The Outmoding of Capitalism

This is my second article detailing an aspect of my new Marxist theory, which I laid out the basic distinctions of here. This article focuses on the following point that was laid out there:

-Communitarian socialism corresponds to the outmoding of capitalism and therefore constitutes Marx’s lower phase of communism, from which humanity will gradually evolve into the higher phase that witnesses the establishment of all property as common property and thus the abolition of class distinctions.


I think I’ll begin this analysis by pointing out the error of those who say that communism is unnatural to our species: the fact that communism has been the rule for our species and class society the exception. Human beings have been around for some 200,000 to 250,000 years, out of which essentially all but the last 10,000 or 12,000 have seen humanity organized in a communist way characterized by collective ownership of all property. Could humanity really have pursued an unnatural form of organization for more than 90% of its existence and survived? But of the communist then you might ask why then it is precisely the age of class society that has been the most prosperous if communism is a superior form of human organization. I like to answer this question by quoting from the summation of the International Communist Current, which provides a classical Marxian answer upon which I will expand:

“…Each level of development of the productive forces of a particular society corresponds to a given type of productive relationship. The relations of production are the relations established between men and women in their activity of producing goods destined to satisfy their needs. In primitive societies the productivity of labour was so low that it scarcely satisfied the barest physical needs of the members of the community. Exploitation and economic inequality were impossible in such a situation: if certain individuals had appropriated to themselves or consumed goods in greater quantities than other members of this society, then the poorer off would not have been able to survive at all. Exploitation…could not appear until the average level of human production had gone beyond the basic minimum needed for physical survival. But between the satisfaction of this basic minimum and the full satisfaction, not only of the material but also the intellectual needs of humanity, there exists an entire range of development in the productivity of labour. … In historical terms, it was this period which separated the dissolution of primitive communist society from the era when fully developed communism would be possible. Just as mankind wasn’t naturally ‘good’ in those ages when men and women weren’t exploited under the conditions of primitive communism, so it hasn’t been naturally ‘bad’ in the epochs of exploitation which have followed. The exploitation of man by man and the existence of economic privilege became possible when average human production exceeded the physical minimum needed for human life to reproduce itself. Both became necessary because the level of human production could not fully satisfy all the needs of all the members of society.

As long as that was the case, communism was impossible, whatever objections the anarchists may raise to the contrary. …”

To expand a bit on a particular point within this — currency — let me highlight that the basic reason why societies of scale use systems of exchange (namely barter and currency) is precisely because 1) the productivity of labor has come to exceed the bare minimum needed to sustain human life, while simultaneously 2) the world’s existing resources remain too finite to satisfy all human needs of all human beings. We thus have to have some way of measuring value until such time as objective scarcity can be vanquished. The Marxist (like yours truly for example) defines the higher phase of communism as being characterized by abundance for precisely that kind of reason. In other words, supply and demand indeed have an inverse relationship and fully developed communism is thus only attainable once supplies in general exceed demand. The more supply exceeds demand, the lower the exchange value of a product or resource gets. Fully developed communism becomes both possible and inevitable when products in general are available in such vast quantities that they have no exchange value and thus become worthless to the capitalist. They then become free. And when everything is free, class distinctions are eliminated. You can’t just leap ahead of objective conditions though and expect it to work out. Any attempt at abolishing money under current global conditions, for example, would simply yield either the spontaneous resurrection of currency systems or the spontaneous resurgence of a bartering system precisely because resources (most of them anyway) remain rather scarce, by which I mean that the global demand for them exceeds the supply. It is, however, exactly this situation which capitalism is itself radically modifying, owing to the enormous increase in the productivity of labor which it is bringing into being.

Most existing schools of Marxism contend that capitalism, with its industrial development, has already rendered human labor productive enough to sustain a fully developed communist system and thus the emergence of such a system is now on the historical agenda and probably has been since the days of either Marx or Lenin. This contention is their fundamental error, which leads to the full host of other errors developed to rationalize why it hasn’t happened yet, dominant among which is the advent of methodological revisionism (the abandonment of dialectical materialism and/or Marxian technological determinism)! In reality, if it were possible to achieve fully developed communism at this time, humanity would already be in the process of doing so according to the Marxian laws of history which dictate that technological revolutions yield social revolutions which in turn yield political revolutions. It isn’t yet happening because scarcity remains the rule! One can see this in that, as I pointed out in my previous post, an equal redistribution of the existing global product would as yet yield universal poverty! (This explains the failure of 20th century communism (state socialism). It was defeated because the realization of its objective was not yet historically possible and because there reached a point where state socialism tended to stand in the way of the emergence of said possibility due to the fact that it was less productive and efficient than capitalism. State socialism is on the retreat today, and nearly vanquished,  not due to a lack of sufficient will power on the part of revolutionaries (as so many other Marxists contend), but due to the fact that it is an historically outmoded aberration of history; one that has already served its historical purpose (assuring the general defeat of feudalism and tribalism) and thus exhausted its usefulness.) But here’s the exciting thing: this situation is changing, for there are today revolutionary changes underway in the development of the productive forces that are trending toward the abolition of scarcity and thus toward the realization of fully developed communism! To highlight how this is happening, bolding a particularly important item therein, I’ll re-post an excerpt from Jeremy Rifkin’s highly insightful new book, The Zero Marginal Cost Society, that was printed recently in the Huffington Post:


“The capitalist era is passing… not quickly, but inevitably. A new economic paradigm — the Collaborative Commons — is rising in its wake that will transform our way of life. We are already witnessing the emergence of a hybrid economy, part capitalist market and part Collaborative Commons. The two economic systems often work in tandem and sometimes compete. They are finding synergies along each other’s perimeters, where they can add value to one another, while benefiting themselves. At other times, they are deeply adversarial, each attempting to absorb or replace the other.

Although the indicators of the great transformation to a new economic system are still soft and largely anecdotal, the Collaborative Commons is ascendant and, by 2050, it will likely settle in as the primary arbiter of economic life in most of the world. An increasingly streamlined and savvy capitalist system will continue to soldier on at the edges of the new economy, finding sufficient vulnerabilities to exploit, primarily as an aggregator of network services and solutions, allowing it to flourish as a powerful niche player in the new economic era, but it will no longer reign.

What’s undermining the capitalist system is the dramatic success of the very operating assumptions that govern it. At the heart of capitalism there lies a contradiction in the driving mechanism that has propelled it ever upward to commanding heights, but now is speeding it to its death: the inherent dynamism of competitive markets that drives productivity up and marginal costs down, enabling businesses to reduce the price of their goods and services in order to win over consumers and market share. (Marginal cost is the cost of producing additional units of a good or service, if fixed costs are not counted.) While economists have always welcomed a reduction in marginal cost, they never anticipated the possibility of a technological revolution that might bring marginal costs to near zero, making goods and services priceless, nearly free, and abundant, and no longer subject to market forces.

The near zero marginal cost phenomenon has already wreaked havoc on the entertainment, communications, and publishing industries, as more and more information is being made available nearly free to billions of people. Today, more than forty percent of the human race is producing its own music, videos, news, and knowledge on relatively cheap cellphones and computers and sharing it at near zero marginal cost in a collaborative networked world. And now the zero marginal cost revolution is beginning to affect other commercial sectors, including renewable energy, 3D printing in manufacturing, and online higher education. There are already millions of “prosumers” — consumers who have become their own producers — generating their own green electricity at near zero marginal cost around the world. It’s estimated that around 100,000 hobbyists are using open source software and recycled plastic feedstock to manufacture their own 3D printed goods at nearly zero marginal cost. Meanwhile, six million students are currently enrolled in free Massive Open Online Courses (MOOCs) that operate at near zero marginal cost and are taught by some of the most distinguished professors in the world, and receiving college credits.

The reluctance to come to grips with near zero marginal cost is understandable.

Many, though not all, of the old guard in the commercial arena can’t imagine how economic life would proceed in a world where most goods and services are nearly free, profit is defunct, property is meaningless, and the market is superfluous. What then?

A powerful new technology platform is emerging with the potential of reducing marginal costs across large sectors of the capitalist economy, with far reaching implications for society in the first half of the 21st Century. The Communications Internet is converging with the fledgling Energy Internet and Logistics Internet in a seamless twenty-first-century intelligent infrastructure — the Internet of Things (IoT). The IoT will connect every thing with everyone in an integrated global network. People, machines, natural resources, production lines, logistics networks, the electricity grid, consumption habits, recycling flows, and virtually every other aspect of economic and social life will be linked via sensors and software to the IoT platform, continually feeding Big Data to every node — businesses, homes, vehicles — moment to moment, in real time. Anyone will be able to access the IoT and use Big Data and analytics to develop predictive algorithms that can dramatically increase productivity and reduce the marginal cost of producing and delivering a full range of physical goods and services to near zero just like we now do with information goods.

Lost in all of the excitement over the prospect of the Internet of Things is that connecting everyone and everything in a global network driven by extreme productivity moves us ever faster toward an era of nearly free goods and services and, with it, the shrinking of capitalism in the next half century. The question is what kind of economic system would we need to organize economic activity that is nearly free and shareable?

We are so used to thinking of the capitalist market and government as the only two means of organizing economic life that we overlook the other organizing model in our midst that we depend on daily to deliver a range of goods and services that neither market nor government provides. The Commons predates both the capitalist market and representative government and is the oldest form of institutionalized, self-managed activity in the world.

The contemporary Commons is where billions of people engage in the deeply social aspects of life. It is made up of literally millions of self-managed, mostly democratically run organizations, including educational institutions, healthcare organizations, charities, religious bodies, arts and cultural groups, amateur sports clubs, producer and consumer cooperatives, credit unions, advocacy groups, and a near endless list of other formal and informal institutions that generate the social capital of society.

Currently, the social Commons is growing faster than the market economy in many countries around the world. Still, because what the social Commons creates is largely of social value, not pecuniary value, it is often dismissed by economists. Nonetheless, the social economy is an impressive force. According to a survey of 40 nations, the nonprofit Commons accounts for $2.2 trillion in operating expenditures. In eight countries surveyed–including the United States, Canada, Japan, and France–the nonprofit sector makes up, on average, 5 percent of the GDP. In the US, Canada, and the UK, the nonprofit sector already exceeds 10% of the workforce.

While the capitalist market is based on self-interest and driven by material gain, the social Commons is motivated by collaborative interests and driven by a deep desire to connect with others and share. If the former defends property rights, caveat emptor, and the search for autonomy, the latter promotes open-source innovation, transparency, and the search for community.

What makes the Commons more relevant today than at any other time in its long history is that we are now erecting a high-tech global technology platform whose defining characteristics potentially optimize the very values and operational principles that animate this age-old institution. The IoT is the technological “soul mate” of an emerging Collaborative Commons. The new infrastructure is configured to be distributed in nature in order to facilitate collaboration and the search for synergies, making it an ideal technological framework for advancing the social economy. The operating logic of the IoT is to optimize lateral peer production, universal access, and inclusion, the same sensibilities that are critical to the nurturing and creation of social capital in the civil society. The very purpose of the new technology platform is to encourage a sharing culture, which is what the Commons is all about. It is these design features of the IoT that bring the social Commons out of the shadows, giving it a high-tech platform to become the dominant economic paradigm of the twenty-first century.

The Collaborative Commons is already profoundly impacting economic life. Markets are beginning to give way to networks, ownership is becoming less important than access, and the traditional dream of rags to riches is being supplanted by a new dream of a sustainable quality of life.

Hundreds of millions of people are transferring bits and pieces of their economic life from capitalist markets to the global Collaborative Commons. Prosumers are not only producing and sharing their own information, entertainment, green energy and 3D-printed goods at near zero marginal cost and enrolling in massive open online college courses for nearly free, on the Collaborative Commons. They are also sharing cars, homes, clothes, tools, toys, and countless other items with one another via social media sites, rentals, redistribution clubs, and cooperatives, at low or near zero marginal cost. An increasing number of people are collaborating in “patient-driven” health-care networks to improve diagnoses and find new treatments and cures for diseases, again at near zero marginal cost. And young social entrepreneurs are establishing socially responsible businesses, crowdfunding new enterprises, and even creating alternative social currencies in the new economy. The result is that “exchange value” in the marketplace is increasingly being replaced by “shareable value” on the Collaborative Commons.

In the unfolding struggle between the exchange economy and the sharing economy, most economists argue that if everything were nearly free, there would be no incentive to innovate and bring new goods and services to the fore because inventors and entrepreneurs would have no way to recoup their up-front costs. Yet millions of prosumers are freely collaborating in social Commons, creating new IT and software, new forms of entertainment, new learning tools, new media outlets, new green energies, new 3D-printed manufactured products, new peer-to-peer health-research initiatives, and new nonprofit social entrepreneurial business ventures, using open-source legal agreements freed up from intellectual property restraints. The upshot is a surge in creativity that is at least equal to the great innovative thrusts experienced by the capitalist market economy in the twentieth century.

While the capitalist market is not likely to disappear, it will no longer exclusively define the economic agenda for civilization. There will still be goods and services whose marginal costs are high enough to warrant their exchange in markets and sufficient profit to ensure a return on investment. But in a world in which more things are potentially nearly free and shareable, social capital is going to play a far more significant role than financial capital, and economic life is increasingly going to take place on a Collaborative Commons.”


In other words, the technological revolutions that are being wrought by the advent of the Internet of Things are trending our species toward the abolition of scarcity in most fields and thus toward a situation wherein the bulk of the social product is more or less freely distributed! And, just as exciting, there are now books like this out discussing how the social relations are already in a protracted process of revolutionary transformation along more collectivist lines as a direct result! Can this not but yield corresponding political revolutions in the future according to Marx’s laws of history which dictate that social revolutions yield corresponding political revolutions??

In Marx’s day the terms “socialism” and “communism” were used interchangeably. Over the 20th century though, the term “socialism” started to generally be applied to the lower phase. For example, when a Marxist uses the term “socialism” today they typically are referring to the lower phase, whereas their use of the term “communism” almost invariably refers to the higher phase. According to Marx, the lower phase of communism can be distinguished from the higher phase by its distribution of the social product: in the lower phase, according to Marx, the social product is mainly distributed according to work, while in the higher phase it is instead distributed according to need. It is through this process, Marx contended, that production for use will come to replace production for exchange. Indeed the former ethos (distribution according to work) prevailed in 20th century communist systems of state socialism accordingly. But systems of state socialism in reality corresponded to the outmoding of feudalism rather than of capitalism, as Marx believed. What we are now seeing is the emergence of a different kind of socialism; one that actually does correspond to the outmoding of capitalism! And this new kind of socialism operates somewhat differently than how Marx envisioned the lower phase of communism functioning. It does not distribute the social product mainly according to work because social value, within its framework, has already largely replaced market value! The interesting feature of such a development — the protracted economic takeover by non-profits — is that it doesn’t feature generalized government ownership, but yet manages to largely replace production for exchange (the capitalist ethos) with production for use (the communist ethos). So, in other words, it’s looking like the lower phase of communism (the kind of socialism that actually leads to fully developed communism) will not be built around the distribution of value according to work after all, but more in accordance with what Marx would have considered the ethos of the higher phase of communism (production of social value). And it’s also looking like property ownership will get more collective than it is right now in this developing lower phase, but that it won’t necessarily reach the level of collective ownership by society (as in ownership by the central government), but rather more like collective ownership or collective control by private groups. And from there we leap to the higher phase — fully developed communism — once further technological revolutions have finished off scarcity in the remaining economic sectors as well. That’s how I think the transition to fully developed communism will actually look as it happens over this next century or two.

Think: We are used to thinking of society and the economy as being divided into two sectors: the public sector and the private sector. However, within the private sector there exists a division between its commercial and not-for-profit sections (the latter of which, as highlighted in the excerpt from Rifkin’s book above, tend to be of a more collectivist structure and ethos). The former produce market value while the latter produces social value. Thus the fact that we can now foresee that the latter will ultimately take over the bulk of the world economy well within this century means that we can now foresee the beginning of capitalism’s historical outmoding.

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