Labour and capital in a post-industrial economy

[rishab@dxm.ernet.in]

Earlier I'd written on the fall of corporations due to cryptoanarchy. This one
is on the decline of (knowledge) capital and property rights, and the rise of
labour.

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Electric Dreams
Weekly column for The Asian Age by Rishab Aiyer Ghosh
#47, 6/February/1995: Labour and capital in a post-industrial economy

The information economy will require not only knowledge
capital, but also knowledge labour. Labour has
historically been subservient to capital (or land, in
agricultural societies) as a source of power and wealth,
leading to various forms of political upheaval contrary to
the naturally unequal relationship between these two
essentials of an economy. But the knowledge revolution
will change the nature of labour even more than it will
that of capital, while also decreasing the distinction
between them.

One of the major differences between capital and labour in
the past is that capital, owned and protected by property
rights, can earn for its owners without their making any
significant effort. Labour, though, is inherent in its
'owners' - you really don't need laws to protect your
ownership of your capacity to work - and earns only with
considerable effort from them. It follows that owners of
capital are wealthier than providers of labour, at least
until a digital deluge changes the rules altogether.

A strict (but not universally accepted) definition of
knowledge capital would consist primarily of those
relatively static forms of intellectual output - specific
ideas, software, works of art - that can be treated as
property, thereby inviting legal protection in the form of
patent and copyright. Like traditional capital, these
don't necessarily require the intervention of their owner
(after the work of painting or inventing is over) to
generate cash. Intellectual property rights will do the
earning.

Unfortunately for fans of intellectual property rights,
they are unworkable. As the sprawling information economy
grows volatile and fast-changing, copyrights and patents
are simply not going to be enforced. The ease of
undetectable duplication, together with the suffocating
effects of strong protection on growing markets, have been
acknowledged by everyone familiar with both the
technological as well as economic aspects. Expertise,
then, not information, is the key.

Expertise, which is dynamic and constantly adapting, is
not 'intellectual property'. It hardly requires legal
protection, and cannot be separated from its owners, the
experts, in whom it inheres. Nor do experts earn without
themselves making active use of their skills. Experts are,
in fact, knowledge labourers.

Not, of course, that these labourers own no capital. Quite
the contrary -experts almost always rely on more static
works, ideas, resources, that are their own. However, this
'property' being less important than their expertise,
knowledge labourers (or knowledge workers, to use a more
familiar but not always equivalent term) often don't
bother about patents or copyrights. Knowledge capital is
not, after all, as valuable as expertise and is also more
inconvenient to rely on - so it will act as the auxiliary
resource, rather as labour has done in industry.

Once we realize this reversal of roles between labour and
capital in a post-industrial economy, we face the prospect
of a vast labour force of experts of all sorts. Knowledge
labour will not always be high-end, though - for every
millionaire quant plotting coffee futures against money-
market derivatives, there will be the human agent,
cybrarian in the jargon, hunting for curious clients rare
species of data amid the information jungle. And there
will always be some who cling on to their intellectual
property rights and attempt to extract license fees from
the on-line universe. But their share of the economy will
shrink, and finally, in the era of expertise, what you
have will matter less, than what you do.



Rishab Aiyer Ghosh is a freelance technology consultant
and writer. You can reach him through voice mail (+91 11
3760335) or e-mail (rishab@dxm.ernet.in).

--====(C) Copyright 1994 Rishab Aiyer Ghosh. ALL RIGHTS RESERVED====--
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