The Network Economy vs The Market Economy

Excerpt from the Telekommunist Manifesto

Capitalism depends on the appropriation of value for its subsistence and growth. The disingenuous rhetoric of the ‘free market economy’ is a smoke screen to justify a system of privilege and exploitation, perhaps better called the ‘casino economy’. There are certainly some conspicuous winners, but the odds always favor the house. Any organized attempt to beat the odds will be excluded, perhaps violently. In a genuinely free economy, competition among producers would reduce the price of everything to the lowest level. If commodities were traded in a truly perfect ‘market’, then land and capital, like labor, would never be able to earn any more than the cost of the production of provision. There could be no class that is exempt from working, as there would be no income to sustain such a class.

For a capitalist class to exist, the market must be rigged, and indeed, all markets are. Capitalism must increase the price of capital by withholding it from labor. In reality, the ‘free market’ is an imposition by property owners on to workers, while retaining their own privileges. Capital needs to make the price of labor low enough to prevent workers, as a class, from being able to retain enough of their own earnings to acquire their own property. If workers could acquire their own property, they could also stop selling their labor to the capitalists. Capitalism, then, could not exist in a free market. The whole idea of the ‘free market’ is part of the mythology of capitalism. It is not possible within capitalism and just as unlikely to exist without it.

If ‘freed’ from the coercion of profit-seeking capitalists, producers would produce for social value, not for profits, as they do in their private and family lives, and as they do in non-capitalist communities. This is not to say that a free society would not have competition, or that its members would not seek to benefit from their own labor. Indeed, the division of labor required in a complex society makes exchange and reciprocity necessary. However, the metaphor of ‘the market’ as it is currently used would no longer hold.

The ‘market economy’ is, by definition, a surveillance economy, where contributions to production and consumption must be measured in minute detail. It is an economy of accountants and security guards. The accounting of value exchange in tiny and reductive lists of individually priced transactions must be superseded by more fluid and generalized forms of exchange. The motive to maximize profit from ownership, so often the driving force behind irrational and destructive forms of production, would give way to a much stronger motive for production: doing work that has direct benefits for our lives and our society, production that fulfills real world needs and desires.

Capitalist apologists will insist that these motives are one and the same, that profit is simply the financial reward for producing what the community needs, but this relationship is tenuous at best. While the increased price of goods in short supply does direct productive activities towards particular areas, the extraction of profit from this production by property owners does little to address social needs. When profit is the motive, price can be increased or costs reduced through predatory, exploitative and anti-competitive business practices, that do not contribute to the fulfillment of community needs. When workers are able to form their own capital, and thereby retain the entire product of their labor, the motivations to pursue such practices fade.

Without the need to account for and measure our consumption and production to appease the imposers of capitalist control, workers in a free society may not bother producing exclusively to maximize profit within a ‘market economy’. Instead, they may decide to focus their efforts on producing what they want and what their community needs, and are motivated to share the products of their labor out of mutual respect. This type of economy does not resemble a ‘market’.

The ‘market’ has become such a pervasive metaphor for ‘free exchange’ that the whole of society is frequently, and uncritically described in terms of a physical marketplace. A physical marketplace is not a free space. Control of the physical location of the market has always been the domain of hierarchy and authority, and proximity to the physical market is the textbook example of unearned income, referred to by economists as ‘economic rent’. The market stall is a physical manifestation of the division between producer and consumer. None of these appear to be essential characteristics of a free society. Instead of an idealized and impossible ‘free market’, a workers’ economy would be better conceptualized as a ‘network economy’, where independent participants exchange according their mutual desires within the context of a common platform, not centrally controlled by any of them, but composed of their own voluntary interconnections.

Capitalism depends on the state to impose control within the network economy, particularly to control relations through authorized channels, and thereby capture value that would otherwise be retained by its producers. Points of control are introduced into the natural mesh of social relations. The ‘market economy’ is then the imposition of the ‘unfree’ terms of a physical marketplace onto society broadly. The distinction between producer and consumer must be enforced so that circulation can be controlled. Hierarchy and authority must have privileged access.

The absurd and reductionist idea that we are to conceive of society itself as a marketplace is born from the imagination of capitalism, a paradise for the extortionist and the bookmaker. The means of imposing the relations of the marketplace on all of society is provided by the state. The state’s traditional role of mediating between the classes on behalf of the ruling class depends on its territorial sovereignty. The state’s ability to impose control on the network economy depends on the fact that the participants mostly interact within the state’s boundaries. Once the network expands beyond the state it has the potential to become a threat to the state itself, by undermining the territorially-based capture of value.

The state’s ability to grant title and privilege is based on its ability to enforce such advantages through its monopoly on the legitimate use of violence. Communications based on global peer networks have a chance to resist and evade the violence contained within such hierarchies. Social relations among transnational, trans-local communities operate within an extra-territorial space, one where the operations of title and privilege could give way to relations of mutual interest and negotiation.


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