity' and the present financial crisis, the chapter concludes by pointing at the contradictions and basic impossibility of this approach.

Chapter IV Understanding Social Production, critically reviews the existing literature on per to per, social production, Web 2.0 and knowledge work, and makes two important additions. First it describes the historical emergence of social production through the increased socialization of capitalist production and the growing reliance on what Marx called General Intellect. Second, examining empirical examples of peer to peer production, the dynamics of urban creative scenes and fan communities, the chapter provides an outline of the ethical value logic of social production, showing how this logic is becoming manifest in emerging media like networks and respect. The chapter concludes by proposing scenarios for the future expansion of this new logic into the field of material production.

Chapter V,Global Ethics. The New Iron Cage, argues for the evolutionary necessity of institutionalizing and objectifying the ethical value logic that has arisen with social production. Analyzing the historical emergence of post-materialist values and connecting this to the establishment of a 'new class' of knowledge workers, it emphasizes the links between such a post-materialist value structure and the practical reality of social production. Second, examining the social institutionalization of the capitalist value logic through the monetary revolution of the 17-20th centuries, it argues that a similar objectification can be expected as the next step in the history of post-materialism. Drawing on a number of concrete examples the chapter claims that the networking and ranking properties of social media make them a likely candidate for that process. The chapter ends by examining the implications of such an 'ethical iron cage' for a number of central issues, like the future of brands, the measurement of intangible value and the management of sustainability.

The Conclusion summarizes the argument and draws out a number of implications for
concrete action in politics as well as in business.

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AdamArvidsson — Thu, 06 Nov 2008 07:41:43 CST

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AdamArvidsson — Thu, 06 Nov 2008 07:41:10 CST

Chapter V: Social Value As the last chapters have described, the post-War years have seen the secular emergence of a new mode of production. Enabled by the diffusion of networked ICTs and global media culture, a multitude of self-organized productive networks have materialized both 'inside' the capitalist economy- as in advanced forms of knowledge work- and 'outside', in the many forms of social production that proliferate in contemporary urban contexts. The distinctive feature of this new mode of production is its primary reliance not on labour time or other privately owned factors of production, but on the inherent productive competences of everyday life; the General Intellect or socially available knowledge and competence, that is a normal feature of a social context where mediation and connectivity are abundant. We have also seen how this new mode of production is intimately connected to a new moral outlook and form of personality. The knowledge workers, the educated elites that are the carrying strata of this new mode of production whole-heartedly embrace a post-materialist value set, centered not on the continuous accumulation of possesions but on the overarching goal of self-realization and the intensification of social participation. This is paired with a conception of personality as deeply formed by, indeed constituted by its links to people and objects in the outside world, rather than some inner moral compass. Such a radically 'other directed' subjectivity fosters a mentality similar to that 'care of the self' found among Hellenistic elites, where the overarching value is a carefully obtained equilibrium , or 'wellness' achieved through the reflexive management of one's affective links to the outside world as manifested in relationships, spiritual pursuits, and importantly, forms of consumption. The combination of such a radically other-directed subjectivity with the planetary consciousness available, for the first time in human history, through a truly global media culture enables an true linking of everyday actions to their global consequences. In emerging movements and tendencies like FairTrade, Organic and local food, Critical Wine, etc, these consequences give rise to strong everyday affective experiences by millions of resourceful consumers. Indeed this conception of the self as constituted by the global impact of its own actions and choices is further reinforced by productive condition of social production. Just like, for the early capitalist entrepreneur, the constant daily struggle against guilds and other forms of traditional privilege served to inculcate the values of liberalism, the daily experience of self-organized production reinforces the ideal of self-realization and the experience of extended cooperation reinforces cosmopolitan values and a profound experience of the social connectedness of the self and its worth. Finally, as last chapter has show, social production works with an as yet embryonic, but nevertheless distinct logic of value, where a persons worth is not primarily directed to the amount of private property he or she has accumulated but to his or her social impact. This value logic is already embodied in informal, yet effective media, which largely determine a parsons status: 'Networks' roughly reflect the extension of a person's social impact, the amount of people and or circumstances to which he or she matters. 'Respect' instead reflects the quality of that impact, the extent to which a person makes a positive difference to the people or circumstances reached by his or her networks. Together these two media make up a persons ethical capital, the resources at a persons disposition in order to create the strong ties that are essential to organize productive cooperation. As networks and reputation thus have a tangible value; they are assiduously and reflexively cultivated by people involved in social production often at the expense of monetary gain. The combination of these three factors: a new mode of production, social production, a new logic of value, social impact as measured in networks and reputation and a new subjectivity with is particular value structure, other-directedness and post materialism, makes it possible to suggest that we stand in front of nothing less than a new economic system with its own potential moral and political forms. Indeed the situation is similar to that of the emergence of modern capitalism in the 17th and 18th centuries. Then too, a new mode of production, rationally organized manufacture and later industry, was paired to a new value logic, quantifiable monetary values as opposed to inherited traditional status and a new subjectivity with its one inherent motivation, the protestant entrepreneur made famous by Max Weber, with his inherent compulsion to accumulate and economize. However, like in the 17th century, this new economic system only became effective as a social and political force once its particular value logic was objectified, inscribed in the 'iron cage' - to once again use Weber' terms- that seemingly automatically and naturally guides social action. This objectification takes many forms, juridical, cultural, political, but- as classical sociologist from Weber to Marx and Simmel who closely observed this process would all agree, at the basis of it all was the diffusion of money as the objective medium of value, and the concomitant becoming natural of the compulsion to continuous accumulation that is inscribed in its protocol (see below). In this chapter we shall examine how matter can be objectified as the natural medium of value of a new economic and political order: the ethical economy.

Liberalism	Socialism	Global Ethics
Merchant Capitalism	Industrial Capitalism	Ethical Economy
1400-	1800-	2000-
Individual freedom against traditional privilege	Collective solidarity and equality	Socially recognized self-realization, cosmopolitanism, planetary consciousness
Trade	Industrial Production	Social Production
(printing press)	(typewriter, telegraph, cinema)	(networked ICTs)

The Value of Personality In order to better understand what such a process of objectification might look like, it might be useful to examine more closely what happened in the 18th century, when the capitalist value form rose to absolute dominance. As Georg Simmel has examined in rich detail this took the form of the capillary diffusion of money as the dominant medium of value. While money had existed, in some form virtually throughout human history (this argument depends a bit on how one defines 'money') the concentration of the power to produce money in national central banks, and the introduction of paper money that could be printed (virtually) at will, both of which occurred in the late 17th century, radically expanded the mass of money in circulation. In combination with the overall destruction of the pre-capitalist social fabric that resulted from the commercialization of agriculture and the enclosures movements, along with important legal reforms as the commercialization of land, this enabled money to penetrate into the minute relations of everyday life in a hitherto unprecedented extent. Up until the 17th century, money had, for most people been something fairly rare, to be used mainly when interacting with strangers, and the amount of things that could be purchased for money were strictly limited. Now, however people could, and were often forced to sell their land, to work for wages for a living and to purchase what they needed on an everyday basis. As Simmel has observed, this capillary introduction of money had a number of important consequences. First, it fostered a mentality of continuous accumulation. Modern money is scarce, this means that holding money or borrowing money has a cost, and more money has to be generated. This inherent feature, or 'protocol', of the medium of money renders natural the drive to continuous accumulation that had once originated within the restricted reality of the capitalist economy, and makes it an inherent feature of a number of social activities that have very little to do with economic accumulation per se. [Franklin: time is money] This drive to continuous accumulation also entails a widespread secularization of human affairs. As money is oriented to the future, the diffusion of the medium of money promotes an attitude in which the future is considered open to rational and reflexive interventions and manipulation, and no longer a metaphysical entity in the hands of God or Destiny. Thirdly, the spread of money entails the commodification of potentially everything. Everything can no be treated as a commodity. Even if it cannot be directly bought and sold, its utility can be evaluated as if it could be bought and sold. Such a commodified approach to the world is perhaps most visible in utilitarian philosophy. This commodification of everything has two important effects. On the one hand a demystification of human relations. What used to be ethically significant and spiritually rich relations, between people, but also between people and things, is now progressively emptied of their affective content to become 'disenchanted' and open to rational calculation. Second, this disenchantment also introduces a dimension of agency. What used to seem natural and God-given, is now open to rational and reflexive intervention: it can be changed. Finally, this commodification and the overall introduction of a calculating attitude leads to a progressive individualization, a de-personalization of human relations and eventually, a becoming impossible of ethics in the Christian or even the Kantian sense. When each man is for himself, surrounded only by quantitative, calculable, and therefore relative values, the fundamental ethical imperative of absolute respect for the other becomes a utopia. The point of listing these well known effects of the diffusion of money has not so much been that of repeating sociology A levels, as much as introducing a framework of comparison, and making the point that the diffusion of money as a medium of value, while not being the root cause of the transformation of society into a capitalist system that occurred in the 17th and 18th centuries, certainly constituted the most important medium by means of which that transformation occurred. Money succeeded in diffusing the fundamental values and attitudes of an originally restricted class of capitalist entrepreneurs and making them part of a general, accepted and natural form of life. The medium of money accomplished the universalization and objectivation of the value logic of the capitalist economy. The question then is, what sort of medium could achieve a similar universialization and objectification of the value logic of the ethical economy: to the point that its logic of matter comes to appear as part of the natural way the world works? How can we build a appropriate iron cage for the ethical economy? In order to answer that we must first take a more detailed look at what the value logic of the ethical economy looks like. The first thing to underline is that the emergence of an ethical economy constitutes a re-introduction of personality as a value form. While money is an impersonal medium with a value that is unrelated to the person that carries it, respect, networks and brands- the main media of value in the ethical economy- are directly tied to a particular and identifiable actor or organization. This personalization of value is nothing new. For most of human history people have been valued not according to the amount of possessions that they have been able to accumulate, but according to the social standing that is reflected in their personality. Indeed, their share of the social wealth has usually been a function of that personality so that for example a chief is entitled to a greater share of local wealth by virtue of him being a chief, a male child is entitled to different foods by virtue of his gender etc. The ethical economy works very much in the same way. A person or organization with a particular personality, and attractive brand or a good reputation, is able to attract free labour and other resources from the community in which it operates. There are however four important differences. First, in most pre-modern societies the value of ones personality was linked to elaborate and fairly static social structure. Generally that value could only change by means of elaborate and time-consuming rituals by mean of which one could pass from one rank or position to another: from boy to man, from 'virgin' to married woman etc. We can still see similar mechanisms at work in elaborate bureaucracies like academia and the military. The ethical economy obviously works differently as it operates in a social context where structure is melting into networks and where the source of value precisely resides in the ability to construct such ethically significant 'stong ties'. Indeed its embryonic media, networks, personality and brand, are not static reflections of overall social status, but dynamic reflections of the impact that a person or an organization has on the networks that it concerns. In other worlds, the media of the ethical economy are a dynamic real-time reflection of the actual social impact that an actor or organization has on its proxies. Second, unlike the economy personality in pre-capitalist societies, the ethical economy does not operate with in any established traditional frameworks. Rather, having inherited a drive for continuous accumulation and the scant regard for tradition from it s capitalist predecessor, the only overriding value imperative of the ethical economy is to maximize one's social impact: to assemble as large networks as possible, to gather as much respect as possible, to build a strong a brand as possible. This means that, like money, the media of the ethical economy are open ended and oriented towards a continuous value-maximization. Third, the value of personality conferred by the ethical economy is much more abstract than that of the specific roles or positions attainable through traditional forms of public ritual. Indeed the productive condition of the global society in which the ethical economy operates is characterized by the co-existence of a plurality of value horizons. Social production occurs in a diverse multitude where very different religious, political or other standards can coexist. The media of the ethical economy need to be able to transcend these diverse standards, like money, while still remaining ethical media, that is, while still linking value to social impact (without, that is, being tied to any particular standards for evaluating that social impact). We can see an emerging solution to this dilemma in the recent evolution of the medium of the brand. Global brands represent qualities, that are abstract enough to function across a wide diversity of value horizons. No matter if you are Muslim of Christian, you can still relate to 'just do it' as an emotional imperative. Like money, global brands thus ensure the communicability of values across specific contexts, but unlike money this communicability does not occur through a reduction of quality to quantity, but through an abstraction and making compatible of qualities themselves. The value of Global brands, the ethical capital that they represent- both in the imaginary of brand managers and o accounting sheets as an intangible- then consists in quantitative estimates of the extent to which their abstract value imperative actually matter to the lives of their consumers. (This estimate is arrived at by conducting surveys, by looking at the status of a brand in trend indexes, by looking at things like advertising investments and market leadership). So the calculation of brand value is a however imprecise measurement of the social impact of the abstract qualities that the brand represents. Similarly, a medium that enables a global objectification and universality of the value logic of the ethical economy must be able to communicate value based on social impact above and across the more concrete value horizons that govern particular productive networks. It needs to be an abstract medium of matter. Fourth and finally, the absence of any fixed structure or central actor, also implies the absence of any distinct system of sanctions. In pre-modern economies of personality, the conference of respect to people who had been ritually endowed with a certain status was generally enforced by sanction: if one did not pay one's respect to the chief, one was punished I some way. Also pre-modern gift economies were generally driven by strong moral sanctions: it was important to give back more than one had received, less one 'lose face'. Similarily, throughout modern times the value of money has been set by central actors, originally central banks, and latter increasingly the banking and financial system: it has at any rate been beyond the reach of ordinary actors. In today's ethical economy there are no such sanctions. Nobody tells you how much you should appreciate a certain brand, and nobody punishes you if you do not. Rather, such respect is freely given to a person or organization, voluntarily conferred without there being any enforcement. So the medium of value of the ethical economy needs to be socially constituted, by the actual actors involved in the process. This way it constitutes a truly ethical value. This means that a rational medium for the ethical economy must be able to reflect this bottom up, or peer-based mechanism for conferring value.

Pre-Modern	Ethical Economy
Ritualized refelction of fixed structural hierarchy	Dynamic real time reflection of actual social impact
Oriented towards the reproduction of tradition	Open-ended and oriented towards the maximization of social impact
Tied to a paticular value context	Abstract enough to transcend particular value contexts
Anchored in central power structure	Peer-based

Social Media. What specific technological form can accomplish this? Without falling into technological determinism it is useful to underline the central importance of the technology of printing and other forms of mechanical reproduction of writing to the becoming objective of the 'iron cage' logic of the capitalist economy. The capillary diffusion of money that mediated this process depended on the ability to extend the money supply beyond what had been possible by means coinage (made of precious metals) through the printing of a (virtually unlimited) supply of paper money. At the same time, the administration of the capitalist iron cage with it gigantic bureaucratic organizations, both in corporations and in the state apparatuses which worked to guarantee and stabilize the value of money, were crucially dependent on technologies for mechanical reproduction and communication like the typewriter and the telegraph. Today networked, interactive information and communication technologies, or social media, are crucial to the emergence of social production as a new mode of production. There is also reason to believe that social media can set off a similar process in which the generation of viable media of value is increasingly democratized and peer-based. Indeed this process is already under way. Just like paper money enabled the transfer of the power to 'make money' away from states to the banking system, the proliferation of ICTs have enabled a massive proliferation of alternative currencies, by putting the necessary means of organization and information processing at the disposal of a wider range of actors. Since the 1980s the number of loyalty schemes, points or similar semi-currencies issued by corporations has increased massively. (The world's second largest 'currency' carrying the second largest volume of value-in-circulation, after the dollar, is, currently , air miles.) This development has reached communities and local organizations as well, and, as the table below shows, the number of community based local currencies has sky-rocketed. Indeed as Bernard Lietier concludes, 'universally available cheap information technologies are a precondition for the widespread emergence of alternative currencies. We should expect that alternative currencies will grow in importance as the information age matures.' [i] So there is reason to believe that the other side to the information-technological renaissance that we are currently experiencing will be a massive democratization of the control over the media by means of which value circulates and is measured. Table Alternative Currencies. These alterantive currencies represent a proliferation of diverse value standards, generally oriented towards time-sharing, local economies or various dimensions of sustainability. One possible scenario is that this multiplication of diverse value standards continuoes and that an emerging ethical economy comes to function with a multiplicity of different currencies that each embody different standards and value systems, and tha teach promote different kinds of actions. These might then by convertible to different degrees. As Paul Hartzog imagines the scenario in his ‘The future of money’ : So, here’s a scenario for the future. You go to a rock concert, and you’ve never seen the opening band before. You like their music, so you get on your mobile device (PDA, cell phone, etc.) and hit the band’s "mobile commerce" exchange. Your software negotiates with their software to determine what currencies they accept and what currencies your various bank accounts carry, including automatically getting you the best currency exchange rate at that instant. The system discovers that because they are opening for a major musician who has his own currency based on his popularity, the opening band has agreed to accept the headliner’s currency for the duration of the show for people who are actually at the concert. You verify that you are there using some kind of brokered authentication (GPS or a ticket number); the two systems complete the transaction for you, and you have access to the music. A different tendency is however at worm in the current proliferation of social media platforms and their convergence with rating mechanisms. Socail media platforms like MySpace and Facebok have been the great success stories of Web 2.0 and their particular properties, the visualization of networks is now spreading to a number of different platforms, from corporate blogs to dating sites. In itself the function and attraction of social meia sits has not only been that of enabling users to manage and extend their networks, but also that of making it possible to visualize and compare the size of networks. Indeed, as Danah Boyd argues, one important motivation of MySpace users has been the ability to visualize large networks and acquire a compatible social status. Indeed there is som empirical evidence that the proliferation of networking sites, and hence the ability to objectify 'networks' as a measure of social standing has contributed to enforcing the mentality of a competitive network sociality among certain groups, like urban creative entrepreneurs, who are heavily dependent on these media. In many ways this constitutes a continuation and rationalization of the tendency long under way in a 'CV-society' to supply proof of one's scial contacts as an embodiment of one's value. The socnd tendency at work is the proliferation of rating mechanisms. As social relations become mediated by ICTs, in particular relations between companies and their clients, rating mechanisms can be easily inserted as a more or less biquitous measure of the quality of those relationships. Today we are asked to rate a plurality of e-commerce services, like the performance of hotels, arilines, booksellers and so on. In recent years the use of rating mechanisms has also penetrated social networking sites. Facebook applications like Sparkey not only extend your network of potential acquaintances but encourage hose acquaintances to constantly rate your desirability. Similarily, couch surfing, the innovative hospitality sharing network, combine a network based mechanisms for guaranteeing peoples reliability as hosts of guests with ratings of individuals performance in those roles. Overall the combination of networks and ratings constitutes a rationalization of the embryonic media of networks and respect: it enables a quantitative measure that combines the extent of one's social impact with the quality of that impact. These two dimensions can be combined in some form of quantitative index, which isolates social impact as a measurable factor and renders social impact comparable across particular value horizons. What we would expect to see is some form of online platforms that rationalize and makes these functions explicit by being dedicated to aggregating measurmentes of a persons social impact- through some form of combination o network metrics and rating mechanisms- across a variety of different contexts. These systems can have a variety fo different forms: we have been working on one such system, actics.com, that we present as one possible example. Actics Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Changing the iron Cage What particular kind of system that will emerge from this development is an open question. However some kind of objectification of the value logic of the ethical economy is crucial to the accomplishment of the evolutionary step beyond the present model of neo liberal capitalism that seems to be the logical consequences of the development tha this book has chartered so far. Such an objectification; the emergence of such an ethical iron cage would accomplish number of transformations that would substantially change the ways in which global society operates. First, this would entail a strengthening of the ethical economy itself. To the extent that the values generated in some of its local instances could become globally tradeable, the ethical economy would be able to evolve from its present existence as a more or less fragmented archipelago of distinct realities: p2p networks, creative scenes in big cities, forms of social entrepreneurship, to an interconnected economy parallel to the capitalist one, with its own distinct channels of trade and mechanisms of exchange. For its actors it would be possible to capitalize on respect and social standing accumulated in oen productive network, to attract resources present in another. I could for example directly rely on some estimate of my impact as a scholar and academic in order to acquire access to concerts or other cultural activites, or even to material goods like organically grown vegetables. On could also imagine more blended economic forms in which one's social impact enables one to attract discounts or privileged access to goods that are, to some extent still paid for in money. This is, after all simply the reverse of what is already occurring when consumers are prepared to pay more for 'organic' , 'fair trade' or other ethical brands. The point with a rational medium of ethical value is that such a pricing in of ethical impact would become both more transparent and more democratic. Today one needs a brand, an the necessary investments in media capital to acquire this to be able to price in one's ethical impact, with a functioning ethical medium, this could be done by consumers as well. After all such a strengthening of the ethical economy vis-à-vis the capitalist economy and the emergence of a plurality of blended economic forms seems to be in line with contemporary technological developments. True, today the capitalist economy is still responsible for the lions share of material production. However, developments in multi purpose machinery along with the proliferation of OpenDesign systems have the potential to radically reduce the costs of material production, thus undermining the last bastion of the capitalist monopoly over the means of production. Twenty years from now you might not have to buy your solar cells: instead you download an Open Design formt he internet and go print it at the local blacksmith. Similar development sin energy provision- where the cost of social and wind technology is going down permitting the proliferation of local networks of Micro-power, and agriculture ponint towards a similar re-organization of material production. Add increasing energy costs and the re-localization of the economy that this would entail and the likely scenario for the future is some kind of re-localization of the economy where estimates of social impact are likely to b an important factor in determining the value of individuals and organizations. Second, the proliferation of information and communications technologies, in particular the likely narrowing of the digital divide through the proliferation of cellular phones with mobile intrnet access in the poor South, and the expansion of RFID tagging are likely to introduce some form of communicative, non-monetary dimensions into a growing number of commercial relations. After all this has already been under way for some time as Customer Relations Management, and contemporary brand management have, since the 1990s, worked to strengthen the relational, enduring and ethical components to commercial transactions. With the further integration of consumers into the production process, through increased reliance on customer centric brand equity and user -led innovation, this is likely to further blur the relations between consumers and production, reconfiguring their relative roles as participants to a productive community with some kind of ethical coherence. This leads us to the second important consequence. The proliferation of internet access and RFID technologies, together with the progressive integration of consumption and production into a single value chain would enable a development of global brands into the kinds of global public spheres that are necessary to counterbalance the globalization of production and of the economy. A functioning platform for measuring and communicating the value of social impact, like the Actics platform discussed below, could create a common space in which people that are involved in the production of a particular brand all along the value chain, from the American consumers of a particular sports-shoe, to the Thai seamstresses who make the actual material product could rate the extent to which the brand lives up to its pronounced values of self-realization and making the most of one's abilities. Indeed such ratings would be easily available by simply sweeping one's mobile phone over the object in question. And they would be easy to generate by simply using one's mobile phone or other device to produce an immediate rating. This would effectively amount to a radical de-fetishization of brands and other commodities. It would no longer be possible for a company to hide a shady productive reality behind advertisements, fake authenticity or catchy slogans, instead that reality would come forth and become visible. As brands would necessarily become less corporate and more communitarian, this would necessarily shift the balance back towards workers, consumers and other stakeholders, enabling them to have much or of n inluence over actual production decisions. For companies this would entail les freedom, on the one hand, but on the other hand it would provide them with more proactive and efficient tools for decision making and management in the context of extended, more diverse and more chaotic value chains, where competitive advantage increasingly depends on the ability to 'breath with the market'. Indeed, the diffusion of such a medium of ethical value, and its connection to actual economic realities would effectively inscribe the logic of matter- typical to the ethical economy- into the iron cage in which corporations as well as individuals in modern societies operate. Paradoxically perhaps this would resolve a number of problems for contemporary corporations. Many companies today realize the necessity of operating according to other logics than that of mere profit maximization. Their most valuable employees, managers and other members of the knowledge class whole-heartedly embrace such alternative values. The problem is that for most companies, internal auditing systems, and other forms of economic control simply do not allow for any performance indicators other than monetary profit. So even if individuals in large corporations do want to change the ways in which those corporations work, and even if upper management realize the strategic benefits of doing so, the very nature of the 'iron cage' in which they operate simply does not allow them to act according to other value sets. A similar transformation of the 'iron cage might be beneficial to individuals as well. Modern individuals are increasingly experiencing life as devoid of meaning and value with a resulting widespread attitude of cynicism. In part this results form the end of modernist grand narratives, the political ideologies that were abl to give hope for the future, and provide the illusion of anticipation and control. In part it is a result of the absence of public spheres for the articulation of new such narratives, in a consumer society in which public sphere has been privatized, and the meaning and affective content of each action pre-programmed by an ever present media culture. However, this situation a result of the becoming impossible of the Kantian (or Christian) ethical imperative. To be able to 'love the other more than oneself' (or as much as oneself) one needs the concrete experience of strong and intense affective solidarity attainable through membership in a significant community: a nation of 'brothers', a religious community, a traditional community. Apart from reactive and fundamentalist solutions, such options are increasingly rare for moder individuals who live in a fragmented and mobile network society. So when the basic definition of humanity provided by a stable large scale social context is no longer there, the natural experience of brotherly love- of philía no longer works as an inner moral compass. The institutionalization of a peer generated medium for communicating ones social impact manages to externalize this ethical imperative. You no longer need to b able to feel solidarity with other human beings, such solidarity will be imposed on you by your peers by their direct ranking of the social impact of your chices and actions. The inner moral compass that stood at the basis of modern ethical philosophy will be socialized. Such a development is also in tune with the general development of visibility. Once again, the proliferation of RFID tagging, ambient computation and an emerging internet of things, will render our current conception of privacy obsolete. Everything that you do, and much of what you think will become immediately visible, or at least traceable. In such a situation, the only coherent option is to accept responsibility for the entirety of one's actions and choices and put them up for scrutiny by one's peers. At any rate, the transformation of the modern iron cage through the insitutionalization of a medium for valuing social impact will accomplish, even in the short term, a rational translation between a growing ethical economy and a global capitalism that is ever more dependent on ethical value. It will do this by promoting a rational valuation of intangibles. While these are measured according to a wide variety of diverse standards today, a model like the actics platform could onnect financial values directly to a peer generated index of social impact. This would serve to resove many of the irrationalities present in today's global economy, and it would constitute a firt step towards a new Global New Deal oriented around ethics, social impact and sustainability. Only by changing the iron cage, in which moder actors act will it be possible tro transform the emerging value structure of the ethical economy into something other than individual misery and malcontent. It is towards promoting such new , objective media of value, in changing the iron cage, that truly progressive political and social action must orient itself.

[i] Lietaer, B. The Future of Payment Systems, Unnisys Corporation, May, 2002, p. 21.

OldVersionCH.V

AdamArvidsson — Thu, 06 Nov 2008 07:40:49 CST

CHAPTER IV: THE ETHICAL ECONOMY OF SOCIAL PRODUCTION 'content becomes cheap in a world of citizen journalists' Last chapter showed how capital is becoming ever more parasitic on diffuse practices of social production that it can neither control nor command. The growing value of what we have called 'ethical capital' - reputation, brand, lived corporate values or 'corporate community'-testifies to the rising importance of the ability to attract rent from such autonomous processes of productive cooperation. Yesterday it was core competences that mattered, developing unique knowledge and designs and rationalizing the production process. Today, with an intensified global circulation of information- licit or illicit- product and process innovation spread, and core competences are commodified, much quicker than before. Instead, edge competences- being able to work with and appropriate social production- matter more. Social production forms an enormous, and free, reservoir of innovation and knowledge to feed an accelerated demand for novelty. It also supplies the kind of affective or 'experiential' premium values that are more difficult to copy. (The Chinese can copy the Rolex watch, but they can't copy the experience of wearing an authentic Rolex watch, much kess the genuine contribution that a company might make to global justice or sustainability.) However, the problem is that since these processes of social production do not follow the monetary value logic of the capitalist economy, they cannot be accounted for with any precision. Instead they enter accounting systems as the imprecise 'dark matter' of intangibles. As last chapter concluded, this leads to bad business decisions, poor allocation of resources and increasingly visible and obvious injustices. However, just because social production does not enter the prevailing value logic of the capitalist economy, this does not mean that these processes do not follow a rational logic of value of their own. The task of this chapter will be to reconstruct that logic of value, what we call the 'ethical economy. ' First, however we need to clarify what we mean by value, and what the traditional capitalist logic of value actually (or at least ideal-typically) looked like. I. Capitalism and the 'labour theory of value'. As we touched on in the introductory chapter, 'value' is one of the most difficult and contested concepts of the social sciences. It is particularly difficult a concept for economists, as the implication is that 'value' is something different from 'price'. Otherwise it would be impossible to say that prices do not reflect the true value of a good, and the whole discussion would become meaningless. This is in fact what has happened in academic economics where the neo-classical school- going back to Jean Babtiste Say's writings in the 1700s- has simply done away with the distinction between value and prices: equating value with market price. (As the introductory chapter has discussed, this theoretical move later became one of the core ideological principles of the neo-liberal reaction of the 1980s.) To simply equate value with price is however not a feasible option for us, as the values that we want to unravel- the value of social production- are per definition imperfectly priced. So we need a workable conception of value as distinct from price. The first thing to keep in mind in building a workable theory of value is that 'value' is not a natural thing: it is a social relation. Things do not 'have value' in themselves: they have value for someone. The fact that value is relational means that it is also historical: that is, conceptions and standards of value changes as social relations change. This means that it is futile to search for some original, natural, standard of value, rather such standards of value are part of larger historical configurations that evolve and change over time. Indeed, conceptions of economic value can be shown to have been intimately linked to conceptions of moral and aesthetic value within different overall 'regimes of value' that have characterized particular modes of production. So we need to think of it this way: a particular mode of production contains two 'economies' an economy of prices that determines the value of goods and the dynamics of their production and an 'economy' of values, that determines the moral or social value of actions- how much and in what way they matter to other people. The Greeks had two separate terms for these two practices: they called the first one oikonomeia (from oikos- household, meaning 'the administration of the household') and the second one ethika: (from ethos, character, situation). They thought that the first economy oikonomeia should be strictly subordinated to the second- ethika: and that it was, consequently, reprehensible to charge a price for a product that did not reflect its actual costs of production, that did not reflect its 'just price', or, even worse, to charge interest on loans. This idea, that the economy of prices should be subordinate to a larger 'economy' of values prevailed all through the Middle Ages, up unto the revolution of industrial capitalism.[i] (To charge interest on loans was only permitted in England in 1545, as King Henry the VIII issued the act 'In Restraint of Usury', while the attitude of the Catholic Church only softened in the mid 1700s as a developing banking system radically diminished interest rates and hence the potential harm caused by charging them. However the Church has still not officially condoned the practice of charging interest on loans: although this is tolerated - and practiced by the Church itself through its merchant bank, the Banca Ambrosiana[ii]) Capitalist development, however, has entailed the emancipation of economy of prices from the moral economy of values to which it had hitherto been subordinate. Consequently the last two entailed a virtual cleansing of economic life from ethical concerns. Capitalist development has meant both a privatization of economic affairs and their subtraction from the field of public debate where ethics and values were articulated. ('Private' comes from the latin privare: 'to take away from', 'to deprive of'. The original meaning of privatus in roman law was 'something that had been taken away from the public' that 'the public had been deprived of'.), The production of goods takes place in a privately owned factory where labour and machinery is subject to the owner's personal control- part of his household, his oikos, as it were- beyond the influence of the moral economy that had characterized production in peasant society, and motivated by an overarching goal that was considered beyond ethical deliberation: the continuous accumulation of monetary wealth and capital. Economic life has been ‘disenchanted’: stripped of its ethical context and guided only by the cold rationality of endless accumulation.[iii] However this amoral side to capitalism, while important, is not the whole story. As it evolved into its industrial phase, capitalism had to develop a new moral order of its own. This was because, unlike merchant capitalism that mainly profited from trade, and could be content with the support and sanctions of kings and elites, industrial capitalism built on the active participation of masses of labourers, indeed of whole societies. This way it needed the support of a moral and political order that not only guaranteed the legitimacy of its private profits, but also supplied its seemingly endless need for labour power by educating the masses to function in a modern factory environment and to value labour as a virtue. (These two aims were, philanthropic rhetoric apart, the main goals of the generalization of basic schooling in the 19th century.) The regime of value that industrial capitalism came to adapt as the main foundation for its moral and political order was what was known as the 'labour theory of value'. The labour theory of value essentially says that labour is the fundamental source of all social wealth, and consequently, its measure. Therefore, prices and wages should reflect the labour time (and the productivity of that labour time) invested in their production. This abstract principle stood at the centre of the industrial, Fordist social model. It enabled enabled trade unions to argue that wages should follow productivity increases, it legitimized giving a salary to the (predominantly male) productive work that took place within the capitalist economy or the public sector, but to the (overwhelmingly female) reproductive labour that unfolded in the private sphere; it supported the self-understanding of the industrial working class and industrial capital as the central social actors and created a moral centrality of labour as a virtue- as depicted in Max Weber's portrait of the protestant entrepreneur and, in partcular Benjamin Franklin who warns young men that: [' alternative costs of drinking in the saloon'. ] The ideological centrality of the labour theory of value was the outcome of a political process, basically a compromise between industrial capital and the organizations of the industrial working class. However it is in itself not entirely a political fiction, but has some basis in reality. (Otherwise it could never have worked as a political fiction, these must have some explanatory power, or they won't be taken seriously.) The labour theory of value does explain some part of how capitalism actually works (although its relevance declines as capitalism develops). While most famously proposed by Marx, the idea that value is proportional to investments of labour time is a classic (and must discussed) theme in political economy, going back to Hume, Smith and Riccardo. It reflects a basic condition for a developing industrial capitalism for which labour power is a scarce resource. This scarcity comes form the fact that labour power- as opposed to the people who exercise labour power- is not a natural resource. Rather people must be educated and disciplined into functioning as labour power, being able to use machinery, show up on time, not drink at the job and importantly, value money over time. (The ability to transform peasant labourers into functioning elements of industrial labour power was indeed one of the main challenges to early industrialists met. It was particularly difficult to convince people to keep on working once they had earned enough to cover basic necessities. The whole ideology of modern consumerism originates as an attempt to overcome that problem.[iv]) This scarcity of labour power means that as capitalism expands it must produce more labour power, by transforming the culture, traditions and mentalities, and most importantly: motivations of the people and societies that surround it into supporting an appropriate mentality and personality. This is primarily accomplished by the spread of market relations and consumer culture: as commodities- goods that are tradable on markets and have prices- become more common, people tend to be more prone to accepting the idea that the way to get what one wants is to work in order to buy commodities. Participation in the capitalist economy- as labour power- becomes not only a way to satisfy basic and limited needs, but also a way to realise (potentially endless) desires. [v] Marxists call this the 'subsumtion of society under capital' and it can proceed in two ways. First, capital can expand 'horizontally' across the globe, involving ever more people in ever more areas into its commodity culture, to the point where there is no longer any 'traditional' outside left. (Just its simulation: sold as 'authentic' holidays or 'genuine' food.) Alternatively it can expand 'veritically' making commodity culture an element of ever more aspects of everday life: to the point that life itself, in all its dimensions- cooking with things bought at the supermarket, keeping in touch with friends on the cell phone, educating children with educational computer games, developing spiritually at an expensive New Age farm- unfolds by means of commodities and consumer culture. This stage has been reached in the post-War period as consumerism, global media culture and lately, mobile Icts has meant that virtually no aspects of our lives remain untouched by the circulation of commodities that is the essence of the capitalist economy. When this happens, the mentality appropriate to labour power as expressed by Benjamin Franklin- that time has value and can be traded for other goods- becomes commonplace, as people are educated into functioning as labour power as part of their normal socialization process, when they pass through family, school, welfare and other institutions- like contemporary British unemployment schemes that teach people to make sure that they are 'employable'. When this process of 'real subsumtion' is completed three things happen. First: labour power is not scarce anymore. By its very transformation of its social environment, capital has crate a vast reserve army of labour- large parts of which remains unemployed- that can be tapped into at will. (The opening up of the Chinese market to international investment is perhaps the most astonishing development in this direction.) The price of labour drops and its role as the crucial measure of value declines. Second: as last chapter described, the vast socialization of the production process that this entails- the fact that anything from love-making to children's play now is part of extended commodity chains that may well span the globe- creates a huge stock of common standards of knowledge and practices - a General Intellect- at the disposition of everybody. This process vastly accelerates with the diffusion of high- speed internet access, which universalizes both access to a global knowledge bank and the ability to communicate, connect and contribute to that knowledge bank as a matter of course. This new importance of cooperation and General Intellect, inside and outside of the capitalist economy proper, further diminishes the role of labour time as a measure of value. (It is more important to have a good brand, which is achieved precisely by cultivating public standing: by growing General Intellect.) Third: people, although they may not be employed, are educated to be productive: they have a mentality that values effort over leisure, self-realization over accepting one's fate and making a difference over remaining passive. And they have the skills to self-organize their own production processes, which they do, increasingly. The result of this process is that a growing mass of people have the mentality, the know-how, and the resources to be productive, even though they might be unemployed or under-employed by the capitalist economy. Instead they begin to organize their own processes of production. This is essentially what we have called social production. It emerges among marginal and underemployed groups, like the young, students and unemployed workers who drove the explosion of sub-cultures in the 1960s and 1970s. As these underemployed groups expand to absorb the children of the middle class (humanities and liberal arts students and recent graduates) we get a growing urban creative 'bohemia' that becomes a driving force first behind fashion and artistic development and, secondarily, for real estate markets.[vi] As Icts enable greater shares of everyday life to be deployed productively and increases access and connectivity, we get an increased and broadened participation of employed professionals who blog in their free time, engineers who pass Sunday afternoons coding away on an Open Source project, pensioners who double as lesbian queens on SecondLife, and housewives who time-share, or take part in communal vegetable gardening. In short the capitalist subsumption of society might turn idiosyncratic desires into standardised life-styles and colourful local habits into Disneyfied universals, but it also enables an explosion of practices of self-organized social production which unfold beyond the control of the capitalist economy itself. As last chapter has shown capitalism alters its models to capture some of these developments, switching to edge competences, making use of swarm-business, cool hunting, and other 'netarchic' business models, but it can not possibly capture all of it. Instead its own overproduction of labour power- driven by its very own scarcity imperative- has realized a different economy of social production, which moves according to a different and incompatible value logic. If industrial capital, prospered by developing the productive forces, it has now developed those forces far beyond what can possibly prosper from. The society wide productive forces that it has unleshed can no longer be contained within its organizational model. 2. The value-logic of social production. So what kind of model could they be contained within? Or, to put the question more precisely, what does the inherent value logic of social production look like? The first thing to stress is that value in social production is not related to investments of labour time in any linear way: You can practice as much as you like on your guitar, that, in itself will not make you into a rock star. In fact, in social production, labour is practically without value because it is abundant. It is supplied free of charge by a mass of volunteers which, for all practical purposes is without limits. We can illustrate the situation by comparing two software producers, Microsoft, which is a typical example of the logic of the traditional capitalist economy applied to software production, and Linux that exemplifies the logic of what we call the ethical economy. To Microsoft, labour is a scarce resource. People have to be paid to code for Microsoft, they do not do this freely. They subsequently have to be managed, commanded and controlled by paid supervisors. In short, the production of software unfolds in a classic capitalist way, through the rational control of commanded labour. Microsoft has sunk labour costs that have to be realized. Consequently its products are sold at a price that is roughly related to the investments of such salaried labour (research, development, programming, de-bugging etc.). If you can charge more, then that is good, but the least you can charge is what allows you to recuperate the value of these investments, hopefully with a profit. And the company struggles hard to uphold the juridical status of the artificial property rights that allows it to charge such a price. For Linux on the other hand, labour is not scarce. There are more willing programmers that want to contribute to the product out there, then can possibly be admitted. The problem is rather to keep people out, and to make sure that only those qualified enough get a chance to cooperate. Because of this Linux has developed a complex system of entry requirements that starts presumptive programmers off with smaller, less significant tasks to determine whether they are worthy to take a greater responsibility in the project.[vii] Indeed, the very management model of Linux is extremely wasteful in relation to labour time. People are allowed to do what they want, to initiate projects of their own. 'Management' has neither the interest nor the mandate to intervene in this. The result is a number of half-finished projects, most of which amount to nothing. Such a management style would be completely inconceivable if labour power had a value. However it is not just labour power that is abundant and readily available outside of the market. So are technology, know-how and skills. Only thirty years ago a computer was a highly priced object, available only to professionals. Today access to a network computer, either by owning it, renting it in a cyber-café or accessing it in school or in a library, is available to virtually everybody in the rich world. (And the availability will increase in poorer contexts as well, chiefly through the diffusion of mobile internet, see Chapter X.) These technologies permit the sharing of knowledge and information, and enables users to locate and contact others with similar interests-be this knitting or industrial music- on a scale that simply was not possible before. What used to be small groups, a sewing club or an amateur orchestra, can no be globally scaled. Also, the Net makes public a wide range of competences that used to be private, in the classical sense of that term: closed off from the public sphere. If you want to learn about wine, how to gamble, knit or how to distinguish a genuine UFO from a fake, you can fairly easily find this knowledge online. Before you needed to belong to certain social circles, which were not accessible to everyone. As Yochlai Benkler has argued, it is this abundance of information and information technology, making communication and General Intellect available to everybody at virtually no cost, that has enabled the scaling up of local networks of cooperation to the global scales we see today. (By February 2006, Wikipedia has 175.000 contributors writing 3.6 million aritcles in over 100 languages, including 'simplified English' and regional dialects like Piemontese.[viii]) The combination of labour time, know-how and access to technology is often referred to as 'talent'. While it is often argued that talent is a major 'driver' or economic development in the information society, is should also be recognized that talent, in itself is abundant, precisely because of this free availability of productive resources. If we look at the average 'creative city' we will see that there is much more talent around that what could ever be employed by the market-driven creative industries. (Indeed the reason these industries exist is this abundance. Business models in creative industries are increasingly developing towards helping big corporations select what talent to purchase or use. This is, essentially, what cool-hunters do.[ix]) If we look at urban 'creative scenes' this abundance is even more evident. As the chart on page x indicated, the number of people self-identifying as artists in the US census data has increased from 267 per 100.000 to 385 in 1970 to 900 in 1999, a 134 per cent increase since the decline of industrial capitalism set in. This means of course that there are more artists than will ever get a exhibition (much less sell a painting), more musicians that will ever become rock stars and more designers than will ever break through. More than anything else there is a significant and increasing population of urban 'neobohemia ' made up of prospective artists and musicians, of students and recent college graduates who engage in a 'bohemian' creative lifestyle with productive networks that unfold, for the most, outside or at the edge of the capitalist economy. As many sociologists have argued, this 'neobohemia', far from being a marginal group like the original bohemia in the 1920, is becoming socially and culturally dominant. [x] So, to say that the creative economy is driven by talent is a bit like saying that growing price orchids is a matter of sunlight. Talent, and sunlight are basic conditions, but they are abundant: They are not what distinguish a valuable outcome form a less valuable one. What, then does? The best way to answer that question is to look at what participants in social production value themselves. Why do they do it? What are their motivations? There have been many investigations of this and they consistently come up with the same result. Whether it is open source programming, communal gardening or DJ:ing, people generally do not engage in these activities primarily for money. The monetary motive is there, but it is usually mentioned as one of the least important ones. This is of course related to the fact that the abundance of talent, and the, relatively, small market for its products makes it very difficult to make money from social production. Gregory Sholette’s statistics show that in 1990, 50 per cent of all who self identified as artists in the US census made less than $ 3000 a year off their art.[xi] Our investigations of the creative scenes of Malmö and Copenhagen support this. Only the absolute top Djs, artists, designers or, lately, promoters, are able to make a living form their creativity. Most live off something else, student loans, state subsidies, their parents. a day job. Some sectors, such as music video production practically build on and presuppose the free labour of participants. People do not get paid as a rule, or get seriously underpaid (As the head of one of Copenhagen's most successful video collectives commented on how they rewarded the producer of one of their most successful videos: 'we paid him with an iPod'.) Even in commercial success stories like Second Life money plays a relatively small role. Although it is possible to convert Linden Dollars into real dollars and thus produce a real income stream from once activities online, there is simply too little money around for this to be a mass pursuit: in early 2008 Lindens own statistics showed that out of Second Life’s ca 700.000 active residents only 935 could potentially life off their online activities[xii] The numbers are similar for World of Warcraft where, with the exception of (predominantly Chinese) ‘goldfarmers’ few people make a living (and even these eek out a very poor income). So although monetary rewards do sometimes figure, along with professional development (one of the reasons people engage in music video production for free is that this that that experience looks good on a CV), these are not the most important motivations. Neither is, generally, the actual enjoyment of what is produced, the use-value of the products of social production. While people do take part in Community Supported Agriculture programs because they like fresh and genuine produce, while they do perform DJ sets because they enjoy the music, and while they do write Open Source code because they envision actually using the resulting program, this is not the main reason why they do it. Instead, the most important motivation that people consistently state for taking part in social production is what we could call 'socially recognized self realization': Stephen Weber stresses this in his The Success of Open Source. Open source programming is first of all an aesthetic pursuit, it is a pleasurable act of self-expression; it is about ‘ the ineffably geeky joys of writing the slickest code you can.’ [xiii] So in part, the ability to engage in what Marx would have called non-alienated labor, to do what one does best according to ones own ideas; to realize oneself in one’s very productive activity, is motivation enough. This seems reasonable enough. After all the opportunity to engage in such authentic productive self-realization is very rare in our society, so rare in fact that a whole ‘experience economy’ can be erected around people’s desire to pay for that possibility. However, it is important to underline that such self-realization is a social activity. It is not enough for me to know that I write excellent code. I need a community of people that I recognize as my peers to, in turn, recognize this fact. So the real motivation consists in developing ‘code that represents an elegant solution to a complex problem’ which ‘is in itself a thing of beauty that in the open source setting can be shared with others’. Open source lets you show the world just how creative you really are. It is the equivalent of putting your best work on display at the national gallery or art as compared to locking it in your basement. [xiv] Such socially recognized self-realization consistently comes out as the top motive in investigations of social production. It is the main reason why people blog, why they act as DJs without being paid for it, why they take leadership in online communities, why they take an interest in developing fashion and engaging in practices of creative consumption and 'prosumerism'. It is also emerging as the main motive for knowledge workers in explaining why they put not only more hours, but often also their 'soul' or at least free time into their work. It is even a primary motive for many entrepreneurs (a recent Liverpool University survey showed that 41.4 per cent of the entrepreneurs and small businesses surveyed stated 'passion for new ideas' as their main motive for starting a business, wile only 6.9 per cent stated 'financial reward' as their prime motivation).[xv] In our survey of social production in Malmö, such socially recognized self-realization came out as the highest motive, along with the creation of friendships and networks. Survey results In other words: people take part in social production because they desire the experience of having meaningful social ties with others, or to use a classic term of philía. Given that socially recognized self realization, or the experience of philìa, consistently comes out as the highest motive for engaging in social production and that this motive is more prevalent than the monetary or even the use-value of what is actually produced, we must conclude one important feature that sets off social production from capitalist production. In social production value is not primarily of the product, but of the process. While the product might be useful and valuable, it is the process that allows participants to have their efforts socially recognized as creative, inventive, beautiful or what have you. Indeed, the use-value of many products consists precisely in that they allow participation in such processes. This is most obviously the case of commercial products that rely on social production to some extent, like a brand or an interactive game platform: where the value consists precisely in the ability to take, a however marginal, role in a process in which your contribution can be recognized. The promise of the product is the process of recognition. This shift in the location of value, form the product to the process, is furthermore obvious from two important observations. First, when commercial actors build on, price in, or otherwise make use of processes of social production, they generally attach value to the process, not its products. The latter is generally freely available, and tends to stay 'free'. On YouTube, the products, that is film clips produced or uploaded by participants are freely available, while the process, that is the particular platform on which this sharing takes place, has commercial value. The value of a brand does not so much consist in the fact that people use it to produce particular self-expressions or forms of sociality, but that people keep using it, that there is a consistency over time in the affective links formed around it, which allows for a certain predictability of consumer demand. When IBM supports Linux Open Soruce, which its business model now builds on, they do not pay for products or reward individuals: Instead they support the Linux community, by enabling their paid personnel to develop time to programming, and by funding, conferences and other events. Finally, when a 'creative scene' is priced in by real estate speculators what is valued is not the particular expressions of that scene, the fact that a neighbourhood is rich in concerts and events, as much as the continuity of the scene itself, the fact that it is able to install particular social processes, that create an attractive affective climate or ambience.[xvi] The same thing goes for contemporary strategies of city branding. There the aim is to install long term processes, which endow the city with a persistent and particular affective climate. Second, the importance of process over product is also evident form the fact that the people who are most highly valued, who have the highest status in networks of social production are the people who are best at contributing to the strength, quality and endurance of the process by organizing social cooperation. If the rock star, the person who actually produced concerts and performances was the king of urban bohemia in the 1970s, to be followed perhaps by the DJ in the 1980s, today the most influential characters tend to be promoters: people who's main role is to organize productive cooperation among others. These are the people who generally have the highest status in urban scenes and other networks of social production, and they are also generally the people who are able to life off their activities in social production by 'selling out' to the creative industries or other actors. The high status of promoters has to do with two fundamental characteristics of social production: First, the abundance of labour, knowledge and other resources. In the 1970s you could gain social standing through your skill at playing or producing rock music, in the 1990s, as Sarah Thornton documents in her study of British club cultures, DJ:s gained respect and standing on the basis of their knowledge of an access to music. [xvii]To some extent these factors still count, but with the diffusion of Ict:s, the ability to produce music has been massified, it is now an abundant potential, as has the knowledge of music. (You no longer need a rare record collection, most things can be found on the net.) This means that the actual production of concerts, club nights or other events is no longer a scarce talent. Secondly, creative production has become increasingly project oriented and short term. A generation ago, cultural organizations were built to last, today creative scenes consist of more loose configurations of diverse talent, which are put together for a single project or event, to then dissolve. Even bands are more short term than before. Add to this the increasingly multi-disciplinary or 'trans-aesthetic' character of these events: It is no longer enough to have a band, a club-night should combine music, art, installations, performances and food. This means that the ability to organize such more or less short-term relations of productive cooperation becomes scarce. Promoters do this: they thrive by giving affective weight to what is essentially weak ties between participants in a scene, and transforming them, for a short time at least, into strong ties, that are entail commitment, trust and solidarity, that are, in other words experienced as ethically significant. We are now getting closer to the main point: the production of value in networks of social production is the same thing as the production of ethically significant strong ties, philía or, to use Italian econonomist Maurizio Lazzarato's term, an 'ethical surplus'. This value from is evident in the main currencies of value that circulates in these networks and 'respect' (or recognition, community status or some similar term). 'Networks' are a measure of the extension of a a person's social impact, how many people that he or she matters to. Reputation, on the other hand is a measure of the quality of that impact: Essentially, it reflects a person's ability to contribute to a particular scene, both by creating actual products (good concerts, beautiful code, interesting blog articles) and, more importantly, by strengthening the scene itself by creating philía and contributing to its productive organization. These two things tend to converge in a mutually reinforcing process. Let's take the example of open source: The more often I participate and the more consistently I write ‘good code’ the higher both the quantity and quality of my reputation: more people know of me and hold my performance in higher regard. The stronger my reputation: the higher my position in the hierarchies of the open source community. It takes reputation to advance from an ordinary programmer to a project manager, and onwards to the select group that has access to the kernel or even the small circles of lieutenants. And the higher my status, the larger my networks and the greater the density of my integration into the community, the greater my experience of community with others, of philia. So in many ways the prevailing motivation, reputation, community integration, experience of philia is similar to that which sociologists have found in many 'new' (i.e. post-ideological) social movements. You participate because participation gives you an ability to construct a life in common. Your status depends on the quantity and quality of your participation in this production process. The higher your status, the higher your experience of philia or 'life in common' with the community. This analogy is also visible in the fact that many communities of free producers have strongly articulated ideals, or vocations, which they experience to set them off form what they regard as their enemy. Indeed, it can often be this strong sense of ideological identity that renders them productive. [flint: Indian garbage collectors] The Open Source movement, for example entertains a strong belief in the virtues of free software, which sets it off form the main enemy Microsoft. Many active Secondlifers believe strongly in the non-commercial nature of the world, which makes them resent advertising and commercial intrusion, and members of the urban creative ‘underground’ strongly resent those who ‘sell out’. But your standing in the community, and your experience of philia with the community, is also a reflection of your ability to create philia, or community bonds in the community. Indeed respect and networks function as a kind of capital- ethical capital- that makes it possible to initiate and organize productive processes. And the higher my position, the more ethical capital I have, the easier it is for me to mobilize resources, motivate others and create the strong ties that organize productive processes. The status and hierarchy of an open source programmer increases not only with his or her ability to produce what is communally recognized as ‘beautiful code’ but also with his or her ability to contribute to the maintenance of community ties, and eventually, once the person has crossed a certain treshold, the ability to organize and manage projects. In our study of creative scenes it was also evident that people who were keen to 'rise in the ranks' consistently cultivated a certain collaborative attitude. Indeed, a particular ethos prevailed in which participants would consistently avoid making monetary profits from their organization of events, to instead spend as much as possibly on the provision of an intense experience, knowing that this, eventually, was what would enhance their community standing, as one party organizer claimed: It’s better to break even, because if there is a surplus, then we have been too cheap, and we could have used the money for something extra, something more fun.[xviii] By giving one’s time, energies and resources away, one can accumulate philia in the form of community standing. This standing can then be capitalized on, either in attracting the free labour of others for some project of one’s own, or by ‘selling out’, i.e. by monetizing one’s standing in these productive communities in relation to the creative industries or other branches of capital. Consistent with this principle it was only the people at the top of the networks, who had been in the scene for the longest period of time, and proven their worth at producing events that would strengthen the community, and thereby accumulated the greatest quantity of ethical capital, the largest networks and the greatest reputation, who were able to live off their creative pursuits by ‘selling out’ to the creative industries proper. Indeed, Elizabeth Currid reaches similar conclusions in her study of the Warhol Economy that drives New York City. At the top of the networks that criss-cross the cities various art and club ‘scenes’ there are certain people who have accumulated extra-ordinarily large networks and great amounts of respect. These are generally the people who are able to connect aspiring artists to the creative industries and thus make or break a career. By this position as ‘tastemakers’ they gain both additional philia from the community (they can convey the gift of a lucrative career on the aspiring artist) and monetary rewards from the creative industries. Indeed, similar to what French sociologist Pierre Bourdieu has described in his study of art scenes, such tastemakers become, by virtue of their endowments of ethical capital, able to direct the ongoing self-production of the scene itself. Similarly, the ‘creative entrepreneurs’ that we have studied- people who work strategically to transform their sub-cultural or ‘scene’ capital into monetary rewards- consistently cultivate their networks and reputation. Indeed, they tend to spend as much time on ‘networking’ and ‘self-branding’ as they do on their core competences. Their real contribution is that they produce the strong, ethically significant ties that enable the persistence of, indeed that make up a particular scene. This leads to another crucial insight. Contrary to the ritualized gift exchange that characterized ‘primitive societies’ or the moral economy of the European peasant village, social production is driven by a paradoxical combination of, on the one hand community oriented sharing and, on the other hand, the rational and reflexive pursuit of self interest. Indeed one gives to the community in order to increase one’s own standing and charisma, or the size of one’s networks. This tendency towards ‘self-interested sharing’ can be more or less expressed. At the more extreme end it takes the form of ‘networking’ or ‘personal branding’ where the very point in creating community ties and offering experiences is the cultivation of charisma and social capital. In our studies of DJs in the Copenhagen ‘underground’ we frequently encountered this particular orientation. While they would often stress the importance of freely offering events and experiences to the community of which they were part, they also stressed that the point in doing this was to increase one’s own networks and reputation.

Capitalist economy	example	Social Production	example
Labor and other productive resources are scarce	Microsoft needs to pay their programmers a wage.	Labor and other productive resources are abundant	Linux confronts an abundance of free 'labor' in the form of volunteers, and must device systems that filter out the less suitable.
Value is embodied in the product and is related to investment of scarce labor time and other productive resources.	Microsoft operating systems must sell at a price that cover costs, at least in the long run.	Value is embodied in the productive process and is related to the affective energies deployed in its production.	Linux is a free good, but the Linux community attracts an abundance of free labor and, lately, corporate financing.
Motivations for participation are monetary.	People code for Microsoft to pay the rent.	Motivations for participation are ethical	People code for Linux because they feel a proximity to its community or its values.
He achievement of private rewards is the overreaching value.		The achievement of public standing is the overreaching value.

So we could identify something like a charismatic logic of value at work in social production. In his modern classic, The Protestant Ethic and the Spirit of Modern Capitalism, German sociologist Max Weber gave us an ideal-typical description of what drives and motivates the modern capitalist entrepreneur: rational and endless private accumulation.[xix] Rational, because even though there had been traders motivated by profit long before modern times (think of Roman slave traders, or the Vikings), modern capitalists relied on systematic measurement and control, on continuous calculation of costs and value; controlled long-term return on investment. This process is endless, because, for the modern capitalist, there are no limits to profits and expansion. The capitalist economy is an inherently expanding economy, and to stop growing, to stop making a profit is simply not a viable strategy. Private, because the wealth that is accumulated is not public: it does not, at least not directly, benefit everybody. But Weber also gave us another concept that we can use to understand the core logic of the ethical economy: charisma. A charismatic leader, he argued, exercises authority not through traditional power, nor through monetary wealth, but through his or her powers to attract the affective investments, the esteem and confidence, of the public. Thorugh his or her ability to produce strong ties or philía. The basis of his power is the ability to create community; to make people feel that they belong to something greater, nobler and more powerful than themselves. (Indeed revolutionary leaders, founders of new movements, like Ghandi or Jesus Christ are prime examples of charismatic leaders.) The point is that the charismatic leader then lives freely off the generosity of the community that he or she has created. Once she has accumulated sufficient affective status, people will volunteer to put their services at her disposition: vote for her, fight fore her, work for her, offer her their hospitality. They do this, not out of personal gain, but because they believe in, feel for, or belong to a community around the charismatic person. Similarly a person enjoying charismatic leadership must appear to give of himself to the community without self-interest. If it would become apparent that he was primarily in it for personal gain, his charisma would clearly suffer. The same thing goes for the entrepreneurs of social production, regardless of their individual motivations, they must genuinely do something to strengthen the ties of the productive network in which they are engaged in order to accumulate ethical capital. The point is that their individual motivations do not really matter. Even if they have purely strategic intentions, the only way they can realize these ambitions is to genuinely contribute to the group they are par to, make a difference and matter to that group. They can only accumulate ethical capital by genuinely putting their resources to work in producing the strong ties that strengthens the community as a whole. So in social production, the accumulation of value- ethical capital- becomes contingent on the ability to produce ethically significant ties, and it currency- networks and respect- is by all means of purposes a measure of that ability. This is why we call it an ethical economy. III. Ethical Economy Social production follows a value logic that is distinct from that of the capitalist economy. It is not primarily driven by monetary motivations, but by the accumulation of what we have called ethical capital: networks and social standing. Such ethical capital is primarily accumulated by the ability to initiate and organize productive processes. This is done by creating meaningful strong ties- ties of philìa- that can motivate and give coherence to a however temporary configuration that arises within a multitude of weak ties (participant sin an open source project, members of an urban scene, employees in a networked organization). So it is the ability to transform weak ties into strong ties- into philía or an 'ethical surplus'- which creates value, and not direct investments of labour time (or of other factors of production). This is because labour time and other factors of production are generally abundant, but, precisely because of this abundance- and the abundance of connectivity- strong meaningful ties are not. So from this point of view, social production is governed by an ethical economy in which the ethical practice or producing affectively meaningful social relations of converting weak ties between free actors into the strong ties of , a however temporary community or polis- comes to coincide with, becomes the same thing as the economic practice of producing value: in fact it is what produces value. In social production, ethics and economics have come to coincide. This has a number of important consequences. First, that the economic production of value and the ethical production of community are no the same thing means that the ethical economy of social production is a self-organizing system. Unlike previous modes of production, like capitalism or feudalism, there is no need for an external power to motivate or otherwise drive the production process forward. Indeed, its participants are driven by what Michel Bauwens calls 'intrinsic positive motivations' the inherent wish to matter and make a difference. This inherent ability to self-organize means that the ethical economy is essentially autonomous in relation to capital. This autonomy is increasingly visible, not just in peer-to-peer systems and online communities, but also among entrepreneurs, in particular the influential movement of social entrepreneurship. Not only are these entrepreneurs not primarily motivated my monetary concerns. They are also able to survive without capital for longer than before. The easy access to computers and internet, combined with the abundance of talent and skills makes it possible to set up a company with very little in terms of investment. [bittorrent] Interesting developments within resource pooling and collective entrepreneurship are exploring ways to prolong this period of independence. Indeed, many people like the 'neo-nomads' of big cities tend to move in and out of employment working for a couple of months to acquire the necessary resources to initiate a start-up. Sometimes this is then sold on to a venture capitalist, sometimes it is not. This autonomy of the ethical economy is the root cause of the growing value crisis that characterizes the contemporary economy. This value crisis is manifest in the fact that a lot of social wealth is produced in an economy that is not valorized, and can not be valorized by the capitalist market. At the same time that market is the main mechanism whereby society as such renumerates productive activities. The result is a situation where a substantial share of social production is not renumerated, or is only partially renumerated. The result is an underpaid, underemployed and generally precarious ‘creative proletariat’ that does not receive any recompense from either capital or the state. (Think of absurd unemployment policies that force young people into unproductive job-training programs.) This gulf between capital and the ethical economy is likely to increase in the future as the ethical economy grows stronger and is rationalized. This has several reasons: First its productivity is higher when it comes to immaterial production for the simple reason that the ethical economy based on sharing rather than property. The productive potential of knowledge increases with its promiscuity, which is an effect of its ability to circulate. The capitalist information economy on the other hand is premised on the ability to limit the circulation and promiscuity of knowledge and other immaterial goods. So its very logic puts it at a disadvantage. Also the potential of the ethical economy accelerates with the ongoing diffusion of ICTs. The diffusion of internet connectivity – mainly by means of the mobile internet – in poorer countries will be particularly important as this will involve new masses of people in online practices of sharing and co-producing. Finally, companies or states that embrace its logic are bound to perform better than those who do not. (This way the situation is similar to the bourgeois revolution where states who embraced trade and manufacture grew more powerful than those who did not.) Second, , even though the monetary economy today commands the lion’s share of material production, that share is likely to diminish in the future. Trends in desktop manufacturing, in rapid manufacturing and tooling, in easy to localize multi-purpose machinery, in personal fabricators that move from plastic to metals, will tend to distribute physical productive capacity and undermine the industrial model of capitalism. As physical production becomes more distributed and associated with financial trends such as social lending and the direct social production of money and wealth acknowledgement systems, any strategy that aims to replace lower rates of physical profit with higher rates of immaterial profit, will tend to be undermined by the generalization of open designs. So we have a deepening crisis of accumulation of capital on the horizon. Finally, the present model of capitalism is rapidly loosing legitimacy. It begins to be obvious to more and more people that a model that builds on the creation of an artificial abundance of non renewable natural resources and an artificial scarcity of easy-to-renew immaterial resources is not only unsustainable but also ethically corrupt. IV. Conclusion In this chapter and the last one we have consciously used the term 'ethical capital' to denote both the positive affective relations that enable a company to attract rent from social production, and the networks and reputation that participants in social production aim to accumulate. We have done this because we see the two things as expressions of the same logic. Participants in social production accumulate ethical capital that enable them to live off the free supply of labour time and other resources from their peers. Companies accumulate ethical capital that enables them to live off a 'free' revenue stream. This similarity implies that capitalism not only lives off social production, it is also gradually assimilating its value-logic: That is the ethical economy is gaining in importance as a socially recognized value form. This means that is needs to be objectified and institutionalized. How to do that will be the topic of next chapter.

[i] Agamben, G. Il regno e la gloria…

[ii] Pope Benedict XIV's encyclical Vix Pervenit of 1747 strictly forbids charging interest on loans, but he adds that "entirely just and legitimate reasons arise to demand something over and above the amount due on the contract" through separate, parallel contracts.

[iii] Weber, M. The Protestant Ethic...

[iv] Thompson: Gary Cross An All Consuming Century: Why Commercialism Won in Modern America (Columbia University Press, 2000

[v] see Campbell, C. Romantic Ethic for this argument

[vi] Loft living

[vii] For more detailed description of the Linux case or of free software in general see, Siefkes, C. From Exchange to Contributions. Generalizing Peer Production to the Physical World, Berlin; Edition C. Siefkes, 2007. Weber, S. The Success of Open Source, Cambridge; MIT Press, 2004

[viii] see http://stats.wikimedia.org/EN/Sitemap.htm (accessed 11/6-08).

[ix] Currid..

[x] Lloyd, Neobohemia

[xi] Sholette, G. ‘Heart of darkness. A Journey into the Dark Matter of the Art World’ www.gregorysholette.com/essays/docs/04_dark (accessed 9/5, 2007).

[xii] I define ‘being able to life off one’s online activities as havin a Positive Monthly Linden Dollar Flow (PMDF) corresponding to USD 1000 or more, see, http://secondlife.com/whatis/economy_stats.php , accessed 5/1-2008.

[xiii] ludocapitalism, Julian Dibbel, IDC list.

[xiv] Weber, 2004, p.137

[xv] 'Entrepreneurs value "ideas" over wealth, study finds', phsyorg.com, 16/5-08 (http://www.physorg.com/news130164408.html , accesed 16/6-08).

[xvi] D. Harvey on Barcelona

[xvii] Thonon, club cultures

[xviii] Arvidsson Ephemera

[xix] what is an ideal type...

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AdamArvidsson — Thu, 06 Nov 2008 07:40:21 CST

CH. III: Ethical Capital ‘We have sophisticated metrics which capture Love and Respect’ Kevin Roberts, CEO of the Saatchi & Saatchi Ideas Company1 Capitalism has changed its appearance. Over the last decades companies and markets have begun to come across in a different way: no longer the cold calculating rationality of the corporate bureaucracy, where the only values are measurable value, and no more Milton Friedman's cynic discarding of any moral responsibility beyond that of making money for shareholders.[i] Instead, more and more companies now claim to be socially responsible. And a growing number publicly list their 'values' - although these often tend to be more or less identical versions of the standard mantra of ' Integrity', 'Commitment', 'Trust', 'Honesty', 'Innovativeness' and, lately, 'Envrionmental Responsibility'- and claim that such values are what really motivates their actions, above and beyond the profit motive. Products increasingly provide 'experiences' and brands reach out, touch and resonate with the deep emotions of consumers, like their desire for social acceptance or their fears of personal inadequacy. (Unilever's recent True Beauty campaign for Dove is widely acclaimed for it success in this field. Using photos of 'real people' and presenting them as 'beautiful' the campaign obviously resonated with widespread fears of physical inadequacy and lack of self-esteem. This triggered a lot of spontaneous consumer activity across blogs and other media, providing the sort of viral push that marketers dream of. ) There are many more examples, but the point is that capitalism is increasingly coming across as concerned with values, emotions and social relations, as an ethical enterprise in the classic sense of that term. To some extent this is of course rhetoric and pure marketing. (In 2001 the tobacco company Philip Morris spent $ 75 million in what they define as 'good deeds', they then spent $ 100 million telling the public about those good deeds. Experts claim that the supposedly 'true' pictures in Dove's campaign were just as retouched as those of ordinary models.[ii]). Such 'ethical' rhetoric is the combined effect of a more aware consumer audience with a more advanced value-set and the stupendous growth and influence of communication, PR, marketing and other consultants that has marked the corporate world since the early 1980s. [iii] But- and this is the theme of this chapter- there is a significant reality behind this rhetoric. Ethics has actually come to play a greater and more important role within the capitalist economy. So even if the claims of individual companies might be exaggerated- or downright fraudulent- the economy as a whole is becoming more dependent on emotion, commitment, philía and other non-monetary, ethical values, in new and complex ways. I. Intangibles This growing importance of ethical and other non-monetary values is clearly visible from existing figures on the role of intangibles.[iv] First, and most obviously, because intangibles represent resources that generate value, but that do not themselves have any obvious monetary values. Intangibles are per definition immeasurable assets. The reasons behind this 'immeasurability' does not so much lie in the nature of the intangibles themselves- it is not primarily a matter of them being 'immaterial' as opposed to 'material'. Rather intangibles are difficult to get a grip on precisely because the values that they 'represent' are produced in processes that unfold beyond the control of traditional accounting systems. Indeed, intangibles, as they figure in contemporary accounting, represent the importance of social production to the value circuit of contemporary capitalism. This is even more evident if we consider the nature and substance of the kinds of intangibles that are considered most important: They all represent the rising significance of what we have called social production. (Indeed the industries that have the largest share of intangibles on their balance sheets- the creative industries and Web 2.0 companies- are also the one's that make the heaviest use of social production, see next section.[v]) Let us begin with the least obvious cases: Investments in software have progressed steadily since the PC revolution in the 1980s. To a large extent software is still produced in a traditional, capitalist way: using paid coders slaving away at a project that is not theirs. But, as next chapter will show in more detail, Free (Libre) Open Source (FLOSS) is growing exponentially and more commercial software expenses actually consists in licensed additions or services around a FLOSS core. Apache (an Open Source product) remains the most popular server and it is only a matter of time before Linux will out-compete Microsoft Windows as the most popular operating system. As for corporate R & D it is well known that patents have always built on publicly financed research at universities and other research institutions. Even when such patents are developed by corporate scientists they belong to a scientific community where the principles of social production, rather than monetary motivations prevail. Lately the tendency to rely on externally produced 'free' knowledge is growing. Research-intensive companies like the big pharmaceutical giants shift their budgets over form R&D to marketing. (In 2001, consumer activists argued that American Big Pharma spend more than twice as much on marketing and administration than on research.[vi]) At the same time universities are behaving more like commercial research institutions, prioritizing applied over basic research and selling off faculty and student efforts- that are generally not fully compensated- to their commercial sponsors.[vii] Finally user-led innovation and ‘crowdsourcing’ schemes actively utilize the accessibility of networked mass intellectuality as a knowledge producer. (By relying on crowdsourcing for product and brand development, Procter & Gamble have increased the productivity of the R&D department with 30 per cent. In their recent 'Global CEO survey' IBM found that the majority of the global CEOs interviewed customers and business partners have by far surpassed the importance of the internal R&D as a source of innovation.[viii]) These resources originate to an overwhelming extent in processes of social production that cannot be directly controlled, but are appropriated through more or less artificial legal constructs, like intellectual property. Indeed this dependency on a socialized and 'free' production process is most evident in the kinds of intangibles that have seen the fastest rise in the post-War period, and that, at the same time, have the less clear legal form, what we call 'ethical capital'. Ethical capital essentially represents a company's ability to sustain positive relations of affiliation and affinity with consumers, co-workers, suppliers and other share-holders. This includes obvious things like brand equity, reputation and other forms of Goodwill that are produced in autonomous forms of interaction among members of the public. Companies can try to push his process in a certain direction, but anyone who has been involved in PR knows that the actual process or reputation formation remains autonomous and extremely difficult to command. It is only in part an effect of investments in advertising. In fact this link has grown ever more tenuous throughout the post- War years. Rather advertising is best understood as one of many tools at the disposition of a discipline of brand management that mainly works as a kind of logistics of public attention and affect, making sure that the brand anticipates what is, in essence, an autonomous, if to some extent predictable or at least foreseeable process. Ethical capital also includes more diffuse assets like ‘intellectual capital’ or ‘collective intelligence’ that stand for a company’s ability to utilize the employee’s ability to share knowledge, co-produce and be creative in ways that are, per definition, up to themselves: to put their energies at work in generating the flexibility, agility and creativity of an organization, its ability to quickly adapt to and breath with a rapidly shifting market and always be one step ahead. Such creativity or agility can, per definition not be commanded or included in a job description. It must rely on an effort that is in essence voluntary; and that is produced by empowering the ability of its employees to freely create networks and sustainable social relations.. [ix] Ethical capital in particular, and intangibles in general, thus represent a company's ability to attract rent from a process of social production that it cannot control. Ethical capital represents in this sense the value of positive relations of affinity and affiliation that can attract such rent in a situation where this 'right to rent' can not be established legally in any clear or straight forward way. So, the more diverse and complex the sources of such rent, the greater importance of ethical capital. Such an increasing diversity in the sources of rent can be traced back to a fundamental structural dynamic of capitalism itself. II. Cooperation and General Intellect Although the dependency on social production accelerates in the early 1980s, with the onset of globalization and information technology, it is in itself nothing new. Rather this dependency is but the latest manifestation of a long-term structural trend towards the growing socialization of capital, inherent in the very dynamics of the capitalist economy from its inception. Already Adam Smith observed this seemingly paradoxical duality: On the one hand, capitalism built on the systematic pursuit of private motives. Indeed, this was its miracle: Such motivations had previously been marginal, and even considered immoral and anti-social. Before capitalism most people were locked into a moral economy where public interest and community standing mattered much more than private gain. No they could now be put to work to generate unprecedented levels of wealth. The miracle of the market and its 'invisible hand' (an expression Smith himself did not use) was that we could now get our bread and bacon, not from the benevolence or moral obligations of butchers and bakers, but from their informed pursuit of self-interest. However Smith also stressed that although the coordination of the capitalist economy depended on the wonders of the market that transformed the self-interested pursuit of individuals into a common social good, the enormous productive developments that capitalism brought on were due to the new and immensely more advanced and extended forms of social cooperation that it made possible. Indeed, Smith’s other famous example, that of the pin factory, which opens ups his Enquiry into the Nature and Causes of the Wealth of Nations, is all about showing how the productivity of labour increases enormously through such new, rational forms of cooperation. Before the advent of industrial capitalism, pins- and other things like chairs, knives, cheese and sausages- were made by individual craftsmen who, generally finished the product by themselves, mastering every step in its production. In the pin factory on the other hand, one man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them in paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them. [x] By thus involving more people who act in a more coordinated way, the capitalist production process is socialized, and the networks of relations that develop among its participants are rationalized. By thus rationalizing the forms of cooperation that prevailed between pin-makers, productivity can be increased: while a single craftsman would be lucky to make 100 pins in a day, ten workers in a pin factory could easily put out 50.000, or 5000 per worker, a fifty-fold rise in productivity. So we are beginning to see the point: there are two sides to the capitalist mode of production, private pursuit of self- interest on the one hand, and social cooperation on the other. Social cooperation as the main productive force, and private property and interest as the main foundation for the social and juridical framework within which the fruits of such cooperation are valued and coordinated. Now, as capitalism develops the scope and reach of social cooperation tends to grow. (Think about today's global assembly lines, or a company like IKEA producing and distributing tens of thousands of paper boxes containing identical components made in thousands of factories and sold in hundreds of stores across the globe.) This means that private interest and the medium of monetary compensation in which it is embodied becomes less efficient as a means for coordinating the complexity of the production process, and trust, Goodwill, philía, in short: ethical capital becomes more important. This is particularly true when the chains of cooperation put in motion by that process expand to involve actors that are located outside the capitalist economy, the arena of social life that can, per definition, not be directly commanded as the subject of a job description, or be measured by a corporate performance review, and where monetary motivations are difficult to implement in any systematic and rational way. (Like, for examples when consumers contribute to producing brand value without being paid for this.) So: the socialization of the capitalist production process -in particular 'outside the factory'- increases the relative value of ethical capital. There are two sides to this argument: one Smithian, and one that bears the name of his successor, the great theorist of industrial capitalism (that Smith never experienced), Karl Marx. The Smithian argument simply stresses that the larger the market, the more complex the division of labour. The emergence of a truly global world market leads to an unprecedented complexity of the production process, with global assembly lines, and a massive recourse to subcontracting. The more complex the production process, the higher the relative value of coordination and organization. This is reflected in the massive post-War growth of management and logistics as important sectors of the world economy. However since the complexity of contemporary production processes is also temporal, i.e. production needs to be flexible and able to rapidly adapt to market demands, older bureaucratic forms of coordination are less able than before to produce such coordination. This increases the value of trust, networks, 'personal brands' and other 'informal' media of coordination that build on the accumulation of ethically relevant personal relations. So the value of ethical capital increases with the complexity and flexibility of the production process. The second, Marxian argument is a bit more complicated, and it underlines a slightly different aspect of the division of labour. In the retrospectively titled 'passage on machinery' in the Grundrisse, Marx stresses that as the complexity of the production processes increases, the relative importance of labour as a source of wealth will decline in favour of what he calls General Intellect, or publicly available knowledge and skills. It is not 'labour time' itself, as much as the 'forces set in motion during labour time' - the complex network of machinery, competences and social networks that the worker operates during labour time, that becomes the main source of wealth. [Quote] Where does this General Intellect come from? From intensified and re-mediated processes of social communication: Complex forms of social cooperation not only render the division of labour more efficient, they also tend to intensify social communication, exchange and the sharing of knowledge, experiences and practices. Workers begin to talk to each other and learn from each other. They move from one factory to another and spread new practices and insights. Engineers and managers talk to subcontractors, clients and even competitors. Overall, the new social formation that arises around a complex system of production, mediated by machinery, transport and new forms of personal meetings, creates a new network of intensified and focused social interaction. This generates a common resource in the form of a stock of knowledge, experiences, and ‘best practices’ that can be drawn on and used as a source for further innovation and improvement. The 'generality' of General Intellect is manifest in two ways. First, this resource arises not from individual genius but from ordinary, or ‘general’ social interaction, it builds on the generic qualities of the human mind and body, which are made productive in a new sense by being mediated and connected in a different fashion. Such a remediation of ordinary communication leading to a facilitation of the exchange and sharing of knowledge, seems to be exactly what too drove the 19th century industrial revolution. If the scientific enlightenment, the new discoveries in physics, chemistry, botany and medicine that took place during the 18th century were, generally, far to abstract to translate into concrete industrial technologies, at least before the 1830s, the early decades of the 19th century were marked by what economic historians now call an ‘industrial enlightenment’. This consisted in a number of more mundane interventions that tended facilitate and intensify the collective production of knowledge. Artisan practices began to be surveyed and catalogued and the superior ones were promoted and diffused. What used to be private knowledge, once available only to a particular master and his apprentices, now became generally available and part of the public domain. Second there was the development of a common language in which to talk about industrial technology, common forms of drawing and mechanical illustration, common ideas and notions of mechanical principles, common measurements and the emergence of standardization. Third, there was a growing circulation of knowledge. More efficient transports enabled workers and engineers to circulate between factories, a new postal system enabled books and journals to spread more efficiently, local scientific societies encouraged the interaction between technicians and scientists. Finally, there was an affective transformation, as an effect of these new forms of mediation came a new ‘scientific mentality’ ‘which imbued engineers and inventors with a faith in the orderliness, rationality and predictability of natural phenomena- even if the actual laws underlying physics and chemistry were not yet fully understood [..]. In other words, the view that nature was intelligible slowly gained ground.’ [xi] So this way, it was the increasing socialization of knowledge-production, its ability to circulate and be promiscuous in new ways that drove the industrial revolution. It did this by radically increasing the stock of common knowledge, the General Intellect that resulted from these new forms of cooperation. The second important thing about General Intellect is that it is a generally available resource. Marx strongly emphasises this. While machinery, buildings, tools and supplies are the private property of the capitalist entrepreneur, General Intellect is a commonly available resource inscribed in the social environment of production. It is available to the worker by virtue of his membership in this environment, by virtue of him being an accepted peer, his status as a ‘social individual’. Now this general or common nature of General Intellect is extremely significant because it means that this resource cannot easily be controlled by capital. To Marx, capitalist control over the social production process (and the power over the workers that this entailed) rests on a monopoly over them means of production. Simply put, industrial buildings and machinery are expensive, most workers cannot afford them, so they are forced to sell their labour to those who can. This puts them in a situation of dependency and potential exploitation. But General Intellect cannot easily be monopolized: it is a resource at the workers’ disposition. And they can use it in ways that are not intended, prescribed or even desired by capital. The conclusion is that the more General Intellect ‘counts’ in the production of social wealth (and this importance is a direct function of the complexity of the overall production process), the less the production of social wealth can be directly controlled by the value forms imposed by capital. (That is, the less the adequacy of traditional accounting systems built around the problem of capturing the value of labour time, and the greater the importance of the catch-all dark matter that we commonly refer to as 'intangibles') So, paradoxically, the more capitalism expands and develops the social production process, the less it is actually able to control that process. With the growing importance of General Intellect, the most important source of productive wealth becomes not labour time directly, but the 'processes set in motion during labour time', the public knowledge that is embodied in machinery and in the production system at large. With the socialization of the production process that has occurred in the post-War years, not least through the diffusion of productive processes of consumption and lately, networked ITCs, with the consequent re-organization of social life- the common productive resource- General Intellect- has expanded to become part of social life as such (see Chapter X for a more detailed description of this process). As 'mass intellectuality' General Intellect is a feature of the lifeworld of an ordinary member of society, or 'social individual'. At this point this massive productive power- the resources set in motion during labour time- becomes nothing less than the ordinary competences embodied in life itself: the 'knowledge worker' uses her natural social competence to create networks, the advertising agency looks for natural cool on the part of consumers etc. Since life-skills, or 'mass intellect' are a generally available source of wealth, value becomes dependent on the ability to organize processes of abstraction and commodification. While consumer 'cool' might be a common resource, the ability to commodify consumer cool as part of your brand-image requires substantial organizational labour. However, again, since what is abstracted is generally available, located beyond the control of capital, such processes of abstraction, where there are no clear forms of property, must rely on the ability to mobilize voluntary contributions that, in the long run, must be ethically motivated; by feelings of solidarity, philìa or other forms of affective proximity. Users contribute to the innovation process when they identify with the product and desire to improve it (von Hippel, 2006). Knowledge workers are productive when they identify with the 'corporate community' and its values (Halal, 1996). Value of ethical capital

Smithian Argument

Marxian Argument

More complex division of labor increases the value of coordination. Flexibility and market dynamism decreases the ability of bureaucratic command to produce such coordination. This increases the value of ethically significant interpersonal relations.

More complex division of labor increases the importance of public knowledge, or General Intellect relative to labor time as a source of wealth. Value is generated by organizing the abstraction and commodification of General Intellect. But since General Intellect is a common resource, such abstraction presupposes voluntary submissions. I the long run such voluntary submissions can only be guaranteed by creating ethically significant social relations.

III. Netarchic Capital This might all sound very complex and theoretical, but it boils down to a fairly simple principle. In a situation in where production is extensively socialized, the scarce resource that creates value becomes the ability to attract, organize, and commodify voluntary contributions of such social productive energies. Value is no longer generated principally by controlling an internal production process, or by 'owning content', instead it is generated by attracting and organizing contributions from an external production process; by initiating and sustaining relations through which consumers and other external interests are involved. This principle is precisely what is embodied in contemporary business models, what Michel Bauwens has called 'netarchic captial' (This ugly neologism combines the English 'net' with the greek root 'arkeo': to manage or govern, i.e. a kind of capital that is governed by networks.) In Bauwens' version the prime examples of such netarchic companies are the Web 2.0 business models that have emerged around new forms of online social production. Web 1.0, or the internet economy of the 1990s dotcom-bubble, was principally organized around ownership of content and eyeballs. This was excellently illustrated in what constituted the high-point of that 'boom', the TimeWarner-AOL merger in 2000, which built on the logic of combining the immense content-library of Time Warner, with the (at the time) enormous number of users controlled by the walled garden of America Online. Contemporary Web 2.0 successes however rarely build principally on the ownership of content, but on the ability to initiate and activate users in the production of content in some form. (Even the Google search is essentially a reflection- if somewhat distorted- of the ways in which ordinary users have implicitly judged the utility of different sites.) Such 'netarchic' models build on exploiting the productive potential of external networks. This reliance on external networks of 'free' social production can take different forms. Bauwens himself lists three different structural principles. First, what he calls 'sharing economies' where people co-operate to produce value, which they then freely share among themselves: examples are MySpace, YouTube, Facebook, various dating sites and other social media. The valuable experience that these sites offer: a film to watch, the ability to extend or strengthen social networks or even to find a partner, is co-produced by the users themselves. The business model then builds on controlling the platform on which this production unfolds. Such control can in turn be monetized either as valuable commercial real-estate (when NewsCorp bought MySpace for $ 580 million in 2005 they calculated an annual advertising revenue of $ 13 million); or as a source of valuable data on consumer behaviour and preference (Google routinely data-mines searches, text in emails stored on Gmail and other content from Google Calender, Google Documents etc. The more users they have on their platform, and the greater share of their lives that those users locate to the Google platform, the richer the raw material that Google mines and the more valuable the targeting, profiling and other forms of organized information that the company can sell on to its paying clients.).A third way is to simply charge users for the pleasure of interacting and co-producing on the site (this is what dating sites usually do). Bauwens' second model is what he calls 'commons-oriented peer production'. In this case communities of peer producers arise without corporate intervention and organize their own production and sharing of wealth. Companies then extract value by creating an archipelago of businesses around such free 'commons'. A prime example of this logic is the number of businesses that have developed around Open Source software (IBM being perhaps the largest and most significant), selling business services, implementations and proprietary platforms and specifications (like Apple's 'Leopard' and 'Tiger' operating systems, which are built around a Linux core). As next chapter will show, the booming sector of 'creative industries' also tends to operate in similar ways. Third, and finally Bauwens lists what he calls 'crowd-sourcing', by which he means forms of social production that are initiated and controlled by companies. These initiatives can range form the 'light', like viral marketing where small parts of the value chain are socialized, to more heavy reliance on social production as in the many user-led innovation or 'swarm-business' models described below. Crowd-sourcing can be initiated and controlled by a particular company, as in Heinz recruiting consumers to co-produce and advertisement (and , principally, buzz around that advertisement), or Procter & Gamble launching a web community for adolescent girls around their Libresse brand of sanitation products. Alternatively it can be organized by specialized intermediaries like Innocentive that announce and outsource the solution of particular engineering problems to the educated public.[xii] Common to these business models is that they do not principally rely on the firm's own resources to create value. Instead, value is contingent on the ability to maintain positive and stable relations to external producers: it is not so much the core competences, as much as the 'edge competences' that count: a firms ability to utilize the universe of value that is located in its environment. Although this movement of value creation from the 'core' to the 'edge', from what the firm itself can produce to its ability to relate to and organize external production processes is perhaps most prevalent among Web 2.0 companies, this tendency is by no means isolated to the online or 'virtual' economy (if there was such a thing). Rather the cultivation of edge competence, or 'relational competence' is becoming an important feature of contemporary management practice over-all. Within Human Relations it has long been known that the best way to stimulate the production of intangible values like innovation, creativity and flexibility is to empower the self-organization of workers. These ideas go back to the early 1960s and the emerging discussions of 'knowledge-work' that we reviewed in Chapter II, but they achieved their breakthrough in the late 1970 and early 1980s when automation, first of factory production and later of office work, combined with lower transportation costs- chiefly through the world wide implementation of container transport- produced higher demands on flexibility and just-in-time production. This challenge was resolved by the introduction of 'Toyotism' in factories whereby workers were given the responsibility to organize the production process themselves and ensure quality standards. This way, the informal sociality of workers was actively put to work in producing the kind of flexibility that gave the company a cutting edge. Something similar happened to managerial work in the Business Process Reingeneering movement that followed the massive introduction of PCs and other office IT in the 1980s. Here to, rigid bureaucratic hierarchies were supplemented by 'networked organizations' and self-organized mobility between (relatively) short-lived project-teams. The ability to extract (surplus) value from employees came to depend less on the traditional ability to directly command what they did during labour time, and more on the ability to motivate spontaneous cooperation and contributions. This way, the importance of corporate 'values', 'culture' and 'community' increased as managerial tools. It was by installing and maintaining a positive climate that facilitated and motivated such voluntary contributions, by generating and maintaining a positive ethical capital around the firm, that such contributions could be motivated. It is no coincidence that the other side to toyotism and similar 'Japanese' management techniques, was a strong, integrated corporate cultures were values were inculcated into employees through everything from corporate welfare to slogans, design and the infamous morning singing of the corporate anthem'. 'Autonomy on the shop floor, and strong centralized values', to quote Tom Peters' core recommendation in his 1982 management bible In Search of Excellence.[xiii] Since then the reliance on such 'free' inputs has expanded to involve consumers and other members of the public as well. Consumers have played a productive role as sources of information and innovation ever since he early 1970s, when 'psychograpchic' market research or ' lifestyle research' first allowed a systematic real-time tracking of an evolving consumer culture. In the 1980s psychographics was supplanted by qualitative research, consumer ethnography and 'cool hunting', in which the spontaneous innovation and creativity of consumers were systematically appropriated. Today a growing number of business rely on user-led innovation projects whereby consumer creativity is directly included in the corporate value chain. These initiatives range from the relatively disorganized, tapping in on and studying the development of a fan culture or another user community, to the highly organized and systematic, like the Nokia beta lab where users are given a decisive role in finalizing software solutions for mobile phones (or the Google phone where large parts of the actual software development has been outsourced to interested members of the public). Indeed, many now speak of an overcoming of the traditional roles of producer and consumer and a move towards new forms of 'produsage', where firms and consumers are involved in a process in which continuous changes and improvements to a product platform are generated collaboratively, and where the material objects are no longer so much final 'products', but more like temporary fixations of an ongoing process or collaborative evolution. In such contexts value does not primarily come from the ownership of patents or copyright (rather these are shared with the developer community in what is known as Open Production). Rather value comes form the ability to sustain a community of producers from which continuous improvements and developments can be harvested. In other words: the value comes from the relationships that can be sustained. Finally the relationship to suppliers and other clients has changed as well. While it used to be the case that large companies either pressed costs by playing out one supplier against another, or alternatively, secured a steady flow of supplies buy acquiring their sources of raw material- a 'vertically integrated company like Ford would own a glass company, a tire company, metal company as well as chains of dealerships- the key to value in more flexible, post-Fordist production systems lies with outsourcing and supply-chain mangemnt. The key to success here is to create enduring relationships with key supplier which involve a lot of cooperation in developing products and processes. As part of their just-in-time production system, Toyota would involve its suppliers in co-developing and knowledge sharing around optimal product designs as well as solutions to guarantee maximum quality. Similar forms of cooperation and knowledge sharing were singled out as the secret to the success of small industrial districts in the 1980s (like silicon valley on the US or Prato in Italy). Such forms of inter-firm cooperation are also what underlies the success of what John Hagel calls 'the Third China': (with reference to the idea of the ¨Third Italy’ of small industrial districts that fascinated development scholars in the 1980s): small Chinese high-tech companies, mainly in electronics. outsource innovation to suppliers as far as possible. They establish huge networks of hundreds or even a thousand suppliers, and build on innovative business process solutions that manage to coordinate these ultra-complex production networks in ways that encourage cooperation and knowledge-sharing so that the ‘tacit ‘ or hidden knowledge of each participant can contribute to the whole.[xiv] This is not the place to investigate Open Production, Produsage, Swarm Business and other similar business models in detail (the interested reader is advised to consult the growing literature on this matter, both on and off line[xv]). Suffice it to say that such 'open' , 'process-based' or 'cooperative' business models are moving from the marginal to the mainstream. If they were mainly deployed by Web 2.0 operations, hip viral marketing bureaus and cutting edge high-tech companies a couple of years ago, they are now being adopted, in some form, by corporate giants like Unilever and Procter & Gamble, by banks, insurance companies, airlines, pharmaceutical companies, aircraft manufacturers, supermarkets and across the board.

	Media	Marketing	Production	Supply
Hierarchic: Control of core competence	Broadcasting copyrighted materials to a public of consumers. Example: AOL-TimeWarner merger	Selling a finished product to consumer who do not contribute to the production process. Example:	Bureaucracy: Specific job descriptions and rigid hierarchies. Example	Buying up suppliers through vertical integration. Example:
Netarchic: cultivation of Edge Competence	Involving public in co-production of content or an experience. Example: YouTube, user network and distribute their own music.	Involving consumers in co-producing an artefact or an experience.	Self-organization combined with strong coporate culture. Example:	Creating lasting relations of cooperation, co-production and knowledge-sharing with suppliers.

This business model is spreading across the board because, as next chapter will show, social production is a booming, ever more public and ever more available resource. And since these business models essentially depend on the easy availability of ICTs, both for the organization of the extended socialized production processes that they rely on, and for the surveillance and data mining of spontaneous consumer interaction- they are set to diffuse with even more ease in the future (see Chapter X for a more detailed analysis of this scenario). What they have in common is that they move the crucial source of value from core to edge competences: from the ability to control and command an internal production process, to the ability to organize and attract contributions from an external production process. This way these business models tend to increase the relative value of the positive relations of affinity and affiliation that can attract such voluntary contribution. What creates value is the organization of a productive community. The spread of Open Business models thus increases the economic significance of such non-monetary values, of ethical capital. IV. The securitization of everyday life. The massive socialization of the production process that has occurred in the post-War year has given rise to a new logic of capital. This logic is visible in the proliferation of 'netarchic' business models that build on the ability to attract rent from external processes of social production. Such 'netarchic' business live off productive practices that have been socialized to the point of coinciding with the ordinary processes of everyday life. Consumers who co-produce brand equity by using a brand or forming community around it do this as part of their everyday life, as a way to create and maintain friendships and other social relations, construct identity or differentiate themselves from others. They do not perceive such productive activities as in any way distinct or separated from the rest of their lives. Similarly, the users of YouTube do not experience their online activities as 'labour', but rather as an extension of their ordinary social lives, as a way of connecting and staying connected. [xvi] Neither is improving on your favourite product and sharing those improvements in a user-forum that is part of a user-driven innovation initiative subjectively felt to be 'labour', nor is downloading and recomposing the image-material supplied by a major company into an advertising clip; blogging about that new advertising campaign, or even filling up your own drinks at McDonald's. The fact that such activites that potentially produce value for 'netarchic' capital are phenomenologically indistinguishable to life itself, testifies to the profound nature in which the capitalist production process has been socialized. There is in this sense no evident or tangible distinction between production and life, between human nature and 'human capital' to use a management term. However, this profound socialization of capital has not only led to the emergence of new business models. It has also triggered a profound transformation in the very value logic of capital. Looking again at the post-War period, the most important parallel development to this socialization of production has been the massive financialization or value. Accelerating in the 1970s (like the socialization of production) the turnover of financial markets has increased from being roughly equal to that GDP in the 1950s to amounting to 53 times GDP in 2000 (in the US, admittedly one of the world's most financialized economies). At the same time financial gains have massively overtaken gains from manufacturing as the main source of corporate profits (see chart below) [xvii]. This means that today, the average company no longer primarily relies on the direct control of the production process- buying machines and hiring workers to operate them- as a primary source of value and profits. Instead, it primarily lies on its ability to attract financial capital in favourable ways. This way, the main task of management and other forms of corporate governance is no longer guaranteeing the long-term profitability of production. This is still important, but secondary to the overarching aim of promoting the (often short-term) value of stocks: corporate governance becomes share-holder oriented governance.[xviii] As capital is socialized, the traditional value logic of capitalism, relying on the generation of a private surplus by putting privately owned capital to work is displaced by a model in which the object of the game becomes securing a share of the global surplus, generated by a completely socialized, public capital, as it is distributed on financial markets. So at the same time as we have had a 'communism of capital' through the socialization of productive machinery, we have also had a socialization of profits and value and their redistribution on financial markets. (One could argue that the main thing that distinguishes this from 'communism as it actually existed' is the haphazard, irrational and casino-like way in which this surplus is distributed…). This expansion of the financial level has proceeded through a massive securitization of a wide diversity of revenue streams. Everything from consumer dept and mortages, through infrastructure to water and energy, has been identified as a viable basis for one form of security or another that can be traded on financial markets. Essentially, the expansion of finance depends on the commodification of a wide range of everyday life processes: 'an impulse to identify almost anything that might provide a stable source of income, on which more speculaton might be built [..] up to and including the kitchen sink'. [xix] From this point of view, intangibles can be understood as a securitzation of the revenue streams that can derive form social production. Ethical capital represents such securitizatins in the absence of clearly recognized forms of property. Its increase then represents a growing diversity in the kinds of social cooperation that are securitized, beyond what is recognized by intellectual property law. In the absence of legal prtection this securitization of social production must be founded on affective relations of affinity and affiliation. So ethical cpaitl represents the ability of such affective relations- of branded experience, goodwill or reputation- to effectively sanction and legitimize the appropriation of rent form the social. Take brand equit for example. Like ethical capital in general the economic importance of brand equity has expanded continuosly in the post-War years to accelerate in the 1980s. As a financial asset a brand represents a predictable future revenue stream that comes from a wide diversity of sources, the most important being the fact that consumer are prepared to pay extra- to pay a premium price- for the affective experience that the brand offers. (Other factors are market stregth, control over distribution channels etc.) While the logo is protected by trademark law, the right to a revenue from the brand can not be legally enforced (consumers cannot b taken to cort for refusing to pay a premium price for branded goods). Instead this 'right to rent' must build on some form of legitimacy and consensus: it must in the end build on the fact that consumer (or other stakeholders) feel that the brand actually maes a positive difference in their lives: actually matters to them. Brand equity, like other ethical capital, must have an underlying foundation in an actual social impact. The problem is however, that to date there are no valid ways of measuring this underlying foundation, this value of the brand. (And consequently brand values tend to be an extremely volatile asset: Indeed, when Marks & Spencer embarked on their Your M&S re-branding campaign in 2006, stocks soared by 60 per cent, although actual turn-over only increased by 10 per cent. The rest was due to the supposedly positive momentum initiated by the campaign, its ability to mobilize novel affective investments around what was in essence an old and tired brand. ) True, there are a number of more or less coherent measurement products around. In many ways the contemporary proliferation of Non Financial Performance Metrics can be read as a response to the crisis of value that confronts contemporary capitalism. Sometimes these metrics originate with NGOs or other actors who want to make their particular value agenda prevail. They are subsequently welcomed by corporations: in part because they offer new and complimentary ways to estimate their social value. Often such metrics are developed by consultancies as a way to legitimize increasingly blatant discrepancies between the market values of companies and their ‘book values’, captured by antiquated accounting systems designed to capture the material realties of industrial production. Most such systems, like brand valuation for example, are not developed to measure the empirical performance of a brand, but to provide an explanation for what is chiefly an accounting problem. The point is that these measurements have no common origin, but emerge out of a multitude of agendas and concerns, most of which are not primarily preoccupied with actual measurement. So when they are successful that is not because they work as valid measurements of some independent reality: what does a system like Buzzmetrics 5, that provides a quantitative estimate of how often a brand or organization is mentioned in the blogsphere, really say about its potential to make money? How does the ‘wall of codes’, where Chinese garment factories tape up the codes of conduct, imposed on them by (mostly) western subcontractors relate to worker rights or environmental standards? Does the performance review measure anything apart from excellence in filling in performance review forms and other forms of documentation? Rather these systems work if they can become self-fulfilling. If a company like Interbrand claims that a brand is worth $ X million (based on a combination of factors ranging from its spending on advertising, via the number of patents the company possesses to the brand’s standing in trend barometers) then investors will act on this and the brand will attract money. Such metrics primarily work to guide investment decisions on financial markets that have become increasingly distanced form the realities of real wealth production (whether material or immaterial), but as tools for aligning ‘shareholder value-creation and social value-creation’ they are virtually worthless (Chatterji & Levine, 2006). So while we do have an emerging new logic of value that links financial prices to social production, and while this new logic of value is generally accepted, at least implicitly- while there is a general agreement that Share-holder Value Performance and Social Value Performance correlate in the abstract, or that strongly lived corporate values do have monetary values in that they increase the efficiency of cooperation. -there is, so far, no standard measure able to determine the exact, or even approximate value of the particular products of this ethical economy. (Rather there is a proliferation of ad hoc measures that work with very different standards.) V. Conclusion Capital increasingly depends on its ability to attract rent form processes of social production that it can not control. This development can be traced back to the growing importance of cooperation and general intellect in the development of capital. As the capitalist production process expands and is further socialized, rent from cooperation and general intellect grows in relation to , and eventually dwarfs direct profit as a source of value. Intangibles represent a securitization of such forms of social production. Some of these intangibles have clear legal forms. Others, like brand, reputation and goodwill, do not. Consequently the rents that these represent can not be legally enforced, but must be offered voluntarily. Such voluntary offers are attracted by the construction of positive affective relations with stakeholders, what we call ethical capital. Existing systems for valuing intangibles, and in particular ethical capital, build on a wide variety of different approaches, most of which are related to the probability of future revenue streams. They do not measure the strength and consistency of the actual affective relations that make up the foundation of ethical capital. This means that these systems cannot distinguish between solid and genuine foundations- the fact that a brand or an organization actually matters positively to its shareholders, and spectacular and artificial foundations, the fact that an organization is able to use advertising and PR to create the impression of having a genuine positive social impact. At the same time, more reflexive and informed consumers, together with increasing availability of information and growing transparency makes it vital, form a managerial as well as a financial perspective, to be able to make such distinction. Failure to do so will lead to bad business decisions and substantial missallocaiton of resources. This is particularly true in relation to the systemic challenges that contemporary capitalism (as well as contemporary society) currently faces. In order be able to make that distinction we need a way of measuring the actual value, and not just the possible price, of social production. Such a system can only depart form a solid understanding of the actual dynamics of the productive practices that make up social production, and the ethical economy according to which these operate.

[i]

[ii] Morsing, M. 'Conspicuous responsibility. Communicating Responsibility- to Whome?' Corporate Values, ????, p 146., Sandison, N. 'Dove's real beauty ads may have been retouhed' BrandRepubblic 8/5, 08 (http://www.brandrepublic.com/BrandRepublicNews/News/808148/Doves-real-beauty-ads-may-retouched/?DCMP=EMC-Daily%20News%20Bulletin , accessed 29/5, 08).

[iii] Thrift, N. Knowing Capitalism, London; Sage, 2005.

[iv] The figures come from Corrado, C., Hulten, C. & Sichel, D. 'Intangible capital and economic growth' , paper presented at the CRIW/NBER Summer Institute Cambridge (MA), July, 26-27, 2004. We have re-branded as 'ethical capital' what they call 'economic competences' that is : ' strategic planning, investments to retain and gain market share, redesigning and reconfiguring existing products in existing markets, and investments in brand equity' as well as 'Investment in firm-specific human and structural resources' influencing 'employer-provided worker training and an estimate of management time devoted to improving the productivity of the firm'. (ibid, p. 17). We estimate this to be a good approximation of what we mean by ethical capital- investments in building relations and increasing the efficiency of social cooperation. At the same time we are aware that this includes investments in purely technical development. However other data show that investments in building the relational and experiential parts of goods are growing faster than investments in purely technical development (to the extent that these aspects are separable), and similar things are happening to worker training and Human Relations (REF). Also, this potential error should be evened out by the fact that an unidentifiable, but probably significant share of what Corrado et al call 'non scientific R&D': 'the revenues of the non-scientific R&D industry [i.e. mainly creative industries, our note], as well as the cost of developing new motion picture films and other forms of entertainment, and a crude estimate od the spending of new product development by financial services and insurance firms' (ibid, p. 17) - would actually count as what we call 'ethical capital'

[v] Higson, Chris, Rivers, Oliver & Deboo, Martin, 2007, 'Creative business- crafting the value narrative', Research paper, Center for Creative Business, London Business School, June, 2007.

[vi] ‘Pharma charged with spending less on R&D than on marketing’, Chemical Market Reporter, July, 2001.

[vii] Bousquet, M. ‘The informal economy of the information university’ (available at http://louisville.edu/journal/workplace/issue5p1/bousquetinformal.html , accessed on 25/11-07).

[viii] Huston & Sakkab, …. Rometti, ….

[ix] See Halal, 1996.

[x] Q

[xi] Mokyr, J. The Gifts of Athena. Historical Origins of the Knowledge Economy. Princeton; Princeton University Press, 2002, p. 39, italics in original.

[xii] www.innocentive.com, see also Arvidsson, A. 'Crowdsourcing', Kommunikationsforum, 12/12-06. (http://www.kommunikationsforum.dk/default.asp?articleid=12571 accessed, 2/6-08.)

[xiii] Halal, William , E. The New Management. Bringing democracy and Markets Inside Organizations, San Francisco; Berrett-Koehler Publishers, 1996, see also Peters, T. In Search fo Excellence, Moss-Kantor, R.

[xiv] Hagel, J. & Brown, J. The Only Sustainable Edge. Why Business Strategy Depends on Productive Friction and Dynamic Specialization, Boston; Harvard Business School Press, 205.

[xv] refs.Bublegrneration, p2p foundation

[xvi] Sholz,..teens love myspace

[xvii]Economic Report of the President, 2007 ( http://www.gpoaccess.gov/eop/tables07.html , accessed, 2/6-08), see also Epstein, G. (ed). Financialization and the World Economy, …

[xviii] Shareholdr oriented governance…

[xix] Leyshon, A. & Thrift, N. 'The capitalization of almost everything. The future of finance and capitalistm', Theory, Culture and Society, 24 (7-8), pp. 97-115.

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AdamArvidsson — Thu, 06 Nov 2008 07:40:01 CST

CH II. The Emergence of Social Production In 1944, Max Horheimer and Theodor Adorno, two members of the German Frankfurt School exiled to the US published their contemporary classic: The Dialectics of Enlightenment. They were inspired both by their US experience, surrounded by the most advanced industrial society of earth and by a booming consumer and media culture- Adorno apparently lived right across the street from Shirley Temple- and by th experience of Nazi Germany with its totalitarian project, which they had fled. In The Dialectics of Enlightment these two experiences came together in an analysis that emphasised the totalitarian nature of consumer society and media culture. They argued that as the capitalist production process expands to encompass virtually all of society and culture- through the diffusion of consumer goods and media technologies, social relations and, by implication human life, is increasingly determined by the gigantic corporate bureaucracies that govern the capitalist production process. Media companies and advertising agencies use their gigantic powers to pre-produce needs and desires to meet the productive requirements of the system. This way, the emancipation and empowerment of human rationality and action, which was the key promise of the enlightenment is, dialectically, transformed into its opposite, new forms of seemingly overpowering domination. By and large Horkheimer and Adorno set the tone for the post-War intellectual discoure on mass culture (and The Dialectics of Enlightenment is still required reading for Cultural Studies undergraduates). Consequently social scientists have generally concentrated on the disempowering side to this process. They have paid little attention to both the growth of social production and the affirmation of a new value structure. Instead, they have focused on the disappearance of older forms of social organization. Pointing at sinking membership figures for traditional civic organizations, like unions, political parties, the Church of England or PTA organizations, and pointing at an overall decline in political participation and interest, they have concluded that contemporary society is growing ever more passive, fragmented and individualized. With Robert Putnam's catchy metaphor, we now 'bowl alone'. But this disappearance of older forms of social organization and political participation is only one side of the story. There is another side to the dialectics of enlightenment (otherwise there would be no dialectics..) which Horkheimer & Adorno, and their more contemporary followers have left virtually untouched: The overall re-mediatization of socielty that follows form its inclusion into the capitalist production process might implement new and powerful forms of power and domination, but it has also lead to a significant empowerment of human creativity, leading to an overall emergence of new self-organized forms of social production, with an accompanying new value structure. This tendency results directly from two immediate factors. The first factor is the growing mediatization of social relations and the impact of new media. With 'mediatization' we mean that media enter into situations and processes where they used to be absent: Instead of playing chess face to face we now play with people at the other side of the globe. Instead of just buying a running shoe, we now pay extra for its brand, which is, at least superficially, a media image. Such mediatization naturally destroys older forms of place-based social relations. It is no longer necessary to join a chess club in order to play chess- you can do it over the internet. At the same time this makes possible new kinds of connections that were not possible before. You can join a network of chess players that extends all across the globe. Similarly, the globalization of media threatens and undermines the national public sphere. This means that national politics no longer necessarily becomes the key preoccupation for the majority of the population. At the same time, however, this globalization makes possible both the emergence of a planetary consciousness, and an identification of trans-national political formations that communicate and aggregate on the internet. [ex Euromayday.etc.] The first aspect; the emergence of a planetary consciousness and its impact on politics was stressed already by early 'new media' theorists like Marshall McLuhan. He argued that electronic media (by which he meant television) create a different and more intense awareness of distant events, and allows for a stronger and more intimate identification with distant sufferers. This, he and his disciple Joshua Meyrowitz argued was a significant factor behind the spread of resistance to the Vietnam war. Now, for the first time, ordinary Americans could watch atrocities directly on their television screens, and thus cultivate a strong emotional identification with the sufferers of war. Television made possible new and strong forms of affective identification with distant others. The second and connected factor is the decline of the value structure of industrial or 'Fordist' modernity. 'Values' is a sociological term for institutionalised, and thus fixated, ethical preferences. They last as long as the institutions that support them are alive and well. When these institutions loose importance, then so do the values on which they are built. Values are only effective as long as they are embodied in functioning institutions. (This is why it is so absurd to speak, as some conservative politicians do today, about the importance of safeguarding traditional values like, say family values. When the institutions that support these values, like the institution of the family are no longer functional- look at the level of divorce rates in the West- then their values are also doomed and beyond any resurrection.) Now the core institutions of modern, industrial or 'Fordist' society have all been loosing in importance for a long time. The nation state with its national culture and national values is loosing its centrality as a referent for people's everyday life as processes of globalization and migration set in. The old class system with its traditions and strong identities and values is becoming culturally irrelevant with industrial decline and urban restructuring. The traditional family, finally, built on the presupposition that women renounce work for a subordinate existence as housewives. When this is no longer the case, this institution too looses its natural significance. However, the strongest factor behind the disappearance of an old institutionalized value structure is probably the emergence of a new value structure with its institutional forms. This way people have an alternative and a real possibility to chose something different. This emergence has occurred, gradually but in an accelerating fashion during the post-War years, and it has been directly linked to the growth of new forms of social production. The narrative of its emergence is complex and multifaceted and virtually impossible to describe in anything short of a thick book. But we shall make a modest and by no means exhaustive attempt in this chapter to make a rough sketch. The 1950s. In the west the 1950s were the high period of Fordism- the social compromise founded on mass production for mass consumption. Societies were converging towards a common model that where they could be neatly divided in three main classes: a large working class of mainly manual labourers, a smaller middle class of bureaucrats and managers and a tiny upper class. All of these had a vested interest in the state and in the development of the national economy, the fruits of which trickled down through the availability of new consumer goods and more developed welfare systems (like pensions). The values of bureaucracy: established hierarchies, formal procedures and a strict division between work and private life were firmly institutionalized in work life. Private life on the other hand revolved around the nuclear family, the village or the urban neighbourhood with its established traditions and fixed gender roles. This harmonic (or repressive) picture was however already crackling as the most central class of the organized, Fordist model: the growing managerial class, was becoming the protagonists of a powerful and largely unexpected dialectic. In the American 1950s there was a prolific and influential literature of lament. Social scientists and public intellectuals like William H White, C. Wright Mills and David Reisman complained that the managerial 'white collar' class was rapidly loosing its connection with the traditional protestant republican values that had made America into what it was. The managerial class no longer exhibited an 'inner-directed' personality: they lacked a moral compass and were unable to make decisions on their own accord. Instead they were overly conformist, dependent on the opinion of others and afraid of conflict. As Riesman and his colleagues, authors of the influential polemic: The Lonely Crowd in 1950, put it: The other directed person wants to be loved rather than esteemed; he wants not to gull or impress, let alone oppress others, but, in the current phase, to relate to them; he seeks less a snobbish status in the eyes of others than assurance of being emotionally in tune with them. [i] Riesman and his colleagues saw this 'other-directedness' as a potential danger to the dynamism and democratic vitality of American society. However, in retrospect we can identify two central psychological traits that have since become ever more central to participants in the ethical economy of social production: First, a constructive attitude to social relations where being a functioning member of a community and earning the respect of others is more important that projecting one's ego and dominating the situation. Second, a profound sensibility to the affective dynamics of social relations, to the emotions and feelings of others. The other-directedness of the managerial class was generally perceived to be an effect of their heavy exposure to social engineering, Mayo-inspired human relations management at work and the range of new manipulative techniques deployed by the 'hidden persuaders' of advertising and marketing. [ii] However, other directedness was also an intrinsic part of their productive condition and a crucial actor behind professional success. The managerial class was entrusted with the management of the complex machinery of organized Fordist society, it was their role to ensure that conflicts were kept at a minimum and that everything ran smoothly. In doing this they worked with social relations, actively purifying them of controversy and conflict. They had a structural identification with values like smoothness and freedom from conflict, and their professional success depended on their ability to embody such values. This, rather than social engineering and the power of consumerism per se was the main reason behind their virtually complete lack of interest in the 'ideologies' of the first half of the century and the ensuing End of Ideology, professed by Daniel Bell in 1960 (and many before him). [iii] However, their internalization of the central values of harmony and social order, and their 'cool' remoteness from the passionate values that drove social conflict, also meant that unlike the proletariat of the first half of the century, their autonomy was not a threat to the system, but rather a potential resource. This idea: that the managerial class or 'the knowledge workers' produced value by organizing their own work-process and that consequently, corporations could profit substantially from encouraging the autonomy and self-organization of managerial work was first put forth in two insightful studies, Peter Drucker's Landmarks of Tomorrow from 1959 and Douglas McGregor's The Human Side of Enterprise from 1960. McGregor strongly criticized the inefficiency of traditional styles of management based on discipline control and a rigid division of tasks. Instead he argued for what he called Theory Y, a management style that attempted to capture and promote the self-organization of strongly motivated employees: He argued that the 'effectiveness of organisations could be at least doubled if managers could discover how to tap into the unrealised potential present in their workforces'. The key to success was to work with, not against the autonomy of employees. A similar discovery of the potential of autonomy and self-organization was also coming out of marketing and consumer research. Fordist marketing had stressed the importance to educate consumer and impose rational set of needs and desires. However in the 1950s market researchers began to discover how the managerial class in particular was using consumer goods in new, innovative and not entirely anticipated ways. Indeed, social mobility and a move to the suburbs had shattered their connection to class or ethnic traditions with their established value hierarchies. In suburbia on the other hand, they had very little in common with their neighbours, except consumption, Consequently they began to use consumer goods in a new way, not primarily to fulfil traditionally given needs, but to construct social relations and community with their new peers. And in this new productive use of consumer culture, other motivations began to emerge. Inspired by influential motivation psychologist Abraham Maslow and the guru of motivation research, Ernest Dichter, may market researchers now argued that the managerial middle class were mainly motivated by a drive for self-expression and self-realization. They conformed, but within their conformism there was a wish to make an individual mark, to project individual difference in a distinct style. The (long) 1960s We have dwelled on the 1950s at length in order to show that the values of self-realization and autonomy, which exploded in a range of practices in the ensuing decade were already there, firmly embodied in the productive condition of the managerial class of 'knowledge workers' as Peter Drucker termed them in 1959.[iv] During the 1960s these values acquired an accelerating influence, chiefly trough the large and very visible youth and counter cultures that came to dominate the imaginary of the epoch. They also became more firmly linked to sentiments of global solidarity and an emerging planetary consciousness (particularly in the wake of the Limits to Growth report in […] and the ensuing oil crisis in 1973 that popularised a consciousness that everyday actions had global consequences[v]). The large-scale diffusion of these values and their connection to new forms of trans-national solidarity had many and complex reasons- ranging from higher levels of education, a prolonged experience of youth to the Vietnam war and the proliferation of post-colonial movements that put 'The Third World' firmly on the cultural agenda. A singularly important factor however was the availability of new communication technologies, and the increasing mediatization of everyday life. We have already discussed the importance of television in fostering a global solidarity and an ability to 'feel with' distant sufferers. But television also proved singularly efficient in giving a global diffusion to what might otherwise have remained local curiosities, like, American rock music or British Pop with its distinct attitudes, styles and demeanours. Through television these could be rapidly diffused as styles to be imitated and small peripheral cities like Malmö, Sweden quickly came to feature a lively music scene populated by faithful Beatles imitations.[vi] The music industry was another powerful factor, in particular since portable record players now made it possible to listen to music outside of the home, and integrate pop into the practices and rituals of youth culture. This new media structure enabled the global diffusion of fashion and new consumer goods that were sold as part of a particular life-style- blue jeans, hippie dresses, Mary Quant fashions. These objects and these technologies served as tools that enabled young people (and others) to produce a trans-national identity through which new forms of solidarity could be forged. Young people from Bangkok to New York could now identify with and share the experience of being part of something new and different: a movement. These movements strongly embodied the values of autonomy, self-realization and global solidarity. In part because autonomy and solidarity were part of the very experience of these movements: they were actively constructing an alternative to adult mass society; in part because they perceived of their practices as forms of resistance or opposition to a stifling, conformist and profoundly unjust Fordist capitalism. These connotations of resistance grew stronger as the counterculture merged with the student movements, the workers strikes and the anti-War movement towards the end of the 1960s. While the connection between the values of autonomy, solidarity and self-realization on the one hand, and political opposition on the other remained strong all through the long 1960s, a different way of living these values was emerging fairly early on. The managerial class had an early fascination with the counter-culture, in particular with its more hedonistic sides like soft drugs and free sex- as evidenced by successful publications like Playboy, which began to emerge in the early 1960s. [vii] This interest was paralleled by a large-scale diffusion of more mundane creative consumer practices like gourmet cooking, a new interest in fashion, tourism and travel as well as a new attention to the body through jogging, body building, dieting and other forms of wellness as well as a virtual explosion in yoga, meditation and New Age spirituality- the origins of what would later be called the 'experience economy'. [viii] It is only partially right to think of these consumer practices as an individualistic or 'escapist' version of the more genuine 'resistance' exposed by the counter culture. On the one hand the consumerist translation of counter-cultural values were a result of the advertising and marketing profession discovering the commercial potential of these movements. And the pleasures of an exotic vacation provide only a temporary escape from the rigours of professional life. On the other hand however, these practices did provide a number of mundane and concrete experiences of self-realization and autonomy. To experiment with cooking, to learn to appreciate wine, to plan and implement a back-packing tour in one's 'gap year', or to actively search out and experiment with new 'organic', 'biodynamic' or 'vegan' diets were genuinely creative practices that did expand one's mental and experiential horizons. They also introduced a new kind of reflexivity, a consciousness that the shape of one's body, what one put into it at meal-time and the experiences it could have at leisure were the effect of one's own making. This reflexivity opened up for the possibility of relating one's consumer practices to the fate of the distant others now visible on television. Consequently these practices took an 'ethical' turn at a very early stage. Nouvel cousine, to take a mundane example, was not only a new gourmet style, it also proposed a conscious alternative to aesthetics of mass-produced food, stressing the importance of local ingredients and working with organic growers. [ix] Similarly the New Age movement, although primarily geared towards individual spiritual quests contained strong elements of global solidarity and openings towards different social and political orders. This ethical turn was of course particularly visible in the expansion of philanthropy and social entrepreneurship (or social enterprise to use a contemporary term) that took place during the 1970s. [stats..]. Towards the end of the long 1960s, that is in the late 1970s, a post-materialist value structure had been firmly established as an alternative within (a now collapsing) Fordist modernity. And theses values were embodied in a multitude of autonomous productive practices. Some of these were explicitly political, and framed within in an older model of 'resistance', like the many extra-parliamentary leftist movements that had survived from the 1960s proper. Many were individualized or escapist like the middle class quest for spiritual enlightenment or a lifestyle richer in 'experiences'. But most were at the same time, at least to some degree, constructive: engaged with the active construction of an alternative to the proscribed state of affairs. The environmentalist movements were busy redefining politics, the New Age movement was collectively constructing new form of spirituality, youth cultures were building new identities and, soon enough new networks of cultural production and, most importantly the booming social entrepreneurship movement were actively enabling new forms of solidarity and social production. So it seems possible to claim, with a range of important modifications, that the post-materialistic values structure that had emerged as a consciousness of the managerial class- the class that produces value by working with social relations- in the preceding decade, now had become firmly institutionalized in a range of actually existing practices of self-organized social production. What is more, these practices were themselves in the process of passing over form an earlier more protest-oriented stage, in which they were mainly framed in terms of an opposition against the existing system, to a more constructive, entrepreneurial phase. In this new phase their dissent was primarily expressed in attempts to construct viable alternatives to the existing order, rather than in criticizing or opposing it. Political practice became a matter of sidestepping the powers that be and the constructing new identities and a new social order.[x] Indeed French sociologist Alain Touraine identifies a long wave of 'creative' social movements, beginning with May 68 in France and continuing with the feminist and environmentalist movements of the 1970s. He sees these movements as chiefly directed towards the construction of a new social and political order, as expressions of a structurally rooted desire for auto-gestion on the part of the new middle class of knowledge workers. [xi] Neoliberalism If autonomy and self-realization had prevailed as 'movment values' during the long 1960s, as values embodied in a series of practices that wee alternative to, autonomous in relation to or in any case not encouraged by the established power system, this changed with the neo-liberal restoration of the 1980s. As these values thus became institutionalized as part of the expected attitude they lost, at least initially, their connections to new forms of trans-national solidarity and were individualized. In the official version, supported by state and consumer culture, autonomy became the freedom to manage one's own life, and self-realization became the realization of one's own private potential- of The Brand You. [xii] There were two sides to this incorporation of the new value structure. One is what has sometimes been called 'the second managerial revolution': Beginning in second late half of the 1970s, factories began to encourage worker autonomy and self-organization by institutionalizing self-governing teams on the work floor, inspired by Japanese models of 'toyotism'. [xiii] In part this was a reaction to the demands for increased autonomy and participation, for 'industrial democracy' voiced by the worker's movement in the early 1970s. In fact many unions actively supported these new measures, thus contributing to undermining the strength of their own position. In part it was an adaptation to increased levels of automation and the use of robotics, which in any case gave workers more of an organizing and supervising function. Most importantly perhaps, it constituted a way to increase the flexibility of production - in line with the demands posed by early implementations of just-in-time systems- by trusting the worker's to self-manage the minute details of the production process. This way the new potential and desire for auto-gestion was actively put to work to produce the kinds of flexibility that were becoming ever more important as a source of strategic advantage in a increasingly global and complex capitalist economy. (The 1970s were also the time when emerging economies like Japan and Korea began to threaten the Western monopoly over competitive material production.) A similar development occurred within the management of knowledge work. There guru's like [Moss Kantor and ……….] established value-based management as the new norm. Knowledge workers should not be ordered about, instead the company and its leaders should install a climate of excellence with which they came to identify and thus quite naturally put the powers of their freedom and creativity at the company's disposition. Management thus became a visionary or even and 'evangelical' practice chiefly concerned with working on 'values', with designing an affective climate conducive to the correct utilization of freedom, promoting a corporate community or 'brand'. During the 1990s this philosophy spread to more general ideas of social governance and welfare, particularly in blairite Britain. There the responsibility for guaranteeing and developing their market value was out-sourced to the disadvantaged themselves, who were to self manage their own re-inclusion into the system by acquiring adequate forms of human capital. The second important way in which the new value structure became, at least superficially, part of the system was through the reorientation of consumer culture. True, the development of a post-fordist, 'life-style' oriented consumer culture had been under way ever since the 1960s. There goods were marketed less as the answer to given needs, and more as tools for self-realization or catalysts for 'experiences'- However with the saturation of markets with basic consumer goods, the establishment of a new middle class of knowledge workers as taste makers, and, most importantly, the globalization of the media landscape, it became both possible and necessary to differentiate between goods by investing in and nurturing their immaterial, symbolic or experiential dimensions. The new global media landscape made it possible to construct powerful global brands, marketed as focal points for identity construction and experiential communities all across the globe. This was consumer culture could become a truly trans-national cultural referent, addressing people in the same way regardless of their national or cultural provenance. And the mode of address was a constant invitation to reflexive self-realization through consumption. The 'post-modern' consumer was supposed to fashion his or her self through an active engagement with brands, construct his or her individual distinction by partaking in home gourmet cooking, adventure tourism, body building or other practices of wellness and various off-the -shelf forms of spirituality. This way new forms of management and a new kind of consumer culture combined to institutionalize the values of autonomy and self-realization as the preferred habitus of a new 'creative class' of knowledge workers. [box: the creative class] These were urged to put their autonomy to work, on the job and in leisure to co-produce both the value of the brands that they used and the flexibility or creativity of the organization to which they belonged through strongly controlled 'creative' practices. This way, the neoliberal model contained not only a re-assertion of corporate powers against a new emerging movement of autonomous social production, but also a real socialization of the capitalist value chain to encompass much of what used to be considered 'the private sphere'- one's affective relations to colleagues as well as one's consumerist dreams desires and fantasies. (Indeed, the boundaries between work and leisure were becoming ever more porous, if nothing else through the diffusion of laptop computers and cellular phones which managed to effectively merge the two spheres. After all the activities of coordinating one's social life and that of coordinating one's sales contacts, or of working on a spreadsheet and engaging in internet dating are close to identical on a phenomenological level. Networked ICTs Indeed, Networked Information and Communication technologies (ICTs), of which the 'creative class' are the most frequent users, are the most important factor behind the emergence of social production as something more than oppositional movement practices or subjectively lived 'values'. Indeed, the internet exhibits a number of properties that make it an ideal infrastructure for autonomous forms of social production. First, its networked architecture allows for ubiquitous access to and free circulation of information. Second the global connectivity enables local processes to unfold globally. Networks, which only used to be efficient as a way of organizing social processes on a small level, can now be globally scaled. Third, and perhaps most importantly, the ability of the internet to support a multitude of practices, from e-commerce to e-religion means that forms of knowledge and information that used to be private, accessible only to members of particular groups or communities, now have become public. It does not matter if your mother taught you how to cook or sew, you can teach yourself by participating in a web forum, consulting sites and blogs or taking part in a discussion group. This means that the internet infrastructure makes possible the socialization of knowledge on a global scale. What used to be private and restricted competences now become part of a globally available general intellect (see next ch.). These new forms of mediation have rendered social production an objective social 'fact' with profound economic, social and political implications. This is visible in the 'internet revolution' of the last fifteen years or so, where a range of autonomous processes of social production have emerged around the net, from the hacker communities, usenets and BBS of the 1980s to the powerful social media and peer-production networks of today. Today's Web 2.0 thrives on a plethora of such forms of social production, some of which (like Facebook) have become firmly institutionalized as part of the everyday life of the creative class. We shall not dwell on the phenomena of Web 2.0 here, as this has been described in great detail elsewhere. However it is worth underlining two things that are often forgotten in the present discussion. First, the emergence of social production and institutionalized autonomy has been equally powerful within the corporate world. It was the 'intranet revolution' that began in the seventies that made the large-scale utilization of worker autonomy- envisioned as early as the late 1950s by visionaries like Dough McGregor and Peter Drucker- practically feasible. Toyotism and self managed workgroups became feasible in the 1970s, not only because of the wide spread use of robots and automation, but also because of the informationalization of industrial production with Computer Assisted Manufacturing and later integrated quality control systems like Total Quality Management (TQM). It was the arrival of networked ICTs that make possible extended Supply Chain Management and just-in-time systems with the accompanying explosion in the logistic sector, to a large scale made up of small firms that freely network with each-other. [xiv] In the sphere of knowledge work, it was the spread of office computers and early intranets that enabled the business process engineering that, in the 1980s, transformed large corporations from bureaucratic organizations into network-organization structured around self-organizing project teams. The emergence of contemporary brand management and the systematic inclusion of consumers into the value chain of immaterial production that this entailed was also an effect of the availability to the new kinds of market intelligence and close surveillance of consumer habits that networked ICTs made possible through datamining of web-surfing habits and credit card histories and bar-code scans. Finally, and perhaps most importantly from a macro economic perspective, early adaptations of networked ICTs made possible the present autonomy of financial markets: self-organized systems which today exercises a far greater influence than central banks in setting the price of money. [xv] Second networked information and communication technologies not only enable self-organization to unfold on an entirely new scale: they also make new and unprecedented forms of control available- from the network of surveillance cameras that adorn public space, through data mining of web surfing habits to the immediate future with wide spread RFID tagging. The downside to this is of course the Orwellian reality of a high-tech police state (and perhaps the corporate attempts to pre-structure social production in ever more detail through sophisticated forms of analytics). The progressive side is that this enables a new kind of transparency of identity and social relations. Actors will have to become responsible for their actions and interests in new ways. And the ways in which other people judge their impact will stick with them even as they move across social groups. It will b much more difficult to maintain a 'backstage area' where aspects of one' life are kept secret. While this might seem oppressive in many ways, it does enable a new kind of civic responsibility. New forms of transparency have the potential to transform isolated networks of social production into a globally interconnected ethical economy. II. The Dialectics of Enlightenment…..Continued. Horkheimer and Adorno's treatise only emphazised one side of the Dialectic of Enlightenment- how the rationalization and organization of society, expressed in the diffusion of media technologies, and the continuing mediatization o fsocial relations through consumer goods and other commoditied ore generally tended to replace personal and social creativity with standardized cultural products and pre-determined life-forms. The other side to this dialectic, wich our quick survey has tried to trace, is that this very same processes of mediatization and re-organization in itself gives a further boost to such creativity, simply by expanding the range and scopre of social cooperation. Indeed, wth Marx, we can argue that capitalsit expansion has consisted in a massive expansion of such forms of cooperation. The two factors that we have looked at above are the empirical expressions of this process of expansion and empowerment In part new media technologies empowers social cooperation at a technological level, by giving more people access to more efficient tools to communicate and cooperate: consumer goods with their global meanings; corporate organizations with their networks of cooperation that span the globe, culminating in today's global commodity chains, and lately networked information and communication technologies, that themselves developed mainly as corporate and state attempts to control these extended and more complex networks of cooperation. These tools have consistently been used in new and unprecedented ways, continuously driving the levels of complexity to degrees that exceed the control capacity of the systems of which they were once part. Second, this expansion and of cooperation also transforms the subjects that take part in these processes. The progressive inclusion of more people in networks of autonomous cooperation, and the ensuing expansion of secondary education necessary to handle these more complex networks, has massified a new, post-materialist values structure, previously a feture of small creative 'elites' in through which people are habituated to valuing productive realization of their ideals over idle leisure. Thogether these factors have produced an oversupply of skilled and motivated people who had been taught to value self-realization as an intrinsic goal. Unlike the 19th century working classes, these knowledge workers (whether employed or not) saw active self-realization through productive labour (and not idle leisure) as their overall goal in life. The result has been, in Ronald Inglehart's words: ' a declining confidence in religious, political and even scientific authority [and] a growing mass desire for participation and self-expression' (Inglehart, 1997:96, cf. Zuboff & Maxim, 2002). [ill. number of artist] The important thing to understand about social production is that its emergence as an alternative to mainstream capitalist society has been an intrinsic part of the dialectics of post-War capitalism itself. Capitalism is a dynamic system driven by the over-all motive of profit maximization. This means that its history has been one of continuous expansion; it has had to find new ways to generate value in order to sustain new profits. (Indeed, capitalism began as a rather marginal phenomenon, the concern of a restricted class of merchants, and has since developed to encompass most of social life.) As capitalism expands it transforms social relations so that they become more compatible with its own requirements. Such processes of transformation can entail the diffusion of a commodity culture that supports an accumulative motivational structure, enabling people to value labour over leisure. (This was one of the main problems for early industrial entrepreneurs. Peasant labourers tended to only work as much as they needed to satisfy their static needs. Modern consumer culture was influential in spreading an endless needs structure that could motivate people to continue to work in order to accumulate more, cf. Campbell, 1987, Cross, 2000, Thompson, 1980). They can entail direct propaganda and re-education, such as the diffusion of primary schooling, an important purpose of which was, at least in the 19th century, to prepare future workers for factory discipline. They can also entail the direct destruction of previous life forms, leaving people with no choice but to adopt a lifestyle compatible with some form of participation in the capitalist economy (like the 17th century English enclosure movement that destroyed the material basis for traditional village life, and created a rootless proletariat on which industrialization could build). Generally the process involves some combination of these three elements (see Klein, 2006, for a list of spectacular contemporary examples). The point here is that the capitalist transformation of social relations is a process in which people's identity and motivations- their subjectivity- change; they become forced, ready and motivated to take part in the capitalist production process; people become expressions of potentially productive and labour power, which can be directly employed, or made to generate value in some other way, without much further ado. From this perspective we can see the expansion of productive consumer practices in the post War years as a result of the successive capitalist transformation of the social environment. The expansion of television, the music industry and a new branded commodity culture, along with new technologies like deep-freeze and the microwave oven, transformed a host of everyday practices- from socializing with neighbours and cooking for your family to finding your identity as an adolescent- and made them transpire through the medium of consumer goods. This way they also came to constitute a potential resource: a reservoir of consumer productivity that could be tapped into as a source for new trends and innovations, of managed to cultivate the image and equity of a brand. However, the capitalist transformation of its environment also puts in motion a powerful dialectic, which would eventually develop beyond the control of the system from which it has originated. In turn, we can understand the develpment of new systems of capitalist governance as progressive reactions to this very increasing productivity of the social. Fordism, bureaucratic cooperation and the assembly line emerged as a reaction to the autonomous productivity of the early industrial proletariat, as expressed in its new and powerful unions. Similarily the neoliberl reaction of the 1980s can be understood as an attempt to meet the challenge of the expanding and more powerful forms of social production that had expanded during the preceeding decade and to, more generally, keep networks of cooperation that had now expanded on a global level within the command of restricted and generally older industrial and financial elites. It did this by combining massive recourse to surveillance, control and, in its most recent 'war against terror' phase also military power combined with a a appropriation of the values of social prodction and their institutionalization as an individualized consumer culture and new forms of entrepreneurial self-responsibility. However, the new wave of social production enmpowered by the massive diffusion of networked ICTS seems to be far to powerful to be contained within this model (the copyright wars docent!), and it has begun to erect a powerful institutional framework of its own. To this we will turn in the following chapters. III. Conclusion. Social production and the new, post-materialist value structure that has accompanied its emergence, have a long history or parallel emergence. Or better, from a macro-historical point of view, the effervescence that has marked the post-War years can be understood as yet another period of transformation of the collective intelligence of mankind. Such periods of effervescence have been intimately connected to transformations in the media infrastructure that underlies human communication. The first and most significant revolution was of course the emergence of language itself and the complex forms of sociality that this made possible. Others have been the emergence of writing and the consequent rise of states, empires and monotheistic religions, that of printing and the European renaissance. Today we are in the midst of a similar renaissance mediated and supported by electronic media and, ultimately networked (ICTs). Like its historical presidents this movement is marked by a combination of a new mode of production (in this case based on self-organized forms of social production) and a new value structure, which is intimately connected to the concrete experience of participation in such new forms of production. Like its precedents, again, this movement contains a powerful dialectic. On the one hand, social production emerges as an alternative to, and in some cases a liberation from an older institutional structure that is loosing its relevance. On the other hand, the powers that be quickly adapt and incorporate the new value structure within its institutions, with out changing their underlying logic. Self-realization is transformed into 'creativity' in the workplace, a space for autonomous self-organization with distinct and well-defined boundaries. The quest for authenticity is channelled into an 'experience economy' where it looses its connections to global solidarity. However this institutionalization also entails a, however selective empowerment. Social production is institutionalized. This way its freedom is restricted. But at the same time the potential of these practices is substantially diffused and strengthened. The result is that social production, once institutionalized, tends to exceed and overflow the boundaries within which such processes of institutionalization occur. A branded experience economy channels the desire for authenticity towards branded goods. At the same time the production of such experiential goods connects consumers to global processes. Their material production occurs through global production chains and their symbolic production happens in a global media culture. This way the experience economy makes possible new experiences of proximity with the distant others involved in this production process. This invites a different and more genuine channelling of the desire for authenticity, as expressed in movements like ethical consumerism. Similarly knowledge workers who go through a long period of socialization into their roles as self-managing creatives tend to discover that their corporate position does not allow them to fulfil the creativity they have been trained to value. This leads to the emergence of a substantial and wide-spread managerial discontent, which is, today a major problem for Human Relations. Such managerial discontent is however also a potentially powerful political force. But for this to happen its outcome needs to be institutionalized as a political force, and not just lived as individual frustration. In order to better understand how such a political institutionalization could potentially occur, we need to take a closer look at the productive dynamics that support this new value structure, beginning in next chapter with how the influence of the ethical economy can be traced within capitalism itself.

[i] Riesman, D., Glazer, N., Denney, R. The Lonely Crowed. A Study of the Changing American Character, New Haven, London ; Yale University Press, 1950 (1977), p. xxxii.

[ii] Packard, V. Hidden persuaders, see also Whyte, w. Organization Man..

[iii] Bell, 1960, Lipset, Rostow

[iv] Drucker, Landmarks of tomorrow

[v] Limits to growth 1971?

[vi] Ref…

[vii] Ogsby Playoy

[viii] Pine & Gilmore

[ix] taste in amrica

[x] Tourr

[xi] Touraine, A. la société post-industrielle, Paris; Denoël-Gonthier, 1969, La voix et le regard, Paris; seuil, 1978, cf. Melucci, A. nomandi nel present…

[xii] Peters, T.

[xiii] Ouchi theoy z

[xiv] Bologna

[xv] Arrighi…

OldVersionCH.II

AdamArvidsson — Thu, 06 Nov 2008 07:39:34 CST

Chapter I. An Asset You Can't Understand… The Business Theory of Social Production. It is becoming ever more obvious that the information economy is split in two; we have two economies rather than one (or three, if we include the growing criminal or informal economy which we will not treat in this paper). On the one hand, there is the traditional capitalist economy that works with monetary incentives. This economy still handles the main part of material production: the production of cars, shoes, computer chips, and the transportation and maintenance of these goods. But immaterial production- the production of the ideas, innovations, experiences and other intangibles that virtually everybody agrees to be the most important source of value and development- is increasingly performed by another economy that does not primarily move according to monetary incentives. Most people who participate in creating the enormous wealth of content that give MySpace or YouTube their market values are not in it for the money. Instead they want to build networks, make friends, show off, be cool or what have you. The same thing goes for the users who participate in the multitude of smaller, less famous sites that make up the new productive developments known as Web 2.0. Neither are the people who participate in the many business initiated user-led innovation initiatives that now proliferate primarily there for the money. Indeed the very business sense behind such initiatives is that they give access to an enormous reservoir of free creativity that needs not be paid for (to be deployed either in the actual design of products or advertisements, or, more importantly perhaps, in brand building).[i] The importance of such non-monetary production is however not limited to the world of on-line initiatives or web 2.0. Within companies it has long been recognized that the prime source of productivity is not what people get paid for, but what is more difficult to include in a job description: their ability to network, share knowledge and support each other, to co-create a good working environment, a marketable service or a flexible organization. Managers recognize that the best way to foster such forms of cooperation is not through monetary incentives, but rather by fostering a solid corporate culture with strong values, a strong sense of solidarity or commitment, a particular ‘mood’ or ‘vibe’. Similarly marketers have discovered that the autonomous cooperation among consumers is an important source of brand value.[ii] Big Business increasingly consider NGOs as partners in supply chain management, insuring coherence with overall value standards and best practices. Finally, the ‘creative economy’ of the urban music, arts and fashion scenes, which is growing in importance as a productive externality for the creative industries proper, is not primarily motivated by monetary incentives. Most members of the ‘creative class’ do not live off their creative labour, but rather accept poor or precarious economic conditions as a (temporary, they hope) trade off for the ability to realize themselves or pursue their dreams. There is, in other words, an emerging archipelago of social production, ranging from the mundane to the sophisticated (OpenScience), from the small to the large scale. This new productive force is affirming itself as an important social, political and economic reality, with profound implication for the kinds of social scenarios that we can imagine for the 21st century. The emergence of social production has of course not passed unnoticed. On the contrary, recent years have seen a steady flow of books on the subject that analyse and draw out its social, economic, managerial or even spiritual implications.[iii] The most prevalent perspective however has been that of business. This is not strange since the growing prominence of management consultants and business writers as public intellectuals (and the concomitant growth in the number and status of business schools) have, since the 1980s, established the point of view and the preoccupations of the business community on the common agenda. Hence is not uncommon to see guides to he management of creativity, or analyses of the economic potential of web 2.0 next to Anne Rice and Michael Crichton in the airport bookstore. Consequently the last decade has experiences cascade of best-sellers like The Wisdom of Crowds, Funky Business, Wikinomics, The Rise of the Creative Class, Revolutionary Wealth and so on, by means of which we have been given a fairly elaborate and coherent understanding of these phenomena- a business theory of social production. [iv] However these explanations necessarily remain partial. They tend to depart from the business point of view, where the phenomena of self-organized social production present themselves as opportunities to exploit (and sometime as challenges to be overcome), but at any rate as something that needs to be subsumed under and incorporated within the established logic of affairs. These analyses generally do not depart from a detailed analysis of the phenomena of social production, rather they depart from what is usually a managerial or accounting problem- how to account for the value of intangibles, for example- and then only push their analysis as far as is necessary for them to deal with the challenge that social production poses for their particular problem. (By arguing, for example that the value of a brand builds on the psychological attitudes of individual consumers, it becomes possible to estimate the value of a brand by determining the psychological attitudes of different categories of consumers in a small sample, and then multiplying this with the total number of consumers in such categories. As a ‘measurement’ of an external reality this is of course entirely non-sense, but it works in that it allows managers to talk about the problem in some way and take some form of action.) ‘Business theories’ might supply functional abstractions, abstractions that work within the everyday practice of management. But these abstractions are seldom adequate as descriptions of what they depict. Such partial and ‘interested’ explanations are not without value, they allow the discourse and practice of management (and related disciplines) to go on, and they enable management gurus to make a living. The contemporary success of managerial discourse is premised precisely on the (perhaps healthy) desire not to reach too deep an understanding of current affairs, and not to ask too many questions. But there is (of course) a significant down-side to such reluctance to understand and analyse. While a consciously superficial approach might very well work in the short run, it builds on the implicit preposition that status quo will endure, and that if the growing galaxy of social production poses any serious challenges, then these can just be wished away. People who believe that this is not the case need a more far reaching analysis of what is going on, one which departs form the phenomena themselves, and not from the challenges they pose to established managerial practices. Such an analysis is crucial not only in order to undertake the systemic change that we, and a growing number of other people, think is necessary, as well as potentially profitable even in the short run, but also to actually accomplish what contemporary managerial theory sets out to accomplish, arriving at a rational evaluation of intangibles, or developing sustainable policies for creative development, for example. This entails going beyond the way in which these phenomena present themselves to business interests, and to descend into the depths of production, as Marx put is some 150 years ago. To propose such an understanding will be the task of the following three chapters. In this chapter we would like to outline the most common positions of contemporary 'business theory' in order to show both what they have understood, and what lacks in their understanding. We will argue that what these established positions lack the most is an understanding of the value logic that governs social production. Most of business theory sees social production as something close to a natural resource to be freely appropriated by business, a 'free lunch for business' to use Alvin Toffler's term. Since these practices do not move according to a monetary logic of value, they appear to have no value. However this is a misunderstanding (as the following chapters will show in more detail) and a potentially costly one too. Not to understand the particular logic of value that governs social production make for poor business judgements and tactical blunders in trying to exploit this resource. More seriously perhaps it creates a strategic blindness as to what are the larger social and economic implications of this new phenomenon. The outline that follows might seem a bit of a caricature, reality is more complex, most individual business book expose some genuine insights that are, generally, not shared by others. But more or less, they share the following four cardinal mistakes. First Mistake: Individualism The back cover of an enormously popular management book sums it up well: ‘Karl Marx was right. The workers do control the most critical means of production. 1.3 kilograms of brain holds the key to all our futures’. It expresses a very common view within contemporary business theory: that strategically important resources like intellectual capital, innovation, social capital, agility and what have you are the outcome of the properties of individuals, and that consequently these valuable individual properties can be owned, as a form of human capital. The notion of human capital, that workers have individually acquired and propertied skills which differentiate their market value goes back to Adam Smith, who listed this as a fourth form of capital: along with machines, buildings and land. He defined it as qualities embodied in the human psyche, acquired through real expense and effort and thus, (according the humeian conception of property that he worked with) the legitimate property of individuals. [ q Smith: the acquired and useful abilities of all the inhabitants or members of the society. The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person. p…] Since then it has been a core assumption of the human capital literature, including Peter Drucker's path-breaking notions of a new class of knowledge workers that he argued were defined by skills acquired in formal education. [v] However, this testifies to a profound misunderstanding of how social production works. Such a theory of human capital might very well have been true in Smith’s own time. The new industrial production that he described still relied on the specialized skills of individual craftsmen who preoccupied themselves with specific aspects of the production process, as he observed of the pin-factory: one man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds. [q] This was before modern industrial organization however, the explicit purpose of which was to make workers replaceable and to radically decrease the value of specialized individual skills. (To a great extent the success of Fredrick W. Taylor’s scientific management depended on its political efficacy. It served to weaken the power of heavily unionized craft-workers, by enabling employers to replace them with recently arrived immigrants with little in terms of industry specific skills and political consciousness.[vi]) Along the assembly line any man (or woman) could take any position. The reason for this is that in industrial capitalism productivity no longer depends primarily on individual skills, but on the social organization of production. (Or rather, the kinds of technical skills needed: the ability to operate a machine and to function in a factory environment, are abundant.) And since this tendency towards more generic technical skills increases with automation, it is true for the contemporary information economy as well. It is true that knowledge work does require some formal skills, and that the diffusion of such skills by means of secondary education has increased, as Peter Drucker predicted it would. But in most cases these skills boil down to the ability to use a computer and a certain familiarity with the language and practice of management. Such skills are hardly scarce: the very boom in secondary and in particular business education has made them abundant. (In the US the number of college BA degrees conferred annually has almost doubled, from 840.000 in 1970 to 1.450.000 in 2005.At the same time the number of business MAs has increased more than sixfold, form 26.000 in 1970 to 143.000 in 2005.[vii]) An MBA is a condition of entry into the profession, but not, in themselves what determine the market value of a knowledge worker. The skills that distinguish valuable or 'talented' knowledge workers are different. They are generally skills that one can apprehend from other knowledge workers. Most successful entrepreneurs in the high-tech sector have been able to capitalize on insights that they have developed by participating in networks of knowledge sharing or 'collective intelligence' like OpenSource or other peer networks, or by otherwise taking part in milieus that cultivate particular specialized forms of knowledge (Los Angeles for film, New York for Advertising, Silicon Valley for software etc.) Indeed, the prime minds of the 'web generation' that have been driving the 'New Economy' since the dotcom boom of the 1990s, people like Bill Gates or Steve Jobs, acquired their extraordinary skills, not in universities or other systems of formal education, but by participating in informal knowledge milieus, like the hacker or computer amateur movements. The same thing goes for today's Web 2.0 entrepreneurs who learn their ropes in Barcamps and similar informal environments. Indeed a surprising number of them are college dropouts. For ordinary knowledge workers a similar mechanism is at work. Even though they might posses a formal education, their market value is increases greatly with their experience. It is difficult to get a job when you're fresh out of university, but generally after three to four years in a first job you begin to get a lot of offers. What is it that these knowledge workers pickup in their first few years of professional existence and that makes them so valuable? It is generally social skills. The present ‘war on talent’ is on for people who are able to motivate others and have proven their worth in acquiring and nurturing networks or otherwise organizing social processes, or in creating 'a climate conducive to innovation' or to use the definition of McKinsey’s recent research report on the ‘war of talent’ smart, sophisticated businesspeople who are technologically literate, globally astute, and operationally agile [and that], in the right kind of culture, have better ideas, execute those ideas better - and even develop other people better.[viii] In other words, talent is primarily about being able to s exploit the capacity of social production. Such talent is to some extent a matter of personal qualities. However the personal qualities required are mostly affective qualities: the ability to feel with, motivate (or manipulate) others. William Halal calls this ‘inner leadership’: it builds on the capacity to ‘really listen’ and being able to articulate the common vision and wisdom of a productive network. And these are skills that come with networks. That is, it is often the case that people who are talented in this way owe their ‘talents’ to the networks that they can command. So the most valuable skills in today's workplace are generally not, codified skills obtained by investments of time and money in formal education; the skills that reside in your head, that you own. Rather they are non-codified, or tacit skills obtained by participation in productive networks; the skills that reside in the common social environment in which you move, and that you share with others. They are skills that emerge from and develop and grow in large-scale non-institutionalized social processes. Richard Florida get this right when he points at the city rather than the firm or the university as the main catalyst of knowledge and talent, and underlines the fundamental role that openness, talent and 'free' forms of social interaction play in this process. (And before him there was a long, although more technical and less popular literature on learning regions or districts.) Indeed, recent empirical studies of 'creative cities' show that what distinguishes successful members of the ‘creative class’ is that they have networks that extend into the ‘dark matter’ of (mostly unpaid) self organized creative production that marks the metropolis, and are thus able to mobilize and translate such resources into commercially viable products. [ix] The 'knowledge economy' is more than anything else a 'communication economy'. It does not primarily thrive on particularly talented individuals, but on social formations where knowledge circulates rapidly and effortlessly, and where collective intelligence thrives. [x] So the popular standpoint that attributes qualities like agility, flexibility or innovation to individual talent is right in the sense that it recognizes the growing importance of such ‘soft factors’ vis-a-vis material production. It is wrong however in treating what is an emergent property of networks as if it was an individual skill. Or rather it is not so much a matter of being wrong as it is a matter of being ideological, i.e. of being wrong in an interested and strategic way. Management itself recognizes the fundamentally social nature of these phenomena, as the salience of concepts like social capital or collective intelligence testify to. Indeed, the recommendations for new ‘talent management’ that came out of McKinsey’s survey on the ‘war on talent’ was that managers should invest more in shaping the company to appeal to and nurture ‘talent’ through, among other things coaching and mentoring programs. So nurturing talent comes to be primarily about creating a social environment that promotes these kinds of attributes among successful individuals. [xi] At the same time, the authors recommend that companies differentiate among A, B and C performers and reward people accordingly. What this amounts to is essentially making people responsible for and rewarding them for the performance of the social networks of which they are part. This might provides a viable point of control or governance- the individuals that can be rewarded or punished for the outcome of more large scale social processes and that thus have an incentive to try to steer or manipulate these- but it does not further any real comprehension of the nature of these social processes. The outcome is rather to foster a cynical and manipulative attitude, as well as a generalized experience of insecurity. Second Cardinal Mistake: Cynicism Such a cynical and manipulative attitude is evident in the self-branding literature, of which Tom Peters’ The Brand Called You is the perhaps most abhorrent example. This has become a very influential force in fostering a managerial state of mind to fit the realities of contemporary social production: much like Benjamin Franklin-inspired self-help books helped foster 19th century industrial entrepreneurs. The argument goes a bit like this: In an earlier epoch, personal identity was largely given by factors beyond the control of the individual- class, religion, inherited profession- and did in any way not matter much for his or her personal success. Today, however, personal self-presentation and social networks are directly productive elements and need to be rationally cultivated in order to maximize the individual’s chances for success. To become a ‘personal brand’ thus means to rationalize one’s self-presentation in order to maximize one’s social efficiency as a ‘networker’, but to do this for ultimately purely strategic purposes: to further one’s personal success. Apart from the outright cynicism that marks this approach, the personal branding literature is marked by two fundamental misconceptions (which it shares with much of the branding literature tout court): that ‘networks’ are morally neutral and that strategies of symbolic manipulation, to pretend or appear to be something, are sufficient to obtain real results. The presupposition that networks are morally neutral is common to most contemporary social science approaches: from the now long-standing discussion of social capital, trough the booming field of mathematical network theory to contemporary theories of the ‘attention economy’. In the latter approach it is assumed that the value of a brand or a website is directly related to the quantity of attention or ‘hits’ that it can accumulate. It is not that theories of an attention economy discard the affective qualities of relations as unimportant. But they argue, along with influential notions of an ‘experience economy’ that such affective qualities are mainly realized in personal experiences that arise from the individual encounter between a consumer and a product, brand or service. In other words qualitative experiences are individual psychological phenomena, and not socially shared. This approach might have worked reasonably well in an earlier online economy (Web 1.0), but contemporary successes like Twitter or MySpace depend not only on the number but also on the affective qualities that they can generate: they are successful because they are experienced as communities. Similarly, most empirical research on ‘experiential consumption’ stresses the social production and consumption of such valuable experiences: that is, for most experiential consumer goods, the value of the experience consists in its ability to provide and experience of social relations and community. In social science, social capital or ‘networks’ are similarly measured according to the quantity of social connections that they enable; essentially a person has a high degree of social capital or is a powerful node in a network if he or she knows many people and can activate these connections, while the affective qualities of these connections are often ignored. While such an approach might carry a lot of explanatory weight in analyzing the diffusion of viruses or the political potential of a social movement, it does not offer a good understanding of how networks function as a productive force. As Chapter X will show in more detail, the affective qualities of network relations matter a lot in the networks of social production: that's why we call them an 'ethical economy'! Indeed this economy is ‘ethical’ precisely because what gives these networks productive power is that its members experience them as communities. Consequently actors are generally conscious of the importance of the affective qualities of relations that underpin such experiences of community and put a lot of effort not only in expanding the size of their networks but also in cultivating their community status. This is generally done by ensuring that ones actions not only further ones own goals, but that such actions also promote ones standing within the community. In short to be a productive member of a community (networked or not) one must matter to that community. And to matter one must actually do things for that community. Simply to appear to matter or to brand oneself as ‘someone who cares’ is not enough. The presumption of moral neutrality is related to the idea that symbolic intervention is sufficient to manipulate such networks. It is telling that the most important theory of causation underlying such approaches is magic. As suggested by The Secret and other similar successful self-help books, reflexive manipulation of what one can control- one’s self or ones thoughts- will somehow magically affect what one cannot control, the realties of social relations.[xii] To quote one self-branding article, this time (quite paradoxically) praising the virtues of appearing authentic: If you are branded in this organic, authentic and holistic way your Personal Brand will be strong, clear, complete, and valuable to others. You will also create a life that is fulfilling and you will automatically attract the people and opportunities that are perfect for you. [xiii] The recourse to magic is the result of the lack of an underlying theory of the productive dynamics of such networks. Magic, like cynicism results from believing that self-organized forms of social production lack a logic of value: that there is no systematic way of evaluating the quality of relations or the contribution of participants, and that questions of value can thus be bracketed with relative ease, to concentrate on the mere size of what one is able to appropriate, the number of clicks or connections. Alternatively this is understood as a magical source of wealth that somehow (in ways reminiscent of protestant theories of predetermination) just flows to the worthy. Not surprisingly such a worldview, marked by either cynicism or magic is similar to that which characterized the medieval European feudal lords who, lacking a theory of agricultural production, had no way of understanding the true nature of their riches, attributing them instead to the wheels of Fortuna. This might not have been an inaccurate description form their point of view, but it made them utterly unable to rationalize and improve the source of such riches. Similarly, contemporary theories of self-branding and the attention economy might offer ways to manipulate and even estimate one’s share of social production, but they offer little guidance in nurturing and rationalizing this productive force. So, to summarize, theories of self-branding and networks are right in that they appreciate the social nature of valuable skills. They do not understand, however, that these social forms, networks, are not just morally neutral agglomerations of 'connections', 'links' or 'nodes', but, in so far as they really are productive, they are ethically significant communities. Third Cardinal Mistake: Gratuity This lack of a theory of value is particularly evident from the business theory of social production, wikinomics, user-led innovation and so forth, and a lot of the critical academic attempts to come to terms with this phenomenon that have emerged in recent years. Neither of these two streams of thought engage with their object on its own terms. The analyses put forth by business theory, exemplified by successful books like Wikinomics, or Revolutionary Wealth generally consist in a list of examples and illustrations of the fact that a lot of (primarily) immaterial wealth is now produced outside of the direct control of capital, informing managers and other potential readers of this new opportunity and suggesting how to best appropriate and monetize it. It generally lacks any in-depth analysis of these phenomena. This is evident not only from the fact that a range of widely diverse practice - form using an ATM to producing OpenSource software- are lumped together under the same heading, 'prosumerism' or something similar, but also from its general blindness to any potential contradiction or even conflict between these socialized productive practices and the value logic of capitalism.[xiv] Instead the 'prosumers' are simply seen as a natural resource to tap into, as an immense free lunch for business. The chief problem is understood to be to bring such 'non monetary phenomena' into the monetary economy again, to enclose and commodify them.[xv] This notion of social production as a 'free lunch' departs from the misconception that since these practices do not follow the monetary logic of value of capitalism, they cannot follow any logic of value. And since they do not follow any logic of value of their own they can be tapped into and subsumed under a capitalist logic of value without this creating much friction. Like the networks through which they are organized these productive practices are perceived to be value-neutral. This inability to imagine that social production can have a value logic of its own leads to a least two strategic shortcomings that could easily have been avoided. It also risks provoking a growing legitimacy crisis for capitalism as a system. This is visible at the minute everyday level where savvy consumers recognize their productive role in producing brand value and resent the brand owners whom they feel are exploiting them[xvi]. It is beginning to be visible on a larger scale, as social movements are forming around the issue of guaranteed income, which is perceived as just payment for the unpaid productivity that most people qua 'prosumers' engage in. In failing to recognize and understand the logic of value that underlies self-organized practices of social production, business risks further alienating or even antagonizing the people involved in these practices on which business itself tends to be ever more dependent. A similar refusal to recognize that these phenomena might have a logic of value of their own, is also common among academics and intellectuals. While liberal academics like Yochlai Benkler, simply leave the question open, arguing that new practices of social production are driven by a diversity of individual motivations and that their particular political and institutional consequences are yet to be seen, most academic or critical analyses come from an anarchist or a Marxist perspective. To the anarchists it is politically useful to argue that new practices of social production have no unified logic of value. This allows them to argue that a social formation without any central order is in fact emerging. (And it does not hurt that such perspectives agree well with the established cannon of postmodernist, or post-structuralist 'Theory'.) Web 2.0, peer production and related practices thus become an incarnation of 'actually existing anarchy', much like the Soviet Union incarnated 'actually existing socialism' to European communist parties up until the mid 1970s. The Marxists, on the other hand, are generally too fixated on the labor theory of value to even conceive of possibility that other forms of value might exist. This gives them two, equally misleading options. One, they can argue that practices of social production are 'beyond value' and hence effectively proclaim the imminent (or virtual) arrival of communism as Marx intended it. Alternatively, they can try to reduce these practices to the established logic of the labor theory of value, by arguing for example that the 'value' of free software is set by the alternative cost of employing programmers.[xvii] Both these prepositions miss the point (as Chapter IV will show) and they lead to inefficient political suggestions: utopianism in the first case, an inability to conceive of the radical potential of present developments on the other. An adequate comprehension of the emerging value-logic that actually guides these practices is even more crucial to progressive thinkers who whish to extract, not monetary exchange value, but new political and ethical values- ideologies and form of life- from these practices. In order to do so with any hope of success, they must leave the schemas and models of the nineteenth century behind. Fouth Cardinal Mistake: Imesurability The area where the absence of a theory of value is most strongly felt is that of intangibles. Since the 1950s there has been a steadily growing significance of this strange asset in financial calculations.[xviii] Today, some, like the World Bank, estimate intangibles to make up a whopping 70 per cent of the world’s wealth.[xix] In a recent article Business Week estimates that investments in intangibles (which are not counted as investments in traditional national accounting systems) could amount to 6.8 per cent of national expenditure in the US, or about $ 1 trillion. There are also clear indications that the relative value of intangibles has increased in recent decades. Leonard Nakamura of the research department of the US Federal Bank argues that factoring in intangibles would result in 0.3 per cent higher growth figures for the US economy in the 1970s and 1.2 per cent in the 1980s. Similarly, data on the one hundred most traded companies on the London Stock Exchange estimate the share of market price attributable to intangibles to have increased from about 20 per cent in 1950 to about 70 per cent in 2000. [xx] In his study Baruch Lev concludes that overall, current levels of intangibles relative to book value are unprecedented, having risen from little over one per cent in the late 1970s to more than six per cent in the 1990s.[xxi] What then is an ‘intangible’? There are many candidates, brand value, reputation, goodwill, stakeholder relations, human capital are most common. But essentially ‘intangibles’ are defined as things that account for the growing discrepancy between the market values of companies and their book values. This way an intangible is something that one knows (or at least suspects) creates value, but that one cannot measure. Intangibles are those assets that an old accounting system, developed in order to measure the productivity of the ‘tangible’ assets: those involved in materially oriented industrial production, cannot measure. While most intangibles are also immaterial assets, this is not the crucial point. (A work of art, for example, or a new storefront, are highly material things, but the benefits they might confer to a company, the increased goodwill or brand equity, are counted as intangibles.) ‘Intangible’ first of all signifies ‘immeasurable’ (within the present accounting system). Indeed there is an emerging consensus in the accounting community that the growing importance of intangible assets have produced a situation where financial reporting no longer represents actual value creation. [xxii] As Chapter III will explain in more detail, this rising discrepancy between market value and book value, and the concomitant rise in the importance of intangibles is the consequence of a real structural transformation in post-war capitalism: the growing socialization of production and its allocation to productive practices that cannot easily be subsumed under established practices for representing assets as (valuable) capital. These practices include the self-organization of knowledge work (represented as 'social capital' or 'knowledge capital', consumer co-production of brands and experiences ('brand equity), Intellectual property that originates from socialized processes of knowledge creation and most of the practices that this book treats as the productive substratum of an emerging ethical economy. In a way informational capitalism here faces a problem similar to that which Herman de Soto has famously described in the case of poor, underdeveloped countries. These countries are poor, not because they do not have any assets (the poor save a lot), but because these assets cannot be represented as valuable, as capital that can function as collateral for credit for example, in any reliable or systematic way. Similarly a contemporary brand-centric company knows that it has a lot of assets in the form of consumer trust and sympathy, but it has no way of representing these assets as value in any rational or coherent way. That there is no coherent, established method for valuing social production (and this is the crux of the matter) does not mean that there are no attempts in that direction. On the contrary there is a booming market for more or less fantastic solutions for valuing intangibles. These instruments are however generally not interested in measuring the value of practices of social production. Instead, and like the business approach to social production in general, they depart from an established problem- the discrepancy between market and book values- and try to invent credible fictions that can account for and legitimize these discrepancies. The mere diversity of approaches and methods that they exhibit in itself testifies to the absence of an established standard measure. The absence of a rational measure of intangibles has problematic consequences for the systemic rationality of informational capitalism. First, the absence of such a measure inhibits the rational allocation of resources. This tends to increase the irrationality and volatility of financial markets and produce recurring speculative bubbles: dotcom, housing market, and what next. It also makes it difficult for agents who do want to have a social impact to decide where to put their resources. Today it is very difficult to know which NGO has a real impact, or which 'ethical' brand actually behaves in a desirable way. Finally, the absence of an established measure means that the non-monetary values that all admit have a growing subjective relevance to a wide range, or even a majority of actors- sustainability, fair trade, global solidarity- lack an adequate impact on business decisions. (Rather engaging with these 'values' becomes a matter of philanthropy, of 'doing good'.) Even if a majority of managers do feel that these things are worth something, there is no way to include their worth into the calculations of objective costs and benefits that drive managerial decisions. Since these values have no objective emboiment, they cannot become a parameter in business decisions. This is tragic, not only from the point of view of a necessary transformation of global capitalism, but also from the point of view of the single company. If it is not able to take these values into account in a systemic way, it is not able to act rationally from a long term, strategic point of view. Conclusion. The split in the information economy means that business increasingly rely on an asset- social production- that it does not fully understand. From the established and growing corpus of business theory we can extract a partial understanding. First, that is by now common knowledge that immaterial or intangible resources are a crucial asset to business. This can be a matter of codified knowledge. But often this asset is composed of things that are more difficult to pin down: tacit knowledge, flexibility, creativity, reputation, brand equity and so on. Second, there is an emerging consensus that these assets, or at least a growing share of them, are produced in processes that unfold beyond managerial control. Consumers interact around a brand, knowledge workers organize their own work-process, bloggers generate reputation that spreads 'virally' and so on. What is missing is an understanding of the value logic behind such processes. This lack implies two important things. First, although there is consensus as to the fact that these intangible assets are worth quite a lot, nobody is able to say with any precision how much they are worth. We lack a rational measure. Second there is an emerging consensus as to the importance of working with, nurturing and supporting processes of social production, of taking them seriously as an asset. However nobody seems to have considered that such a serious consideration of social production might have important implications for the ways in which established business work and think. In order to begin to fill this lack, we need an understanding of the value logic that governs social production. And where better to start than with its historical emergence.

[i] Benkler, von Hippel

[ii] Holt Arvidsson

[iii] we think, here coems everybody, wikinomics, cathedral and bazaar

[iv] Social Scientists have analysed this growing ‘reflexivity’ of capitalism: see Nigel Thrifts Knowing Capitalism (London; Sage, 2005) and Luc Boltanski and Even Chiapello’s Le nouvel esprit du capitalisme (Paris; Gallimard, 1999) for two particularly insightful analyses.

[v] Landmarks of tomorrow, 1959

[vi] Moulier Boutang- esclavage salariat

[vii] see national Center for Educational Statistics, US department of Education, http://nces.ed.gov/fastfacts/display.asp?id=37, accessed 23/7-2008.

[viii] Fishman, C. ‘The war for talent’ Fastcompany, 16, July, 1998.

[ix] Currid...

[x] Rullani…

[xi] Ed Michaels, Helen Handfield-Jones and Beth Axelrod, The War for Talent, Cambridge; Harvard Business School Press, 2001.

[xii] Byrne, R. The Secret, New York; Atria Books, 2006.

[xiii] Hubert Rampersand, ‘Authentic Personal Branding’ Brandchannel, Jan 14, 2008 (available at http://www.brandchannel.com/papers_review.asp?sp_id=1360 , accessed jan 20, 2008).

[xiv] Toffler

[xv] Toffler, A. revolutionary wealth

[xvi] See Holt, N. 'Why do brands cause trouble',…

[xvii] Firt perspective, Negri, value and affect, second perspective, Swedish guy, hacking capitlaism

[xviii] Estimates of the size of ‘intangibles’ are by their very nature difficult. (The best definition of an intangible is aguably ‘ a resource that we think is valuable but cannot measure with any precision within existing accounting systems’A recent paper from the World Bank estimate intangibles to make up 77 per cent of the world’s total wealth. They define the ‘intangible capital variable’, by the way as‘all those assets that are unaccounted for in the estimates of produced and natural capitalsee. Where is the Wealth of Nations. Measuring Capital for the 21st century, Washington (DC); The World Bank, 2006, p. xvii, passim (available at http://siteresources.worldbank.org/INTEEI/214578-1110886258964/20748034/All.pdf , accessed 7/1, 2008).

[xix] World Bank, 2006, Where is the Wealth of Nations. Measuring Capital for the 21st century, Washington (DC); The World Bank

[xx] Mandel, M. , Hamm, S. & Farrell, C. ‘Why the economy is a lot stronger than you think’ BusinessWeek, 13/2, 2006 (available at http://www.businessweek.com/magazine/content/06_07/b3971001.htm) accessed 25/11-07, Nakamura, L. ‘Investing in intangibles. Is a trillion dollars missing from GDP?’ Business Review, 04/2001, pp. 27-37 (available at http://www.philadelphiafed.org/files/br/brq401ln.pdf , accessed 25/11-07).

[xxi] Lev, B. Intangibles. Mangement, Measurment and Reporting; Brookings Institute, 2001.

[xxii] ‘A European peer discussion: ‘Measuring and managing intangible values in today’s economy’ The New Economy Analysis Report, nov. 30, 2002, juergendam.com/news/11_20_2002.htm (accessed 23/11-07).

OldVersionCH.I

AdamArvidsson — Thu, 06 Nov 2008 07:39:01 CST

Going to the bookstore has become a depressing experience. While television and the tabloids are busy with the usual- advertising, celebrity culture and home decoration- books seem to probe more deeply into the our collective anxiety. In consequence bookstores, at least in the UK, are filled with titles that propose the end of something or other, oil, food, energy, credit, affluence, globalization, security, civilization or even human kind as such. (One of the recently most successful products in this genre was a combined book and documentary exploring what the world would look like if -or when, this was at least the implication- human beings had disappeared.) Together with the rise of religious and secular doomsday prophets, eco-relativists pointing at our cosmic insignificance and Hollywood's enduring fixation with disaster and apocalypse -Disney's new cartoon features a cute robot who is cleaning up the debris left behind on a post-human planet- the abundance of such titles create an enduring perception of looming disaster and overwhelming crisis, at least among those who have the time and energy to care. More dramatically, there is a shared perception that none of our existing political and economic systems, or even ideas are able to redeem this threat. Instead they appear to be part of the problem. (Will existing political and economic systems manage to reduce even the speed of increase in global carbon emissions? Probably not.) It seems that civilization as we know it is going straight to hell (in 2012, perhaps!), and nobody knows how to even slow down, much less stop the ride. This crisis is real enough. Only twenty years ago global capitalism stood out as the only realistic alternative, and promised to achieve wonders in alleviating poverty and democratizing the access to basic necessities, promoting double-digit growth rates across Asia and creating a new global middle class with identical tastes for McDonald's Hamburgers and Nike sneakers.[i] With the exception of Africa and parts of the Middle East, this 'flat world' seemed to have the potential to involve everyone in a new affluent global eucumene of consumer culture, thus realizing the rosy predictions of global affluence and convergence on the part of the American 'Cold War Left' in an enduring pax americana [ii] Now it is clear that this last boom of global growth (the belle époque of the 1990s) was living on borrowed time; that its fundamental productive synergies- global brands with global supply chains- depended on cheap fossil fuels, which are both running out and creating an ever more tangible environmental disaster; and that its consumerist boom built on an ingenuous and hyper-complex but in the end unsustainable credit bubble. In fact, globalization is now slowing down; US steel production is increasing as transport costs make it to expensive to produce such basic commodities in China.[iii] And with the possible off-set of more rapid sea-passage enabled by an ice-free Arctic region, this slow-down is set to continue, and move up the value chain until nothing but very labour intensive goods can be profitably produced in Asia for the European and US markets. This will spell disaster for consumer capitalism as we know it. (No more IKEA!) However beneath the shiny surface of shopping malls and global brands (that managed to blind intellectuals, and have them obsess about 'postmodernism' or even the 'end of history' for almost a decade) global capitalism is far too locked into its oligarchic interests to alter its basic modus operandi. Consequently it will not kick its addiction to fossil fuel, despite noble albeit vague pronouncements to the contrary [G8 in Japan], but continue to wage wars for control of oil access and push new exploration into as yet untouched areas, creating a hundred new Nigerias and Iraqs, and in the process further increase inequalities globally as well as nationally, to the point where the privileged elites have no choice but closing themselves off into gated islands of luxury in a sea of militarized slums- like a 1970s horror movie come true! [iv] This is already happening, in the US income inequality is at its highest level since 1928 (the year before the Great Depression!), and the number of gated communities and private security firms is rising continuously: the poor and the rich become increasingly spatially segregated, inhabiting different worlds (and the tendencies are similar in developing economies like China or Turkey.) [v] Figure I. US income inequality as measured by the top 1 per cent's share of total pre-tax income, 1913-2005, including capital gains. Data elaborated from Piketty, T. & Saez, E. 'Income Inequality in the United States, 1913-1998' Quarterly Journal of Economics, 118(1), 2003: pp-pp. Updated to 2005 at http://emlab.berkeley.edu/users/saez, available at http://www.demos.org/inequality/numbers.cfm , accessed 14/7-08. Even worse, perhaps, this situation seems to be thoroughly ungovernable. National and international politics is ever more blatantly a playground for elite and oligarchic interests and democracy a media-show to deceive the masses (Iraq docet!). Consequently the masses abandon politics, voting figures are steadily declining in the US and Western Europe, making 'democracy' but a shallow catchword to be used with the utmost cynicism (as in 'spreading democracy to Iraq'). Even sincere politicians are too closed up within old, ever more irrelevant ideologies that at best have nothing to say about today's realities and, at worst, turn into almost Orwellian variants of NewSpeak, like 'New Labour' or 'Communist China'. The only thing left are irrational and extreme populist movements, xenophobia, neo-nazism, and the worst kinds of religious bigotry as in Muslim and Christian fundamentalism, with their various charismatic and apocalyptic manifestations. This move away from politics is understandable and entirely rational since states are less and less able to or even interested in doing something to benefit the average citizen, and in particular the poorer-than-average citizen. BOX: similar dynamics of muslim and Christian fundamentalism. Decline economic growth middle east, decline US bue collar workers, Saudi Arabia finances mosques proseltimsa s political constituency, chirstian funadamentealism cynically maipulatd by political establishment. The problem is that not much else seems to be able to offer anything in its place. Everyday life at the turn of the century is marked by a widespread social disintegration, anomie and loneliness, paired with a generalized existential anxiety and fear, manifest in mass prescriptions of anti-depressants, tranquilizers and other forms of psycho-pharmaca (the prescription of anti-depressants in the UK more than doubled between 1991 and 2001) and wide-spread eating disorders and other forms of destructive behaviours. [vi] The most profound crisis perhaps is intellectual. Within an environment of trash culture intellectuals seem unable to rise above the fray. Instead they are either too overwhelmed with the general situation of despair, too disillusioned by the failure of their youthful political ideals, too corrupt or too locked into an ever more scholastic academia to be have anything to say about the world around them. Life at the turn of the century is lonely, insecure, anxiety ridden and devoid of any source of meaning or direction, apart from the shopping mall and the mega-church. At the same time, however we are in the midst of what can very well be described as a new enlightenment. Like the diffusion of print media in the 18th and 19th centuries, the spread of networked information and communication technologies (Ict's) have produced a massive empowerment of collective intelligence on a planetary level. Millions of people contribute regularly to blogs and act as citizen journalists, and just as many produce and distribute their own music or video, millions take part in discussion groups and online fora for a exchanging ideas an knowledge on everything from cake-design to alternative treatments for diabetes; and hundreds of thousands contribute to more specialized pursuits like writing Wikipedia or Linux code, or engaging in enlightened debates on spirituality, environmental sustainability and the habits and intentions of space-aliens. Within this massive socialized productivity new kinds of social relations are forming: young people travel and make friends all over the world through Couchsurfing, a site where people offer their hospitality all over the globe, organic farms recruit voluntary labour power on Wwoof; people keep in touch on Facebook, and lonely people find real partners on dating sites or virtual ones in artificial worlds like Second Life. The statistics clearly indicate that we are witnessing a massive spread of a new, participatory culture: in 2006, according to the Pew internet survey, 49 per cent of the American population had contributed to creating online content, and (in 2007) 64 per cent of all teenagers, today the figures are probably even higher as the participation rates as well as the productivity of this collective intelligence are increasing exponentially (see Figure x in Chapter I). [vii] [Box: three enlightenment: speech, writing, print and ICts] Like in the first enlightenment, this flowering of collective intelligence is linked to the arrival of a new medium. Then, mass printing enabled a (by then) enormous number of people to become authors, producing literature and, more importantly perhaps, pamphlets and learned treatises on a multitude of subjects that led to a massive acceleration in scientific, scientific and technological and philosophical. And this flowering of collective intelligence made possible by a new medium lead to a number of new social, economic and eventually political practices: the coffeehouse with its free space for political and philosophical discussion, the large industrial firm with its precise bureaucratic systems of management, and eventually, nation states and democratic mass politics. Today we can see a number of such new social and economic practices emerging around new information and communications media. Food production systems are being re-organized all around the world, taking advantage of new media to combine the quality and transparency of local production with the economics of new computerized distribution system. Community Supported Agriculture, the fastest growing element of the US food economy enables thousands of people to regularly receive fresh, high quality produce made in a sustainable way in exchange for a few hours of farm labour. In the poor 'South' new media are used in innovative ways to keep farmers abreast of world market prices for their produce and taking charge of marketing themselves, thus bypassing middlemen. Innovative systems like Prosper and Kiva coordinate the cash needs of poor entrepreneurs with thousands of micro-donors. This way you can pair up with 10 strangers to lend a Vietnamese small-scale pig farmer the cash needed to invest in a new fence! Along side multitude of forms of cooperation are flowering linking poor producers, rich consumers, social entrepreneurs and corporations in new and innovative ways.[viii] In big cities in the North there is a flowering of creative production as more and more young people chose artistic careers (see Figure x Ch I), using cheap and ubiquitous digital technologies to create music, design and art and distributing their works and coordinating their collective effort through the internet. All across the North, people are coming together in a multitude of self-organized productive activities, communal gardening, time-banks, reading groups, New Age and other spiritual pursuits, the realization of 'kinky' sexualities, producing and circulating recipes, and improving on and altering sporting goods like skate-boards or Mountain bikes. Surveys show that between 58 and 79 per cent of the adult population of Western European cities take part in some such activity of social production. And they do it not only because of need or desire for a particular good or product (be this better skateboards or organic carrots), but also because taking part in such practices of social production is an excellent way to create networks and friendships in the face of the looming loneliness that has become an intrinsic feature of the modern world. (Our survey in the Swedish city of Malmö indicated that xxxxxx) So as older forms of civic participation based on the political party, the labour union with its associated organizations like the evening school or cultural association are dwindling, new civic culture based on self-organized forms of social production, enabled and empowered by new media, is emerging. People might 'bowl alone' but they socialize around farmer's market and the online forum.[ix] It seems clear, and ever more people are recognizing this, that it will be thes new forms of self-organized production that will offer the blueprints and inspiration for how to achieve the necessary re-orientation of our global system in a more sustainable way. The business world has definitely recognized this radical potential. In fact social production has acquired a sizeable economic importance as large companies, from Nokia to Procter & Gamble, tend to progressively include consumers in the processes that produce value. In the last decade these strategies have evolved from the indirect inclusion of consumers as co-producers of the symbolic and affective status that give value to brands, to their direct involvement in user-led innovation systems, 'crowdsourcing' and viral marketing. Procter & Gamble has allegedly improved the productivity of its Research and Development department by 30 per cent, by systematically involving consumers in the development of new brands, packaging and even products. In Latin American and across Asia companies are involving poor people themselves in co-producing services like insurance and banking for the enormous markets at the 'bottom of the pyramid'. Other companies like IBM has reorganized its entire business model around the provision of services around a product, open source software that is produced in autonomous networks of social production. [x] In the Web 2.0 economy entire business models, like YouTube or Facebook build on the cultivation of user-generated content, and through the spread of contemporary convergence culture, such business models are becoming increasingly influential in the mainstream media industry as well.[xi] Overall marketing theorists are thinking ever more in terms of a fusion of the once neatly separated areas of consumption and production. People are becoming 'prosumers', 'prod-users', or 'professional amateurs' and they are contributing ever more to the production of the goods or brands that they consume. As Chapter II will discuss in more detail, contemporary capitalism is becoming increasingly dependent on social production, on what it sees as the free labour of a connected multitude of consumers. [xii] However, this capitalist dependency on social production does not mean that social production- the archipelago of self-organized productive practices that have emerged around new information and communications media- are part of, or even easily compatible with the capitalist economy. Indeed, as this book will argue throughout, social production follows a value-logic that is radically different from that of the capitalist economy. As the founding fathers of modern social science- from Adam Smith to Karl Marx and Max Weber- have all argued, the capitalist economy is unique in that it institutionalizes the maximization of private profit- to get rich- as the overall aim for economic activity. (While there has always been people who have striven to get rich; this ambition was socially marginal before the arrival of modern capitalism, and generally looked down at or shunned. Most production of goods of everyday use occurred locally according to in quantities and qualities that were, by and large, determined by tradition, see Chapter III for a further development of this argument.) This way, for the first time in history, the production of goods and services to satisfy needs and wants becomes simply a side effect of the urge to make an ever-greater profit. However participants in social production are generally not motivated by the desire to make a profit in terms of private accumulation of monetary gain. (True, the money motive is there, but in most surveys it emerges as relatively unimportant, see Chapter III.) Instead they take part in activities of social production for principally two reasons: First, they want to realize themselves and make the most of their talents or interests, and they want these efforts to be recognized by people that they themselves recognize as their peers. Second, they sympathise with a cause, identify with a productive community, have a strong feeling of affinity or affiliation with a brand or company, or simply want to make friends and expand their social life, and contribute their time and energy to its cause because of this. We can rephrase this to two primary- and interconnected- motives for taking part in efforts of social production: socially recognized self-realization and the desire to matter to other people and have and impact. Conversely, people who engage in social production are not primarily valued according to the amount of money they make, but according to how much they matter to the particular productive community or the causes that it embraces. The currency of value are networks and respect, and the people how are at the top of these -often strongly hierarchical- fields tend to have the largest networks and command the greatest amounts of respect. Now networks and respect are both media that communicate how much an actor matters to other actors in a particular productive community. Networks are a quantitative medium that vary with the amount of people you matter to, respect, on the other hand is a qualitative medium: respect depends on the quality of impact you have on those people's lives. So in contrast to the capitalist economy, actors are not valued in terms of the amount of private property that they can accumulate, but in terms of the amount of public recognition- we call it ethical capital- that they can acquire. If you matter a lot to many people (large networks and a lot of respect) you tend to be a highly valued individual, at the top of your field, ad conversely endowed with a great amount of ethical capital, that you can mobilize in making things happen and thus matter even more. (Think of a respected fashion critic who can act as a gatekeeper, making and breaking careers because of her large networks and the influence she can exercise because she is so respected.) We will come back to a more detailed analysis of the value-logic of social production in Chapter II, but the point here is to argue that social production unfolds according to a particular value-logic, which is different from that of the capitalist economy: people do not engage in these practices in order to get rich, but in order to get recognition, their value is not dependent on the input of labour time or other privately owned resources, but on their ability to make a difference; to contribute to the strength and vivacity of a community and to, more generally matter positively in people's life. What is more, this value logic is already institutionalized, it is inscribed in the -however embryonic- media and organizational forms that coordinate social production: it is becoming objective, independent of people's subjective wishes. The fact that this value logic is becoming institutionalized- that it is becoming something more than mere subjective motivation, that it is becoming what Emile Durkheim called a 'social fact'- means that social production is part of a new and distinct economy. This is something quite revolutionary: social production is not just a new way of producing (mostly immaterial) wealth, it also harbours the possibility of a new way of organizing economic- and by implication- social and political relations. So if the first enlightenment, contributed greatly to giving birth to the industrial capitalism that has conditioned our social existence for more than a century, this second enlightenment seems to harbour the possibility of a new economy that might be equally influential in determining the course of the 21st century. This new economy follows a value logic that is based on matter, not money. Precisely because of this we call this emerging, still embryonic- or perhaps 'possible' is a better term- economy and 'ethical economy', and this book is dedicated to understanding how it works, how it can be strengthened and empowered and what uses and implications it might possible have. The ethical economy and the capitalist economy are not two, neatly separated things. In most concrete cases there is an overlap between the two. People want to make money and to expand their networks, they want to have a corporate career and a positive social impact. This is nothing new, in itself. What we are seeing though is more than a shift of emphasis. It is increasingly becoming the case that the way to make money is to expand one's networks, or that the way to have a corporate career of business success in general is to have a positive ethical impact. That is, in simple terms, ethical value, value in the ethical economy is increasingly becoming a precondition for commercial value. This is evident form the expanding fields of ethical consumerism, corporate ethics and socially responsible investment. (In the UK, according to the Cooperative Bank’s 2007 report, the ‘ethical sector’ was worth £ 29 billion, more than the markets for alcohol and tobacco together.[1]) But it is also evident from the new importance given to corporate ethics as a strategic management tool - both in relation to employees and external stakeholders; from the growing capitalization on 'ethical' intangibles like reputation and brand value, and even, as the following chapters will argue, from the development of new business models primarily but not exclusively within the creative industries, that aim at capitalizing on and monetizing reputation and networks. What is perhaps even more crucial is that the relative weight of this ethical economy is set to increase in the future. In part this will follow from the further diffusion on information and communication technologies. (The so-called digital divide is closing down rapidly as mobile phones spread among the South f the world. Within a decade they will all have mobile internet as standard, connecting the poor masses of Africa and Asia to the internet.[2]) In part this has to do with the nature of knowledge production itself. In a situation with limited physical resources- already reflected in rising energy and raw material prices- any further economic expansion will probably mostly take the form of immaterial values: new and valuable forms of knowledge, experiences, aesthetics. But in the field of such immaterial production, the ethical economy is much more efficient than the capitalist economy. This is because it works with a logic of sharing, co-division and free circulation. Now the very productivity of immaterial assets is based on their ability to circulate. If I let you have access to my new recipes, then you can use them and improve on them. If everybody has access to them, than everybody can do this. New productive configurations and networks can form freely across geographical and institutional borders. The fantastic productivity of modern science comes precisely from the fact that it has institutionalized the free circulation of knowledge through the peer review system. The capitalist economy, on the other hand builds its value form- property- precisely on the ability to limit or control the circulation of objects, which diminishes its relative efficiency in generating economic development that is primarily based on immaterial production. In this situation, the strategic weight is bound to shift over in favor of the ethical economy. To create ethical value will ever more crucial for commercial success, and it will no longer be possible to sustain, as Milton Friedman famously did in 1962, that the only social responsibility of business is to increase its profits.[xiii] The concrete outcomes of this situation are difficult to envision (the Concluding chapter will present an attempt in that direction): it could mean that capitalism itself will reformed in a more 'ethical' direction, through a sort of new global New Deal. It could also mean that the capitalist economy will be out-competed and marginalized by new economic systems organized around an ethical logic of value. (This has certainly happened before, the capitalist industrialization process of the 18th and 19th centuries reduced the feudal economy to a mere memory.) Whatever the outcome, it seems clear that a through understanding of the workings of the ethical economy is necessary to anyone - and perhaps businesspeople in particular- who has an interest and a stake in the future. We will start this journey on the conceptual level, trying to give a primary definition to the term 'ethical economy'. Ethical Economy Let us start with the term 'economy'. We use the term ethical economy to indicate that we are dealing with something more than a new mode of production. A lot of people has pointed at this later fact for quite some time now, emphasising how new collaborative forms of production- social production- are changing the way capitalism works and how wealth is produced more generally. There has been a lot of talk about 'social production', 'wikinomics', 'prosumerism', WeThink' and so on. By using the term 'economy' we want to suggest that we are dealing with something more than this. The term economy goes back to the Greek oikonomeia, which meant 'government of the household' (from oikos- 'household' and nomos- 'law' or 'rule'). So a new economy is not just a matter of a new way of producing wealth, but of a new way of governing the production of wealth: in more precise terms, an new economy implies a new, institutionalized logic of value. This way the capitalist economy is not distinguished by a particular mode of production. Although industrial wage labour- what Marx called the 'capitalist mode of production proper' -has mainly developed with capitalism, the capitalist economy has always encompassed a number of different modes of production: a feudal mode of production in the home, slavery (which has never disappeared), and particularly in the post-War period, the kinds of collaborative immaterial labour that we tend to associate with the ethical economy (see Chapter I for a more detailed analysis of this). What unites the capitalist economy, indeed what defines capitalism, is that all these modes of production operate with a common institutionalized value logic, they all operate in order to generate return on investment in the form of a monetary profit. What defines the capitalist economy is then the institutionalized primary imperative to make a profit. Although many academic economists would argue that the drive to make a profit, in some form, is close to a human universal; that people have always lived by this imperative, or even that it is inscribed in their genetic 'program', sociologists, historians and anthropologist, who have actually studied other societies that our capitalist market society, contest this. They ague that the drive to make a profit, although always present in human societies, remained a fairly marginal, and generally socially illegitimate motivation- the business of traders, pirates and merchants- up until the commercial revolution of the 18th century. Up until then most people produced what they used locally, according to traditional prescriptions. In the European peasant village, a substantial part of the land was used in common, and its produce divided according to a complex moral economy infused with traditional rights and obligations. The feudal lord had his traditional rights to parts of the surplus, which could only be increased with great difficulty (hence the general impoverishment of the aristocracy in the 18th and 19th century when other more efficient systems of exploitation developed). Markets, where wealth was traded as property, were rather infrequent and in any case marginal phenomena: on the market you traded with strangers, with members of other communities, and not with your peers from the village. For the nobility, wealth was squandered in battles and costly public spectacles that served to maximize ones public standing, it was not generally accumulated in order to be reinvested. Similarly, in the so-called ‘primitive’ societies that European anthropologists began to study in the 19th century, it was relatively rare to find the accumulation of private property as the main economic motivation. Rather, wealth was often produced in order to be given away; like the produce of the yam gardens where men took pride in sweating away, or the pigs that important Big Men often exchanged as public gifts (and women reared) across Melanesia. As Polish/British anthropologist Bronislaw Malinowski observed about yam gardening in New Guinea, that all, or almost all of the fruits of his work, and certainly any surplus which he can achieve by extra effort, goes not to the man himself, but to his relatives-in-law. Without entering into details [..] it may be said that about three quarters of a man’s crops go partly as a tribute to the chief, partly as is due to his sister’s (or mother’s) husband and family. and very little was saved for private consumption or trade.[xiv] The point is that the motivations and values that guide human productive activity are not eternally given, they are social and historical constructs and, consequently, they change over time. In this light, an 'economy' denotes precisely such a socially and historically distinct logic of value. We have now lived in a society dominated by the capitalist value-logic for more than a century. Now we are seeing the emergence of a new value logic which has the potential to develop to parallel or even rival that of capitalism: the ethical economy. Production for profit becomes institutionalized as a socially sanctioned value logic through the development and becoming mainstream of the capitalist economy from the 16th century onwards. German sociologist Max Weber has produced a wonderful analysis of this. He argues that while the first generations of capitalist entrepreneurs were mainly driven by religious motivations (the protestant drive to improve the world in the name of God), these external motivations were no longer necessary once the capitalist economy had reached a certain level of maturity. Once a competitive market society had developed in the early 19th century- continuous improvement and rationalization became a necessity, if you did not engage in it you quickly lost out and eventually went bust. So the value logic of capitalism became institutionalized, it became part of what Weber called the 'iron cage': the set of seemingly immutable social laws that guide human action and that we, as individuals are forced to abide. A further point with using the term ethical economy is thus to argue that something similar is happening today: that the logic of matter is on its way to becoming institutionalized as the 'iron cage' of a new, ethical economy, and that (as Chapter V will suggest) it is in our interest to speed up and strengthen this process. A new, institutionalized economic value logic also tends to support a new moral and political value system. If nothing else because people are now systematically encouraged to do or desire certain things, and that such actions and desires trend to crystallize into habits, which support 'values' in the philosophical sense of that term. Thus, for example the merging capitalist economy supported a class of people - the bourgeosie- who were habitually desired the freedom to pursue their own business, and to improve on methods and institutions without the heavy-handed interference of the guilds or other sources of traditional privilege. Eventually this value structure developed into the ideology of liberalism, which became the rallying cry for the ascendant bourgeoisie throughout the 18th and 19th centuries. Today we can see a similar development, the global knowledge class, which is the core carrying strata of the ethical economy is ever more habituated to valuing self-realization and peer recognition. The new middle class of knowledge workers, symbol analysts or 'cultural creatives' are abandoning the values of individual achievement and material acquisition that were central to industrial society. Instead they embrace a value structure that combines personal self-realization and individual authenticity with a planetary consciousness. [box statistics on value shift: cultural creatives, Inglehardt Eurobarometer surveys] Today's middle classes are the first major social group in the history of humanity to relate their actions and intentions, not to only to their importance for family, friends or village, but to their impact on the planet as a whole and their consequences for the long-term survival of humanity. At the same time, they are the first major social group (since the Athenian aristocracy perhaps) to exhibit a profoundly ethical consciousness. For the cultural creatives, there are no given moral rules. Instead these rules have to be made up as one goes along. The ethical consequences of each action; as well as the authenticity of each personal relation need to be continuously evaluated without reference to any fixed standards. The middle classes are free, and at the same time responsible as they need to confront and navigate the moral ambiguity of human existence on an everyday basis. And they do this in a situation where humanity and the planet, not family, community or nation, are the only reasonable limits for ethical engagement. The kinds of people who have embraced this new value structure most strongly, knowledge workers and the new 'web generation' are also generally the people who are most heavily engaged in new forms of social production. There is a strong connection between these two phenomena: Engagement in social production presupposes a constant ethical engagement with other people and an opening up to relations of proximity with distant others, regardless of their social or cultural allocation. This productive experience forms a social basis for the emergence of a 'post-materialistic' value structure on the other. (Just like the like the experience of working together with others in a factory, sharing the same condition of exploitation formed a basis for the emergence of a proletarian class consciousness that Marx referred to in the quote above.) Post-materialism is the kind of consciousness that naturally arises from engagement with social production At the same time the expansion of a global media culture has increased the speed of information transfer and connected people more closely to, often suffering, 'distant others' who present themselves as ethically significant subjects.[xv] This means that we stand in front of something much deeper and more structurally profound than simply the effects of technological change and a new information environment. Like in the times of the bourgeois-capitalist revolution of the 17th and 18th centuries we are facing something quite revolutionary a new moral and political consciousness that is strongly tied to, indeed part of a new economic regime. This makes it incredibly powerful. So far this new economy has not translated into many new political institutions (although the emergent forms are there in the various structures of peer governance), but that needs to and will happen. It is only by finding a political form that this post-materialist value-structure proper to the ethical economy can become something more than a mere source of subjective frustration and disappointment; only this way can it have a real impact on the course of human development over the next century. There is however reason to believe that this political transformation will come about in new, unprecedented ways. After all, there is no longer any Bastille to storm, and the experiment of the French revolution can not be replicated (and the most important attempt to perform such a reprise, the Soviet revolution of 1917- ended in tragedy.) A radical novelty with the ethical economy is that it is based on a new convergence of economic and politics. If producing commercial value is increasingly based on the production of social value, on matter, then this means that the political pursuit of constructing a new, and hopefully better society, becomes the same thing as the economic pursuit of generating wealth, and eventually profits. We are seeing a convergence of economics and ethics in ways that are unprecedented since the bourgeois revolution in the 18th century. Indeed for Aristoteles, with whom most of the modern discussion of ethics begins, the sphere of ethics was radically separate from that of economics. Economics was about governing the production of material wealth that took place in the private sphere of the household. The household was a private space in the classic sense of that term, it was closed off from the realm of the polis, and hence beyond the rule of law. In the private sphere of the oikos, the master of the house ruled with absolute power and most household members were his private property. (Indeed private come the latin privare which means something close to 'deprive'. In Roman law privatus meant 'deprived from the common cause' the res pubblica.) Ethics (ethika) on the other hand belonged to the public sphere of the city (polis), and it was primarily about organizing the interaction between free actors (in his case, men), in the absence of any pre-established hierarchies. In the oikos this was not a problem, slaves simply had to obey, their relations with their Maters were not ethical in the strict sense of the term. But free men had a choice; there was an element of contingency. Hence for Aristoteles, ethics was not primarily about separating 'good' from 'bad', it was about solving the difficult question of how free men could live together in the absence of established obligations. Indeed ethika is closely related to ethos, which means something like 'mood' or 'character'; and ethics was to a large extent about managing one's affective relations to others (like anger, desire, or, crucially friendship, philía) in was that permitted a peaceful, balanced and harmonic co-existence in the polis (eudaimonia- and the separation of 'good' form 'bad' followed from the resolution of this problem). With the development and institutionalization of a capitalist economy this separation of economics and ethics has persisted and grown even stronger. Capitalist development has meant both a privatization of economic affairs, and their subtraction from the field of public debate where ethics and values were articulated. The production of everyday necessities no longer unfolded within the ‘moral economy’ that had characterized pre-capitalist peasant society. Instead it took place in a privately owned factory where labour and machinery was subject to the owners personal control, and motivated by an overarching goal that was considered beyond ethical deliberation: the continuous accumulation of monetary wealth and capital. Similarly the life-goals of the wealthy merchant changed, as Max Weber described it, from being oriented to the preservation of a traditional style of life, anchored in a living community, to aiming towards the endless accumulation of private wealth, with more or less disastrous consequences for that community. Economic life was ‘disenchanted’ stripped of its ethical context and guided only by the cold rationality of endless accumulation.[xvi] In the post-War year most sociologists and moral philosophers agreed on this functional separation of economics from he sphere of ethics and politics. Socially concerned intellectuals argued that the growing influence of an a-moral economic ‘privatism’ meant that public and political life was crippled. Instead of using their capacity for ethical reflection and political action, people divided their lives between the equally ‘mindless’ activities of production: the everyday tedium of a standardized job motivated only by the need for money; and consumption: the private accumulation of mostly useless objects driven mainly by empty individual hedonism; non of which allowed for any reflection on the overall goals of life or the general direction of social development. [xvii] In the ethical economy this separation has been overcome. In part this is because this economy is largely driven by people who have strong ethical motivations. More importantly however, it is because success in these pursuits is contingent on the construction of ethically significant ties, of creating sustainable ways of living and producing together in an environment of free actors who have no apriori obligations to each other, whether this be a functioning project team or an enduring open-source project. So economic success is actually contingent on resolving the ethical problem, as posed by Aristoteles: of creating the strong ties and philía that make a sustainable polis possible. In the ethical economy the construction of economic value and the construction of ethical value has become the same thing, of to put it in different terms: economics and politics have converged. In a way this also resembles the revolutionary phase of modern capitalism. To the emerging bourgeois entrepreneurs of the 17th and 18th centuries, economic pursuits were also attempts to create a new, more liberal and more rational modern society. There are however three important differences. First, for the 18th century bourgeois entrepreneurs, large parts of humanity (women, slaves, colonized peoples) remained outside of the realm of ethical consideration. The new, liberal society was not built for them and it did not concern them. Today's ethical economy on the other hand unfolds in an environment of planetary cosmopolitism, where (potentially) all of humanity has a voice, and where it is simply not possible to legitimize the intentional exclusion of anybody. This means that the diversity of the ethical economy is much greater, which increases its versatility, creativity and productive potential. Second, today's ethical economy is simply much larger. As Chapter II will argue it is the fruit of centuries of capitalist expansion that has included people all across the world in its participatory networks. By compassion, the industrial enlightenment that drove the British industrial revolution in the 19th century built on some 3000 active participants. Today's open source movement alone dwarfs this figure and it is quickly accelerating. Figure I. Millions of source lines of code added in Open Source Projects, 1993-2008[xviii] This larger scale is to a large extent the effect of new information and communicating technologies that allow the radical geographical extension of productive networks and the scaling of what used to be feasible as local forms of participation, up to a global level. Third and finally, today's forms of social production satisfy an ever-greater desire for sociality and companionship. Taking part ins these processes is not only a convenient way to obtain useful goods, it is also a way to make friends, expand one's social horizons and overcome the loneliness and alienation that are an intrinsic part of contemporary societies. Consequently people have profound affective motivations to engage in the ethical economy. It follows that the ethical economy is something fairly radical. It represents a reunification of the political practice of constructing new ways of living together, and the economic practice of producing value, on a global scale. A new, post capitalist civilization is actually constructed here and now, in the open source movement, in the mash up between social movements and entrepreneurship that makes up web 2.0, in the flourishing local economies that ICTs have made possible, in the social entrepreneurship movement, and in the growing number of partnerships between business and NGOs. And this ethical economy represents a progressive alternative to a neoliberal global capitalism which is ever more dependent on vanishing reserves of cheap energy. It is progressive because the ethical economy is the organizational form that naturally emerges from the new and more advanced relations of production that have developed from within capitalism itself- the extension of social production and the ensuing activation of social life into a productive 'mass intellectuality' that has built on the diffusion of a new technological framework: networked information and communication technologies. And since these developments show no signs of receding, it is probable that the ethical economy will become even more central in the future. It will become an important factor in the economic ecology of the 21st century: either as an alternative to global capitalism based perhaps on re-localized production systems or as the driving force of a reform of capitalism, a sort of global new deal organized around ethics and sustainability, or as some combination of the two (see the concluding chapter for a further elaboration of these scenarios). Whatever the outcome, the ethical economy is no utopian construct. It represents the real and emerging institutional form that naturally arises from relations of production that have grown too advanced to be contained within the capitalist mode of production. This book is an attempt to come to terms with this new reality: to propose a first, and admittedly sketchy, conceptual articulation, a theory, that can serve as the beginnings of a self- understanding. But it is not just a neutral observation Just as Adam Smith was convinced that strengthening the institutions of market society was a progressive cause, so we believe that giving further coherence and above all objectivity to the so far implicit and emergent logic of the ethical economy is a desirable pursuit for anyone who has an interest and stake in the future. So this book will both suggest an analysis of how the ethical economy operates today and, departing form this analysis, propose how its development can be further empowered. The Argument Next chapter provides an introduction to the concept of social production by critically analysing how this phenomenon has featured in the contemporary business litrature. A multiplicity of books like Wikinomics, WeThink, The Wisdom of Crowds, Revolutionary Wealth etc, have pointed to this new phenomenon. While all of these books have made interesting and useful observations, they all share a fundamental misunderstanding of social production. To these business writers, as well as to most academics social production basically appears as a free resource that has no intrinsic value. We argue that this is a mistake that naturally leads on to four cardinal misunderstandings, which make for poor analysis and judgement. Having thus exposed the errors of existing approaches, Chapter II goes on to provide the beginnings of a theory of social production by looking at its emergence in the post-War years. It shows how contemporary forms of social produciton are the dialectical outcome of the progressive socialization of the capitalist production process- its extension to encompass ever more social relations, and how this radically changes the foundations for its value logic. The chapter goes on to show how this emergence of social production has been intimately tied to the affirmation of a new, post-materialist value structure, in particular among its chief carrying stratum: the knowledge class. Chapter III goes on to further elaborate a theory of the ethical economy by putting its emergence within the framework of the general dynamics of post-War capitalism, in particular the emerging issue of 'intangibles' and accompanied forms of immaterial production. It concludes that the rising importance of intangibles reflects an increasing dependence on the ethical economy on the part of capitalism itself, and shows how the capitalist modus operandi is already hevily influenced by an ethical value logic. Chapter IV provides an nalysis of the modus operandi of the ethical economy and arrives at some fundamental points about its actually existing value logic. The conclusions are that essentially social production unfolds in an environment of abundance, not scarcity. Its basic productive resources , knowledge, skills, creativity and connectivity are abundant . Furthermore these resources are social, not individual, they are not the property of particularly talented individuals, but more or less inscribed in the social environment in which we all live and work. This means that, contrary to the logic of the capitalist economy that is based on the scarcity of productive factors - beginning with labour- and individual talent, social production presupposes the abundance and hence the close to zero value of these factors. What is scarce is rather the ability to give organization and direction to these abundant resources, to give them productive organization. This takes place through an ethical practice, that transforms an abundant connectivity of weak ties, in ethically significant strong ties. The chapter goes on to show that the value currencies actually at work in social production- chiefly reputation and networks- are reflections of the ability to do this. Chapter V elaborates on how new social media can serve as an embodiment of these, so far, embryonic value forms giving them coherence and transparency to become part of a globally relevant objectified value logic. It elaborates on what properties social media systems that perform this must have. Chapter VI suggests how such an objectified ethical economy can cast new light on umber of policy issues and business opportunities, while the concluding Chapter VII draws out the more philosophical implications.

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[2] 'African mobile subscribers surpass North America' , textually.org, 1May, 2008, http://www.textually.org/textually/archives/2008/05/019983.htm , accessed 22/7-2008

[i] See Fukuyama, F. The End of History and the Last Man, …. Friedman, T. The World is Flat….

[ii] See for example Rostow, …Stages of Economic Growth, Bell, … for a history of the 'Cold War Left' Barbrook, R. Imaginary Futures, London; Pluto, 2007. See also Hardt, M. & Negri, A. Empire, Harvard University Press, 2000.

[iii] Rubinn, J. & Tal, B. 'Will soaring transport costs reverse globalization?', StrategEcon, May 26, 2008. (available at http://research.cibcwm.com/economic_public/download/smay08.pdf accessed 11/7-08).

[iv] Klein, disaster capitlaims..

[v] big sort

[vi] 'Number of prescription items for antidepressant drugs 1991 to 2002. Social trends 33', http://www.statistics.gov.uk/STATBASE/Product.asp?vlnk=9917&More=Y , accessed 14/7-08.

[vii] Lenhart, A, Madden, M, Mcgill, A & Smith, A, 'Teens and social media', Pew Internet and American Life Project, December 19, 2007, http://www.pewinternet.org/PPF/r/230/report_display.asp , accessed 21/7-2008, Madden, M. & Fox, S. 'Riding the waves of Web 2.0, Pew Internet and American Life Project, My 5, 2006 http://www.pewinternet.org/PPF/r/189/report_display.asp , accessed 21/7, 2008.

[viii] McKibben, B. Deep Economy. The Wealth of Communities and the Durable Future, New York; Times books, 2007, Senge, P. The Necessary Revolution. How Individuals and Organizations are Working together to Create a Sustainable World, London; Nicolas Brealey, 2008.

[ix] Putnam, R. Bowling Alone, New York; Simon & Schuster, 2000.

[x] Balch, O. 'Latin America: Social Innovation. Giving the Majority a Stake' Ethical Corporation, June 10, 2008, http://www.ethicalcorp.com/content.asp?ContentID=5945&rss=ec-main.xml , accessed 21/7-08, Rometti, G. 2006, Expanding the Innovation Horizon. The Global CEO Survey 2006, IBM Enterprise Business Services, Huston, L. & Sakkab, N. 2006, ‘Connect and develop. Inside Procter & Gamble’s new model for innovation’, Harvard Business Review, March, pp. 58-66.

[xi] Jenkins, H. Convergence Culture….

[xii] Prahalad, C. & Ramaswamy, V. 2004. The Future of Competition. Co-creating Unique Value with Customers, Boston (Mass.); Harvard Business School Press, Tapscott, D. & Williams, A. 2006. Wikinomics. How Mass Collaboration Changes Everything. New York, Portfolio, Leadbetter: WeThink

[xiii] Friedman, M. Capitalism and Freedom, 1962

[xiv] Malinowski, B. Argonauts of the Western Pacific: An Account of Native Enterprise and Adventure in the Archipelagoes of Melanesian New Guinea, London: Routledge, 1922, pp. 60-61.

[xv] Benkler, Y. & Nissenbaum, H. 'Commons based peer production and virtue', The Journal of Political Philosophy, 14 (4), 2006:394-419, Boltanski, L. Distant Suffering, …

[xvi] Weber, M. The Protestant Ethic...

[xvii] See for example Arendt, H...

[xviii] Deshpande, A., Riehle, D. 'The total growth of Open Source' Proceedings of the Fourth Conference on Open Source Systems, (OSS 2008), Berlin; Springer Verlag, 2008:5.