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A Short History of Neoliberalism

                                 By Susan George
     Conference on Economic Sovereignty in a Globalising World
                                    March 24-26, 1999

     The Conference organisers have asked me for a brief history of neo-liberalism which they title "Twenty
     Years of Elite Economics". I'm sorry to tell you that in order to make any sense, I have to start even
     further back, some 50 years ago, just after the end of World War II.

     In 1945 or 1950, if you had seriously proposed any of the ideas and policies in today's standard
     neo-liberal toolkit, you would have been laughed off the stage or sent off to the insane asylum. At least
     in the Western countries, at that time, everyone was a Keynesian, a social democrat or a
     social-Christian democrat or some shade of Marxist. The idea that the market should be allowed to
     make major social and political decisions; the idea that the State should voluntarily reduce its role in the
     economy, or that corporations should be given total freedom, that trade unions should be curbed and
     citizens given much less rather than more social protection--such ideas were utterly foreign to the spirit
     of the time. Even if someone actually agreed with these ideas, he or she would have hesitated to take
     such a position in public and would have had a hard time finding an audience.

     However incredible it may sound today, particularly to the younger members of the audience, the IMF
     and the World Bank were seen as progressive institutions. They were sometimes called Keynes's twins
     because they were the brain-children of Keynes and Harry Dexter White, one of Franklin Roosevelt's
     closest advisors. When these institutions were created at Bretton Woods in 1944, their mandate was to
     help prevent future conflicts by lending for reconstruction and development and by smoothing out
     temporary balance of payments problems. They had no control over individual government's economic
     decisions nor did their mandate include a licence to intervene in national policy.

     In the Western nations, the Welfare State and the New Deal had got underway in the 1930s but their
     spread had been interrupted by the war. The first order of business in the post-war world was to put
     them back in place. The other major item on the agenda was to get world trade moving--this was
     accomplished through the Marshall Plan which established Europe once again as the major trading
     partner for the US, the most powerful economy in the world. And it was at this time that the strong
     winds of decolonisation also began to blow, whether freedom was obtained by grant as in India or
     through armed struggle as in Kenya, Vietnam and other nations.

     On the whole, the world had signed on for an extremely progressive agenda. The great scholar Karl
     Polanyi published his masterwork, The Great Transformation in 1944, a fierce critique of 19th century
     industrial, market-based society. Over 50 years ago Polanyi made this amazingly prophetic and modern
     statement: "To allow the market mechanism to be sole director of the fate of human beings and their
     natural environment...would result in the demolition of society" [p.73]. However, Polanyi was convinced
     that such a demolition could no longer happen in the post-war world because, as he said [p.251],
     "Within the nations we are witnessing a development under which the economic system ceases to lay
     down the law to society and the primacy of society over that system is secured". Alas, Polanyi's
     optimism was misplaced--the whole point of neo-liberalism is that the market mechanism should be
     allowed to direct the fate of human beings. The economy should dictate its rules to society, not the other
     way around. And just as Polanyi foresaw, this doctrine is leading us directly towards the "demolition of

     So what happened? Why have we reached this point half a century after the end of the Second World
     War? Or, as the organisers ask, "Why are we having this conference right now?" The short answer is
     "Because of the series of recent financial crises, especially in Asia". But this begs the question--the
     question they are really asking is "How did neo-liberalism ever emerge from its ultra-minoritarian ghetto
     to become the dominant doctrine in the world today?" Why can the IMF and the Bank intervene at will
     and force countries to participate in the world economy on basically unfavourable terms. Why is the
     Welfare State under threat in all the countries where it was established? Why is the environment on the
     edge of collapse and why are there so many poor people in both the rich and the poor countries at a
     time when there has never existed such great wealth? Those are the questions that need to be answered
     from an historical perspective.

     As I've argued in detail in the US quarterly journal Dissent, one explanation for this triumph of
     neo-liberalism and the economic, political, social and ecological disasters that go with it is that
     neo-liberals have bought and paid for their own vicious and regressive "Great Transformation". They
     have understood, as progressives have not, that ideas have consequences. Starting from a tiny embryo
     at the University of Chicago with the philosopher-economist Friedrich von Hayek and his students like
     Milton Friedman at its nucleus, the neo-liberals and their funders have created a huge international
     network of foundations, institutes, research centers, publications, scholars, writers and public relations
     hacks to develop, package and push their ideas and doctrine relentlessly.

     They have built this highly efficient ideological cadre because they understand what the Italian Marxist
     thinker Antonio Gramsci was talking about when he developed the concept of cultural hegemony. If you
     can occupy peoples' heads, their hearts and their hands will follow. I do not have time to give you
     details here, but believe me, the ideological and promotional work of the right has been absolutely
     brilliant. They have spent hundreds of millions of dollars, but the result has been worth every penny to
     them because they have made neo-liberalism seem as if it were the natural and normal condition of
     humankind. No matter how many disasters of all kinds the neo-liberal system has visibly created, no
     matter what financial crises it may engender, no matter how many losers and outcasts it may create, it is
     still made to seem inevitable, like an act of God, the only possible economic and social order available
     to us.

     Let me stress how important it is to understand that this vast neo-liberal experiment we are all being
     forced to live under has been created by people with a purpose. Once you grasp this, once you
     understand that neo-liberalism is not a force like gravity but a totally artificial construct, you can also
     understand that what some people have created, other people can change. But they cannot change it
     without recognising the importance of ideas. I'm all for grassroots projects, but I also warn that these
     will collapse if the overall ideological climate is hostile to their goals.

     So, from a small, unpopular sect with virtually no influence, neo-liberalism has become the major world
     religion with its dogmatic doctrine, its priesthood, its law-giving institutions and perhaps most important
     of all, its hell for heathen and sinners who dare to contest the revealed truth. Oskar Lafontaine, the
     ex-German Finance Minister who the Financial Times called an "unreconstructed Keynesian" has just
     been consigned to that hell because he dared to propose higher taxes on corporations and tax cuts for
     ordinary and less well-off families.

     Having set the ideological stage and the context, now let me fast-forward so that we are back in the
     twenty year time frame. That means 1979, the year Margaret Thatcher came to power and undertook
     the neo-liberal revolution in Britain. The Iron Lady was herself a disciple of Friedrich von Hayek, she
     was a social Darwinist and had no qualms about expressing her convictions. She was well known for
     justifying her programme with the single word TINA, short for There Is No Alternative. The central
     value of Thatcher's doctrine and of neo-liberalism itself is the notion of competition--competition
     between nations, regions, firms and of course between individuals. Competition is central because it
     separates the sheep from the goats, the men from the boys, the fit from the unfit. It is supposed to
     allocate all resources, whether physical, natural, human or financial with the greatest possible efficiency.

     In sharp contrast, the great Chinese philosopher Lao Tzu ended his Tao-te Ching with these words:
     "Above all, do not compete". The only actors in the neo-liberal world who seem to have taken his
     advice are the largest actors of all, the Transnational Corporations. The principle of competition
     scarcely applies to them; they prefer to practise what we could call Alliance Capitalism. It is no accident
     that, depending on the year, two-thirds to three-quarters of all the money labeled "Foreign Direct
     Investment" is not devoted to new, job-creating investment but to Mergers and Acquisitions which
     almost invariably result in job losses.

     Because competition is always a virtue, its results cannot be bad. For the neo-liberal, the market is so
     wise and so good that like God, the Invisible Hand can bring good out of apparent evil. Thus Thatcher
     once said in a speech, "It is our job to glory in inequality and see that talents and abilities are given vent
     and expression for the benefit of us all." In other words, don't worry about those who might be left
     behind in the competitive struggle. People are unequal by nature, but this is good because the
     contributions of the well-born, the best-educated, the toughest, will eventually benefit everyone. Nothing
     in particular is owed to the weak, the poorly educated, what happens to them is their own fault, never
     the fault of society. If the competitive system is "given vent" as Margaret says, society will be the better
     for it. Unfortunately, the history of the past twenty years teaches us that exactly the opposite is the case.

     In pre-Thatcher Britain, about one person in ten was classed as living below the poverty line, not a
     brilliant result but honourable as nations go and a lot better than in the pre-War period. Now one
     person in four, and one child in three is officially poor. This is the meaning of survival of the fittest:
     people who cannot heat their houses in winter, who must put a coin in the meter before they can have
     electricity or water, who do not own a warm waterproof coat, etc. I am taking these examples from the
     1996 report of the British Child Poverty Action Group. I will illustrate the result of the Thatcher-Major
     "tax reforms" with a single example: During the 1980s, 1 percent of taxpayers received 29 percent of all
     the tax reduction benefits, such that a single person earning half the average salary found his or her taxes
     had gone up by 7 percent, whereas a single person earning 10 times the average salary got a reduction
     of 21%.

     Another implication of competition as the central value of neo-liberalism is that the public sector must be
     brutally downsized because it does not and cannot obey the basic law of competing for profits or for
     market share. Privatisation is one of the major economic transformations of the past twenty years. The
     trend began in Britain and has spread throughout the world.

     Let me start by asking why capitalist countries, particularly in Europe, had public services to begin with,
     and why many still do. In reality, nearly all public services constitute what economists call "natural
     monopolies". A natural monopoly exists when the minimum size to guarantee maximum economic
     efficiency is equal to the actual size of the market. In other words, a company has to be a certain size to
     realise economies of scale and thus provide the best possible service at the lowest possible cost to the
     consumer. Public services also require very large investment outlays at the beginning--like railroad
     tracks or power grids--which does not encourage competition either. That's why public monopolies
     were the obvious optimum solution. But neo-liberals define anything public as ipso facto "inefficient".

     So what happens when a natural monopoly is privatised? Quite normally and naturally, the new
     capitalist owners tend to impose monopoly prices on the public, while richly remunerating themselves.
     Classical economists call this outcome "structural market failure" because prices are higher than they
     ought to be and service to the consumer is not necessarily good. In order to prevent structural market
     failures, up to the mid-1980s, the capitalist countries of Europe almost universally entrusted the post
     office, telecomms, electricity, gas, railways, metros, air transport and usually other services like water,
     rubbish collection, etc. to state-owned monopolies. The USA is the big exception, perhaps because it is
     too huge geographically to favour natural monopolies.

     In any event, Margaret Thatcher set out to change all that. As an added bonus, she could also use
     privatisation to break the power of the trade unions. By destroying the public sector where unions were
     strongest, she was able to weaken them drastically. Thus between 1979 and 1994, the number of jobs
     in the public sector in Britain was reduced from over 7 million to 5 million, a drop of 29 percent.
     Virtually all the jobs eliminated were unionised jobs. Since private sector employment was stagnant
     during those fifteen years, the overall reduction in the number of British jobs came to 1.7 million, a drop
     of 7% compared to 1979. To neo-liberals, fewer workers is always better than more because workers
     impinge on shareholder value.

     As for other effects of privatisation, they were predictable and predicted. The managers of the newly
     privatised enterprises, often exactly the same people as before, doubled or tripled their own salaries.
     The government used taxpayer money to wipe out debts and recapitalise firms before putting them on
     the market--for example, the water authority got 5 billion pounds of debt relief plus 1.6 billion pounds
     called the "green dowry" to make the bride more attractive to prospective buyers. A lot of Public
     Relations fuss was made about how small stockholders would have a stake in these companies--and in
     fact 9 million Brits did buy shares--but half of them invested less than a thousand pounds and most of
     them sold their shares rather quickly, as soon as they could cash in on the instant profits.

     From the results, one can easily see that the whole point of privatisation is neither economic efficiency or
     improved services to the consumer but simply to transfer wealth from the public purse--which could
     redistribute it to even out social inequalities--to private hands. In Britain and elsewhere, the
     overwhelming majority of privatised company shares are now in the hands of financial institutions and
     very large investors. The employees of British Telecom bought only 1 percent of the shares, those of
     British Aerospace 1.3 percent, etc. Prior to Ms Thatcher's onslaught, a lot of the public sector in Britain
     was profitable. Consequently, in 1984, public companies contributed over 7 billion pounds to the
     treasury. All that money is now going to private shareholders. Service in the privatised industries is now
     often disastrous--the Financial Times reported an invasion of rats in the Yorkshire Water system and
     anyone who has survived taking Thames trains in Britain deserves a medal.

     Exactly the same mechanisms have been at work throughout the world. In Britain, the Adam Smith
     Institute was the intellectual partner for creating the privatisation ideology. USAID and the World Bank
     have also used Adam Smith experts and have pushed the privatisation doctrine in the South. By 1991
     the Bank had already made 114 loans to speed the process, and every year its Global Development
     Finance report lists hundreds of privatisations carried out in the Bank's borrowing countries.

     I submit that we should stop talking about privatisation and use words that tell the truth: we are talking
     about alienation and surrender of the product of decades of work by thousands of people to a tiny
     minority of large investors. This is one of the greatest hold-ups of ours or any generation.

     Another structural feature of neo-liberalism consists in remunerating capital to the detriment of labour
     and thus moving wealth from the bottom of society to the top. If you are, roughly, in the top 20 percent
     of the income scale, you are likely to gain something from neo-liberalism and the higher you are up the
     ladder, the more you gain. Conversely, the bottom 80 percent all lose and the lower they are to begin
     with, the more they lose proportionally.

     Lest you thought I had forgotten Ronald Reagan, let me illustrate this point with the observations of
     Kevin Phillips, a Republican analyst and former aid to President Nixon, who published a book in 1990
     called The Politics of Rich and Poor. He charted the way Reagan's neo-liberal doctrine and policies had
     changed American income distribution between 1977 and 1988. These policies were largely elaborated
     by the conservative Heritage Foundation, the principle think-tank of the Reagan administration and still
     an important force in American politics. Over the decade of the 1980s, the top 10 percent of American
     families increased their average family income by 16 percent, the top 5 percent increased theirs by 23
     percent, but the extremely lucky top 1 percent of American families could thank Reagan for a 50
     percent increase. Their revenues went from an affluent $270.000 to a heady $405.000. As for poorer
     Americans, the bottom 80 percent all lost something; true to the rule, the lower they were on the scale,
     the more they lost. The bottom 10 percent of Americans reached the nadir: according to Phillip's
     figures, they lost 15% of their already meagre incomes: from an already rock-bottom average of $4.113
     annually, they dropped to an inhuman $3.504. In 1977, the top 1 percent of American families had
     average incomes 65 times as great as those of the bottom 10 percent. A decade later, the top 1 percent
     was 115 times as well off as the bottom decile.

     America is one of the most unequal societies on earth, but virtually all countries have seen inequalities
     increase over the past twenty years because of neo-liberal policies. UNCTAD published some damning
     evidence to this effect in its 1997 Trade and Development Report based on some 2600 separate
     studies of income inequalities, impoverishment and the hollowing out of the middle classes. The
     UNCTAD team documents these trends in dozens of widely differing societies, including China, Russia
     and the other former Socialist countries.

     There is nothing mysterious about this trend towards greater inequality. Policies are specifically designed
     to give the already rich more disposable income, particularly through tax cuts and by pushing down
     wages. The theory and ideological justification for such measures is that higher incomes for the rich and
     higher profits will lead to more investment, better allocation of resources and therefore more jobs and
     welfare for everyone. In reality, as was perfectly predictable, moving money up the economic ladder
     has led to stock market bubbles, untold paper wealth for the few, and the kind of financial crises we
     shall be hearing a lot about in the course of this conference. If income is redistributed towards the
     bottom 80 percent of society, it will be used for consumption and consequently benefit employment. If
     wealth is redistributed towards the top, where people already have most of the things they need, it will
     go not into the local or national economy but to international stockmarkets.

     As you are all aware, the same policies have been carried out throughout the South and East under the
     guise of structural adjustment, which is merely another name for neo-liberalism. I've used Thatcher and
     Reagan to illustrate the policies at the national level. At the international level, neo-liberals have
     concentrated all their efforts on three fundamental points:

          free trade in goods and services

          free circulation of capital

          freedom of investment

     Over the past twenty years, the IMF has been strengthened enormously. Thanks to the debt crisis and
     the mechanism of conditionality, it has moved from balance of payments support to being
     quasi-universal dictator of so-called "sound" economic policies, meaning of course neo-liberal ones. The
     World Trade Organisation was finally put in place in January 1995 after long and laborious negotiations,
     often rammed through parliaments which had little idea what they were ratifying. Thankfully, the most
     recent effort to make binding and universal neo-liberal rules, the Multilateral Agreement on Investment,
     has failed, at least temporarily. It would have given all rights to corporations, all obligations to
     governments and no rights at all to citizens.

     The common denominator of these institutions is their lack of transparency and democratic
     accountability. This is the essence of neo-liberalism. It claims that the economy should dictate its rules to
     society, not the other way around. Democracy is an encumbrance, neo-liberalism is designed for
     winners, not for voters who, necessarily encompass the categories of both winners and losers.

     I'd like to conclude by asking you to take very seriously indeed the neo-liberal definition of the loser, to
     whom nothing in particular is owed. Anyone can be ejected from the system at any time--because of
     illness, age, pregnancy, perceived failure, or simply because economic circumstances and the relentless
     transfer of wealth from top to bottom demand it. Shareholder value is all. Recently the International
     Herald Tribune reported that foreign investors are "snapping up" Thai and Korean companies and
     Banks. Not surprisingly, these purchases are expected to result in "heavy layoffs". In other words, the
     results of years of work by thousands of Thais and Koreans is being transferred into foreign corporate
     hands. Many of those who laboured to create that wealth have already been, or soon will be left on the
     pavement. Under the principles of competition and maximising shareholder value, such behaviour is seen
     not as criminally unjust but as normal and indeed virtuous.

     I submit that neo-liberalism has changed the fundamental nature of politics. Politics used to be primarily
     about who ruled whom and who got what share of the pie. Aspects of both these central questions
     remain, of course, but the great new central question of politics is, in my view, "Who has a right to live
     and who does not". Radical exclusion is now the order of the day, I mean this deadly seriously. I've
     given you rather a lot of bad news because the history of the past 20 years is full of it. But I don't want
     to end on such a depressing and pessimistic note. A lot is already happening to counter these
     life-threatening trends and there is enormous scope for further action.

     This conference is going to help define much of that action which I believe must include an ideological
     offensive. It's time we set the agenda instead of letting the Masters of the Universe set it at Davos. I
     hope funders may also understand that they should not be funding just projects but also ideas. We can't
     count on the neo-liberals to do it, so we need to design workable and equitable international taxation
     systems, including a Tobin Tax on all monetary and financial market transactions and taxes on
     Transnational Corporation sales on a pro-rata basis. I expect we will go into detail on such questions in
     the workshops here. The proceeds of an international tax system should go to closing the North-South
     gap and to redistribution to all the people who have been robbed over the past twenty years.

     Let me repeat what I said earlier: neo-liberalism is not the natural human condition, it is not supernatural,
     it can be challenged and replaced because its own failures will require this. We have to be ready with
     replacement policies which restore power to communities and democratic States while working to
     institute democracy, the rule of law and fair distribution at the international level. Business and the
     market have their place, but this place cannot occupy the entire sphere of human existence.

      Further good news is that there is plenty of money sloshing around out there and a tiny fraction, a ridiculous, infinitesimal proportion of it would be enough to provide a decent life to every person on earth, to supply universal health and education, to clean up the environment and prevent further
destruction to the planet, to close the North-South gap--at least according to the UNDP which calls for a paltry $40 billion a year. That, frankly, is peanuts.

     Finally, please remember that neo-liberalism may be insatiable but it is not invulnerable. A coalition of
     international activists only yesterday obliged them to abandon, at least temporarily, their project to
     liberalise all investment through the MAI. The surprise victory of its opponents infuriated the supporters
     of corporate rule and demonstrates that well organised network guerillas can win battles. Now we have
     to regroup our forces and keep at them so that they cannot transfer the MAI to the WTO.

     Look at it this way. We have the numbers on our side, because there are far more losers than winners in
     the neo-liberal game. We have the ideas, whereas theirs are finally coming into question because of
     repeated crisis. What we lack, so far, is the organisation and the unity which in this age of advanced
     technology we can overcome. The threat is clearly transnational so the response must also be
     transnational. Solidarity no longer means aid, or not just aid, but finding the hidden synergies in each
     other's struggles so that our numerical force and the power of our ideas become overwhelming. I'm
     convinced this conference will contribute mightily to this goal and I thank you all for your kind attention.

                   More Information on Economic Liberalization and Integration
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The Information Age
Cyber-space article in Against Sleep And Nightmare #4, circa 1992.
Despite archaic references, the thrush of the article anticipates
info-capitalism and info-repression.
                                          The Information Age

John Fogerty, tired former star of Creedence Clearwater Revival, was sued a few years back for
plagiarizing his own songs by Saul Zantz, mega-music-capitalist and the largest landlord in Berkeley, CA.
There are two ways this cuts.

On one hand, suing someone for plagiarizing themselves shows the level to which this society will sink in
commodifying life. It's like buying someone's feet and charging them to walk or buying someone's asshole
and charging them for taking a shit.

On the other hand, rock stars themselves are simply professional music thieves and recyclers. They
churn distinct trends into a mediocre amalgamation. The gesture of suing a rock star for plagiarizing
himself has a certain charm. Fogerty, in his earlier incarnation as the front man of Creedence, sold a
carefree vagabond spirit to millions of dislocated youths. After that, he regorgitated the same trash for
years. He could be legitimately convicted of plagiarizing himself.

Fogerty and Zantz's legal cat fight is not only an example of this society's absurdity. It is also part of the
leading edge of this society's absurd logic. It reflects Capital's abstract crisis in a visible form. These
battles for the control of intellectual property are gang fights. The different gangs battle for their cuts of
the spoils of the "information age."

Information as the opposite of human abundance

Tentatively, we can accept the term "information age" for the present stage of social decomposition.
The information age is a systematic effort to colonize a part of life that until relatively recently had not
been thought controllable.

The stages that capital is going through can be seen as a kind of after-life. The original agricultural/slave
societies (Egyptian, Sumerian or Inca) began as a way that human societies dealt with a local scarcity of
resources. Like later slave societies, modern society must deal with the opposite problem. It must
maintain the order of scarcity in a society where resources are more and more abundant. It must
conquer more and more of the human existence that is based on abundance. It must hold it's slaves in
thrall when the chance of living fruitfully is all around them.

The rulers of this society arose as capitalists. Capitalists base their power on owning labor power. They
trace their origins to the mill owners of England. These rulers learned to pay workers for their labor power
instead of simply taking the surplus grain of peasants. Capitalists need the order of scarcity to exist.

Instead of owning slaves or peasants, they own the means of production that wage-workers work at.
They maintain their power on top of our alienated activity. They siphon profits off the exchange of goods
and services. The factories, offices and shopping malls they own must be filled for them to make money.

By this very logic, capitalism cannot maintain scarcity with pure domination. It cannot have an elite
consume all excess production like earlier systems. Having the morality of abosulte master, medieval
nobles and Tibetan monks consumed the excess of their societies in ritual or cruel play. Rather than have
absolute power in a set territory, capitalists have their zones of influence within parts of life. Each
capitalist compromises with the system's logic. GM sells cars. ATT sells long distance telephone service.
And so on. Each slice of life must be balanced in power. Capitalists need the marketplace to negotiate
their relative power. ATT sells GM so many long distance calls for the money to pay for so many cars.
One GM stock is worth as many as so many ATT stocks etc..

To maintain their power, capitalists must maintain the circulation of money. Thus capitalism maintains its
power to the extent that each person must pay for everything in their lives. This what we mean by this
society commodifies our lives. The commodity society has this paradox: People consume more and more
different things but they consume a smaller and smaller percentage of what society produces.

As Lewis Mumford points out, human speech is the most immediately available model of an economy of
the gift. We all speak and we all gain something from our speech. No computer can duplicate it, no
accounting system can manage it and it is given freely. We don't need computer networks or special
permission. The human mind outstrips any computer in the complexity and the interest of its output. A
room with ten people hhas infinitely more possibilities than a room with ten computers.

This system has always had various contradictions. While lately the system has faced various crises, it
has so far survived and controlled these problems.

The information age is capitalism trying to come to terms with the abundance. Our technology is
developing faster and faster to the point of eliminating the need for labor for survival. Capital tries to
capture intelligence and sell it back to those with an artificial need for it. Artificial intelligence is for those
without natural intelligence.

But full human intelligence can't be captured. It exists outside of any accounting system. If we look at
it's accounting in detail, we see how the information system explodes.

What Is Information?

A computer scientist calls the number of bits needed to store a given document on a computer disk
information. A bit is a one or zero stored on a disk. A floppy disk that fits in a shirt pocket can contain
one million separate one or zero bits.

The beauty of information is that it combines all of Western civilization's mechanical categories into one
total category. Information is anything from machine diagrams, digitized photographs and MIDI coded
music to junk mail and gibberish. Information is the perfections of all automated production and

This makes information the perfect product. Through this redefinition of the world the sale of information
is a huge industry. Information is everything from video games, to television, to fashion, to packaging to
CD's to college lectures to bank records and junk mail.


To make the ideal model of information real, corporate America is trying to build a "cyberspace" where
information is the universal substance. Once it is built, this "cyberspace" would exist entirely within a
computer or a group of computers.

The information age offers capitalists a solution to the problem of maintaining the logic of scarcity.
Capitalists imagine the information age as a bigger and bigger world where the old order of scarcity
continue. All information will be a commodity and all commodities will be information.

In the capitalists' retrospect, the information world is the conclusion to all history. As capitalism
commodifies life, it builds a larger and larger cage for human activity and intelligence. Miniaturization will
now let these huge automatic cages exist in one silicone chip.

Capital's long range salesmen conjure a frontier to be exploited like the "untrampled" shore of America
five hundred years ago. Here all capital's information production will be sold and all its debts paid. Like
America, future colonists call the plane of information "empty" only because it hasn't been colonized by
them. There is still an infinite amount of human activity that marketing has not captured.

Cyberspace proposes life within configuration space. This is the terrain of all possible configurations of
symbols - the universe as viewed by computer scientists. A piece of information is can be seen as one
point in the hypothetical cyberspace.

An entity that "lives" in cyberspace would move from one configuration of information to another. A
person would experience this new world by having data simulate sensory impressions for her or him

Everything that happens here is information processing. A bicycle, an elevator or printing press are
devices to change the configuration of elements in the real world.

To move in cyberspace, you change the information arround you. The capitalist sees that information
processing involves both production and consumption of information. Thus information is the ideal
commodity; profits are guaranteed. Everyone is an information processor by definition.

Market research and cybernetic control are the methods for building this new world. Instead of singing
together as community, each atomized consumer buys mass marketed music for individual entertainment.
When consumers are like ping pong ball bouncing different ways with each manufactured trend, their
action become simple mathematical modelling.

Any part of social life that can be mathematically described can already be seen as information

Capital Crisis Overview

Along with capitalist logic, the contradictions of capitalism are also embedded in cyberspace. Building this
space creates more and more crises. Cyberspace gives a single capitalist the chance to own everything.
It contradicts the fluidity of power that capitalist wage labor rests on.

The world market faces a crisis on the level of pricing information commodities. Prices are set by the
struggles between capitalists and between workers and capitalists. Each capitalist faces the other as a
commodity seller.

The information world has no natural ordering according to price or information configurations. A company
must tack the price onto an information commodity at the end of production. Price is an extraneous part
of any piece of information. An industry thus must use an arbitrarily chosen information standard to order
for information its information production. Video games must be written for Nintendo or Atari. Music is
recorded on compact disks, tapes, or "Mini disks."

Thus the ultimate price of a piece of information is arbitrary. Its cost of production is either zero or
based on extraneous factors.

Owning an information commodity only gives a person power at the level of legality. A store keeper or a
factory owner produces items that she or he exercises physical control over. A break-in or employee
theft will produce a call to the police. The method of production insures some control over the product.
The possessor of the product has an incentive to maintain the property relations since if the product is
stolen, the possessor loses it. It is quite difficult for someone to build a bridge, even if they steal the
design from someone else.

It is very easy for someone to duplicate a videocassette, a piece of software, or a piece of music.
Networks of friends give away free software. The Compact Discs now being used for both data and music
were design specially to be hard to duplicate. Still, the nature of information will make it easier to
duplicate these also - Digital Audio Tape (DAT) is already a step in this direction.

The ownership of capital goods, of information standards, is hardly in better shape. Information
standards are the highways on which information processing takes place. The largest computer
companies count on Graphic User Interface (GUI) standards to be their "profit centers." By owning the
basic system that a computer works with, companies like Microsoft, Sun, and Apple Computer expect to
get profits from each computer regardless of what other programs the computers' users buy.

But every information standard is subject to "cloning," to having a different system designed that works
the same way. From computer systems to chips to operating systems, many important standards have
been cloned. This has kept them from producing high profit rates for their owners.

While courts often allow companies to patent an information standard, these patents are completely
arbitrary. There is no reasonable way to decide what screen appearance, algorithm or computer language
can be reasonably owned. The result is an endless stream of lawsuits. Since the lawsuits decide
boundaries of the information world, more and more money rests on them. Microsoft recent said that
Apple Computer's suit against it asks for 4 billion dollars in damages.

When all information is property, it is necessary to continuously police all possessors of any kind of
information to stop its unauthorized use. Already, workers in with assess to classified information are
supposed to be constantly watched.

The policing is the only thing that can protects information commodities. Companies spend millions
tracking down those who pirate information. But this only catches people brazen enough to sell the
pirated information. Those who give it away are virtually invisible. And giving it away is easy.

Today, it is mostly individuals who pirate software. Larger companies still fear the lawsuits that pirating
may bring on. But is because most companies invest only a fraction of their total value in software.

When software becomes the main capital good, when a program allows someone to make money with
 it alone, piracy is likely to become universal.


The information world maintains itself only if becomes an ever-expanding repressive bureaucracy. The
contradictions of the information standards naturally end up in the policing. The borders of who owns
what information are not perfectly defined. Thus continuous judicial labor is required to decide them.

Just like Apple and Microsoft, Fogerty and Zantz are fighting over the boundary lines of legally redefined
reality. Zantz tried to use the principle of intellectual property to own not just a certain configuration of
notes but Fogerty vagabond attitude as well. At the limit of this, we could imagine a future world where
hippies, punks or heavy metalers buy a licence for their images.

The only need created by information is the need for police to protect information commodities. The
"Personal Computer," which corporation originally sold as equivalent to television, is now sold only to
workers who the corporations force to take their work home.

An information commodity is only valuable if information itself is scarce. Thus the "intelligence
community," where "for security reasons, information can only be given on a need-to-know basis" is the
perfection of the information world. The gang system, whether legal or illegal, as just as perfect for an
information scarce system.

Security is the good that world capitalism is redefining in all these maneuvers. By making people less
andless secure, the information system forces people to buy more and more information. The point of
information sales is to sell many pieces of information without giving out a general knowledge of any

The  ghetto with it's infinite permutation of rumors and protection systems is just as much part of the
information world is silicone valley.

Policing today serves as primitive accumulation of information. No one has much information and what
unique information they will be taken away and used in the common pot.

Even if the information you produce is your ID for a cop on the corner, you have completed a circuit of
information capital.

We can easily extrapolate. Laws, tax regulations, medical processes, and retirement systems are now so
obscure that they require computers to keep track of them. Now that powerful microcomputers are
available to consumers, the complexities can multiply. Eventually each consumer will be forced to buy
autonomous software to survive. This software will then issue orders whose purposes cannot be

This ultimate order is limited only by how atomized and irrational the information system can make
workers. The clarity of total must ultimately destroy information.

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