Production of Surplus Value in a Knowledge Economy

M. Vijaya Kumar

The aim of this paper is to outline sore aspects of a Marxist labor theory of value in the Information Age.

Today, it is fashionable to argue that we are moving into the knowledge revolution, which is the latest phase of capitalism. This knowledge revolution is said to be dependent on knowledge. information, skills, human capital, intellectual capita], ideas, services, intangibles, brainpower, education and brand names,

The problem underlying such concepts is that they create the impression that we have entered a new type of society. Peter Golding (2000) argues that the information-society discourse is an ideology that ‘‘anticipates and celebrates the privatization of information, and the incorporation of ICT developments into the expansion of the free market.’’ There is a dialectic of continuity and discontinuity - we can surmise that capitalist development has entered a new phase of development.

Historical Materialism

Karl Marx. determined that the basis of understanding society lay in understanding how societies organize to meet their material needs. This social organization is in turn determined by the available productive forces - the technology and knowledge and organization - in a given period. Each qualitative advance of technology defines a period, or stage of human history. These periods have distinctive corollary forms of social or productive relations. Marx recognized that the constantly developing forces of production race ahead of the relatively static relations of production (the relationship of individuals and groups of people to one another in the process of production), laying the basis for transformation in society.

This observation - that societies organize around the available technology, and that a qualitative change in the available technology sets the stage for a qualitative change in social relations - can perhaps be seen best by looking at different periods of human history, and noting what tools are available at different periods, and how people have organized themselves around those tools to meet their seeds.

Knowledge-Based Economy

It is common to identify contemporary capitalism, however, as a knowledge-based economy (or KBE) on the grounds that knowledge has now become the most important factor of production and the key to economic competitiveness. When capitalist businessmen refer to creating value from knowledge, they seldom refer to the labour process that is necessary in order for this to succeed, but the labour process is essential - value cannot be created from knowledge without the labourer undertaking some form of intellectual labour.

Marxist value theory is highly relevant for understanding recent changes in knowledge-intensive sectors such as Information and Communication Technologies (ICT). In the categories of the Marxian labor theory of value, the value of a product is the objectified labor time needed for producing the good. ‘‘The value of a commodity. therefore, varies directly as the quantity, and inversely as the productiveness, of the labor incorporated in it’* (Marx 1867). Marx's method of analysis in Capital, views knowledge and information as discrete moments in the process of production and value creation. This creation of value from intellectual labour, which is then embedded in the commodity becomes necessary. so that intangible commodities can be sold in the market-place.

The development of the new technologies in a close collaboration with humans has appointed capital with new ways of extracting value that is social, cultural as well as economic and is far from declaring the end of production. Rather, it demonstrates the shift of production and the different ways through profit is now realized.

Information and the Commodity

A commodity is a moment in the circulation process of value. A commodity is a container of value. It is the material embodiment of dead, congealed, labor. and, by extension, information. A commodity is produced through the application of physical activity, knowledge, and information. If, for a moment we forget about capitalist commodities, capital, and value, and concentrate on information we can see that all material products of human activity contain, or embody information and/or knowledge. In this sense there is no difference between a match box and a microchip. The difference lies in the determinant social context in which the information is produced, i.e., the division of labor, the system of exchange, private property, etc. Information sharing is minimal in the primitive context, it increases vastly in the capitalist context. The accumulation of capital from information commodities is in need of a substantial material carrier. Hence, workers who process information can create surplus value.

Ralf Kraemer (2000) says that the wages of knowledge workers are not determined by the value of their labour power, but that they exceed this value by far. Extra surplus value is produced at the expense of other areas of the economy.

James Curry (1997) argues that knowledge is not a thing, but a social process, a general abstraction outside the nexus of capital, a general pool that is non-proprietary and available for everyone. When it is subsumed under capital, knowledge becomes information. Capital accumulation in the software industry is not only based on intellectual labour, but is also in need of a substantial- material carrier of knowledge.

Software engineering as a mental activity cannot be seen as being independent from material- substantial commodities. The value that is produced and that is objectified in commodities can only exist because there is a material object. Hence, intellectual and industrial production are interrelated in the framework of the manufacturing of information products.

3. Software Engineering and the Production of Surplus Value

Information is not objectified in a single product. It is objectified in many products at the same time (not only by one firm, but possibly by many firms at the same time) although it must only be produced 6.:ce, Furthermore it does not wear out nor is it used up.

Idealistic conceptions such as the "weightless economy" (Coyle 1997, Kelly 1998, Quah 1997) or the "post-industrial society” (Bell 1976) suggest that capitalism can exist without material- substantial objects. But capitalism and economic processes in general are always in need of materiality in the broader as well as in the narrower sense.

Humans make use of objects in the world and they actively create new objects in the labour process. Hence for Marx, man is objective man (gegenstndlicher Mensch). In this process, his living labour power is being objectified in use values which are a type of dead labour that store information about the world and society.

The surplus value which capital obtains through the production process consists only of the excess of surplus labour over necessary labour. The increase in productive force can increase surplus labour—i.e. the excess of labour objectified in capital as product over the labour objectified in the exchange value of the working day—only to the extent that it diminishes the relation of necessary labour to surplus labour, and only in the proportion in which it diminishes this relation. Surplus value is exactly equal to surplus labour; the increase of one {is} exactly measured by the diminution of necessary labour. (Marx 1857/58, 339)

The concept of immaterial labour has become a central issue today. In as much as such a concept addresses the transformations undergone by labour in its post-industrial mode. In the Grllndrisse, Marx explicitly stats that in the capitalist mode of production. the source of wealth is no longer the immediate work of the individual, but a general productivity of the social body dispersed through technologies and human bodies, connected in shifting assemblage (the general intellect) in this context, the creation  of wealth no longer depends on  the working time narrowly defined, but coincides with the whole time of life.

This is a socialised wealth, which cannot be measured by money but resides in the intensive value of relations, affections, modes of expressions, and forms of life. Thus we can say, that within this interpretation of Marxism, the source of value is not only the alienated surplus labour of the individual worker, but also a more indeterminate activity which captures and re-combines features of aesthetic experience and artistic experimentation. Thus the immaterial does not exist in a space that is exclusively psychological.

Impact of Financialization

The most visible structural consequences of the financial expansion have been the financialization of a number of services related to the reproduction of everyday life: credit card debt, housing and mortgages, pensions, insurance, health care and education. The second deep structural tendency of post-Fordism is the massive flight of value from the mechanisms of capture that were established with the Fordist industrial economy. Social production, the production of (mostly but not exclusively) immaterial wealth outside of the capitalist economy has increased massively with the diffusion of information and communications technologies.

For companies, value is increasingly generated outside of the wage relation, in diffuse practices of social production that cannot be easily managed or measured. Success and profit becomes increasingly contingent on the ability to capture such socially produced wealth, and depend less on the direct contribution of salaried labour.

Since the wage relation looses its centrality as a way of distributing social wealth, it also looses its centrality as a way of appropriating surplus value and profits. This way the enormous expansion of personal debt as the source of the new kinds of securitized value streams that underpin new financial instruments could simply be seen as the establishment of an alternative to salaried labour as an instrument for the capture of value.

Critical Questions: Value in the Age of Robots

Marx writes “The development of the means of labour into machinery is not an accidental moment of capital, but is rather the historical reshaping of the traditional, inherited means of iabour into a form adequate to capital. The accumulation of knowledge and of skill, of the general productive forces of the social brain, is thus absorbed into capital, as opposed to labour, and hence appears as an attribute of capital, and more specifically of fixed capital, in so far as it enters into the production process as a means of production proper. Machinery appears, then, as the most adequate form of fixed capital, and fixed capital, in so far as capital’s relations with itself are concerned, appears as the most adequate form of capital as such.”

When a commodity goes on to the market, it exchanges not at its individual value, that is, based on labor used to produce it, but on the average value of all of the same type of commodities from various producers, its social value.

In the present technological context, the value generated by production of physical goods and knowledge products entails the use of extensive share of knowledge, much of that in the form of dead labour that is embedded in machines as computer software and networking. The surplus value thus produced is in turn shared by number of agencies, besides the actual capitalist who produces these commodities. These include agencies such as banks and financial institutions, advertising and distributing agencies etc., besides the agencies that produce and distribute the computer software. This sharing of the surplus value is governed by mutual arrangements and safeguards such as royalties, patents and copyrights etc.

Conclusion

The emergence of new lCTs has not altered the fundamental capitalist relations in any substantial way. The basic class antagonism between the capitalist and the working class remains unchanged. What is undergoing change is the way the appropriation of surplus value and its sharing between the oppressing classes.