Mike Masnick over at Techdirt has some rock-solid analysis on Kodak, and why it's an outstanding example of the Innovator's Dilemma.
The article sent me off on a tangent in the comments about the role of disruptive technology, and the Internet in general. I asked if there were any examples of technologies that expanded capitalization in a market instead of shrunk it. I was promptly corrected (of course there were! Most technology is introduced to this effect!). Mike listed many of the basics: automobiles, telephones, computers, etc.
My question revealed my bias: I was thinking only of the Internet (which I would equate more to Mass Production than to the Automobile, in terms of historically allegorical technologies). A new product is likely to expand a market, but a new *mode of production* has vastly more complex effects.
Part of my reply:
There are more players than ever getting their slice of the pie, but that pie is certainly shrinking (if the pie is measured in capital only). Lucky for them it was a really really big pie when it started to shrink.
The Internet added Value to the music industry, but it added it in a way that Capital couldn't capture it. I see this a lot when the Internet disrupts some legacy industry.
What I'm really looking for is a way to measure the change in Value vs. the change in Capital. (But traditionally, we measure Value in terms of Capital!)
If any brilliant economists/sociologists out there are reading this humble little blog, share your thoughts on this.
The article sent me off on a tangent in the comments about the role of disruptive technology, and the Internet in general. I asked if there were any examples of technologies that expanded capitalization in a market instead of shrunk it. I was promptly corrected (of course there were! Most technology is introduced to this effect!). Mike listed many of the basics: automobiles, telephones, computers, etc.
My question revealed my bias: I was thinking only of the Internet (which I would equate more to Mass Production than to the Automobile, in terms of historically allegorical technologies). A new product is likely to expand a market, but a new *mode of production* has vastly more complex effects.
Part of my reply:
When it comes to new technology in general, I think you're absolutely correct--they tend to increase the pie. I was thinking specifically of the Internet's effect on photography more than the digital camera's (which was enabled by the move to digital).
The effects of the digital camera may enable greater capitalization if it was the only innovation in photography, but it also enabled photography to make the jump to the Internet, whose benefits I don't think are as black-and-white[...].
While the Internet's disruption has made many a billionaire, it's certainly well on it's way to destroying some entire industries. And it seems to me, many of the institutions that are popping up to replace them don't have the same capitalization, if they have capitalization at all.
I know the Internet is adding Value, I just don't know if it's adding Value in a place where Capital can capture it.I think the music industry is a very good example of what I was questioning. The industry is expanding, but capitalization is definitely shrinking. I know more people making a living from their music than ever before, but only because of a massive disruption of the music industry that has cost billions of dollars.
There are more players than ever getting their slice of the pie, but that pie is certainly shrinking (if the pie is measured in capital only). Lucky for them it was a really really big pie when it started to shrink.
The Internet added Value to the music industry, but it added it in a way that Capital couldn't capture it. I see this a lot when the Internet disrupts some legacy industry.
What I'm really looking for is a way to measure the change in Value vs. the change in Capital. (But traditionally, we measure Value in terms of Capital!)
If any brilliant economists/sociologists out there are reading this humble little blog, share your thoughts on this.
“You stumbled upon the difference between use value and exchange value. The use value of music is constant. What was reduced recently was the ability of the music industry to restrict access and therefore continue and increase the extraction of *exchange* value. You can observe the same with Free/Libre Software that exploded use value but makes it very difficult to enclose and make scarce. That is why only a fraction is transformed into exchange value (and then fixed capital). Marx explained it all very well, look it up.
ReplyDeleteAlso, it’s not that “a massive disruption of the music industry that has cost billions of dollars”, but that the disruption *prevented them* from extracting millions of dollars. Their expectation of revenue is not cost, no matter how many times they try to confuse and mystify the issue.”
Jose-
ReplyDeleteThanks for your comments!
In response, what you call “exchange value”, I call “capital”, then then we’re pretty much saying the same thing. I think Marx has a lot to bring to the table in understanding this third space of creating social value without creating capital, but I think it’s mostly by accident.
Lastly, I feel that the massive disruption of the music industry has indeed cost millions of dollars (not that it’s unwelcome). Their expectation of revenue may be absurd looking towards the future, as artists and fans learn that they don’t need an intermediary; but that doesn’t mean that once upon a time they didn’t add real value, and value that could be captured by capital.