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Profit and Gift in the Digital Economy: extract from chapter 1

Over three billion times a day, someone types a search term into Google and within a few seconds receives a list of search results on their screen (Internet Live Stats, 2014). This service, delivered entirely free to the user, has become a cornerstone of the work and knowledge practices of a substantial portion of humanity. But the Google Search business model – like many others in the digital economy – confounds and undermines some of our best established ways of thinking about the economy.

Although Google makes substantial profits by serving up advertisements alongside these search results, the idea that one can run a successful business by giving away a free service to perhaps a quarter of the human race flies in the face of conventional economics. Yet it also confounds Marxist ideas that economic value is essentially a product of labour: both the delivery of search results and the sale of advertising space alongside them are thoroughly automated processes, in which almost all of the processing required is done by computers not people. Nor does it support conventional ideas of the gift economy, which is usually seen as an alternative to the commercial economy, making personal connections on the basis of reciprocal obligations.

The best-established ways of understanding our economy are the neoclassical tradition that dominates mainstream academic economics and the Marxist tradition that dominates critical politics. For both, despite individual dissenters and substantial differences in the details, the contemporary economy is a monolith: a capitalist monolith, characterised more-or-less universally by the production of commodities by businesses for sale at a profit. For the typical neoclassical economist this is to be celebrated as the most efficient way to run an economy – and extended into whatever benighted spaces have resisted it. For the typical Marxist it is to be criticised as alienating and exploitative, and overthrown by taking control of the state and imposing an entirely different, but equally monolithic, form of economy.
The real economy, however, is far more diverse. It is neither overwhelmingly capitalist as most Marxists assume nor overwhelmingly a market economy as most mainstream economists assume. Both traditions tend to ignore vast swathes of the economy that do not fit with their stylised models, but because their models have thoroughly shaped our thinking they have largely succeeded in obscuring these diverse economic forms from view. This is not a new problem. Feminists, for example, drew attention to the household economy many years ago (e.g. Friedan, 1963; Hochschild, 1989; Molyneux, 1979). But the problem is coming more sharply into focus with the rise of the digital economy, with its proliferation of innovative economic forms.
Our failure to recognise the diversity of our existing economic systems is doubly consequential. On the one hand, it produces a warped and damaging understanding of how the existing economy works; and on the other, it radically limits our ability to think creatively about economic futures. Capitalism as a universal system, if such a thing could even exist, would be utterly inadequate to the challenge of meeting human needs, but this does not mean that the solution is some other universal system. If we are to think productively about alternatives we must stop imagining our economic futures in all or nothing terms: capitalism universal vs. capitalism destroyed.
The central original contribution of this book is to propose a new framework that enables us both to see and to analyse a vast range of diverse economic forms, and to illustrate that framework by applying it to cases in the contemporary digital economy. In this framework, which I call a political economy of practices, each economic form is understood as a complex of appropriative practices: social practices that influence the allocation of benefits from the process of production. Different combinations of appropriative practices give us different economic forms with very different effects on who receives what benefits and harms from the economy. The political economy of practices examines how the practices concerned interact to produce those effects, but it also takes an evaluative stance, offering grounds to judge which forms are more desirable in any given context.
The appropriative practices at work in a fairly conventional capitalist firm like Apple are very different from the set at work in a gift economy structure like Wikipedia, but some of the most interesting processes in the digital economy are hybrid forms that combine elements of both capitalist and gift economy forms. The digital economy is diverse not only in the sense that it includes both capitalist and non-capitalist forms, but also in the sense that there are multiple varieties of the capitalist form, many of which do not conform to the traditional models, and indeed multiple varieties of gift economy forms, as well as forms that are neither, or indeed a mixture of both. From this perspective, it becomes possible to see our economy as a complex ecosystem of competing and interacting economic forms, each with their own strengths and weaknesses, and to develop a progressive politics that seeks to reshape that ecosystem rather than pursuing the imaginary perfection of one single universal economic form.

[This post reproduces text from pages 3-5 of Elder-Vass, D. (2016) Profit and Gift in the Digital Economy, Cambridge: Cambridge UP, due to be published in July 2016.]

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