<img src="http://larvatusprodeo.net/wp-content/uploads/2009/04/jefferson_thumbo87o8686.jpg" align=left Karl Marx’ concept of ‘fictitious capital’ has enjoyed something of a revival recently – in the context of explaining the Global Financial Crisis. It’s interesting to observe [h/t Richard Metzger at Boing Boing] that Marx doesn’t appear to have invented the term – the phrase was used by Thomas Jefferson and the concept goes back to Ricardo and Adam Smith, and beyond them to earlier writers in the Eighteenth Century. There’s a bit of a message in that. Observers such as David Harvey argued quite some time ago – contrary to all the hype that was around in the 90s about the ‘new economy’ – that the increased and increasingly ubiquitous role of financial capital was what was distinctive about globalisation. More broadly, following the French historian Fernand Braudel and some of his epigones in world systems theory, we can conclude that markets predate capitalism. In tracing the history of capitalism, Giovanni Arrighi argues that particular accumulation regimes tend to emphasise financialisation as an accumulation strategy towards the end of their life cycle, as the limits of ‘material expansion’ are reached. There’s a recombination effect where the production of tangibles is eclipsed by the circulation of intangibles – each time opening up a new cycle of innovation across an ever larger geographical space and constructing a new ‘spirit of capitalism’ which brings in its wake newly reassembled subjectivities, new political divisions and new forms of inequality.
The ‘age of neo-liberalism’, then, saw a shift of power towards finance capital and a harnessing of immaterial labour to the creation of intangible value. It saw a new logic of personality where constant change and the ability to network trumped security and the old bourgeois virtues. What’s also new about the era of globalisation is the world wide scope and reach of one economic system, and the geographical dispersion of networks of value creation – where, for instance, value can be added by design in the metropoles to products manufactured in the developing world. Within the developed world, we’ve had a bifurcated services economy – with Robert Reich‘s “symbolic analysts” at the top of the tree forming a highly mobile elite and personal services provided by low skilled and often immigrant labour (mobile in a somewhat different way) or younger workers whose mobility into high end occupations is temporal. It’s been the less skilled and relatively immobile workforce in the declining ‘productive’ sectors who’ve largely been the losers in this conjuncture – a fact which explains a lot about the politics of the last couple of decades.
One way of looking at the current financial crisis is that it’s the first major recession to hit the developed world since the value creation switch was flicked from the production of things to the creation of intangibles. If one takes a Schumpeterian view, the “creative destruction” now occurring should lead to the emergence of a new frontier of value creation. It’s difficult to say what that might be, and the inability to identify any emergent field for capital to till probably contributes to the (quite possibly mistaken) belief that a little bit of interventionism will soon return things to business as usual. There’s a big contrast with the last major downturn – where Paul Keating recognised that the evisceration of manufacturing jobs in Australia – despite its human cost – was a necessary condition for the insertion of this country into the global flows and networks where the action was. That also explained his focus on the Asian and Pacific region.
I was struck last week by some comments from consultant, film maker and creative industries theorist John Howkins, in a keynote he gave at the CCi Symposium held at QUT. Howkins drew a parallel between the sorts of work and commerce advocated by the evangelists of the knowledge economy and the phenomenon of sub-prime mortgages. In his own case, he discussed Handmade Films (of which he is the Chair) and its experience in having to secure a valuation of its assets in order to raise finance. The valuation is highly subjective – given that the inventory of the company is immaterial and intangible – films and the prospect of future films. Howkins remarked that the mode of accounting for value is analogous in the case of financial instruments and derivatives, low doc loans and the products of creative labour – all three are essentially projective and dependent on shifting patterns of demand, income and the ability at any stage to liquidify, commodify or realise intangible value.
Similarly, Howkins argued that the forms of work pioneered in the creative sectors – project based, fluid, subject to multiple reinvention and recombination and reassemblage – have their parallels in the working lives of those at the bottom of the economic ladder.
Returning to the point I made earlier, there’s a dichotomy between mobility and immobility which parallels the division between material and immaterial value. We do live in a services economy when both those who are profiting from intangible products and those who are providing services within the same economic networks work in a way which privileges insecurity – the big difference being the highly unequal levels of social capital which can literally be realised as income and the degree of control and autonomy enjoyed by the assemblers of networks compared to those who are low level nodes in the same productive space.
We have really only just begun to think about the implications of all this for both economic analysis and social inequality.
We are also about to find out what happens to economies where competitive advantage comes from intangible factors when what is effectively value unsecured by any material assets or products encounters the collapse of the financialised networks and the evaporation of the fictitious capital which enabled the culture of the new capitalism to flourish (for some).