Review: Postcapitalism: A Guide to Our Future by Paul Mason

Reading this book made me keenly aware of one thing: I don’t have a nearly good enough understanding of how the economy works. The author presents a lot of interesting arguments about how the economy got to be the way it is, how capitalism is likely to collapse, and a proposal for an alternative, and I realized I lack the tools and mental model to fully understand or debate these topics. The book is reasonably well-written, so I still got something out of it, but I think I’m going to have to do a bunch of more basic reading on economics and come back to this one :) Recommendations welcome!

Below are some of the notes I got out of the book, though these are far more sparse than I’d normally have for a book of this density and importance. Apologies if there are inaccuracies or misunderstandings here; as I said, I’m still trying to wrap my head around some of these ideas, so corrections are welcome too.

• The core argument of the book is that (neoliberal) capitalism is on the verge of collapse. Capitalist economies go through crises on a roughly 50 year cycle, and while the economy has recovered in the past, there have been a number of critical changes in the modern world that will require a fundamental rethinking of how the economy works.

• What are those changes? The main ones discussed in the book are: (a) climate change, (b) an aging population, (c) globalism petering out and wages equalizing, (d) economic inequality, (e) finance becoming larger and larger part of the economy, accounting for something like 40% of corporate profits these days, so we’re making more and more money from credit, interest, speculation, and other “fictional value” rather than on actual labor or goods or “real value”, and (f) most importantly, the rise of the information economy.

• The information economy is the most important factor because it completely changes the mechanics of supply and demand. In traditional economics, supply and demand is based on scarcity, as the supply of any product is limited: there is a cost to creating each “widget” and if one person owns the widget, another person doesn’t. In the information economy, there is no more scarcity, as supply is virtually infinite: the cost to copy information (e.g., an iTunes track or a piece of software) is virtually zero and 1 person can use it just as easily as 1 million. The only limit to the supply is artificial: e.g., licensing and IP laws. When cost is 0 and supply is infinite, supply and demand is no longer relevant.

• Moreover, a greater and greater part of the value of even physical products is now in their information. For example, the materials it takes to create a modern jet engine are negligible in cost compared to the value of the information about how to create one. The vast majority of the work to create a jet engine these days happens on computers—3D software, calculations, simulations, and so on—and compared to that, turning the information into a physical product is just a final, small, relatively inexpensive step. So the real value is in the information, but once again, the supply here is effectively infinite, as that information can be easily copied and shared.

• And a great deal of this valuable information is now created for free! The rise of open source and open collaborative projects such as Wikipedia is a major shift. We’ve found that once we have the technology for people to do “non market” work, they are more than happy to do so. There are massive armies of volunteers who are now creating, completely for free, a huge amount of value which can be copied infinitely. Traditional businesses can’t compete with this sort of thing; and perhaps the traditional capitalist economy can’t survive in such an environment.

• Over the centuries, we have transformed from an economy where the main actor was man, to one where it was man doing all the work with tools, to one where it was man doing the work with the help of a machine, to one where the machine does most of the work and man supervises, and now to one where the machine does all the work, and man’s role is to manage the knowledge that goes into the machine. Of course, machines have an up-front cost and wear down over time, but what if we had machines that cost essentially nothing and never wore down? It turns out we do! We call these machines “software.” Software can effectively run forever, does not wear down, and can be copied at no cost; the real value in software is in the knowledge that goes into it. So whereas the value used to be in owning the materials and doing labor, nowadays, the vast majority of the value is in knowledge.

• But knowledge can’t truly be owned. Every bit of knowledge is inseparably intertwined with all other knowledge. For example, even if I’m writing proprietary code for some company, the code I write uses libraries and frameworks (often open source) written by someone else, runs on top an operating system written by someone else (e.g., the open source Linux), sends information over a network (the Internet) written and maintained by someone else, and so on. The reality is that most of the value of my “proprietary” product is actually outside that product, my contribution is only a tiny part, and therefore, I can’t really say I own that product. In other words, our notion of ownership is collapsing, as all knowledge is fundamentally socially owned.

• Socially owned knowledge is apparently something Marx wrote about in a set of unpublished notes. He talks about the idea of “general intelligence” and how workers are able to deploy the knowledge of all of society. This is a zero marginal cost society—products cost nothing, supply is infinite, people work for free—where the boundaries between work and play melt away. Marx ended up abandoning this set of thoughts, as they weren’t quite relevant in the 19th century, but it seems fairly prescient now.

• So where we are today is that we need to transition from a world of hierarchies to a world of networks. We need to move from the old model of ownership, monopolies, and IP to a new world where we socially create goods with nearly zero cost, using different models of value and exchange (e.g., gifts, brand, reputation, etc). We need to replace capitalism with something new. Replacing capitalism may feel impossible or utopian, but the reality is that capitalism itself is only about 200 years old—there was a world before capitalism and there will be a world after it. The question is, what do we replace it with and how do we make the transition?

• The final part of the book talks tries to answer these questions. Mason presents a lot of lofty goals—e.g., fight global warming, stabilize the global finance system, and improve technology to the point where work is purely voluntary—but the concrete details on how to accomplish these are somewhat lacking. The means Mason mentions are: (a) using our massive quantities of data to model and test policies on computers before implementing them in the real world, (b) tackling public debt by closing down offshore banking and holding interest rates below inflation rates, (c) promoting cooperative and non-profit forms of work and creative commons production through state support/regulations, (d) breaking up or socializing monopolies, (e) socializing the finance system, and (f) paying everyone a universal basic income. Some of these ideas make sense and some sound impractical, but to be honest, I don’t have a good mental model of how all these items come together, how this new world is “post capitalist” (as a lot of it sounds the same as today?), and whether this world really solves all the challenges Mason brought up earlier in the book. So while the book does a good job of highlighting the problems with capitalism and modern society, I found the solutions it proposes to be lacking and unsatisfying.

Rating: 4 stars