December 22, 2011

Wealth vs Creativity

The basis of wealth is exclusively material. Everything non-material in an economy is a social convention.

Money, trade, and even labor is worthless unless it satisfies a particular desire in a particular point in time (see Deleuze and Guattari's Anti-Oedipus about the role of desire in capitalism).

It's easy to accept that money is a social convention, but how can labor be worthless? The famous illustration is Bastiat's "broken window" fallacy. While Bastiat's conclusions are correct, his reasoning starts with the wrong assumptions. Wealth has nothing do with the classical notions of trade and utility and "money better spent elsewhere" - the broken window fallacy is directly explained by the material reality of objects.

The key thing to understand is that material objects are cumulative and impermanent. These two qualities are what drive everything else about wealth.

A window is cumulative in that it satisfies a desire and has a physical manifestation, and it is impermanent in that the physical manifestation is now broken and the desire is no longer satisfied. Even if currency were completely devalued tomorrow, the fact that a window is there would still satisfy the desire.

This is why the labor theory of value (indeed any other theory of value that doesn't take into account Deleuze and Guattari's desire machines as the ultimate driver of the economic process) is wrong. Labor or technology itself has no value whatsoever, unless it ultimately (if through a long series of immaterial social transactions) results in the production of a material object that satisfies a desire.

So far this essay has talked about labor, but what about trade? To understand trade, first we need to define the word: there is no such single thing as "trade," rather the word refers to two things, which may or may not be present in a particular "trade" (transaction): the social (buyer/seller, consignee/consignor relationship) and the material (embodied in labor as transportation of material objects). A purely social transaction would be finance, a purely material one would be theft.

Trade is obviously important in satisfying desire - if a material object is not in the right place at the right time, it can't satisfy that desire. A chain of social trades resulting in the transportation of a material object then obviously has value.

One of the most pressing questions today (see: SOPA act), is where does this leave purely social transactions? If you want $10 for a pile of bits, money that will buy you lunch, but someone else is satisfied with a "thanks for sharing!" for the same pile of bits, where does materialism come in?

The material reality of the world is that those bits are worthless. The movie, music, and publishing industries were built on material objects: selling time slots in seats in a movie theater, selling vinyl and plastic discs, selling bound stacks of paper. The particular content on those material objects was in a very fundamental way completely irrelevant to their business, even if paradoxically it was the key to their business model.

Knowledge may be cumulative, but it is worthless unless it can be applied to satisfy a desire. It is also permanent - it cannot be stolen. What knowledge is great at is helping produce better material objects with less cost and greater ability to satisfy desire.

The real competition to the movie, music and publishing industries are the computer manufacturers and ISPs.

What the MPAA and RIAA and the SAG are doing when they attempt to put in digital restrictions management into computer hardware and force ISPs to filter content is the equivalent of the Luddites burning water mills and power looms. This is a strategy that will ultimately fail, but in the short term causes a slow-down in the rate of improvement of material objects, both directly (PCs and Internet connections suck more because of attempts to implement digital restrictions management), and indirectly (this improvement in the production of objects is driven by knowledge produced with the aid of PCs and the Internet, in a cumulative process).

So what about the MPAA excuse that no one will be able to finance the production of big-budget action movies anymore? At a time when the very same progress in material production is drastically reducing the cost of producing a movie (via an all-digital process and computer-generated imagery), this is exactly like arguing that no one will be able to afford to author books during the time of Gutenberg's invention of the printing press.

The creative urge is a desire in and of itself. If there's anything you should take away from this essay, it's that people pay to have their desires satisfied.

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