From Das Capital to DOS Capital: A Look at Recent Theories of Value (page 2 of 3)
By Jerry Harris, Chicago/Third Wave Study Group

Fortune's main focus is on the relationship between labor and capital. Leif Edvinsson, director of intellectual capital at Skandia AFS has theorized about two basic types of intellectual capital: human and structural. The task of the corporation is to capture and transform a dynamic human intellect into a stable, usable and reusable structural form, to make "individual know-how into the property of the group." Preferably, this knowledge is stable and orderly enough to be on call in your hard drive. As Edvinson argues, structural capital is the most important: "It doesn't go home at night or quit and hire on with a rival; it puts new ideas to work; and it can be used again and again to create value, just as a die can stamp out part after part."

Of course once a worker's knowledge is captured as structural capital, you can then do away with the worker. In industrial capitalism the worker's surplus labor was expropriated, but you had to retain the worker as long as you wanted to make use of his labor. The worker still owned his labor power, and sold it for his wages. But in the new economy, knowledge is both labor and the means of production, both of which are expropriated and turned into structural capital for the exclusive use of the corporation. Thus, intellectual capital can be totally alienated from the worker. Not only is the value of the labor stolen, but the labor itself.

This process is the basis for growing unemployment and the increase in temporary and part-time work. A hard drive can hold the knowledge of thousands of workers, and be accessible to one worker whenever the company needs it. Turning knowledge into the key productive component impacts all industries, and all levels of employment, not only white collar work. Business Week's cover story, "Rethinking Work," (Oct. 17, 1994), gives the example of Cummins Engine Company, a producer of heavy-duty engines. The old plant is run by union labor with wages at $17.60 an hour. "Those at the new plant average $8.75. They're trained in statistical process control and engine technology and maintenance, and tested for math ability and communication skills. Pay increases are predicated on completing course work." Says chairman Henry Schact; "We have fewer people doing much more work, much of which is knowledge based and we're paying people less."

The productive power of intellectual capital, made possible by the new tools of cybernetic production, is thus changing both blue and white collar jobs. All work has become increasingly knowledge based, and this is revolutionizing the relations of production. Both of two recently published books, The End of Work by Jeremy Rifkin, and The Jobless Future by Stanley Aronowitz and William DiFazio, focus on this important process. As Rifkin notes; "We are entering a new phase in world history one in which fewer and fewer workers will be needed to produce the goods and services for the global population."

But entering this new era with old capitalist values will spell disaster. Viewing knowledge as a capital asset in a competitive market drives corporations to try to own and control information as they did with other commodities. In the industrial period, owning your assets meant machinery and physical commodities. Today it means surrounding your intellectual capital in secrecy and hiring lawyers to protect intellectual property rights. This overriding tendency of capitalism undermines the tremendous productive potential of intellectual capital. Knowledge expands most rapidly, and therefore in value, only with its greatest use. Unlike physical commodities which are consumed with use, knowledge is generative it expands with use. Therefore the best way to create wealth is to fully liberate the productive potential of information by sharing knowledge through universal democratic access.

Control, ownership, and secrecy drastically limit this growth, and destroy the possibility of a broad economy. Entering the new economy with the rules of the old capitalist market will only deepen the social crisis rapidly developing around us. In a knowledge-based economy, education becomes the key factor for growth and employment. Yet today only 10 percent of U.S. corporations pay for worker retraining. Fortune argues for a retreat even from this limited involvement. Citing Canadian Imperial Bank of Commerce, Fortune explains that instead of spending $30 million a year on training; "Now the bank puts the monkey on employees' backs: Armed with their lists of competencies, employees are responsible for learning. ...Department heads track how fast their crew is learning, or whether it is weak in any particular area data that provides a far better picture of human capital development than the amount of time or money spent in training."

This "monkey on the employees' back" is another form of social control of the labor force. What is even more cynical is the further observation offered by Fortune that "Growth in human capital . . . through training and education . . . is bootless if it cannot be exploited. That requires structural intellectual assets." With this strategy corporations can externalize the cost of education onto the worker, capture the knowledge using information technologies, and then cut their labor force resulting in cost savings while increasing productivity and profits.

Making education into an individualized market fits nicely into the Third Wave Republicanism of Newt Gingrich. Broadside attacks on school funding and student aid will build the new economy into a society increasingly divided between "info-rich" and "info-poor." Free or low cost, lifelong learning opportunities are needed to generate the type of labor force necessary in an information economy.

Education should not only be a right, but a social responsibility underwritten by government taxation on corporations. If corporations plan to expropriate intellectual capital, let them at least pay for its development.

No Cost Production

Another fundamental shift in the information economy is that digital and fiber technology is lowering the cost of production to almost zero. Business Week (March 6, 1995) calls this the "technology paradox." As it reports; "The new rules . . . are redefining value in an economy where the cost of raw technology is plummeting toward zero. Sooner or later, this plunge will obliterate the worth of almost any specific piece of hardware or software." The same article observes that this "cheap technology has crossed an invisible threshold to assume a central role in economies around the world."

Cheaper, faster and smaller has become the mantra of silicon engineering. When power goes up, prices come down. Chip making technology is able to double its performance with no increase in prices every eighteen months. These chips are being inserted into everything from cars, to lathes and home computers. This is also true with software, an essential tool of production. The actual price of producing an additional diskette amounts to pennies, while its productive worth can be enormous.

The same pattern has developed in fiber optics. The ability to increase pulse rates and split light beams has made the carrying cost of one more phone call practically zero. How then do you price a call, and what does this all mean for the commodity market? As Eastman Kodak CEO George Fisher worries; "How will I be competitive in a world [in which] technology will be virtually free?" More >>