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<nettime> Markets, Antimarkets, and the Internet.
Manuel De Landa by way of Felix Stalder on Tue, 22 Sep 1998 18:54:41 +0200 (MET DST)


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<nettime> Markets, Antimarkets, and the Internet.


[DeLanda's Antimarkets argument in a very condensed form. For those who
missed out the more elaborate versions that have been posted on nettime in
1996 and 1997.F]


        Markets, Antimarkets, and the Internet.
        by Manuel DeLanda.


One hundred years ago, Western societies underwent a second Industrial
Revolution, based on the the interaction of several technologies:
electricity, the internal combustion engine, oil, steel and plastics.
Although knowledge and information as inputs to production processes had
already played a role in the first Industrial Revolution, it was the coming
of electricity, and the creation of the first industrial research
laboratories (such as the General Electric laboratory) that propelled
knowledge to its position as the most important input to production.
Information, of course, also plays key roles in other economic areas such
as marketing and investment, and indeed, to the extent that a particular
economy is truly driven by supply and demand, the information transmitted
by prices has always played a central role. But regardless of the fact that
knowledge has always been a key factor in the working of economies,
electricity and the other innovations of the early twenty century greatly
intensified its importance. And, of course, the explosive growth of
computer networks in the last three decades is bound to intensify the flow
of knowledge even more and this intensification will undoubtedly transform
the nature of the economy in the next century.

It follows that a very important task for today's intellectuals is to
create realistic scenarios of the world of twenty-first century economics.
The problem is that, when we try to picture what the effects of the
intensification of knowledge will be like, several obstacles stand in the
way. The most important of these roadblocks is that intellectuals on the
right, center and left sides of the political spectrum are all trying to
predict what a twenty first century economy will be like on the basis of
theories devised to explain the working of nineteenth century England. In
other words, whether one is using the conceptual machinery of Adam Smith or
of Karl Marx (or of any combination of the two), whether one sees in the
recent commercialization of the Internet a new "invisible hand" that will
magically benefit society, or whether one sees in this commercialization
the "commodification" of the Net which will magically ruin society, one is
still trying to understand what is a radically new phenomenon in terms of
obsolete categories belonging to bankrupt systems of thought. It is time to
go beyond both the "invisible handers" and the "commodifiers" and to
attempt to construct a new economic theory that not only give us a clearer
picture of the future, but almost as important, of the past, since it is
impossible to know where we are going unless we know how we got where we
are.

What follows is only a brief sketch of what these new economic theories
would be like. First of all, it is not as if we would need to manufacture a
new theory out of thin air. Alternatives to the "invisible handers" and the
"commodifiers" have existed in the past (such as the institutionalist
school of the followers of Thorstein Veblen) and new theories are
flourishing today, such as the neo-institutionalist school and the growing
field of nonlinear economics. {1} Also, economic historians like Fernand
Braudel and his followers have given us a fantastically detailed account of
the development of Western economies in the last eight hundred years, and
this research has generated a wealth of empirical data which simply was not
available to either Adam Smith or Karl Marx when they created their
theories. Furthermore, the new data contradicts many of the foundations of
those two systems of thought. Finally, not just economists and economic
historians will be involved in developing the new ideas we need,
philosophers will also participate: in the last twenty years the discipline
of the philosophy of economics (that is the philosophy of science applied
to economics) has grown at a tremendous pace and is today and very active
field of research.{2}

Here I only have space to discuss a few of the ideas that have been
developed by economists, historians and philosophers. Perhaps the most
dramatic new insight emerges from Fernand Braudel's history of capitalism.
Unlike theorists from the left and the right who believe capitalism
developed through several stages, first being competitive and subservient
to market forces and only later, in the twentieth century, becoming
monopolistic, Braudel has shown with a wealth of historical evidence that
as far back as the thirteenth century, and in all the centuries in between,
capitalists have always engaged in anti-competitive practices, manipulating
demand and supply in a variety of ways. Whenever large fortunes were made
in foreign trade, wholesale, finance or large scale industry and
agriculture, market forces were not acting on their own, and in some cases
not acting at all. In short what Braudel shows is that we must sharply
differentiate between the dynamics generated by many interacting  small
producers and traders (where automatic coordination via prices does occur),
from the dynamics of a few big businesses (or oligopolies, to use the
technical term), in which prices are increasingly replaced by commands as
coordinating mechanisms, and spontaneous allocation by the market replaced
with rigid planning by a managerial hierarchy. What these new historical
findings suggest is that all that has existed in the West since the
fourteenth century, and even after the Industrial Revolution, is a
heterogeneous collection of institutions, some governed by market dynamics
and some others manipulating those dynamics, and not a homogeneous,
society-wide "capitalist system". In the words of Fernand Braudel:

"We should not be too quick to assume that capitalism embraces the whole of
western society, that it accounts for every stitch in the social
fabric...that our societies are organized from top to bottom in a
'capitalist system'. On the contrary, ...there is a dialectic still very
much alive between capitalism on one hand, and its antithesis, the
'non-capitalism' of the lower level on the other." {3} And he adds that,
indeed, capitalism was carried upward and onward on the shoulders of small
shops and "the enormous creative powers of the market, of the lower storey
of exchange...[This] lowest level, not being paralyzed by the size of its
plant or organization, is the one readiest to adapt; it is the seed bed of
inspiration, improvisation and even innovation, although its most brilliant
discoveries sooner or later fall into the hands of the holders of capital.
It was not the capitalists who brought about the first cotton revolution;
all the new ideas came from enterprising small businesses." {4}

Several things follow from Braudel's distinction between market and
capitalist institutions (or as he calls them "antimarkets"). If markets and
antimarkets have never been the same thing then both the invisible handers
as well as the commodifiers are wrong, the former because spontaneous
coordination by an invisible hand does not apply to big business, and the
latter because commodity fetishism does not apply to the products created
by small business but only to large hierarchical organizations capable of
manipulating demand to create artificial needs. In other words, for people
on the right and center of the political spectrum all monetary
transactions, even if they involve large oligopolies or even monopolies,
are considered market transactions. For the Marxist left, on the other
hand, the very presence of money, regardless of whether it involves
economic power or not, means that a social transaction has now been
commodified and hence made part of capitalism. It is my belief that
Braudel's empirical data forces on us to make a distinction which is not
made by the left or the right: that between market and antimarket
institutions. In fact, we can already see the kind of dogmatic responses
that the lack of this distinction promotes on discussions in the Internet.
As it became clear that digital cash and secure crypto-technology for
credit card transactions were going to transform the Net into a place to do
business, some intellectuals became euphoric about the utopic potential of
digital "free enterprise", while others began to denounce the Internet as
the latest expression of international capitalism or claim that the Net was
becoming commodified and hence reabsorbed into the system. It is clear,
however, that if we reject these two dogmatic positions, our evaluation of
the economic impact of the Net (its potential for both decentralization and
empowerment of the individual producer and for centralization of content
production by a few large firms) will have to become more nuanced and based
on more complex models of economic reality.

Recognizing the complexity and  heterogeneity of actual "institutional
ecologies" may be crucial not only when thinking about Internet economics
but, more generally, when analyzing the oppressive aspects of today's
economic system, that is, those aspects that we would want to change to
make economic institutions more fair and less exploitatitive. We need to
think of economic institutions as part of a larger institutional ecology,
an ecology that must include, for example, military institutions. Only this
way will we be able to locate the specific sources of certain forms of
economic power, sources which would remain invisible if we simply thought
of every aspect of our current situation as coming from free enterprise or
from exploitative capitalism. In particular, many of the most oppressive
aspects of industrial discipline and of the use of machines to control
human workers in assembly line factories, were not originated by
capitalists but by military engineers in eighteenth century French and
nineteenth century American arsenals and armories. Without exaggeration,
these and other military institutions created many of the techniques used
to withdraw control of the production process from workers and then
exported these techniques to civilian enterprises, typically antimarket
organizations. {5} Hence, not to include in our economic models processes
occurring within this wider institutional ecology can make invisible the
source of the very structures we must change to create a better society,
and hence diminish our chances of ever dismantling those oppressive
structures.



REFERENCES:

{1} Douglas C. North. Institutions, Institutional Change and Economic
Performance. (New York: Cambridge University Press, 1990).

{2} Uskali Maki. Economics with Institutions: Agenda for Methodological
Enquiry.
And:
Christian Knudsen. Modelling Rationality, Institutions and Processes in
Economic Theory.
Both in:
Uskali Maki, Bo Gustafsson and Christian Knudsen eds. Rationality,
Institutions and Economic Methodology. (London: Routledge, 1993).

{3} Fernand Braudel. The Perspective of the World. (New York: Harper and
Row, 1986), page 630

{4} ibid. 631

{6} Merrit Roe Smith. Army Ordnance and the "American System of
Manufacturing", 1815-1861.
And:
Charles F. O'Connell, Jr. The Corps of Engineers and the Rise of Modern
Management, 1827-1856.
Both in:
Military Enterprise. Perspectives on the American Experience. Merrit Roe
Smith, ed. (Cambridge Mass: MIT Press, 1987).


Manuel DeLanda
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