<div>Dear friends,</div>
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<div>I would like to announce that we have put a revised version of Adam's Arvidsson's (which I consider to be a landmark one), online at</div>
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<div><a href="http://www.p2pfoundation.net/Crisis_of_Value_and_the_Ethical_Economy">http://www.p2pfoundation.net/Crisis_of_Value_and_the_Ethical_Economy</a></div>
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<div>My own reply, to the first version, is available at</div>
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<div><a href="http://www.p2pfoundation.net/Dornbirn_Manifesto">http://www.p2pfoundation.net/Dornbirn_Manifesto</a></div>
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<div>Here are some excerpts from Adam's text:</div>
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<div>- On the impending crisis of value:</div>
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<p>Adam Arvidsson has just sent me his latest essay, and I have no hesitation to call it a landmark essay because it is the very first really cogent analysis of the emerging Crisis of Value which is affecting the present market economy model.
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<p>In short, a new second economy is arising, which he calls <a href="http://www.p2pfoundation.net/Ethical_Economy"><font color="#0066cc">the Ethical Economy</font></a>, which does not run according to monetary exchange, and can only be very partially monetized and controlled by the market. There is a crisis of value he says, because this new economy cannot be measured, either because the right metrics are not yet in place, but perhaps more fundamentally, because it is largely beyond measure, and even what can be measured of it, cannot be directly related to the monetary economy.
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<p>This essay is as yet unpublished, but I want to publish some key excerpts, followed by my own response.</p>
<p><strong>Excerpt: the impending crisis of value</strong></p>
<p>"It is becoming ever more obvious, even the mainstream business press is acknowledging this, 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, as well as 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, like the Nokia Concept Lounge (450.000 visitors, 4.500 Ideas submitted) or user generated advertising campaigns like Heinz tv-challenge, primarily there for the money. Indeed the very business sense behind such initiatives is that they give access to an enormous resevoir 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, von Hippel, 2006).
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<p>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' (cf. Brian & Joyce, 2006). Similarly marketers have discovered that the autonomous cooperation among consumers is an important source of brand value (Holt. 2002, Arvidsson, 2006). 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 (Florida, 2002, cf. Arvidsson, 2007).
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<p><strong>We have chosen to call this emerging non-monetary economy an 'ethical' economy. Not because we necessarily believe that it is inherently better or nicer than the mainstream corporate economy. Instead, our choice of the term 'ethical' refers to the fact that this economy is largely coordinated by respect, peer-status, networks, friendships and other forms of inter-personal recognition. It is geared towards the accumulation of such forms of interpersonal recognition, what sociologists would call 'social capital'
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<div>- On the absense of measure</div>
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<p>This absence of a measure points towards a power vacuum within the information economy. There is no common measure simply because nobody has been strong enough to impose a common measure, or to put in more Nietzschian terms, to decide what the values should be. Indeed, the issue is not so much ontological as it is sociological. It is not that you cannot measure 'ethical things' like love or respect, there are systems that do this as we will show below. It is rather that the ethical economy presents a problem of measure for the capitalist monetary economy because it largely unfolds largely beyond its direct control. The situation was similar, two centuries ago. The way in which industrial capitalism established itself was by imposing its own measure of value as the societal standard, as against the moral economy of peasant tradition Modern management, emerged (with Taylorist scientific management) as an attempt to break down the complex networks of craft production into simple units of worker-machine interaction that cold be measured in terms of labour time. (And modern consumerism was largely shaped by the need to impose a different conception of the value of time: that it was better spent productively to acquire more goods than idly in rest once one had accumulated enough, cf..) Consequently, productivity could be defined as output per unit of labour time. Although this kind of measure originated with the situation of material factory production it has since been extended to various forms of immaterial labour, like the taylorized production of services at McDonalds restaurants, call-centers and increasingly, British universities. So the problem of measure is not about the nature of immaterial production. It is rather about its sociological relation to 'the (capitalist) machine' that mediates productive interaction within the factory or organization. Indeed, the further we move from the original situation in which this philosophy of measurement developed, the less the quantum of time spent interacting with a machine that also acts as a disciplining device (whether a material machine or an immaterial, organizational one), and the more emergent factors like networks, tacit knowledge and social organization- what Marx called 'General Intellect'- matters, the less valid this form of measurement becomes. And we can argue that the main productive contribution of information- and communication technologies is unleashing of such General Intellect on a societal scale, which is difficult to control and measure. (And the reason why the relation between investments in ICTs and productivity growth is tenuous is precisely that productive contribution of this General Intellect largely unfolds outside of the monetary economy.) The result is a 'crisis of value': a lot of the actual wealth produced cannot be measured, or can only be measured with great difficulty. And what cannot be measured can hardly be managed.
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<p>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 then 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 legitimized 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."
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<div> - On peer-based measurements systems</div>
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<div>" The advantages of such peer based measurement systems are that they are emergent. They are not imposed by managers, NGOs or other organizations who might have little knowledge of the actual productive realities of particular practice, and who tend to impose 'codes of conduct' which easily degenerate into mere bureaucratic exercises. Instead they are generated by the community itself, and hence tend to give a more realistic estimate of the social impact of a product, organization or person. And we can envision that such peer-based valuation systems will become more efficient with technological development. With a mobile internet and developed RFID tagging it could be possible to sweep one's mobile phone over a sweater or another piece of garment to instantly acquire a quantitative estimate of what several thousand people, placed all along the production and distribution chain say about its environmental impact, respect for worker's rights, adherence to particular religious practices, or what have you. It might also be possible to use your cell phone to easily acquire products with alternative currencies, like units of credit earned writing for a blog or hosting someone on your couch.
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<p>The perspective for the immediate future is that the monetary capitalist economy will continue to loose its monopoly over the measurement, and hence also the organization of productive processes. This is natural, since that monopoly has essentially been founded on a monopoly over the means of organization. It has only been possible to govern complex productive networks like the modern corporation, by means of efficient information processing machines like the bureaucracy. Likewise, the central bank with its large affiliated research institutions was the only organ capable of determining the price of money with any accuracy. Today such information monopolies are challenged. Central banks have but a minimal influence over the price of money, Most is determined by financial markets, which are in essence mediated real time interaction systems, not very different from Second Life (Zaloom, 2006).
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<p>In the form of Information and Communication technologies the means of organization have been socialized to the extent that alternative coordination and measurement systems can and do arise beyond the direct control of corporate capital.
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<p>The outcomes of this are twofold. </p>
<p>On the one hand, such new peer based measurement systems can be integrated into the value dynamics of corporate capitalism. This is already happening: the proliferation of non- financial performance metrics is a (generally inefficient) step in that direction. There are also a number of consultancies that provide advice on performing such integration, like Namaste economics, offering to 'integrate economics with social values' or the Karmainitative, providing 'trust metrics in the market place'.
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<p>On the other hand we can predict that corporate capitalism and the institutions at its control will resist and repress attempts at constructing alternative valuation and measurement media. Again this is already happening. We can understand Intellectual Property legislation and Digital Rights Management systems as attempts not only to enforce property claims, but also to restrict the circulation of such property to circuits in which measurable values are created."
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