The Cybernetic Revolution and the Crisis of Capitalism (page 4 of 11)
By Jerry Harris and Carl Davidson
The Chicago Third Wave Study Group

O'Connor sums it up well in his essay "Socialism and Ecology": "The vitality of Western capitalism since World War II has been based on the massive externalization of social and ecological costs of production. Since the slowdown of world economic growth in the mid-1970s the concerns of both socialism and ecology have become more pressing than ever before in history. The accumulation of global capital through the modern crisis has produced even more devastating effects not only on wealth and income distribution, norms of social justice, and treatment of minorities, but also on nature or the environment. Socially the crisis has lead to more wrenching poverty and violence, rising misery in all parts of the world, especially the South, and, environmentally, to toxicification of whole regions, the production of drought, the thinning of the ozone layer, the greenhouse effect, and the withering away of rain forests and wildlife."

Industrial capitalism, structured to build and feed a mass market, has thus reached new limits of growth. On one hand, it must maintain its profitability and increase its accumulation. On the other hand, it can no longer afford the unrestricted expansion of mass consumption, especially its "externalities." The new limits are both economic and ecological. Thus the present structural crisis is all sided and deep.

The Crisis and Information Capitalism

Coinciding with the crisis of accumulation, however, was a revolutionary development in the means of production. Advances in computer, microelectronics and telecommunications technologies have brought major changes to the basic character of industrial capitalism. The application of knowledge is now the primary means of new value production. Of course, all labor has always contained two parts--the knowledge of how to produce something and the physical effort necessary to make it. In first wave society, physical labor encompassed the vast majority of work, whether it took the form of growing corn, weaving wool or maintaining feudal manors.

In second-wave industrial society, however, machine technology and manufacturing increased productivity by a factor of 100. The knowledge of building a lathe or steam engine reduced the proportion of input of physical labor. But still the factory system relied mainly on physical labor and large scale material assets and inputs to produce value.

But in third wave societies, the application of microelectronics technology has already increased computer productivity by one million. Intellectual capital, developed and held by knowledge workers and encoded in software and smart machines, is the key element of wealth in today's information capitalism. Physical labor and industrial machinery are now secondary to the value added by information. This has had a dramatic impacted on both finance and manufacturing, as is allowing capitalism to develop along new lines.

The application of new information technology has meant that industry can produce more with fewer resources, less energy and less labor. Plastics have replaced metals, fiber has replaced copper, and chips are made of sand and clay. In fact computer technology consists almost entirely of intellectual capital, with raw materials costing only 1% and unskilled labor 5%.