Vectors or value Chains?

The neoliberal era–when organized labor in the imperial core was routed through offshoring and automation, and a new hyper-individualist ethos displaced social democratic aspirations–coincided with a decisive repudiation of Marxism within the Western academy. As the working-class Left declined in confidence and organization, the academic Left divorced itself from class politics entirely. It became possible to style oneself as a “radical” while at the same time disavowing socialism, Marx, and the whole idea of revolution. Deindustrialization, developments in information technology, and the collapse of the USSR provided openings to attack Marxism as an obsolete, antiquated theory, no longer suited to the complex and changing world of the 21^st century. This line of attack, which could just as easily be found in the pages of The Economist as in the work of trendy “radical” academics, has most recently been repackaged in McKenzie Wark’s Capital is Dead: Is This Something Worse?

“The dominant ruling class of our time,” writes Wark, “no longer maintains its rule through the ownership of the means of production… The dominant ruling class of our time owns and controls information.” This is Wark’s central thesis, that capitalism as we know it has been superseded by a new mode of production, which she calls vectoralism. Capitalist and laborer have been replaced by vectoralist (the owner of information) and hacker (the information-worker, employed by the vectoralist). Because information has “strange ontological properties,” namely that it is “infinitely replicable, cheap to store, cheap to transmit…” its prominent role in production constitutes an entirely new mode of production. The vectoralist class, we’re told, “does not appropriate a quantity of surplus value so much as exploit an asymmetry of information.” Rather than controlling production, the vectoralists control algorithms, brands, and images, exploiting the mental labor of hackers who engineer the information that is the true font of power in this post-industrial, post-capitalist world.

“The companies that appear to sell actual things, like Nike,” says Wark, “are really in the brand business.” Nike of course does sell actual things, namely garments, and these garments are not made by “hackers” but by garment workers. Wark does not deny this. She repeatedly emphasizes that capitalism still exists, but is now dominated by vectoralists; she admits that “much of the world is a giant sweatshop” and labor-capital struggle is “alive and well” in the Global South. The difference is that capitalists now are subordinated to the rule of vectoralists.

But hang on–we’ve been told that vectoralism consists not in the appropriation of surplus value, but in the private control of information. Indeed, this is the essence of Wark’s critique; otherwise, we would still be talking about capitalism, and we would still need Marxist categories to make sense of things. Wark claims that vectoralists “dominate manufacturing through the control of information.” But why dominate manufacturing if not to appropriate surplus value?

To dominate manufacturing, even through chains of outsourced contractors and sub-sub-contractors, is to dominate the labor process in order to extract surplus value. And indeed, this is what Nike and other multinationals do. Their vast wealth is produced by labor. Information, of course, is involved–ruling elites have used information to organize production since the first kings invented writing to tabulate agricultural tributes. To claim slavery is unimportant because Egyptian pharaohs were actually “vectoralists” hardly clarifies anything.

Throughout Capital is Dead, Wark vacillates between claiming vectoralism is only a new “layer” on top of capitalism, and insisting, in line with the book’s striking title, that capitalism indeed no longer exists. This strong line of argument (capital is dead) is clearly incompatible with the weak line of argument (capital is now subordinate to the vector), but this does not seem to trouble Wark. While the weak argument is the only way of putting forward the theory of vectoralism, the strong argument is necessary for Wark’s other major purpose in the book: attacking Marxism.

Capital is dead. Marxism, therefore, is irrelevant. Why then have scholars and theorists persisted in their use of Marxist methods and categories? For Wark, this is due to the “emotional attachment” of Left theorists to the old models. Capitalism is a myth, a “theological production.” The existence of capitalism is merely a “master narrative” sustained by Marxist orthodoxy. The Cold War canard of Marxism-as-theology is here revived under the guise of “radical” critique.

The Left, we’re told, is wallowing in “eternal sadness about eternal capitalism,” no longer theorizing revolution or communism but positing capitalism as an unchanging and inescapable reality. This is in direct contradiction to the most fundamental tenets of Marxist theory, which is the critique of capitalism’s historical, crisis-ridden, and ultimately unsustainable character. Ignoring the vibrant tradition of debate and theorization on the subject, Wark asserts that Marxists have not accounted for the political economy of globalization. Into this invented gap, she inserts the theory of vectoralism.

In a bizarre reversal, the Marxist critique of neoliberalism is itself rejected as the product of ruling ideology. “Ideology today is not the acceptance of a neoliberal structure of feeling or habits of thought and action,” writes Wark.

Ideology today is clinging to the belief that this is capitalism.

For these sweeping dismissals of Marxist philosophy and social science, Wark provides no evidence or specific examples. In place of critique, we are given blanket assertions and flashy turns of phrase. Indeed, this aesthetic, as opposed to critical, approach to theorizing is explicitly endorsed in the book. Part of Wark’s attack on Marxism is that it is “banal” and “boring.” “What if,” Wark posits, “we asked of theory as a genre that it be as interesting, as strange, as poetically or narratively rich as we ask our other kinds of literature to be?” While there is, of course, nothing inherently objectionable in this, an aestheticized theory divorced from material analysis is at best a distraction, and at worst a vehicle for mystification.

Wark’s conclusion–that middle-class professionals (romanticized as “hackers”) have replaced the working class as the new agent of progressive struggle–when divested of its science fiction facade, is far from a new theoretical contribution. It is, rather, a manifestation of the anti-proletarian and culturalist ideology of the neoliberal academic Left, remarkable only for its intransigent blindness to the past ten years of history. Wark ends her book with a characteristically dramatic proclamation, the logical consequence of the book’s title: “Communism is dead.”

If we reject “vectoralism” as a model for understanding the current mode of production, how are we to make sense of deindustrialization and the rise of information technology? In Value Chains: The New Economic Imperialism, Intan Suwandi offers a concise and compelling overview of “labor-value commodity chains” as a framework for understanding “the extraction of surplus from the Global South within a Marxist perspective.” Suwandi shows that we are indeed still living in a capitalist system, but that the imperialist globalization of capitalism through arms-length manufacturing has disguised class relations.

Simply put, multinational corporations in the neoliberal period offshored production to increase profits by cutting labor costs. The countries to which industry was offshored–such as China, India, and Indonesia–are those with the lowest labor costs. “Labor-value commodity chains” refer to the scattered nodes of production in which value is added by labor.

Because “production and consumption in the world economy are increasingly severed from each other,” those of us living in the wealthy imperial core are liable to misunderstand how the system functions, precisely because the labor process is so far removed. The result is confusion and mystification about how wealth is actually generated.

The main drivers of offshoring are big retailers and the brand-name companies like Apple and Nike that do not engage directly in manufacturing. Wark, correctly pointing out that major corporations such as these no longer directly own factories where goods are produced, concludes that capitalism has been superseded and that wealth is now derived from the enclosure of information. Suwandi shows that this is false, and that indeed these companies obtain their wealth through the exploitation of labor in the Global South.

Regarding Apple, Suwandi writes:

Due in large part to low-end wages paid for labor-intensive assembly operations, Apple’s gross profit margin on its iPhone 4 in 2010 was found to be 59 percent of the final sales price. For each iPhone 4 imported to the United States from China in 2010, retailing at $549, only about $10, or 1.8 percent of the final sales price, went to labor costs for production of components and assembly in China.

As for Nike, “The entire direct labor cost for the production of a pair of Nike basketball shoes in Vietnam in the late 1990s, retailing for $149.50 in the United States, was $1.50, or 1 percent.” According to a recent report cited by Suwandi, Indian garment workers, the majority of them women and some of them children, work for as little as 15 cents an hour. In general, in the garment industry,

direct labor cost per garment is typically around 1-3 percent of the final retail price.

Nike is only a brand, Wark would argue–their wealth is based in ownership of trademarks, not factories. But the Nike trademark on its own is incapable of producing wealth. As important as marketing and branding have become, commodities still must be manufactured and sold, and these commodities are produced by workers.

The most cogent section of Suwandi’s book consists of case studies of two Indonesian firms, which dramatically illustrate how power and class operate on a global basis through value chains. While the subcontractors who produce goods for multinationals are technically independent firms, they are far from autonomous. Their reliance on contracts from big corporations means they are dependent on them, and must constantly adjust their practices to meet the demands of their powerful clients. In Suwandi’s case studies, we see how clients demand specific alterations to labor practices, materials, and technology in order to cut costs and maximize profitability.

In addition to saving on labor costs, the use of offshore contractors means that multinationals are able to evade responsibility for labor violations. If reports surface of poor working conditions, child labor, low pay, or other violations, corporations can simply shrug their shoulders and blame the contractors, who in reality have been pressured into adopting such practices in order to keep down costs.

What Wark identifies as “vectoralism” is a change in ownership models, not in the overall mode of production. She’s correct that Nike doesn’t produce anything, but capitalists by definition have never produced anything themselves. Wealth is produced by labor. The power of capitalists is derived from arranging and controlling the labor process. The means of this control have become more complex only as a result of the enormously vast size of corporations today, and their need to outsource production to compensate for rising labor costs in their home countries.

If the wealth of rich countries in the North is indeed still the result of the exploitation of labor, as Suwandi contends, why is this simple fact so difficult to see? After all, low pay and poor working conditions in the Global South are an open secret. One major factor that Suwandi points to is that the value extracted from the Global South is often included in the GDP of the corporation’s home country. “Standard data on GDP and trade flows,” writes Suwandi, “exaggerate the North’s contribution to global wealth and, at the same time, decrease the South’s.” The vast wealth accumulated in countries like the United States becomes a mystery which is then explained by recourse to an overestimation of the role of finance and technology.

Suwandi agrees with Wark that information technology is indeed of central importance. Information technology, writes Suwandi, “allows production to be done outside the core companies but with control largely exercised by them” and is thus crucial. However, technology is more properly understood as part of the means of production which allows corporations to exploit workers, rather than constituting an entirely new and distinct system unto itself as Wark posits. Wark is right that information, which could be freely transmitted, is instead privatized and monopolized by corporations. But the purpose of this is to maintain the privileged position of the corporations in relation to their contractors. “Core companies in the commodity chains,” Suwandi writes,

have to make sure that the exclusive access to knowledge, technology, and development remains only within their inner circles.

In addition to the management of global value chains, information technology is an essential component of marketing. But, as Suwandi reminds us, markets are where value is realized, not produced. We can not, therefore, point to “surveillance capitalism” and the centrality of personal data in marketing as indicators of a new, post-capitalist system.

For Suwandi, it is not a new system, but an advanced form of capitalist imperialism that accounts for massive global wealth inequality. “As it has become more pervasive,” writes Suwandi, “this imperialist exploitation and expropriation has become more disguised and invisible.” We must, she argues,

tear away the veil that hides this exploitation.

While information technology appears as a pervasive, almost totalitarian, presence in wealthy, consumerist nations, with Silicon Valley seemingly conjuring limitless wealth out of 1s and 0s, this is only half the story. We must, in Marx’s words, return to the “hidden abode of production” to analyze the real source of wealth, and the real basis of radical politics–the international working class.