Digifesto

Tag: thomas piketty

July 6, 2017

Capital, democracy, and oligarchy

1. Capital

Bourdieu nicely lays out a taxonomy of forms of capital (1986), including economic capital (wealth) which we are all familiar with, as well as cultural capital (skills, elite tastes) and social capital (relationships with others, especially other elites). By saying that all three categories are forms of capital, what he means is that each “is accumulated labor (in its materialized form or its ‘incorporated,’ embodied form) which, when appropriated on a private, i.e., exclusive, basis by agents or groups of agents, enables them to appropriate social energy in the form of reified or living labor.” In his account, capital in all its forms are what give society its structure, including especially its economic structure.

[Capital] is what makes the games of society – not least, the economic game – something other than simple games of chance offering at every moment the possibility of a miracle. Roulette, which holds out the opportunity of winning a lot of money in a short space of time, and therefore of changing one’s social status quasi-instantaneously, and in which the winning of the previous spin of the wheel can be staked and lost at every new spin, gives a fairly accurate image of this imaginary universe of perfect competition or perfect equality of opportunity, a world without inertia, without accumulation, without heredity or acquired properties, in which every moment is perfectly independent of the previous one, every soldier has a marshal’s baton in his knapsack, and every prize can be attained, instantaneously, by everyone, so that at each moment anyone can become anything. Capital, which, in its objectified or embodied forms, takes time to accumulate and which, as a potential capacity to produce profits and to reproduce itself in identical or expanded form, contains a tendency to persist in its being, is a force inscribed in the objectivity of things so that everything is not equally possible or impossible. And the structure of the distribution of the different types and subtypes of capital at a given moment in time represents the immanent structure of the social world, i.e. , the set of constraints, inscribed in the very reality of that world, which govern its functioning in a durable way, determining the chances of success for practices.

Bourdieu is clear in his writing that he does not intend this to be taken as unsubstantiated theoretical posture. Rather, it is a theory he has developed through his empirical research. Obviously, it is also informed by many other significant Western theorists, including Kant and Marx. There is something slightly tautological about the way he defines his terms: if capital is posited to explain all social structure, then any social structure may be explained according to a distribution of capital. This leads Bourdieu to theorize about many forms of capital less obvious than wealth, such as the symbolic capital, like academic degrees.

The costs of such a theory is that it demands that one begin the difficult task of enumerate different forms of capital and, importantly, the ways in which some forms of capital can be converted into others. It is a framework which, in principle, could be used to adequately explain social reality in a properly scientific way, as opposed to other frameworks that seem more intended to maintain the motivation of a political agenda or academic discipline. Indeed there is something “interdisciplinary” about the very proposal to address symbolic and economic power in a way that deals responsibly with their commensurability.

So it has to be posited simultaneously that economic capital is at the root of all the other types of capital and that these transformed, disguised forms of economic capital, never entirely reducible to that definition, produce their most specific effects only to the extent that they conceal (not least from their possessors) the fact that economic capital is at their root, in other words – but only in the last analysis – at the root of their effects. The real logic of the functioning of capital, the conversions from one type to another, and the law of conservation which governs them cannot be understood unless two opposing but equally partial views are superseded: on the one hand, economism, which, on the grounds that every type of capital is reducible in the last analysis to economic capital, ignores what makes the specific efficacy of the other types of capital, and on the other hand, semiologism (nowadays represented by structuralism, symbolic interactionism, or ethnomethodology), which reduces social exchanges to phenomena of communication and ignores the brutal fact of universal reducibility to economics.

[I must comment that after years in an academic environment where sincere intellectual effort seemed effectively boobytrapped by disciplinary trip wires around ethnomethodology, quantification, and so on, this Bourdieusian perspective continues to provide me fresh hope. I’ve written here before about Bourdieu’s Science of Science and Reflexivity (2004), which was a wake up call for me that led to my writing this paper. That has been my main entrypoint into Bourdieu’s thought until now. The essay I’m quoting from now was published at least fifteen years prior and by its 34k citations appears to be a classic. Much of what’s written here will no doubt come across as obvious to the sophisticated reader. It is a symptom of a perhaps haphazard education that leads me to write about it now as if I’ve discovered it; indeed, the personal discovery is genuine for me, and though it is not a particularly old work, reading it and thinking it over carefully does untangle some of the knots in my thinking as I try to understand society and my role in it. Perhaps some of that relief can be shared through writing here.]

Naturally, Bourdieu’s account of capital is more nuanced and harder to measure than an economist’s. But it does not preclude an analysis of economic capital such as Piketty‘s. Indeed, much of the economist’s discussion of human capital, especially technological skill, and its relationship to wages can be mapped to a discussion of a specific form of cultural capital and how it can be converted into economic capital. A helpful aspect of this shift is that it allows one to conceptualize the effects of class, gender, and racial privilege in the transmission of technical skills. Cultural capital is, explicitly in Bourdieu’s account, labor intensive to transmit and often done so informally. Cultural tendencies to transmit this kind of capital preferentially to men instead of women in the family home become a viable explanation for the gender cap in the tech industry. While this is perhaps not a novel explanation, it is a significant one and Bourdieu’s theory helps us formulate it in a specific and testable way that transcends, as he says, both economism and semiologism, which seems productive when one is discussing society in a serious way.

One could also use a Bourdieusian framework to understand innovation spillover effects, as economists like to discuss, or the rise of Silicon Valley’s “Regional Advantage” (Saxenian, 1996), to take a specific case. One of Saxenian’s arguments (as I gloss it) is that Silicon Valley was more economically effective as a region than Route 128 in Massachusetts because the influx of engineers experimenting with new business models and reinvesting their profits into other new technology industries created a confluence of relevant cultural capital (technical skill) and economic capital (venture capital) that allowed the economic capital to be deployed more effectively. In other words, it wasn’t that the engineers in Silicon Valley were better engineers than the engineers in Route 128; it was that the economic capital was being deployed in a way that was less informed by technical knowledge. [Incidentally, if this argument is correct, then in some ways it undermines an argument put forward recently for setting up a “cyber workforce incubator” for the Federal Government in the Bay Area based on the idea that it’s necessary to tap into the labor pool there. If what makes Silicon Valley is smart capital rather than smart engineers, then that explains why there are so many engineers there (they are following the money) but also suggests that the price of technical labor there may be inflated. Engineers elsewhere may be just as good at being part of a cyber workforce. Which is just to say that when Bourdieusian theory is taken seriously, it can have practical policy implications.]

One must imagine, when considering society thus, that one could in principle map out the whole of society and the distribution of capitals within it. I believe Bourdieu does something like this in Distinction (1979), which I haven’t read–it is sadly referred to in the United States as the kind of book that is too dense to read. This is too bad.

But I was going to talk about…

2. Democracy

There are at least two great moments in history when democracy flourished. They have something in common.

One is Ancient Greece. The account of the polis in Hannah Arendt’s The Human Condition (1, cf (2 3) makes the familiar point that the citizens of the Ancient Greek city-state were masters of economically independent households. It was precisely the independence of politics (polis – city) from household economic affairs (oikos – house) that defined political life. Owning capital, in this case land and maybe slaves, was a condition for democratic participation. The democracy, such as it was, was the political unity of otherwise free capital holders.

The other historical moment is the rise of the mercantile class and the emergence of the democratic public sphere, as detailed by Habermas. If the public sphere Habermas described (and to some extent idealized) has been critiqued as being “bourgeois masculinist” (Fraser), that critique is telling. The bourgeoisie were precisely those who were owners of newly activated forms of economic capital–ships, mechanizing technologies, and the like.

If we can look at the public sphere in its original form realistically through the disillusionment of criticism, the need for rational discourse among capital holders was strategically necessary for the bourgeoisie to make strategic decisions about how to collectively allocate their economic capital. The Viewed through the objective lens of information processing and pure strategy, the public sphere was an effective means of economic coordination that complemented the rise of the Weberian bureaucracy, which provided a predictable state and also created new demand for legal professionals and the early information workers: clerks and scriveners and such.

The diversity of professions necessary for the functioning of the modern mercantile state created a diversity of forms of cultural capital that could be exchanged for economic capital. Hence, capital diffused from its concentration in the aristocracy into the hands of the widening class of the bourgeoisie.

Neither the Ancient Greek nor the mercantile democracies were particularly inclusive. Perhaps there is no historical precedent for a fully inclusive democracy. Rather, there is precedent for egalitarian alliances of capital holders in cases where that capital is broadly enough distributed to constitute citizenship as an economic class. Moreover, I must insert here that the Bourdieusian model suggests that citizenship could extend through the diffusion of non-economic forms of capital as well. For example, membership in the clergy was a form of capital taken on by some of the gentry; this came, presumably, with symbolic and social capital. The public sphere creates opportunities for the public socialite that were distinct from the opportunities of the courtier or courtesan. And so on.

However exclusive these democracies were, Fraser’s account of subaltern publics and counterpublics is of course very significant. What about the early workers and womens movements? Arguably these too can be understood in Bourdieusian terms. There were other forms of (social and cultural, if not economic) capital that workers and women in particular had available that provided the basis for their shared political interest and political participation.

What I’m suggesting is that:

  • Historically, the democratic impulse has been about uniting the interests of freeholders of capital.
  • A Bourdieusian understanding of capital allows us to maintain this (analytically helpful) understanding of democracy while also acknowledging the complexity of social structure, through the many forms of capital
  • That the complexity of society through the proliferation of forms of capital is one of, if not the, main mechanism of expanding effective citizenship, which is still conditioned on capital ownership even though we like to pretend it’s not.

Which leads me to my last point, which is about…

3. Oligarchy

If a democracy is a political unity of many different capital holders, what then is oligarchy in contrast?

Oligarchy is rule of the few, especially the rich few.

We know, through Bourdieu, that there are many ways to be rich (not just economic ways). Nevertheless, capital (in its many forms) is very unevenly distributed, which accounts for social structure.

To some extent, it is unrealistic to expect the flattening of this distribution. Society is accumulated history and there has been a lot of history and most of it has been brutally unkind.

However, there have been times when capital (in its many forms) has diffused because of the terms of capital exchange, broadly speaking. The functional separation of different professions was one way in which capital was fragmented into many differently exchangeable forms of cultural, social, and economic capitals. A more complex society is therefore a more democratic one, because of the diversity of forms of capital required to manage it. [I suspect there’s a technically specific way to make this point but don’t know how to do it yet.]

There are some consequences of this.

  1. Inequality in the sense of a very skewed distribution of capital and especially economic capital does in fact undermine democracy. You can’t really be a citizen unless you have enough capital to be able to act (use your labor) in ways that are not fully determined by economic survival. And of course this is not all or nothing; quantity of capital and relative capital do matter even beyond a minimum threshold.
  2. The second is that (1) can’t be the end of the story. Rather, to judge if the capital distribution of e.g. a nation can sustain a democracy, you need to account for many kinds of capital, not just economic capital, and see how these are distribute and exchanged. In other words, it’s necessary to look at the political economy broadly speaking. (But, I think, it’s helpful to do so in terms of ‘forms of capital’.)

One example, which I just learned recently, is this. In the United States, we have an independent judiciary, a third branch of government. This is different from other countries that are allegedly oligarchies, notably Russia but also Rhode Island before 2004. One could ask: is this Separation of Powers important for democracy? The answer is intuitively “yes”, and though I’m sure very smart things have been written to answer the question “why”, I haven’t read them, because I’ve been too busy blogging….

Instead, I have an answer for you based on the preceding argument. It was a new idea for me. It was this: What separation of powers does is its constructs a form of cultural capital associated with professional lawyers which is less exchangeable for economic and other forms of capital than in places where non-independence of the judiciary leads to more regular bribery, graft, and preferential treatment. Because it mediates economic exchanges, this has a massively distortative effect on the ability of economic capital to bulldoze other forms of capital, and the accompanying social structures (and social strictures) that bind it. It also creates a new professional class who can own this kind of capital and thereby accomplish citizenship.

Coda

In this blog post, I’ve suggested that not everybody who, for example, legally has suffrage in nominally democratic state is, in an effective sense, a citizen. Only capital owners can be citizens.

This is not intended in any way to be a normative statement about who should or should not be a citizen. Rather, it is a descriptive statement about how power is distributed in nominal democracies. To be an effective citizen, you need to have some kind of surplus of social power; capital the objectification of that social power.

The project of expanding democracy, if it is to be taken seriously, needs to be understood as the project of expanding capital ownership. This can include the redistribution of economic capital. It can also changing institutions that ground cultural and social capitals in ways that distribute other forms of capital more widely. Diversifying professional roles is a way of doing this.

Nothing I’ve written here is groundbreaking, for sure. It is for me a clearer way to think about these issues than I have had before.

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May 25, 2017

thinking about Naidu on Piketty and universal basic income

Multiple sources have no referred me to Suresh Naidu’s article in the “After Piketty” anthology. It’s now high on my to-read list.

A key insight from the secondary reviews is the reminder that however capital is supplied (whether it be in liquidity, or capital “goods” like factory equipment, or land, or today in intellectual property), they are priced according to the expectation of future return on ownership. Given the diverse forms that capital can take, “expected return on future ownership” may very well be what distinguishes capital from consumer goods.

Capital accumulation is then, at its most basic, the process of strategic investment to maximize return across lots of asset classes.

Let’s assume for now the most cynical possible view of political economy, in which all political agendas are just rallying will in favor of this or that kind of capital, pushing for the revaluation of capital or policies that change its distribution. In many ways, this is consistent with Bourdieusian social theory.

Then look at the push for universal basic income (UBI). I’ve though UBI is a great idea in the past. It seems humane: everybody gets enough to live on, and people can at last be free with nothing to complain about. No problem, right?

There is the sticky concern that UBI does not address equity concerns. I’m not going to write about that now.

What I’m thinking about now, just putting myself in the shoes of an arch-capitalist for once, is that giving everybody a budget for consumer goods paid out of general taxes changes the way capital is valued. Specifically, capital that is directed towards to provision of consumer products becomes higher-value with UBI, since it guarantees a greater income stream.

This analysis is perhaps neither here nor there, so to speak. But it’s the kind of thinking I’d like to do more of. I’m coming to the conclusion that a useful analysis of political classes has to be done with a solid understanding of economic supply chains, the human parts of them especially. This is not a matter of simple polarities or binaries but rather the analysis has to take the supply topology into account.

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October 27, 2015

We need more Sittlichkeit: Vallier on Piketty and Rawls; Cyril on Surveillance and Democracy; Taylor on Hegel

Kevin Vallier’s critique of Piketty in Bleeding Heart Libertarians (funny name) is mainly a criticism of the idea that economic inequality leads to political stability.

In the course of his rebuttal of Piketty, he brings in some interesting Rawlsian theory which is more broadly important. He distinguishes between power stability, the stability of a state in maintaining itself due to its forcible prevention of resistance by Hobbesian power. “Inherent stability”, or moral stability (Vallier’s term) is “stability for the right reasons”–that comes from the state’s comportment with our sense of justice.

There are lots of other ways of saying the same think in the literature. We can ask if justice is de facto or de jure. We can distinguish, as does Hanah Arendt in On Violence, between power (which she maintains is only what’s rooted in collective action) and violence (which is I guess what Vallier would call ‘Hobbesian power’). In a perhaps more subtle move, we can with Habermas ask what legitimizes the power of the state.

The left-wing zeitgeist at the moment is emphasizing inequality as a problem. While Piketty argues that inequality leads to instability, it’s an open question whether this is in fact the case. There’s no particular reason why a Hobbesian sovereign with swarms of killer drones couldn’t maintain its despotic rule through violence. Probably the real cause for complaint is that this is illegitimate power (if you’re Habermas), or violence not power (if you’re Arendt), or moral instability (if you’re Rawls).

That makes sense. Illegitimate power is the kind of power that one would complain about.

Ok, so now cut to Malkia Cyril’s talk at CFP tying technological surveillance to racism. What better illustration of the problems of inequality in the United States than the history of racist policies towards black people? Cyril acknowledges the benefits of Internet technology in providing tools for activists but suspects that now technology will be used by people in power to maintain power for the sake of profit.

The fourth amendment, for us, is not and has never been about privacy, per se. It’s about sovereignty. It’s about power. It’s about democracy. It’s about the historic and present day overreach of governments and corporations into our lives, in order to facilitate discrimination and disadvantage for the purposes of control; for profit. Privacy, per se, is not the fight we are called to. We are called to this question of defending real democracy, not to this distinction between mass surveillance and targeted surveillance

So there’s a clear problem for Cyril which is that ‘real democracy’ is threatened by technical invasions of privacy. A lot of this is tied to the problem of who owns the technical infrastructure. “I believe in the Internet. But I don’t control it. Someone else does. We need a new civil rights act for the era of big data, and we need it now.” And later:

Last year, New York City Police Commissioner Bill Bratton said 2015 would be the year of technology for law enforcement. And indeed, it has been. Predictive policing has taken hold as the big brother of broken windows policing. Total information awareness has become the goal. Across the country, local police departments are working with federal law enforcement agencies to use advanced technological tools and data analysis to “pre-empt crime”. I have never seen anyone able to pre-empt crime, but I appreciate the arrogance that suggests you can tell the future in that way. I wish, instead, technologists would attempt to pre-empt poverty. Instead, algorithms. Instead, automation. In the name of community safety and national security we are now relying on algorithms to mete out sentences, determine city budgets, and automate public decision-making without any public input. That sounds familiar too. It sounds like Black codes. Like Jim Crow. Like 1963.

My head hurts a little as I read this because while the rhetoric is powerful, the logic is loose. Of course you can do better or worse at preempting crime. You can look at past statistics on crime and extrapolate to the future. Maybe that’s hard but you could do it in worse or better ways. A great way to do that would be, as Cyril suggests, by preempting poverty–which some people try to do, and which can be assisted by algorithmic decision-making. There’s nothing strictly speaking racist about relying on algorithms to make decisions.

So for all that I want to support Cyril’s call for ‘civil rights act for the era of big data’, I can’t figure out from the rhetoric what that would involve or what its intellectual foundations would be.

Maybe there are two kinds of problems here:

  1. A problem of outcome legitimacy. Inequality, for example, might be an outcome that leads to a moral case against the power of the state.
  2. A problem of procedural legitimacy. When people are excluded from the decision-making processes that affect their lives, they may find that to be grounds for a moral objection to state power.

It’s worth making a distinction between these two problems even though they are related. If procedures are opaque and outcomes are unequal, there will naturally be resentment of the procedures and the suspicion that they are discriminatory.

We might ask: what would happen if procedures were transparent and outcomes were still unequal? What would happen if procedures were opaque and outcomes were fair?

One last point…I’ve been dipping into Charles Taylor’s analysis of Hegel because…shouldn’t everybody be studying Hegel? Taylor maintains that Hegel’s political philosophy in The Philosophy of Right (which I’ve never read) is still relevant today despite Hegel’s inability to predict the future of liberal democracy, let alone the future of his native Prussia (which is apparently something of a pain point for Hegel scholars).

Hegel, or maybe Taylor in a creative reinterpretation of Hegel, anticipates the problem of liberal democracy of maintaining the loyalty of its citizens. I can’t really do justice to Taylor’s analysis so I will repeat verbatim with my comments in square brackets.

[Hegel] did not think such a society [of free and interchangeable individuals] was viable, that is, it could not commadn the loyalty, the minimum degree of discipline and acceptance of its ground rules, it could not generate the agreement on fundamentals necessary to carry on. [N.B.: Hegel conflates power stability and moral stability] In this he was not entirely wrong. For in fact the loyal co-operation which modern societies have been able to command of their members has not been mainly a function of the liberty, equality, and popular rule they have incorporated. [N.B. This is a rejection of the idea that outcome and procedural legitimacy are in fact what leads to moral stability.] It has been an underlying belief of the liberal tradition that it was enough to satisfy these principles in order to gain men’s allegiance. But in fact, where they are not partly ‘coasting’ on traditional allegiance, liberal, as all other, modern societies have relied on other forces to keep them together.

The most important of these is, of course, nationalism. Secondly, the ideologies of mobilization have played an important role in some societies, focussing men’s attention and loyalties through the unprecedented future, the building of which is the justification of all present structures (especially that ubiquitous institution, the party).

But thirdly, liberal societies have had their own ‘mythology’, in the sense of a conception of human life and purposes which is expressed in and legitimizes its structures and practices. Contrary to widespread liberal myth, it has not relied on the ‘goods’ it could deliver, be they liberty, equality, or property, to maintain its members loyalty. The belief that this was coming to be so underlay the notion of the ‘end of ideology’ which was fashionable in the fifties.

But in fact what looked like an end of ideology was only a short period of unchallenged reign of a central ideology of liberalism.

This is a lot, but bear with me. What this is leading up to is an analysis of social cohesion in terms of what Hegel called Sittlichkeit, “ethical life” or “ethical order”. I gather that Sittlichkeit is not unlike what we’d call an ideology or worldview in other contexts. But a Sittlichkeit is better than mere ideology, because Sittlichkeit is a view of ethically ordered society and so therefore is somehow incompatible with liberal atomization of the self which of course is the root of alienation under liberal capitalism.

A liberal society which is a going concern has a Sittlichkeit of its own, although paradoxically this is grounded on a vision of things which denies the need for Sittlickeiit and portrays the ideal society as created and sustained by the will of its members. Liberal societies, in other words, are lucky when they do not live up, in this respect, to their own specifications.

If these common meaning fail, then the foundations of liberal society are in danger. And this indeed seems as distinct possibility today. The problem of recovering Sittlichkeit, of reforming a set of institutions and practices with which men can identify, is with us in an acute way in the apathy and alienation of modern society. For instance the central institutions of representative government are challenged by a growing sense that the individual’s vote has no signficance. [c.f. Cyril’s rhetoric of alienation from algorithmic decision-making.]

But then it should not surprise us to find this phenomenon of electoral indifference referred to in [The Philosophy of Right]. For in fact the problem of alienation and the recovery of Sittlichkeit is a central one in Hegel’s theory and any age in which it is on the agenda is one to which Hegel’s though is bound to be relevant. Not that Hegel’s particular solutions are of any interest today. But rather that his grasp of the relations of man to society–of identity and alienation, of differentiation and partial communities–and their evolution through history, gives us an important part of the language we sorely ned to come to grips with this problem in our time.

Charles Taylor wrote all this in 1975. I’d argue that this problem of establishing ethical order to legitimize state power despite alienation from procedure is a perennial one. That the burden of political judgment has been placed most recently on the technology of decision-making is a function of the automation of bureaucratic control (see Beniger) and, it’s awkward to admit, my own disciplinary bias. In particular it seems like what we need is a Sittlichkeit that deals adequately with the causes of inequality in society, which seem poorly understood.

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March 31, 2015

Innovation, automation, and inequality

What is the economic relationship between innovation, automation, and inequality?

This is a recurring topic in the discussion of technology and the economy. It comes up when people are worried about a new innovation (such as data science) that threatens their livelihood. It also comes up in discussions of inequality, such as in Piketty’s Capital in the Twenty-First Century.

For technological pessimists, innovation implies automation, and automation suggests the transfer of surplus from many service providers to a technological monopolist providing a substitute service at greater scale (scale being one of the primary benefits of automation).

For Piketty, it’s the spread of innovation in the sense of the education of skilled labor that is primary force that counteracts capitalism’s tendency towards inequality and (he suggests) the implied instability. For the importance Piketty places on this process, he treats it hardly at all in his book.

Whether or not you buy Piketty’s analysis, the preceding discussion indicates how innovation can cut both for and against inequality. When there is innovation in capital goods, this increases inequality. When there is innovation in a kind of skilled technique that can be broadly taught, that decreases inequality by increasing the relative value of labor to capital (which is generally much more concentrated than labor).

I’m a software engineer in the Bay Area and realize that it’s easy to overestimate the importance of software in the economy at large. This is apparently an easy mistake for other people to make as well. Matthew Rognlie, the economist who has been declared Piketty’s latest and greatest challenger, thinks that software is an important new form of capital and draws certain conclusions based on this.

I agree that software is an important form of capital–exactly how important I cannot yet say. One reason why software is an especially interesting kind of capital is that it exists ambiguously as both a capital good and as a skilled technique. While naively one can consider software as an artifact in isolation from its social environment, in the dynamic information economy a piece of software is only as good as the sociotechnical system in which it is embedded. Hence, its value depends both on its affordances as a capital good and its role as an extension of labor technique. It is perhaps easiest to see the latter aspect of software by considering it a form of extended cognition on the part of the software developer. The human capital required to understand, reproduce, and maintain the software is attained by, for example, studying its source code and documentation.

All software is a form of innovation. All software automates something. There has been a lot written about the potential effects of software on inequality through its function in decision-making (for example: Solon Barocas, Andrew D. Selbst, “Big Data’s Disparate Impact” (link).) Much less has been said about the effects of software on inequality through its effects on industrial organization and the labor market. After having my antennas up for this for many reasons, I’ve come to a conclusion about why: it’s because the intersection between those who are concerned about inequality in society and those that can identify well enough with software engineers and other skilled laborers is quite small. As a result there is not a ready audience for this kind of analysis.

However unreceptive society may be to it, I think it’s still worth making the point that we already have a very common and robust compromise in the technology industry that recognizes software’s dual role as a capital good and labor technique. This compromise is open source software. Open source software can exist both as an unalienated extension of its developer’s cognition and as a capital good playing a role in a production process. Human capital tied to the software is liquid between the software’s users. Surplus due to open software innovations goes first to the software users, then second to the ecosystem of developers who sell services around it. Contrast this with the proprietary case, where surplus goes mainly to a singular entity that owns and sells the software rights as a monopolist. The former case is vastly better if one considers societal equality a positive outcome.

This has straightforward policy implications. As an alternative to Piketty’s proposed tax on capital, any policies that encourage open source software are ones that combat societal inequality. This includes procurement policies, which need not increase government spending. On the contrary, if governments procure primarily open software, that should lead to savings over time as their investment leads to a more competitive market for services. Equivalently, R&D funding to open science institutions results in more income equality than equivalent funding provided to private companies.

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July 6, 2014

economic theory and intellectual property

I’ve started reading Piketty’s Capital. His introduction begins with an overview of the history of economic theory, starting with Ricardo and Marx.

Both these early theorists predicted the concentration of wealth into the hands of the owners of factors of production that are not labor. For Ricardo, land owners extract rents and dominate the economy. For Marx, capitalists–owners of private capital–accumulate capital and dominate the economy.

Since those of us with an eye on the tech sector are aware of a concentration of wealth in the hands of the owners of intellectual property, it’s a good question what kind of economic theory ought to apply to those cases.

One one sense, intellectual property is a kind of capital. It is a factor of production that is made through human labor.

On the other hand, we talk about ideas being ‘discovered’ like land is discovered, and we imagine that intellectual property can in principle be ‘shared’ like a ‘commons’. If we see intellectual property as a position in a space of ideas, it is not hard to think of it like land.

Like land, a piece of intellectual property is unique and gains in value due to further improvements–applications or innovations–built upon it. In a world where intellectual property ownership never expires and isn’t shared, you can imagine that whoever hold some critical early work in some field could extract rents for perpetuity. Owning a patent would be like owning a land estate.

Like capital, intellectual property is produced by workers and often owned by those investing in the workers with pre-existing capital. The produced capital is then owned by the initiating capitalist, and accumulates.

Open source software is an important exception to this pattern. This kind of intellectual property is unalienated from those that produce it.

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