Tuesday, 31 July 2018

Paul Mason's Postcapitalism - A Detailed Critique - Chapter 5(3)

The Price of Information

Paul's point, in respect of information, is this. If A spends 100,000 hours of labour (£100,000) producing useful information, they can sell this information, for example, by producing a book, film etc. But, herein lies a problem. A landowner can fairly easily obtain a rent from a farmer, who seeks to cultivate the land. However, they cannot so easily obtain revenue from the poachers who capture game on their land, or who scavenge firewood etc. They have to employ gamekeepers, and impose heavy penalties for those who seek to engage in such freeloading activities. 

Similarly, the producer of information may be able to obtain payment for the first copy of the information they produce, but they cannot then ensure payment for any further copies. As soon as the information is released, it can be copied by whoever takes possession of it. Herein lies a problem that stems from the difference between intellectual property, and other forms of property, such as land or capital. The latter have no value, and yet they have market prices; the former has value – and contrary to Paul's suggestion may not be near zero – but it may be impossible to actually realise that value. 

There are, in fact, two different conditions here that overlap. Firstly, if we take the information that the engine maker obtains from the telemetry, it has no value. It is not the product of labour, but is effectively a bi-product of the technology required for the functioning of the engine itself. Similarly, the information that a supermarket obtains from its EPOS systems, and from our use of loyalty cards, credit cards and bank cards, effectively cost it nothing. This is information that has no value, but has use-value, and, as the Cambridge Analytica scandal showed, is a use value that some customers are prepared to pay a price for. As with the price of land or capital, this price ultimately comes down to a question of demand and supply, and this is what distinguishes these commodities from all others, whose market price revolves around their price of production

But, from this, it can be seen that there is nothing new for capitalism in creating a market, or determining a market price for commodities that have no value. 

The second condition, however, is for that information that is the product of labour, of scientific research and analysis, but for which the problem is not the identification of such value, but its realisation. Because this information, once placed in the public domain, can be easily copied, the labour required to produce such copies is negligible, and so the value of these copies is near zero. Herein also lies one of those beautiful ironies of capitalism. In general, in relation to this information that which has no value becomes valuable, and that which has the most value becomes worthless. The information that the engine producer obtains for free, becomes valuable. It enables them to gain further knowledge, so as to gain competitive advantage over their rivals. They will tend to hoard it. If a rival seeks to obtain it, they can either buy it from them – in which case they will be themselves unlikely to sell it on the cheap – or they will have to spend considerable amounts to engage in industrial espionage, which does occur to a considerable degree. Alternatively, every producer in an industry who produces their own large amounts of this valuable data for free, can agree to pool their resources, and share the information they gather, so as to collectively benefit from it. 

But, it is the information that has real value, as opposed to use value that tends to be made worthless. The labour that goes into the intellectual property of an iPhone is what gives it its value, but every other potential producer of a clone of an iPhone has an incentive to obtain that information for free, because the material cost of producing the phone is minimal by comparison. The same is true of Nike's trainers and so on. 

For some commodities, this is a manageable problem. If I am prepared to pay for a meal in a restaurant owned by a celebrity chef, in which the value of the food stems largely from their status, and reputedly the intellectual property they own, either the restaurant belongs to them or it doesn't. If I want to enjoy a live performance by a particular singer, etc., again either its them performing or it isn't. If I'm happy with a digitised copy, it could be a legitimate copy or a bootleg. 

As a general rule, anything that is intended to be mass produced, and takes some kind of material form, including digital form, can be copied, and the intellectual property content thereby destroyed. But, although this is a more significant problem, today, it is not a new problem. Forgers always forged things of value from money tokens to Old Masters. As soon as cheap reel-to-reel tape recorders became available, teenagers, and others, copied their favourite music for free from the radio. 

The real answer, in most of these cases, is not that its impossible to value the information, or to realise that value in production. It is that the producers of these commodities seek to restrain supply, so as to obtain monopoly prices. If a book is printed in sufficient quantity that the intellectual property component amounts to only a few pence per book, no one is going to be bothered to, say, photocopy its contents. Mass production reduces the unit values of commodities, and as a fixed cost, like with fixed capital, the greater the volume of output, the smaller that proportion of the unit value it becomes. But, it is not zero. The key here is to produce and sell on a sufficiently large scale that even at very low prices, the average profit is produced. 

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