The Digital Advantage

Jim Davis and Michael Stack


As Dan Schiller points out, most "post-industrial theorists agreed that the ultimate source of the social discontinuity [in the post-industrial era] emanated from the seemingly anomalous nature of information itself": its replicability, its synergistic qualities, its persistence, and its transference to others without loss to the possessor.[1] Theorists of such an "information exceptionalism", Schiller suggests, would place the information economy outside of history and society. Arguing that "information itself is conditioned and structured by the social institutions and relations in which it is embedded"[2], Schiller brings us back firmly to a world where information is correctly seen as just another commodity (D. Schiller, 1988, 1994). Despite the exponential growth of information technologies, apparently nothing is essentially changed. But although we agree that information production and dispersal is bounded by the matrix of commodity relationships that define the capitalist system, a question remains: how then can we distinguish "information capitalism" from previous forms of capitalism?

In an earlier paper, we identified the increasing use of "knowledge in production" as the quality peculiar to these times, drawing on the pregnant suggestions made by Marx (1993) in his "Fragment on Machines" (Davis and Stack, 1992). Tessa Morris-Suzuki had written along the same lines over decade ago (see chapters 2 and 3 in this volume). "Knowledge-intensive" production allows the "recording" and "playback" of human effort many times in the absence, for all practical purposes, of human beings; and at the same time, "productive knowledge" mobilizes in situ benefits of Nature, extracting use values possessing little or no exchange values, to generate a profuse productivity. Together, these phenomena point towards the outright elimination of human labor from production.

Below we draw out a thread from our original thesis. We focus on a vehicle peculiar to this late period of capitalism that tends to enable, heighten and accelerate the dispersal of not only productive knowledge, but also, more generally, "information."[3] Information does not exist independent of some material container, whether it be brain cells or the pages of a book. Continual evolution in the mechanisms of information dispersal has brought us from parchment to Internet. An important locus for what is different and distinctive today, we argue, may be found in the digital rendering of information. The economic benefits derived from converting information to a digital format help to explain the radically different features of the so-called "information economy". A critical difference between past periods and today's economy is not so much to be found in some essence of information or "knowledge" (for they have always been with us), or even in the quantity of information circulating in the economy, but in its digital rendition. While we focus in this paper on "digital" and "electronic", more efficient forms of information processing may lie beyond: scientists are exploring protein-based computer chips[4], with a distant goal being the replication of the organic processing power of the human brain. The effects of the digital rendering, discussed below, will only be intensified by subsequent technological development.

"Information Superhighway" and "National Information Infrastructure" (or Gingrichian "cyberspace") are popular labels applied to recent political, technical and economic trends in the communications and information industries. The current high interest in - and capital spending[5] on - communications and information-processing technology is a to-be-expected qualitative change in the systems of communications and transport accompanying a corresponding shift to digitally based (and thus apparently "information-intensive") production. The data packet travelling the digital networks is the boxcar of the Information Economy. The deployment of digital communications and transport thus has economy-wide repercussions the better publicized battles over ownership, regulation, access, privacy and censorship. Any other explanation for the scale of change transforming communications and transport leaves much missing matter to be accounted for. In what follows, we make a small study of how communications and transport are changing under the impact of digitization.

As more and more products are digitally rendered, as digital machines take over the replication of products, and as distribution channels morph into global direct computer-to-consumer transmissions. so entire layers of human labor are evicted from production, warehousing, transportation and sales. This tendency towards total automation - for each individual capitalist, for "reasons of its own self-preservation", must "automate or die" (Ramtin, p. 101) - presents profound problems for a commodity system, where goods are exchanged on the basis of the human labor embodied in them, and where profits are derived from unpaid labor: labor power - what the worker brings to the labor market - ceases to be a commodity, because it no longer has any use for any purchaser. Though there may be avenues of temporary relief - for example, in "perpetual innovation" (Morris-Suzuki, 1984), or the privatization of the public sphere - this describes, at least, the conditions for the end of capitalism.

Information Vehicles And Vessels

Communication is the transfer of information from one store to another. For information to cross the ether ("channel"), i.e., for communication to take place, the sender and receiver must agree on a vehicle for conveyance. This is the signal, a detectable physical phenomenon such as staccato pulses of light travelling through a glass fiber or sound waves passing through the air. An agreement must also exist between the communicators as to how the signal represents information ("Two knocks mean yes, one knock means no"). This is the code. For example, the computer networking standard called ethernet is a code that specifies how computers signal data over connecting wires. Language is thus a social agreement on the physical expression of mental compositions (0'Sullivan, p. 161).

In direct communication, information is transferred immediately between sender and receiver. The signal briefly occupies the physical connecting channel. Indirect communications, where the sender "sends" in the absence of a receiver, requires an intermediate agent. The signal is held in stasis. Information is captured in code in some medium, to be decoded at a later time by a decoding perceiver. A messenger bearing a verbal message is such an intermediary medium in human form. A book is an example of inanimate media. Both forms consume resources. Under capitalism, both are "value forms" - the messenger is direct labor; the book is indirect labor - past human effort embodied in matter. The process of encoding on intermediary media is writing or recording; decoding is reading or play-back. Recording allows information to exist beyond the moment of transmission, enabling communications across distance and time.[6] Recordings made in object media that are transportable and "copyable" allow for multiple dispersals.

Technological developments in communications are concentrated in the gap between information stores - between mouth and ear, between radiator and irradiated - in the physical expression of the message in signal and the codings used in direct or indirect delivery. Technologies of communication are continually evolving. They are evaluated not just on how faithfully they reproduce the original signal, but also on speed, efficiency, durability and cost of recording, media reproduction, distribution, and storage. It is also important to note that different communication, recording and play-back technologies are utilized for the various perceiving senses. This factor in the past has dictated the media upon which the signal is stored (for sound there is one preference and for signs another). Into this mess of forms arrives the digital rendition.

The Digital Rendition

A digital rendition of information is first of all a signal coding suited to machine perception and handling. The digital representation uses an alphabet complete in two characters. The characters are at either end of physically representable extremes: on or off, negative or positive, low voltage or high voltage. Any degrees between the two poles are rounded off to one of the extremes. As such, the digital representation is an abstraction. The symbols 1 and 0 are attached arbitrarily to the two physical extremes as an aid in denoting digital sequences. The discrete physical location where these digital characters manifest themselves is in the bit. That a machine needs to look for the presence or absence of a signal at only one discrete location significantly eases technical issues like discernment.

As with all communications, the digital representation of information requires an agreement between writer and reader. If the information to be coded is itself symbolic - such as the letter A - then another, intermediary, digital symbol composed of an appropriate number of bits set in a particular sequence may in turn be used to encode the information. In that case, the rendering is exact - a coding of a coding. If the phenomenon is simple, having only two possible states (for example, a light bulb that can be either on or off), then the digital representation will also be exact. Otherwise, the digital coding involves a compromise that varies inversely with the number of digital bits devoted to the rendering. This is true for the representation of all continuous phenomenon such as light, sound and heat - that is, for most of nature. The more bits that are allocated to the rendering, the more degrees of detail that can be represented. These degrees correlate with machine and media resources. Finer, more detailed renderings consume more resources. Terms such as "sampling rates", "24-bit color" and "16-bit sound" describe the degree of renderable detail of which particular recorders and playback machines are capable.

Although a digital rendition involves a compromise between the continuous phenomena of nature and the pointillist representation of the digital bits, the technical advantages of bits yield compelling economic arguments for widespread and rapid digitization: (1) digital is a "universal rendering"; (2) digital machines are relatively cheap replacements for labor; and (3) digital is resource-conservative.

A "Universal Rendering"

We live amidst a babel of information representations, a variety of technologies having been developed to record various types of phenomena. Visual images have been written on photosensitive film. Sound has been saved as analog scratches on petroleum-derived platters, or as analog patterns on magnetic tape. Statistics, reports, and other information have been recorded as language codes on paper.

When phenomena are written digitally (coded into sequences of 1s and 0s), the recorded image floats free of the method of capture and its complementary object media. Digitized images, sound and other forms of data may instead be stored by any number of methods: electromagnetically, optically or even as punched holes in paper. At the level of 1s and 0s, all recordings are equal in their representation. A compact disc can contain music, video, text, or a mixture of all three. Economies of scale push down the cost of recording, storage and playback. With a medium-independent rendering, storage can be chosen on the basis of factors such as retrieval speed or longevity, not on the content that is being stored. In the same manner, digital channels, whether wired or wireless, are information-indiscriminate. Multiple conduits like cable, fiber or microwave can transport the digital rendition: each has its advantages and drawbacks. But where before there might have been only one means of conveyance, now what is being carried no longer dictates the mode of delivery.

With digital's discrete representation, once digitally rendered, a copy may be made across media and machine-verified for exactness. Digital copies are exact copies: a copy of a copy of a copy will be identical to the original.[7] Copying - analogous to "printing" on an offset press, or "pressing" phonograph records - is extremely cheap, using virtually no human labor or materials in the process, as digital machines transfer the original digital sequence to new media. This benefit applies irrespective of what is being copied, whether it be a $700 QuarkXpress computer software program, a sound recording of John Cage's 4' 33'', or an image of the Mona Lisa with a moustache.

Digital Machines

Computers are machines that record, manipulate and playback digital representations, operating at speeds and levels of discernment beyond the abilities of humans. The steady decline in the price of computers has made the rapid spread of digital rendering feasible: the $200 Nintendo 64 video-game player is more powerful than a 1976-era $14 million dollar Cray 1 supercomputer.[8] As a writer in Scientific American observed at the beginning of the decade, "Computers have grown so powerful and cost-effective that they can be found nearly everywhere doing nearly everything."[9]

There is nothing particularly mystical about computers. Computers are simply sophisticated machines, acting on electrical signals at specific, addressable locations. A machine's action can be made conditional upon physical phenomenon such as feedback from other areas of the machine, or on signals fed from the outside, for example, by a human operator. So also with computers: an exterior agent may send a signal such that, in concert with defining etchings and in consideration of just-previous conditions, the computer produces a well-defined result (which is also a signal). This output may be saved in other computer chips, or in some storage medium for later recall. Amplified, this signal may play a sound or turn a servo motor in a robot joint. With a multiplicity of possible input combinations and feeding sequences, computers may - as theorized by Alan Turing - "solve almost any logical or mathematical problem" (Augarten, p. 143). Here is the outline of how an electronic representation of passive information - that is, the presence or absence of electrical pulse at specific locations - can be read by computer machines in an ordered manner, activating them to perform particular tasks.

Such organized input - productive knowledge objectified, or "software" - may ordain the mundane or the sophisticated, depending upon the complexity and breadth of the list of instructions fed the computer. Although specialized devices may do particular tasks better than general-purpose computers, the latter's hardware may enjoy economies of mass production while its software can be easily and cheaply replicated and transported. Its metal or flesh counterparts can not. In addition, processes encoded in software do not wear out or require servicing. For such reasons, complexity in hardware (expensive to replicate) whenever possible is replaced by complexity in software (inexpensive to replicate).

The "gratuitous labor" of machines replaces human labor at the point when the machine can take over the complete range of the worker's activity. Computers continue to take on new tasks as more aspects of human abilities, actions and knowledge are broken into discrete units and recorded. Tasks stored in a software representation may be animated by a worker pressing a key on a computer keyboard. Even this invocation may be automated, triggered by another computer program. When the last outpost of humans in production - that of monitor, controller, decision-maker - is overrun by the computing machine, the category "worker" becomes obsolete.

The penetration of production and distribution by digital machines is already profound. Increasingly sophisticated tasks are represented in software in a wide range of industries. Programmable digital switches and voice-recognition software have been used to decimate the ranks of telephone operators.[10] Movie locations and actors can be digitally added to film and animated[11], saving production companies time and money (and labor) as more of the shoot is done under controlled conditions in the studio. A $100 software program holds sufficient balance between cliché, new variables and rough prose to replace a $1,500-a-month sports reporter.[12] Aircraft and other industrial design work can be done within a virtual, computer-constructed reality - Boeing's 777 airliner was designed, modelled and tested digitally before any planes were built.[13] The phrase "dark factories" - where the lights are rarely turned on, because no humans work the production lines - describes the emerging production site.

Resource Conservation

As noted above, recorded information consumes material resources. Although the digital representation is verbose (for example, the American Standard Code for Information Interchange - ASCII - uses eight 1s and 0s to represent each character of the alphabet), the simplicity of the digital encoding allows designers to exploit basic physical phenomena. As advances are made in material sciences, digital bits can be stored in smaller and smaller spaces. For example, contemporary magnetic media (similar to recording tape or computer disks) can fit 570 billion bits - approximately 35 million typed, double-spaced pages - onto a surface area of one square inch.[14] While a letter symbol rather than its digital representation can be stored on magnetic media, the machinery for placing it there, and later retrieving it, is technically more complex. This would compromise developments in miniaturization, a profound source of resource conservation. The scales mentioned here have shrunk and will continue to shrink: "[IBM's] first hard disk drive, the RAMAC 350, introduced in 1956, stored 4.4 megabytes [million bytes] on twenty-four-inch platters in a box the size of a washing machine. Today it is possible to store as many as 3.5 billion bytes on a multiple-platter disk drive the size of a paperback book.'" (Davidson and Malone, 1993, p. 81).

Digital representation makes possible savings in more than just computer hardware:

[At a] Northrop Corporation's plants in the United States thousands of photographs are taken to document every step in building a plane. 'The adoption of the Sony Electronic Photography System has eliminated the need for 1.2 million gallons of water a year in processing photos, as well as the electrical energy required to heat the water to 90 degrees Additionally, more than 5,000 gallons of annual hazardous waste have been eliminated Expected savings are more than $4.3 million over the next five years.' [15]

Information also consumes resources when it moves. Before communications were electrically encoded, transport and communications were tightly bound. Disseminating information meant transporting the information medium: the person or paper had to be carried over land and sea to its destination. Transportation and communications systems began to diverge with the invention of the telegraph (Taylor, 1968, p. 151) as electrical pulses began conveying information over distinct channels, across vast distances, at great speed, and at dramatically reduced cost. Independent communications channels grew rapidly, later fueled by radio and telephone technologies.

Both wired and wireless communications channels now carry digital signals instead of the traditional analog ones. Communications are increasingly cast in the universal digital mold, because digital communication has compelling advantages that are difficult, if not impossible to realize in analog mode: compression techniques increase data throughput, sending more information in the same amount of time; error-correcting algorithms ensure accurate transmissions, reducing the need to retransmit messages; encryption technology "scrambles" the information content so it is concealed from unintended readers, providing an efficient security mechanism[16]; while switching instructions may be encapsulated in the message - like an address on the outside of an envelope - to enable automated delivery over intelligent networks ("packet-switching"). Fiber optics uses laser-generated digital light pulses to carry greater capacity, at lower cost and at lower maintenance than the copper cables it is fast replacing.[17] Digital wireless networks are static-free and allow technical tricks that squeeze more capacity out of the available electromagnetic spectrum.[18] Consequently, space is being allocated on the spectrum for digital versions of current analog transmissions: digital high-definition TV (HDTV), digital cellular packets and digital audio radio service.

The Digital Advantage

Most of the compass of human experiences - voices, images and even smells[19] - can be captured in various degrees of verisimilitude in object media: all representations can be reduced ultimately to the esperanto of 1s and 0s. Once digitized, information acquires the digital advantage: a universal rendering that is resource-conservative, cheap to store and transport, and easy to copy, meter and manipulate. Digital rendering thus liberates information from the constraints of any particular medium and raises the possibility of the liberation of "information" from the constraints of scarcity and rationing by price: easy and cheap replicability means that whatever can be digitally rendered can be made universally available.

Transport and Communications

Where communications is the transfer of information, transportation is the conveyance of goods and persons.[20] When the materials and products of "information capitalism" are represented in an informational form - that is, when they assume the same properties as that of a message or communications - then transport can travel over the same channels as communications, enjoying the same cost and speed benefits. With the development of digital machines, the transport of information mass over communications channels becomes not only feasible, but compelling.

Electronics have enabled fast computers, digital switches and digital routers to handle the dockworker's task of on- and off-loading, the truck driver's job of transmission, the night watchman's job of ensuring integrity during passage, the clerk's problem of measuring drayage, and the dispatcher's job of monitoring the load's progress through the transportation system. Digital communications and transport thus allow digitally rendered products to be delivered directly from the producer to the customer, eliminating the need of intermediaries. Massive cost-savings occur because whole layers of labor in warehousing, transport and sales are eliminated by automated information manufacture, storage, shipping and handling. Retailers and distributors can be bypassed and the billions of dollars spent on trucks and warehousing can be saved.[21]

For example, Pacific Bell is testing a system that will allow Hollywood studios to distribute new releases to theaters nationwide by transmitting digitized movies over high-speed phone lines directly to neighborhood theaters. The average film budget today is $15 million to $20 million, and about 25 percent of that goes to distribution, as studios make hundreds or thousands of prints of the film and ship them by courier to theaters. "Theoretically, you could have one guy sitting in a closet anywhere in the world, programming all 25,000 theater screens in the country," according to Pacific Bell's technical manager for advanced video services.[22] Equivalent delivery schemesare being devised for other information products.[23]

Elliott McEntree, president of the National Automated Clearing House, the bank-owned U.S. electronic-payment system, has attacked the "absurdities" of checks in an age of computers, estimating that printing, mailing and clearing the 60 billion or so checks written by individuals and companies each year in the U.S. cost more than $50 billion. "Literally hundreds of tons of them are on the move every day, lugged around by truck, helicopters and planes from branches to headquarters and then to other banks over a labyrinth of routes."[24] The digital rendering and transmission of check transactions will reduce traffic and save trees (and also eliminate the labor in check-processing departments and transport teams, just as a previous digital technology, the automatic teller machine, has reduced the number of bank-tellers by 180,000 over the past decade[25]). John Warnock of Adobe Systems has generalized the implications of digital "transportation" beyond banking (while promoting his company's digital document technology), observing that "we used 21 billion tons of paper in 1989 to communicate information. To move the paper around, we used planes, trains and trucks."[26] The Miami Herald used to ship one ton of newspapers daily to cities in Latin America. Beginning in January of 1995, the paper is now distributed by satellite to local printing plants throughout the region.[27]

Digital transport enables savings beyond the movement of information alone. Teleconferencing - in which data, images and speech are shared simultaneously among people - will make the concept of much business travel redundant, according to Andy Grove, CEO of Intel: "Already airlines are scaling down their expectations of the number of business travelers towards the end of the century, and it's the computer that is to blame."[28] Access to "reading" materials no longer requires a visit to the library or bookstore, since many texts can be ordered or downloaded via the Internet. Access to music, or video or computer software is no longer confined to retail, or even mail order, outlets. Special point-of-sale environments such as cinemas (movies-on-demand), Disneyland (virtual reality, video games and other forms of "information nicotine"), malls (shopping channels and the ecash/charge World Wide Web), trade shows ('Virtual' Trade Show[29]), work (telecommuting[30]), school (on-line classes[31]) or even socializing (Internet Relay Chat or multi-user dungeons) lose their exclusivity in space. The sales counter, shop display, video arcade, workbench and office desk are at any computer network node. Setting aside other considerations of the media or the form, digital transport at least makes possible the redundancy of many of their physical Main Street counterparts.

Although digital technology is expensive to install - usually requiring the complete replacement of previous-generation technologies - digital storage and distribution costs are qualitatively different. Unlike traditional transport and communications, a digital infrastructure consumes relatively little in the way of energy, resources or labor, regardless of the load.[32]

The post World War II increase in information circulating in the economy has spurred a demand for an expanding information infrastructure. The channels of communication are being widened and converted to transport the new bulk of communications and digitized information goods. The "Information Superhighway" emerges as the latest chapter in the development of transport and communications. In an economy where information goods and materials assume an increasingly dominant role, rubber and concrete fade, as did rails and ties before them.

The drive to maximize profits provides a steady pressure to reduce communication and transport costs, both in production and in moving commodities to market and into the hands of the buyer. So capital seeks out ways to speed delivery, while at the same time widening its reach in the form of new markets and expanded horizons of exploitation. Other movements aim to reduce the large amounts of capital that can be suspended unproductively in the distribution channel. Profitability rises to the degree that the circuit of capital - from money to commodity and back to money - can be shortened and sped up. Dominant means of transport and communications have therefore repeatedly been supplanted by faster or more flexible systems.

The new transport and communications systems of the 19th century facilitated the development of new forms of productive organization (See Taylor 1968 on railways, p. 206, and Stone 1989 on the telegraph, p.25), including the mass market and the corporation (Piore and Sabel 1984, p. 66). In turn the Industrial Revolution was driven forward by demands that the means of communication and transport put on the manufacturers of the time. Railroads, as consumers of large quantities of steel, coal and timber, pushed production to higher levels of more sophisticated products. At the same time, with their control of the transportation systems, railroads became the dominant industry at the height of the industrial revolution. A profile of the U.S. economy describing the mid twentieth century has much the same to say about later developments in transport and communications (Woytinsky 1967).

As in the past, contemporary industry is both shaping and being shaped by transportation and communication systems. Present day communication and transport technologies enable capital to make the entire planet its playground, allowing production to be dispersed to the peripheries for the exploitation of cheaper labor and lax environmental laws. New systems of production organization, enabled by recent developments in communications, have also emerged with such names as the "virtual corporation," the "temporary company,"[33] the "flattened organization," and "telecommuting." Finally, just as the railroads were the leading industry of the nineteenth century, Vice President Al Gore estimates that by the year 2000, telecommunications will be America's foremost export and the world's number one business.[34]

The Digital Convergence

Business today is marked by a trend toward mergers and alliances among companies in computing, communications, consumer electronics, entertainment and publishing, along with waves of corporate downsizing. Although a large proportion of these alliances and acquisitions are the garden-variety corporate consolidations within a given field - witness the recent rash of mergers in the software industry[35] - many others transcend traditional industry boundaries and interests.

Whole industries - rather than just single corporations - are trying to break out of the mold they were cast in. Cable companies want to offer telephone service while the phone companies want to be cable companies, selling movies, information and computer services. In less-regulated countries, both are already encroaching on each other's businesses.[36] Broadcasters want to operate somewhere between the two, offering pay-per-view and data transmission over their licensed television spectrum.[37] The power utilities, with their extensive networks of wires, want to provide telecommunications services.[38] Wireless communications encroach on wired[39], and digital makes inroads on paper as even "venerable" institutions such as Encyclopedia Britannica suffer because they waited so long to produce electronic versions.[40] Hollywood film and TV moguls do lunch with computer nerds[41] and exectuives from telephone companies[42]. Book publishers acquire software firms[43] while Microsoft has recently begun dabblings in television channels[44], wireless networks[45], online services[46], personal finance and "art books".[47] All of these economic maneuvers are part of the general process of restructuring production around what the new technologies make possible[48]. Capital is flowing, as always, to where profits are highest - and with traditional markets saturated, enterprises are looking for opportunities to expand into new areas.[49]

Technologically, digital rendering is bringing down the walls between information industries: communications, entertainment (music, film, television and the new hybrid "multimedia"), publishing, education, scientific research, financial services and advertising. It is disturbing current relationships and threatening monopolies, causing once separate industry sectors to blend into each other, and corporations are now finding themselves uncomfortably close to new competitors from other industries on the same playing field.

With information abstracted from media and transport structures, much of what defines entities in the information industries falls away. What remains to differentiate the separate enterprises are organizational structure, capital investments not made obsolete by recent technological developments, knowledge of a particular field, and legal definitions[50]. For many corporations, these distinctions will not be sufficient. An industry's raison d'etre may completely evaporate in the digital convergence - for example, video stores[51], music stores[52], record companies and aspects of banking.[53]

In these times of flux, companies come to rely on "intellectual property" claims - content ownership, a title on information - as delivery becomes ecumenical, only concerned with quantities and not form or system. The information industries try to extend their portfolios, developing new information goods or buying up that which is currently in demand, or, speculatively, that which may be a valuable asset in the future. As more and more of the treasury of human experience - knowledge, art and ideas - is digitally rendered, and thus discernible and measurable by machines, copyright and patents are extended into new realms, enabling new "commodities" in software, multimedia, video games[54], digital libraries, digital museums[55], colors[56], smells[57] and even human genetic sequences. Continued development and enforcement of "intellectual property" law is thus critical to capital in the information economy. Yet the easy replicability of the digital product poses a quandary for capitalists - how to deliver digital products while still enforcing ownership and control of distribution when copying is virtually free and exact?[58] As information products make up a larger share of the national product, the harmonization of international 'intellectual property" law is necessary for the formation of a world market in "intellectual property" and a leading trade issue. As Morris-Suzuki has noted, knowledge can only assume a price when it is monopolized (1984, p. 86). The very technological developments that make information dispersal and duplication costs negligible are hobbled and instead turned to measure and meter "consumption." (H. Schiller, 1984)

Nonsectarian and oblivious to content, digital rendering and its facilitating computer technologies infiltrate every industry and all applications. Increasingly, the forms of production, the product of production, the physical form of capital appears as "information". In turn the brave new world is made up of digitally-encoded decisions, digitally encoded products, digital money and productive knowledge objectified in increasingly powerful inexpensive digital machines. As a greater percentage of transactions are digitally based, customer and citizen behavior may be tracked and behaviors recorded and billed. Secondary multiplier effects follow on from easy communication, easy monitoring and the ballooning digital database. "Data mining" of massive data stores - the supercomputer's new application now that Star Wars (perhaps) fades - is a growth industry.[59] Analysis, by friend or foe, aided by intelligent software, reveals tendencies and patterns ripe for exploitation.[60] And police and other government agencies have new tools for controlling the citizenry[61], constructing the Panopticon of bits, not bricks.[62]

The Was-Working Class

A recent spate of books and articles analyzes the changing nature of work, including The Jobless Future by Stanley Aronowitz and William DiFazio, The End of Work by Jeremy Rifkin, and Shifting Time by Armine Yalnizyan, T. Ran Ide and Arthur J. Cordell. The pieces note the replacement of full-time, stably employed workers - from secretaries to physicians - with temporary and part-time workers; the dumbing-down of work as machines simplify tasks, increase productivity and intrude into more areas of production and services; large-scale layoffs, even while profits are up, particularly in the Fortune 500 companies; and the export of both manual and mental work overseas, facilitated by easy global communications. In addition, capital uses other, nondigital strategies to cope with the changing technological climate. Companies extend the working day to extract more, absolute, surplus value.[63] New areas of human activity are pulled into the commodity sphere, through privatization of public services, or the manufacture of new desires made possible by new technologies. Capitalism is restructuring, and paid work is at the very least changing radically.

Even the Wall Street Journal has expressed concern: a recent front-page story warned of the "danger" that "America's work force could evolve into an elite minority of highly paid 'knowledge workers' and frustrated masses of the underemployed and unemployed."[64] Other recent stories have reported that increasing numbers finding that available jobs are low-skill, low-pay and dead-end.

While American industry reaps the benefits of a new, high-technology era, it has consigned a large class of workers to a Dickensian time warp, laboring not just for meager wages but also under dehumanized and often dangerous conditions. Automation, which has liberated thousands from backbreaking drudgery, has created for others a new and insidious toil in many high-growth industries: work that is faster than ever before, subject to Orwellian control and electronic surveillance, and reduced to limited tasks that are numbingly repetitive, potentially crippling and stripped of any meaningful skills or the chance to develop them.[65]

No sector of the economy is immune, not even the high-tech sector itself. The very companies busy supplying digital communications and transport equipment and services, for example, are simultaneously laying off tens of thousands workers. "Smart" digital networks automatically route calls, record billing information, and diagnose problems. Voice-recognition technologies manage customer phone calls. Following a conscious plan[66], former AT&T operating companies are deploying machines to take over the middle ground between customer and phone company hoping to achieve "End-To-End Automation".[67] IBM, Digital Equipment, Groupe Bull, Olivetti, Wang, Amdahl, Apple, Novell, Borland, Xerox are just some of the more prominent technology companies that had substantial lay-offs in the first half of the 1990s.[68]

"Efficiency", "downsizing", "cost-cutting" - the euphemisms that accompany the dispersal of the new knowledge-intensive technologies - are code-words for the squeezing-out of human activity from production and it is in this process that the digital revolution assumes its greatest significance. Latter-day capitalism asymptotically approaches "laborless production". Where value is the presence of living and accumulated dead human labor, the foundation of the commodity system, and the basis on which commodities are exchanged, the end of "labor" is also the end of "value", the commodity, and economics as we have known them.

The digital advantage not only replaces human labor in obvious ways - robots replacing factory workers, products shipped over wires instead of by human hands, or virtual spaces being created inside machines instead of in the "real" world - but also replaces labor when computers can control the application of fertilizers to increase yields[69], or more data can be squeezed into less space, or cheap glass strands replace expensive copper cable, or digital watches substitute for their mechanically complex counter-parts. Value is squeezed out of the system, as more is produced with fewer resources, and therefore fewer workers. And, as more "intelligence" is incorporated into systems, fewer workers are required as skill-bearers to accompany commodities during installation, operation or maintenance.[70] Knowledge may add to the mass of use values (the satisfaction of subjective needs or wants) by appropriating the in situ benefits of science-expanded nature, or replaying workers' skills encoded in software, but it transfers no exchange value (abstract human labor added during production). The result: more products, less value.

The value - the accumulation of human labor - in a commodity is destroyed when a similar commodity with the same usefulness, but with less labor in it (made possible by the application of more knowledge dispersed with digital technologies), appears on the market. The value in the old product, produced with the old methods, falls to the value of the new product, that is, value is destroyed. This is the "moral depreciation" to which Marx referred, and which becomes rampant in the "perpetual innovation" economy.

Such value destruction has an interesting twist in the "knowledge" economy. The economics of knowledge production are such that the initial version requires a substantial investment (a high fixed cost), and therefore, because of the high quantity of human labor embodied in that first copy, it has a high exchange value. But just as machinery loses value as cheaper versions come into use, copies of knowledge, depending on the cost of duplicating knowledge "containers", has the potential to depreciate the exchange value of the original. The digital rendition abets this process of value-destruction because each digital copy of "knowledge" consumes almost no material relative to its development cost, so has little exchange value to transfer to the final product. Compare this with, say, a machine cutting tool. Each "copy" of the cutting tool consumes additional steel, energy, labor, and so forth, so it may have a substantial exchange value to transfer to the final product.

The same process of destruction happens to the value of human labor, as the world labor market becomes a reality, and, for example, $60,000-a-year Silicon Valley engineers find themselves in the same labor market with $12,000-a-year engineers in Bangalore or Kiev.[71] As with other commodities, the value of labor power, both as an exchange value (as the values that go into the reproduction of labor power are themselves cheapened), and as a use value, where labor power is no longer is useful to any purchaser (because robots or digital machines can do the work more cheaply, efficiently, and tirelessly), also loses value.

Do we face a "jobless future"?

Popular arguments against the prediction of a jobless future point out that the world labor market, far from shrinking, is expanding; and while jobs - the exchange of labor power for wages - may be lost in the industrialized countries, they are being created in traditional industries on the periphery. Others argue that opportunities will open up in new industries, such as "information technologies", to absorb the workers displaced by automation. Reports of the death of jobs, it would appear, are premature.

Or are they? The impact of knowledge-intensive, digitally-based production may not necessarily show up immediately or directly or dramatically in employment statistics. Employment statistics are political, and reflect the needs of the capitalist class and their political representatives, and are haphazardly collected on a global scale. They do not distinguish, for example, between productive versus unproductive labor, a distinction that is critical to comprehending the value-creation process at the heart of capitalism. Snapshots taken at any particular time may reflect a flow instead of an ebb in the dialectical progress of the process. We say this even though global unemployment, according to the International Labor Organization is at its highest point since the 1930s, with one-third of the international labor force unemployed or underemployed,[72] and overall unemployment according to OECD figures has been growing since the late 1960s in Europe and the U.S. (Carchedi 1991, p. 61). The major growth areas of employment are in unproductive labor, and the historic trend, at least in the U.S., is towards lower wages and fewer hours.[73] The high-tech industries employ few workers, and will not absorb those displaced from traditional industries (Henwood, 1995). Rather, the process of the destruction of value most vividly shows up in the destruction of the social relations of capital.

In the new digital economy, the social relations of capital - the contract between capitalist and worker, the maintenance of a reserve army of unemployed, the bribe of the workers in the center to tolerate the greater exploitation of their class in the periphery, the relative social stability and security - are being eroded at their foundations. Any number of metrics might be used to chart the destruction: the growth of poverty, the increase in the prison population, the polarization of wealth and poverty both within the societies at the center, and between the center and the periphery.

Those still engaged in the waged work relationship have seen the value of labor, reflected in wages, fall through cuts in wage and benefits. Workers made redundant from high-paying jobs re-enter the workforce at lower-paid jobs. More workers in the family enter the workforce to maintain the household's standard of living, or work longer hours.[74] A growing section of the workforce is forced into barely paid, or unpaid labor, through "job-training" schemes or workfare or prison labor[75]; others scrabble together a living with their shopping carts in the "hidden economy" of aluminum recycling, dumpster diving and street vending, "making a living where there is none"[76]; and others work below minimum wage, without rights, as undocumented workers, or as extralegal workers in the street drug or sex industries. In such cases, the effect of labor-replacing technology might not be reflected in official employment statistics, or family income figures, though the polarization of wealth is increasing[77], and a general sense of a declining standard of living enters the vernacular. The number of people living in poverty in the United States is at its highest point since 1961.[78]

Increasing numbers are living at subsistence levels, while others, unable to find work, are hard-pressed to obtain necessities like food and shelter. Private industry has little need for their labor as machines take over; nor does the foreseeable future hold in store a time when their labor may again be in demand. The "end of the job" means, under capitalism, the end of the old social contract, and the beginning of what can only be described as a policy of genocide against the former working class. The Bell Curve (Herrnstein and Murray 1994) lays the "scientific" basis for the policy; and the end of welfare, prisons (or their digital surrogates of electronic ankle bracelets and other high-tech controls), and the death penalty implement it. In realspace, we see widespread social destruction and new forms of domination developing in parallel with the construction of cyberspace.

The process of value destruction that accompanies "knowledge-intensive" production and the widespread implementation of the digital advantage is not a straightforward or smooth process. Capital expansion has not yet completed in many countries of the periphery, where much of today's industrial production takes place, while another process - the replacement of expensive labor with cheap technology - has begun elsewhere within the capitalist system. While the logic of capitalism suggests that even the jobs of the workers in Indonesia or China (or the expanding American Gulag) are not safe from the march of the robots, it is possible that wages of $1.35 per day (Brecher and Costello 1994, p. 16), enforced by the billy club and the bayonet, will price their labor below that of their high-tech equivalent. This super-exploitation sustains some profitability in the system as a whole, but places a downward pressure on the wages of workers worldwide, threatening the stability of the social relations in the center and eroding the political base of the capitalists. Pursuit of the digital advantage is a dangerous gambit for a ruling class.


With replacement of human labor by digitally rendered productive knowledge comes the beginning of the end of the distribution of the social wealth on the basis of time worked. As a result, the social product of the digital age cannot be distributed optimally via traditional pay-per channels (Mosco 1988). For Business Week, this is the "Technology Paradox" synopsized in a quote from Yotaro Suzuki, senior vice-president of the Japan Institute of Office Automation: "How do you assign prices or value in a world where quality is perfect and nothing breaks?"[79]

Capital's strategy has been to hang on through more and more desperate strategies: the extension of property claims into further reaches of human experience; aggressive attacks on labor costs; maintenance of price structures through manufactured scarcity or legally sanctioned monopolies; the general dismantling of government, while leaving as its main function the protection of private property.[80] In the digital era, the edifice of property and exclusive private ownership is called into question in a profoundly new way.

While the hyperproductivity of the digital economy promises the beginning of the end of scarcity, capital blocks the way to the optimal social use of the new technological foundation. If the optimal benefits of the digital economy are to be realized, society will need to be re-organized, but in a much bolder way than the information capitalists have envisioned. In a digital economy, the social distribution of wealth according to need is both feasible and necessary.


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[1] The authors of this piece have not been completely innocent of this view.

[2] "As against the post-industrialists' assertion that the value of information derives from its inherent attributes as a resource, we counter that its value stems uniquely from its transformation into a commodity — a resource socially revalued and redefined through progressive historical application of wage labor and the market to its production and exchange." (D. Schiller, 1988)

[3] Here we define information as a broad category of both crude and refined observations (data), with or without "meaning"; "knowledge" is "information that has been systematized and integrated, organized so that it is relevant to natural and social processes" (Davis and Stack, 1992).

[4] "Protein-Based Computers: Devices fabricated from biological molecules promise compact size and faster data storage. They lend themselves to use in parallel-processing computers, three-dimensional memories and neural networks", by Robert R. Birge, Scientific American, March, 1995. Also, "The advantages of DNA computers would be that they are a billion times as energy efficient as conventional computers. And they use just a trillionth of the space to store information." New York Times, "A Vat of DNA May Become Fast Computer Of the Future", April 11, 1995, p. B5.

[5] "Throughout the 1980s, U.S. Businesses invested a staggering, $1 trillion in information technology." Business Week, "The Technology Payoff", June 14, 1993, p. 57.

[6] "..[a] result of the invention of writing was a separation of text and performance, of knowledge and knower. As Havelock puts it in Origins of Western Literacy (1976), writing separates 'the knower from the known' by creating a fossilized text that can achieve a continued existence apart from any knower… A manuscript… can be handled, stored, retrieved from a vault and re-performed a millennium after all previous readers have died. Therefore, with writing, knowledge comes to be seen as something reified, as existing outside the self." (Brent, 1991)

[7] "The sense of a single original — an author's draft, a frame of set type, a master copy — becomes increasingly difficult to sustain in an environment in which every copy can spawn another copy at a keystroke, without loss of physical quality. In 'magnetic code' Michael Heim points out, 'there are no originals' (1987, p. 162)." (Brent, 1991)

[8] New York Times, April 20, 1994 and Business Week, "The Technology Paradox", March 6, 1995.

[9] "Communications, Computers and Networks", by Michael L. Dertouzos, Scientific American, September 1991.

[10] "Service Productivity is Rising Fast -- and So is the Fear of Lost Jobs", Wall Street Journal, June 8, 1995.

[11] "What if W. C. Fields, say, is brought back to perform on screen with Billy Crystal, not through time-spliced footage from a 1930's comedy but instead in an entirely new performance? Imagine 'The Piano' with Bette Davis instead of Holly Hunter, or 'Schindler's List' with Clark Gable instead of Liam Neeson … it promises legal tangles galore, particularly as the technology advances further and brings down costs that can now make the most detailed imaging — the kind needed to re-create real people convincingly — prohibitively expense… In an article in High Technology Law Journal entitled 'Casting Call at Forest Lawn: The Digital Resurrection of Deceased Entertainers,' Prof. Joesph J. Beard of St. John's University School of Law in New York pointed out that the existing copyright and right of publicity laws governing the appropriation of images do not strictly apply to what he calls 'reanimation technology'" New York Times, "High-Tech Film Casting: Death Is No Drawback… ", p. B1 March 11, 1994. Also, "Brando is on a database in three-dimensional form to accommodate future developments. If a future moviemaker doesn't want to pay top dollar for Marlon actually heaving himself onto a set, he or she can make use of the more affordable one in storage." San Francisco Chronicle & Examiner, "DateBook ", April 17, 1994. p. 28.

[12] Wall Street Journal, p. 1, March 29, 1994. The same article talks of software writing hourly stock-market summaries and foreign market trends.

[13] "Previously, the problem of having two components in the same place was often not discovered until the first airplane was assembled, requiring extensive redesign. By using what engineers here call digital pre-assembly, many of those conflicts were identified and solved before the first piece of metal was cut…". And to other advantages. New York Times , March 27, 1994.

[14] "IBM's DFMS and DFHS families of high-performance 3-1/2 drives can hold 564 Mb per square inch." BYTE , March, 1994.

[15] New York Times , November 8, 1992. p 25(n) Camera.

[16] It is easy to overlook the significance of this aspect. Encryption enables everything from personal correspondence to trade-secrets to allowing fully-anonymous two-way exchanges of information of all sorts creating a private channel completely hidden from government or corporate scrutiny. As a result, this technology has become a heated battleground, with business, government, and privacy advocates in a three-way struggle over policy and legal status of competing technologies. A coincidence of interests exists between business groups that see encryption as a means of protecting property claims over digital material, and personal privacy advocates, who see encryption as essential to guaranteeing personal privacy. For more on this, see various references in Epic Alert, published by the Electronic Privacy Information Center (

[17] See 'Fiber Optics', p. 391, Communications Standard Dictionary, 1989, Martin H. Weik. Van Nostrand Reinhold. Also, "The cost and maintenance for fiber [-optic] lines will be so much less than for copper ones that fiber will be installed even without the need to accommodate wideband services." This is one of Negroponte's constantly recycled tunes told here in Scientific American, September 1991 and later in Wired editorials. As it is only 0.1% of installed fiber is currently in use. No wonder we're all talking about the "Internet" of a sudden. Wall Street Journal, "Dark Fiber", March 21, 1994, p. R4

[18] Wall Street Journal, Special Supplement on Wireless, February 11, 1994. p. RI6. And, "The Fight for Digital TV's Future", New York Times, January 22, 1995, p. 6.

[19] A British company has developed the first 'electronic nose,' capable of measuring and recording smells digitally. AromaScan Plc says its invention will revolutionize aroma analysis in the food, drink and perfume industries. USA Today, December 11, 1994, p. A1, cited in Edupage.

[20] The New Columbia Encyclopedia . 1975. Columbia University Press — See under "Communications".

[21] "Even Federal Express, which places considerable emphasis on continuously improving its position and taking advantage of economics of scale in marketing and R & D, has found fax and EDI [Electronic Data Interchange], which can substitute for much of its core business, dissipating its competitive advantage. In the not-too-distant future, we may send all documents delivered via EDI, in color with graphics or even animation. High-quality hard-copy, if needed, will be printed locally. Recognizing the threat of substitution to its overnight package delivery service, Federal Express is aggressively soliciting shipments such as spare parts, that cannot be transmitted electronically." (Bradley et al., p. 133)

[22] Wall Street Journal, March 21,1994, p. B6.

[23] IBM, in partnership with Hughes Network Systems, will deliver software to stores and businesses by satellite, eliminating the need to ship it on floppy disks, allowing customers to keep only a minimum inventory of software, and making it possible for them to update software as often as needed with new versions. Wall Street Journal, November 1, 1994 , p. A3, cited in Edupage. Also, "A Trusting Oracle to Enter Market Via Internet", Wall Street Journal, January 14. 1995, p. B1.

[24] Wall Street Journal, April 13, 1994, p. 1.

[25] Wall Street Journal, November 14, 1994, p. R8.

[26] Online Design, "Seybold San Francisco Conference Review", October, 1993,

[27] New York Times, January 30th, 1995, p. C6.

[28] San Francisco Chronicle, March 20, 1994. p. C6. Also, a recent Conference Board of Canada study found that fax machines, e-mail and video-conferencing have cut business travel by as much as 25%. Montreal Gazette, November 2, 1994 , p D3, cited in Edupage.

[29] New York Times, "A 'Virtual' Trade Show: You Don't Have to Go ", September 13, 1994.

[30] "At AT&T where about 8,000 employees function in the virtual world, managers report increase in productivity of up to 45 percent and savings from the elimination of costly office space of up to 50 percent…" San Francisco Chronicle, May 29, 1994, p. C5.

[31] Wall Street Journal, "Virtual U. — At Phoenix University, Class Can Be Anywhere — Even in Cyberspace", September 12 1994, p. 1.

[32] "Modalink [a computer network aimed at the fashion industry] has only six employees, all working in a 21st Street loft. As an information provider it probably will not need more space or workers, no matter how successful it gets, said the President, J. Randall Brockett." New York Times, July 5th, 1994, p. A12.

[33] Inc., March 1995, p. 64, writes of project-orientated companies in Hollywood.

[34] New Yorker, "Under the Wire" by Ken Auletta, January 17, 1994, p. 49.

[35] See Wall Street Journal, "Consolidation Sweeps The Software Industry: Small Firms Imperiled", March 23, 1994, p. 1.

[36] "Don't Stifle Global Merger Mania" by J. Gregory Sidak, Wall Street Journal, July 6, 1994, p. A20.

[37] Wall Street Journal, March 1, 1994, p. B6.

[38] "Utilities' entry into Telecom questioned." BNA Daily Report for Executives, February 7, 1994 A11. Cited in Edupage.

[39] A special wireless supplement to the Wall Street Journal on February 11, 1994 talks of the explosive growth in wired technologies with their growing penetration into the market for wired communications.

[40] "Britannica's 44 Million Words Are Going On Line" New York Times, February 8, 1994, p. C1.

[41] Wall Street Journal, May 19, 1993, p. 1.

[42] Business Week, August 29, 1994, p.34, Cited in Edupage.

[43] San Francisco Chronicle, ""British Media Giant to Acquire Toolworks", April 1, 1994.

[44] Wall Street Journal, "Microsoft, TCI Plan Computer Channel", March 8, 1994, p. B5.

[45] Wall Street Journal, "Microsoft Plans Wireless Data Network With Mobile Telecommunications Firm", March 24, 1994, p. B4.

[46] Wall Street Journal,, "Microsoft Signs 50 major Vendors For Its On-Line Computer Service", February 8, 1995, p. B5.

[47] "Best 'Art Book' isn't a 'book.'" A New York Times critic describes Microsoft's CD ROM collection of art works from the National Gallery of London as possibly "the best art book I've ever bought", New York Times Book Review, March 6, 1994, p. 3.

[48] "Shock is a common feeling these days among leaders of five of the world's biggest industries: computing, communications, consumer electronics, entertainment and publishing. Under a common technological lash — the increasing ability to cheaply convey huge chunks of video, sound, graphics and text in digital form — they are transforming and converging, albeit at different speeds…This inexorable drive toward alliances may even amount to a new chapter in the development of capitalism...", "Vague New World: Digital Media Companies Form Webs of Alliances in a Race to Establish Markets", Wall Street Journal, July 14, 1993, p. 1.

[49] "After all, the [Hollywood] industry's traditional revenue sources have been flattening, and its growth now comes mainly from expanding international markets." Wall Street Journal, March 21, 1994, Entertainment + Technology supplement p. R6. Also, "The [Baby] Bells… currently have well over 90% of the local telephone business in their regions…" Wall Street Journal, March 16, 1994, p. B4. IBM has $11 Billion in cash reserves, Wall Street Journal, "Even for a Man Called Mr. Fixit, the Job is Formidable", January 12, 1995, p. B4. Microsoft has more than $6 Billion in cash, New York Times, "Sun Microsystems Climbing Aboard the Net", May 22, 1995, p. C4.

[50] There is a comedic element attached to government regulating "competition" and profits among some of the world's largest private corporations. The various local, state and "institutionally weak" ("They lack the power base of electoral accountability to offset the lobbying of large business." Hill, p. 6.) federal bodies charged with upholding the public interest are met by large-scale "issues management" — "a high-powered synthesis of lobbying, legal advocacy, public relations, and the quasi-intellectual work of 'think tanks'" — practised by the communication's industry, "aimed at institutionalizing a set of anti-competitive regulatory structures." Phil Agree in The Network Observer, Vol 1, No. 2, February 1994,

[51] "Mr Londoner [who follows Paramount for Wertheim Schroder & Company], along with others, says that Blockbuster's video stores will soon be outmoded by moves that will be offered on demand in the home." New York Times, January 10, 1994, p. C1.

[52] "Record companies… fear that digital transmission of high-quality recordings will encourage more home taping. 'Eventually consumers will be able to acquire and copy digitally transmitted music in their homes, bypassing the stores entirely,' said Tim Boggs, chief lobbyist for Time Warner Inc." Wall Street Journal, April 22, 1994, p. B8.

[53] "Banks, fighting to hold on to this $500 million-a-year business [in collecting and disseminating