This on-line version is the pre-copyedited, preprint version. The published version can be found here:
‘Knowledge as a fictitious commodity: insights and limits of a Polanyian analysis’, in A. Buğra and K. Ağartan, eds, Reading Karl Polanyi for the 21st century. Market Economy as a Political Project, Basingstoke: Palgrave, 115-134, 2007.
One of Polanyi’s most important contributions to critical social science was his insistence that land, labour, and money were fictitious commodities and that the liberal propensity to treat them as if they were real commodities was a major source of contradictions and crisis-tendencies in capitalist development – so great that society would eventually fight back against the environmentally and socially destructive effects of such treatment. Polanyi wrote during the epoch of industrial and financial capitalism when land, labour, and capital were considered as the primary ‘factors of production’. Contemporary capitalism is widely seen as a knowledge-based economy (or KBE), however, on the grounds that knowledge has become the most important factor of production and the key to economic competitiveness. This raises interesting questions as to whether knowledge is also a fictitious commodity, whether it has been disembedded from wider social relations and whether its disembedding and fictitious commodification also entail a ‘double movement’. This chapter explores these questions and deploys the answers to interrogate Polanyi’s analysis of the other fictitious commodities.
Some Basic Concepts
Polanyi provided some useful concepts for examining knowledge as a fictitious commodity: substantive economy, formal economy, the economistic fallacy, dis- and re-embedding, fictitious commodity, market society, and double movement. He defined the economy in its substantive sense as ‘an instituted process of interaction between man and his environment, which results in a continuous supply of want-satisfying material means’ (Polanyi 1982: 33). He then criticized the ‘economistic fallacy’ that regards all economic conduct as formally rational and economizing and therefore assimilates the properties and dynamics of non-capitalist economies to those of market economies. But he also recognized that, whereas economic activities in pre-capitalist social formations were not conducted primarily for ‘economic’ motives, i.e., for the sake of gain or fear of going hungry for lack of employment (1977: 51-2), contemporary market economies are increasingly dominated by profit-oriented, market-mediated activities.
Given his interest in non-market as well as market economies, Polanyi focused on the organization of distribution rather than production. He identified four main principles: (a) householding based on autarkic production to satisfy the needs of a largely self-sufficient unit such as a family, settlement, or manor; (b) reciprocity among similarly arranged or organized groupings (e.g., segmentary kinship groups); (c) redistribution through an allocative centre linked to a political regime; and (d) exchange mediated through price-making markets in a disembedded and potentially self-regulating economy (1957: 47-53; 1977: 34-47; 1982: 35). He noted that symmetry, centricity, and market exchange can be combined under the dominance of one principle (1982: 37); and added that trade could be based on reciprocal gift-giving or centrally organized redistribution rather than monetary exchange (1982: 40-45).
Polanyi further argued that ‘a market economy can exist only in a market society. … [It] must comprise all elements of industry, including labour, land, and money’ (1957: 71). However, while these three elements have a price, they are either not produced at all (e.g., land is a gift of nature) or, if they are produced, this is not undertaken to sell them (e.g., labour-power, tokens of exchange). Nonetheless,
Because labor and land were freely bought and sold, the mechanism of the market was made to apply to them. There was now a supply of labor and demand for it. Accordingly, there was a market price for the use of labor power, called wages, and a market price for the use of land, called rent. Labor and land were provided with markets of their own, similar to those of the proper commodities produced with their help. … [Yet] labor is only another name for man, and land for nature (Polanyi 1977: 10).
This explains why, although land, labour, and money are ‘absolutely vital parts’ of the market economy, Polanyi regards them as fictitious commodities. For, as he notes, what we call labour is simply human activity, whereas land is the natural environment of human beings, and money is just an account of value. Indeed, Polanyi emphasizes several times both that ‘[t]he postulate that they are produced for sale is emphatically untrue’ and that ‘it is with the help of this fiction that the actual markets for labour, land and money are organized’ (1957: 72). This also entails the organization of the wider society as a market society to sustain the organization of the economy in separate, market-based and market-oriented institutions disembedded from non-market relations. For ‘a market economy can function only in a market society’ (1957: 57). Yet if this threefold [fictitious] commodification goes too far, it undermines the market economy by provoking a wide range of social forces adversely affected thereby. Thus ‘the extension of the market organization in relation to genuine commodities was accompanied by its restriction in relation to fictitious ones’. The self-regulating market of economic liberalism is opposed by social protection intended to preserve man and nature. This is Polanyi’s famous ‘double movement’.
Is Knowledge a Fictitious Commodity?
Discussions of the information revolution, informational capitalism, or the knowledge-based economy often treat knowledge as a factor of production similar to land, capital, enterprise, or labour. This informs a common periodization according to which there is a transition from agriculture (land) through industrialism (capital and manual labour) to ‘informationalism’ (information and communication technologies – or ICTs – and intellectual labour). This poses the question whether the alleged primacy of knowledge in the post-industrial market economy can be fruitfully analyzed in line with Polanyi’s analysis of industrial society by considering knowledge as a fictitious commodity.
Three arguments suggest themselves. First, the production and circulation of knowledge can be secured otherwise than through market exchange: for example, through closure, reciprocity, and redistribution via private or state patronage. Thus one can ask under what conditions market rationality emerges and might then come to dominate other modes of knowledge production and circulation (cf. Polanyi 1982: 37). Second, to paraphrase Polanyi, while knowledge in the ‘information economy’ has a price, it is not produced for sale but is simply a gift of [human] nature or another ‘aspect of man’. Nonetheless, ‘once the economic system is organized in separate institutions, based on specific motives and conferring a special status, society must be shaped in such a manner as to allow that system to function according to its own laws (1957: 57). Thus, third, the ‘information economy’ can survive only as part of a market economy and market society — and information and knowledge must therefore be priced to ensure a balance in supply and demand.
One might expect this to trigger another round of the ‘double movement’. But, despite increasing resistance from many forces at many sites on many scales, states have not yet responded with active and massive intervention to protect the intellectual commons and thereby prevent the treatment of knowledge as if it were a simple commodity, let alone one that is always produced within capitalist relations of production (see below). Indeed, the leading capitalist states are intervening to subordinate knowledge as a collective resource to the profit-oriented, market-mediated logic of economic competitiveness. This said, capital itself recognizes the limits of this logic in relation to knowledge and is attempting self-limitation and self-regulation in response to the contradictions of approaching knowledge as if it were just simple commodity. Likewise, economists concerned with innovation and information, intellectual property lawyers, and students of innovation are also busy debating the limits of commodification of knowledge.
More on Commodities and Fictitious Commodities
This section elaborates some crucial distinctions based partly on Polanyi’s analysis and partly on a more general critique of capitalism inspired by Marx.
First, a commodity is a good or service that is actively produced for sale in a labour process. If this were not so, Polanyi could not sensibly distinguish commodities and fictitious commodities. A commodity can result from peasant, petty commodity, state production, cooperative production, or social enterprise as well as capitalist production – what matters is its production for sale.
Second, a capitalist commodity is one produced in a labour process subject to capitalist competition that creates pressures to reduce both the socially necessary labour-time involved in its production and the socially necessary turnover time involved in realizing the surplus-value that it embodies. This generates a dynamic relation between the organization of production and the commodity character of the products being produced.
Third, a fictitious commodity has the form of a commodity (can be bought and sold) but is not actually produced in order to be sold. It already exists as a use-value before it acquires the form of an exchange-value (e.g., raw nature) or it is produced as a use-value before being appropriated and offered for sale (e.g., human artefacts originating in a substantive, socially embedded economy). Above all, in contrast to a capitalist commodity, a fictitious commodity is not created in a profit-oriented labour process subject to the competitive pressures of market forces to rationalize its production and reduce the turnover time of invested capital. This concept is important because analyzing land, money, and labour-power as simple and/or capitalist commodities would obscure the conditions under which they enter the market economy, get transformed therein, and so contribute to the production of goods and services for sale. In this sense, a fictitious commodity belongs to the broader spectrum of quasi-commodities that have a price but otherwise fail to meet one or more of the criteria for a full capitalist commodity (Schaniel and Neale 1999).
Both Marx and Polanyi argue that land (or nature), labour-power, and money are fictitious commodities. They regard land as a free gift of nature and, indeed, Marx considers that this holds for knowledge too. They view labour-power as a generic human capacity that is not produced by capitalists for profit. Even when it has acquired a commodity form (a process that occurs very late in human evolution), labour-power is reproduced in significant measure through a heterogeneous ensemble of non-market as well as market institutions and practices. Finally, regardless of the substantive nature of money tokens (natural, commodity, or fiduciary), the system in which it circulates is not operated solely for profit. On the contrary, money’s economic functionality depends critically on personal and impersonal trust as well as extra-economic institutions and sanctions.
The tendency to naturalize fictitious commodities as objectively given factors of production leads to the fallacious belief, strongly criticized by Marx, that economic value arises from the immanent, eternal qualities of things rather than from contingent, historically specific social relations (Marx 1976: 993; Schiller 1988: 32). This legitimates in turn the idea that each factor of production is entitled to its own share in the distribution of the total income and/or wealth of society. This theme is elaborated by Polanyi in the following terms:
Self-regulation implies that all production is for sale on the market and that all incomes derive from such sales. Accordingly, markets exist for all elements of industry, not only for goods (always including services) but also for labor, land, and money, their prices being called respectively commodity prices, wages, rent and interest. The very terms indicate that prices form incomes: interest is the price for the use of money and forms the income of whose who are in the position to provide it; rent is the price for the use of land and forms the income of whose who supply it; wages are the price for the use of labor power, and form the income of those who sell it; commodity prices, finally, contribute to the incomes of those who sell their entrepreneurial services, the income called profit being actually the difference between two sets of prices, the price of the goods produced and their costs, i.e., the price of the goods necessary to produce them. If these conditions are fulfilled, all incomes will derive from sales on the market, and incomes will be just sufficient to buy all the goods produced (1977: 69)
Focusing on social relations rather than naturalized factors of production matters not only for a general understanding of the market economy as Polanyi knew it but also for the role of information, knowledge, and intelligence in ‘post-industrial economies’. One must ask under what conditions knowledge gains the form of a commodity. Insofar as knowledge is collectively produced and is not inherently scarce (in economic terms, it is a ‘non-rival’ good), it only acquires a commodity form insofar as it is made artificially scarce and access thereto depends on payment of rent. Hence, instead of naturalising knowledge, one should assume that ‘information is not inherently valuable but that a profound social reorganisation is required to turn it into something valuable’ (Schiller 1988: 32).
There are three key aspects to this profound social reorganisation. First, as opposed to being an organic and inseparable part of creative labour in general, knowledge is codified, detached from manual labour, and disentangled from material products to acquire independent form in expert systems, intelligent machines, or immaterial products and services. Second, by analogy with the disembedding of economic activities from their wider social contexts, knowledge is disembedded from its social roots and integrated into extra-economic institutional orders, functional systems, and the lifeworld and subject to creeping commodification so that the primary code governing its use becomes profitable/unprofitable rather than true/false, sacred/profane, healthy/diseased, etc. And, third, knowledge no longer circulates in closed economic units (householding), through reciprocity, and/or through redistribution but is allocated through profit-oriented markets. An obvious analogy in all three respects is the enclosure movement analyzed by Polanyi in The Great Transformation – an analogy that invites the question whether these intellectual enclosures also entail ‘a revolution of the rich against the poor’ (1957: 35; cf. Agraine 2005; Goldmann 1998; Harvey 2003; May 1998).
Rethinking Fictitious Commodification
Reinforcing the enclosure of the collectively produced knowledge of past generations is the process whereby workers’ tacit knowledge is formalized and integrated into expert systems and/or smart machines. Knowledge can also be fictitiously commodified through the separation of intellectual from manual labour and its transformation into ‘knowledge work for hire’ under capitalist control. Here workers are paid a wage and their immaterial output belongs to the employer. This is analogous to the formal subsumption of manual labour under capitalist control. Finally, intellectual labour can be subsumed directly under capitalist control through the commoditization of intellectual labour and the integration of its immaterial outputs into a networked, digitized production-consumption process (on the first, see, for example, Aoki 1998; Dawson 1998; on the second, Schiller 1988: 33 and Sohn-Rethel 1978; on the third, Menzies 1998: 92-3 and Kelly 1998: 77).
Formal and/or real subsumption leads to important changes in the overall organization of the market economy when it is associated with the specialization of some firms in the production of immaterial goods or services that are information-rich, knowledge-intensive, or otherwise ‘creative’. If these goods or services are key inputs into the market economy and/or final products and services that are deemed important components of socially defined consumption standards more generally, then, in a profit-oriented, market-mediated capitalist economy, their producers need to obtain at least the average rate of profit. Otherwise these inputs will not be provided. Polanyi hints at this when he writes:
All transactions are turned into money transactions, and these in turn require that a medium of exchange be introduced into every articulation of industrial life. All incomes must derive from the sale of something or other, and whatever the actual source of a person’s income, it must be regarded as resulting from sale (1957: 41)
Thus, just as wages are the market price for the use of labour power, rent is the market price for the use of land, and interest is the market price for the use of money capital, so we can interpret royalties in their different forms as the market price for the use of knowledge as a quasi- or real commodity. This price must be paid when the application of knowledge to the production of immaterial goods and services becomes a distinct function within the division of labour and all such functions are rewarded through market mechanisms. There are different legal forms of intellectual property as ‘fictitious capital’ that confer rights of ownership over ideal, immaterial, or intangible objects and their corresponding revenue streams. In addition to more traditional intellectual property rights (including patents, trademarks, trade secrets, design rights, and copyright), newer forms cover other specialized economic inputs to the information economy. These include database rights; protection for semi-conductor topographies; plant breeders’ rights; protection for indications of geographical origin; rights in performances; and protection against circumvention of copy protection devices.
As Polanyi emphasized, however, there is nothing natural about the market economy. This is especially clear in the rise of intellectual property as a revenue category that purportedly rewards intellectual creativity. Historically, the production of knowledge occurred outside the market, in institutions such as guilds, universities, religious bodies, or state institutions; and it was rewarded through patronage, prestige, prizes, or income tied to rank or status rather than to economic performance. This was recognized in Bell’s early claim that, since the free circulation of knowledge offers no incentives to firms to produce, it must be created by some ‘social unit, be it university or government’ (1979: 174). Or, as Polanyi concluded, ‘[s]cience and the arts should always be under the guardianship of the republic of letters’ (1957: 255). This contrasts markedly with the growing importance of intellectual property rights (IPRs) as the basis for remunerating suppliers of information, knowledge, and intellectual creativity. Indeed, in contrast to the institution of property rights in land, labour-power, and money, IPRs are distinctive because they have been extended to secure the average rate of profit for immaterial goods and services but do so by establishing a legal monopoly that enables IP owners (who may well not be direct knowledge workers) to earn super-profits provided effective demand for their products continues.
Knowledge has always been important economically and especially in the major shifts associated with long waves of technological innovation. Novel features of the current period are the growing application of knowledge to the production of knowledge in developing the technical and social forces of production; the increased importance of knowledge as a fictitious commodity in shaping the social relations of production; and the increased importance of intellectual property as a revenue category that modifies the overall distribution of social wealth. None of this entails that knowledge must be a real commodity – let alone that its exchange-value equals the costs of the commodities consumed in its reproduction. For knowledge is a collectively generated resource and, even where specific forms of intellectual property are produced within capitalist relations of production for profit, this process typically depends on the unpaid input of a far wider intellectual commons. The exchange-value of commodified knowledge is hard to measure, of course, owing to the well-known peculiarities of information. These include the phenomenon that the use-value of knowledge qua non-rival good does not diminish when that knowledge is shared – and may even increase thanks to network economies – with corresponding problems for a purely market-led determination of output and price. The complexities of knowledge generation and its different forms of embodiment and embeddedness – especially in a networked economy – also make it hard to establish how knowledge in its various forms contributes to surplus-value and profits. All of this renders implausible a naturalized ‘knowledge theory of value’ (Bell 1974: 127) but it does still permit a ‘value theory of knowledge’ that, by analogy with Marx’s ‘value theory of labour’ (Elson 1979), would assess the implications of treating knowledge as if it were a commodity.
Fictitious Commodities, Real Commodities, Fictive Capital
If these arguments are broadly correct, then knowledge has a complex economic status. First, as an intellectual commons that circulates more or less freely in society through reciprocity and/or is produced and distributed through non-market mechanisms (such as patronage), it is a non-commodity. Second, when the intellectual commons is enclosed through non-market mechanisms and circulates as private property within the market, it can be regarded as a simple fictitious commodity. Third, when intellectual labour is formally and/or really subsumed under relations of capitalist exploitation and is transformed into immaterial goods and services, then it becomes a fictitious commodity like other forms of labour-power and can become embedded in quasi- or real capitalist commodities. The latter possibility will occur to the extent that the reflexive application of knowledge to the production of knowledge (i.e., information-rich, knowledge-intensive, or otherwise creative goods and services produced for sale) is subject to competition between different capitals to minimize the socially necessary labour-time embodied within them and reduce the socially necessary turnover time of the capital invested in their production. Fourth, when the revenue streams to producers of information-rich, knowledge-intensive, or otherwise creative goods and services are guaranteed by IPRs rather than normal market mechanisms analogous to ‘technological rents’, then we can talk of information, knowledge, and creativity as the basis of ‘fictitious capital’ or even of ‘fictive capital’. The last category reflects the power of abstraction of capitalism that can reduce intellectual capital (embodied in intellectual property rights) to an anticipated flow of future revenue streams that can be bought and sold in secondary markets.
If these distinctions are accepted for knowledge, we should perhaps revisit Polanyi’s arguments about land, labour-power, and money. For they too might have a fivefold status: as non-commodities, fictitious commodities, other quasi-commodities, real commodities, and the basis of fictive capital.
First, as non-commodities, they would comprise raw nature, human creativity, and natural tokens of exchange respectively. Raw nature is unproblematic – it comprises the natural world prior to its appropriation and transformation in and through human labour; human creativity is also unproblematic – it comprises the innate capacities of the human species to engage in useful labour; and, as Polanyi shows, tokens would not be commodities where they exchange in equivalencies set outside the market mechanism (1977: 62-73).
Second, as fictitious commodities, land, labour, and money would comprise: (a) nature that has been appropriated and transformed by human labour and sold on the market; (b) wage-labour reproduced beyond the market economy and entering the labour-market from outside; and (c) money as a marketable store of value and medium of exchange, with competing commodity monies (e.g., gold, silver), fiduciary monies (tokens, paper money, bank credits), or tradable currencies (e.g., dollars, euros, yen). Polanyi’s analyses of the limits of fictitious commodification remain as powerful as ever. Thus he emphasizes the disjunction between the logic of the market and the reproduction requirements of nature and of labour-power alike and explores the effects of dissociating the circulation of money from the immediate requirements of economic exchange.
Third, treating land, labour, and money as if they were commodities could lead in due course to their transformation into one or more types of quasi-commodity as they become more closely integrated into the cash nexus of market relations. At stake here are the ways in which economic forces engage in formal, rational action to increase the exchange-value of these fictitious commodities, i.e., their price as opposed to their value, through various forms of ‘investment’. Examples of this include improvement in ‘land’ (reflected in changes in absolute and differential rent), increasing skill levels or re-skilling labour power (considered as ‘human capital’), or ensuring the credibility of money by linking it to real assets (e.g., the recovery from hyper-inflation in the Weimar Republic by backing the new German mark with another fictitious commodity, land values). It is the integration of these non-commodities and/or fictitious commodities into the circuits of capital and their real subsumption under the competitive pressures of capital accumulation that leads to their treatment as if they were real commodities and thereby reinforces the ‘economistic fallacy’ in and through which fictitious commodities acquire the appearance of real commodities.
Contradictions of the Knowledge-Based Economy
So far I have engaged in a critical dialogue with Polanyi’s analysis of fictitious commodities in order to affirm the main thrust of his argument and to qualify it by introducing two further ways of thinking about ‘commodities’, i.e., quasi-commodities and fictive capital. I now analyze the contradictions of the KBE, drawing once more on Marx as well as Polanyi (for a more extended version, see Jessop 2002). My starting point is Marx’s observation that the cell form of the capitalist mode of production is the commodity and is fundamentally shaped by the basic contradiction in the commodity form between use-value and exchange-value (Marx 1976). Exchange-value refers to a commodity’s market-mediated monetary value for the seller; use-value to its material and/or symbolic usefulness to the purchaser. Without exchange-value, commodities would not be produced for sale; without use-value, they would not be purchased. This was the basis on which Marx dialectically unfolded the complex dynamic of the capitalist mode of production. In the case of knowledge, this contradiction is expressed in the form of knowledge as intellectual commons and knowledge as intellectual property – a contradiction that becomes more acute in the KBE because it is based on the reflexive application of knowledge to the production of marketable knowledge (Castells 1996). This contradiction manifests itself differently in relation to knowledge as a non-commodity, fictitious commodity, other forms of quasi-commodity, and basis of fictive capital. Five issues can be mentioned here.
First, there is the primitive accumulation of capital (in the form of intellectual property) through private expropriation of the collectively produced knowledge handed down from previous generations. This enclosure of knowledge takes several forms: (a) the appropriation of indigenous, tribal, or peasant ‘culture’ in the form of undocumented, informal, and collective knowledge, expertise, and other intellectual resources and its transformation without recompense into commodified knowledge (documented, formal, private) by commercial enterprises – bio-piracy is the most notorious example; (b) divorcing intellectual labour from control over the means of production that it deploys – this is achieved through its formalization and codification in smart machines and expert systems – and thereby appropriating the knowledge of the collective labourer; and (c) a creeping extension of the limited nature of copyright into broader forms of property right with a consequent erosion of any residual public interest.
Second, there is the role of ‘intellectual technology’ in the real subsumption of mental as well as manual labour. Bell compares this to machinofacture in the subordination of manual labour to capitalist control (Bell 1974: 29; 1979: 167) and Robins and Webster note its role in appropriating the knowledge of the collective labourer (1987: 103).
Third, the dynamics of technological rents generated by new knowledge and the disappearance once the new knowledge (whether as knowledge or as intelligent means of production) becomes generalised and thereby comes to define the socially necessary labour time embodied in commodities. This problem is intensified by the reflexive application of knowledge to the production of knowledge. For this increases the pressure on firms, regions, or production systems to stay ahead of their competitors so that ever-renewed technological rents and increasing market share can alleviate the normal tendency for super-profits to be competed away. It also encourages attempts to protect vulnerable monopolies in knowledge or information by embedding them in technology, standards, tacit knowledge, or legally entrenched intellectual property rights. These considerations underline the self-defeating character of the informational revolution from capital’s viewpoint insofar as each new round of innovation is prone to ever more rapid devalorization.
Intellectual property also poses contradictions for capital itself. For each capital wishes to pay nothing for its knowledge inputs but wishes to change for its intellectual output. This is reflected fractally in multi-scalar versions of this contradiction, e.g., Microsoft vs Linux, Microsoft’s use of hacker communities to beta-test its commercial software vs firms that sell value-added services for Linux. Related to this is the conflict in the very form of intellectual property which is both a potential guarantee of the average rate of profit for firms that specialize in the production of immaterial products and services and a potential guarantee of super-profits based on a legal monopoly position.
Finally, the KBE has implications for social inequality and polarisation within and across national societies. This is seen in growing economic differentiation between knowledge workers, the creative class, or symbolic analysts with scarce skills and other workers who are deskilled through smart machines and expert systems. This is reinforced by a ‘global war for talents’ and transfer of low-skilled goods production and some consumer or producer services provision to low cost sites. In the longer term this changes could also pose problems of demand for the products of the information economy on a global scale.
Knowledge and the State
Exploring potential contradictions between informationalism and capitalism provides an interesting way to think about the state’s role in the KBE. For example, is the growing socialisation of productive forces (expressed in dynamic forms of networking and learning) coming into conflict with capitalist dominance in the social relations of production? Is capital blocking the realisation of an information society? Does informationalism erode private control through its emerging networked forms of governance? We can explore these and other alternatives in terms of the various degrees of commodification of knowledge.
First, states help to create the legal and extra-legal conditions for the primitive accumulation of knowledge and/or to protect indigenous resources that are liable to dispossession. States tend to polarize in this regard around, first, protecting or enclosing the commons (for example, North-South) and, second, the most appropriate forms of intellectual property rights and regimes from the global to local scales. Some states are more active than others in promoting the primitive accumulation of intellectual property, privatizing public knowledge and commoditizing all forms of knowledge; others are more concerned to protect the intellectual commons, promote the information society and develop social capital. States have a key role here in changing IPR laws and protecting domestic firms’ appropriation of the intellectual commons at home and abroad. Given its competitive advantage in information and communications technology products, the knowledge revolution, and the so-called creative industries, the US federal state has been especially significant in promoting a neo-liberal form of the knowledge revolution on a global scale. This is evident in its advocacy of the Trade-Related Aspects of Intellectual Property Rights agreement and its use of bi- and multilateral trade agreements, conditionalities and other pressures to seek to enforce US interests in regard to intellectual property rights.
Second, states attempt to manage the contradictions of knowledge as a fictitious commodity. They ‘must balance the need to protect and maintain the intellectual commons against the need to stimulate inventive activity’ (Dawson 1998: 278). At stake here is the ‘socially optimal policy of investment in knowledge’ (Bell 1979: 175). This need not always occur through the market. For example, Polanyi noted of mercantilist states that:
Their chancelleries and courts of prerogative were anything but conservative in outlook; they represented the scientific spirit of the new statecraft, favoring the immigration of foreign craftsmen, eagerly implanting new techniques, adopting statistical methods and precise habits of reporting, flouting custom and tradition, opposing prescriptive rights, curtailing ecclesiastical prerogatives, ignoring Common Law. If innovation makes the revolutionary, they were revolutionaries of the age (1957: 38).
Whatever their position on such issues, all states must try to resolve contradictions and dilemmas in knowledge production whilst eschewing any direct, hierarchical control over it. This is often pursued through state promotion of innovation and diffusion systems (including social capital), broad forms of ‘technological foresight’, co-involvement and/or negotiated ‘guidance’ of the production of knowledge, and the development of suitable metagovernance structures (Messner 1998; Willke 1997). Thus states sponsor information infrastructures and social innovation systems on different scales; develop IPR regimes and new forms of governance for activities in cyberspace; promote movement away from national utility structures with universal supply obligations suited to an era of mass production and mass consumption to more flexible, differential, multiscalar structures suited to a post-Fordist era; and intervene to restructure research in universities to realign it more closely with the perceived needs of business and to encourage the management and exploitation of intellectual property through spin-offs, licensing, partnerships, science parks, technology parks, industry parks, and so on.
Third, states also promote the commoditization of knowledge and the integration of knowledge and intellectual labour into production. This is reflected in the increased emphasis on the training of knowledge workers and lifelong learning, including distance learning, the introduction of ICTs into fields of activity for which the state is more or less directly responsible, and the more general prosyletization of the KBE and information society. They promote these strategies in the private sphere and third sector. There is also increasing emphasis on flexibility in manufacturing and services (including the public sector) based on new technologies (especially microelectronics) and more flexible forms of organizing production. Hence it attempts to introduce post-Fordist labour practices into the state sector itself and into new public-private sector partnerships. New technologies actively promoted by the state include: information and communication technologies; manufacturing technology; nanotechnology; biotechnology; optoelectronics; genetic engineering; marine sciences and technology; new materials; and bio-pharmaceuticals;
Fourth, the state also heavily promotes the dynamics of technological rents generated by new knowledge as part of a more general promotion of innovation. This serves to intensify the self-defeating character of the informational revolution from the viewpoint of capital, insofar as each new round of innovation is prone to ever more rapid devalorization. But it nonetheless wins temporary advantages and technological rents for the economic spaces it controls and, insofar as there are sustainable first-mover advantages, it can consolidate longer-term advantages for a region, nation, or triad. This strategy is an important and quite explicit element in the reassertion of US hegemony since the years of pessimism about the growing threat of the Japanese and East Asian economies, and helps to explain the American commitment to the consolidation of a robust IPR regime (cf. Lehman 1996; Schiller 1999). Moreover, if firms in the information economy are to maintain above average- profit rates despite the tendency for technological rents to be competed away, less technologically advanced sectors must secure below-average profits. This is another driving force behind globalization insofar as less profitable firms are forced to relocate or outsource to lower cost production sites and reinforces the tendencies towards unequal exchange and development associated with globalization. States also get involved in often-contradictory ways in promoting and retarding the mobility of productive capital.
Beyond Marx and Polanyi
Marx and Polanyi both regard land, labour, and money as non-commodities that may acquire the form of commodities in the process of circulation. As such they have a price and the logic of capital requires that they be treated as if they were real commodities. These arguments can also be applied to knowledge as a non-commodity and a fictitious commodity. But knowledge can also become a quasi-commodity and, through the process of abstraction in capitalist production and circulation, serve as a basis of fictive capital. These insights can be applied in turn to land, labour-power, and money to reveal the limitations of Polanyi’s analysis of these ‘three factors of production’. For treating these non-commodities as if they were real commodities produces distinctive effects that subordinate them to the logic of market forces and even enables them to become the basis of ‘fictive capital’.
Marx and Polanyi wrote in the period of industrial and financial capitalism (defined misleadingly in terms of their dominant factors of production) rather than the current period of ‘informational capitalism’ or ‘knowledge-based economy’. So they paid less attention to the contradictions of treating knowledge as a capitalist commodity than is justified today. Interestingly, Marx does adumbrate some aspects of these contradictions in his discussions, notably in Grundrisse, of the significance of the ‘general intellect’ or knowledge as a generic factor of production that is not amenable to private appropriation and valorization (Marx 1973: 703 et seq). And, even more interestingly, Polanyi’s brother, Michael, developed some important insights into the role of tacit knowledge and the reciprocal organization of the ‘republic of science’ for scientific innovation and how state planning of science and, to a lesser extent, its subordination to a profit-oriented, market-mediated logic would weaken or even block capacities for innovation (1958: 65, 375-6; 1969: 50, 56, 82, 143-4).
If we recognize these limits to a capitalist KBE, we should also recognize, with Marx and Polanyi, the need to embed nature and human creativity in a re-moralized society. The critique of political economy must be extended to include political ecology and combined with a new moral economy. Given Bell’s distinction between economizing and sociologizing logics, it is tempting to call for a transition from a knowledge-based economy to a knowledge-based society. Re-reading The Great Transformation and reflecting on the reprise of its lessons under global neo-liberalism, however, it would be better to call for a wisdom-based society that draws on the collective good sense as well as accumulated knowledge of humankind. This is reflected in the wise words that are wrongly attributed to Chief Seattle of the Cree Indians but that nonetheless indicate the limits of commodification:
Only after the last tree has been cut down
Only after the last river has been poisoned
Only after the last fish has been caught
Only then you will find out that money cannot be eaten
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 A full commodity for Schaniel and Neale is one that it is produced in factory like ways for sale on a commercial market (1999: 96). My definition (above) adds the role of capitalist competition to reduce socially necessary labour and turnover times, which is a key factor in distinguishing craft and professional intellectual labour from the formal or real subsumption of ‘work for hire’ and, above all, from a fully constituted capitalist immaterial labour process producing real commodities (see table 1).
 Fictitious capital is a financial asset that circulates independently of material assets; it involves ‘financial assets/liabilities’ accounting suited to an economy dominated by financialization as opposed to ‘fixed assets’ accounting of industrial capitalism oriented to material depreciation. The former is linked to the growth of securitization and derivatives and also rests on ‘relations of property’ rather than ‘relations of production’ (Ishikawa 2005).
 Nick Dyer-Witherford summarizes Marx’s argument succinctly: ‘By setting in motion the powers of scientific knowledge and social co-operation, capital ultimately undermines itself. … First, as advances in machinery and organisation reduce the requirement for direct labour in production, the need for people to sell their labour power – the very basis of capitalism’s social order – is systematically eroded. There arises a “monstrous disproportion” between individual labour time and the forces set in motion by organised science. … [S]econd … the increasingly social nature of activity required for technoscientific development, which unfolds not on the basis of individual effort but as a vast co-operative endeavor. As this becomes more and more apparent, highlighted by the diffusion and integration of communication and transport networks, both private ownership and payment for isolated quanta of work-time appear increasingly as irrelevant impediments to the full use of social resources. Automation and socialisation together create the possibility of – and necessity for – dispensing with wage labour and private ownership’, Cyber-Marx, Urbana, IL: University of Illinois Press, 1999, pp. 484-5.