RE: [OPE] Valuation of knowledge

From: Paul Cockshott <>
Date: Fri Nov 06 2009 - 04:35:41 EST

You can not invent a new drug just by thinking of it under the shower.

A new math formula perhaps, a new mechanical linkage perhaps, but not something in biotechnology. This is an empirical process of knowledge discovery
From: [] On Behalf Of Adler Paul []
Sent: Thursday, November 05, 2009 4:01 PM
To: Outline on Political Economy mailing list
Subject: Re: [OPE] Valuation of knowledge

As I see it, it is for only very limited forms of knowledge and in only very limited ways that a capitalist economy can define the value of knowledge. Knowledge is where the value-form reaches a fundamental limit.

Consider the creation of a new idea for a new therapeutic molecule in pharmaceuticals: the idea is just as likely to occur to me while I'm under the shower in the morning as sitting at my lab bench at work during the day: what meaning can we give the idea of SNLT under those conditions?

Moreover, my creativity -- the generation of this new knowledge -- leverages a whole universe of scientific knowledge, and only tiny parts of that universe have been commodified (in the form of patents). It is my status as a "social individual" (the breadth and depth of my ties to the whole "noosphere" of science and technology) that determines my productivity as a knowledge-worker.

It seems to me that this is exactly what Marx was referring to in the Grundrisse passage we all know: the labor directly involved in producing knowledge become a tiny part of the labor actually required for this production: so SNLT as a determinant of exchange-value becomes progressively more difficult to define in practice, and progressively less adequate as a mechanism for stabilizing and orienting productive activity. Pricing knowledge-intensive products and assets becomes increasingly "conventional": the market loses its traction as a governing mechanism.

It's true that capitalist firms attempt to "manage" this knowledge-generation process and to bring innovation under their control. And some of these efforts are most impressive -- formally organizing the innovation process, developing metrics for assessing its progress, establishing productivity norms for innovation. (I teach this stuff.) But these efforts always bring to the fore the essential paradox that they are trying to "manage the unmanageable". In the literature on the management of innovation, this paradox has always occupied a central place: in this arena, capitalist self-consciousness is rather lucid. And with the growth of the internet, it has been considerably sharpened.

On Nov 4, 2009, at 11:17 PM, Jurriaan Bendien wrote:

I think we are still in the early stages of the valuation of knowledge as a commodity. It is not yet certain for many kinds of knowledge what its market value is, and for some kinds of knowledge it may never be quite certain. As I pointed out, there are different possibilities for valuation, similar to fixed capital: acquisition cost, sale value, replacement value, income-earning potential, labour content. Moreover knowledges may be revalued or devalued by other knowledges.

As I noted in wikipedia the transformation of a labor-product into a commodity (its "marketing") is in reality not a simple process, but has many technical and social preconditions. These often include:

*the existence of a reliable ''supply'' of a product, or at least a surplus or surplus product
*the existence of a social need for it (a market demand) that must be met through trade, or at any event cannot be met otherwise.
*the legally sanctioned assertion of private ownership rights to the commodity.
*the enforcement of these rights, so that ownership is secure.
*the transferability of these private rights from one owner to another.
*the right to buy and sell the commodity, and/or obtain it (privately) and keep income from such trade
*the (physical) transferability of the commodity itself, i.e. the ability to store, package, preserve and transport it from one owner to another.
*the imposition of exclusivity of access to the commodity.
*the possibility of the owner to use or consume the commodity privately.
*guarantees about the quality and safety of the commodity, and possibly a guarantee of replacement or service, should it fail to function as intended.

For many kinds of knowledge these kinds of criteria cannot, or cannot fully be met - they assume ownership or access barriers which do not exist yet.

To understand the cost structure of products, Marxist theoretical dogma will not do. We have to look at the data. For example, in December 2008, Kline revealed that the top marketers in the personal care industry collectively spend about 29% of sales on cost of goods, 53% on marketing, and 7% on other expenses including R&D and administration, leaving an operating margin of about 11%.

In reality the commodification of knowledge weakens capitalism, since the ability to produce, and produce at a competitive cost, has to scale the additional hurdle of the economic rents extracted from the monopolisation of knowledge by individuals and organisations.


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