Issue 3 - Fall 1995

An Orthodox Marxist Critique of the Third Wave Study Group:
Do Computers Change the Face of Capitalism or Only Give It a Facelift?
(page 1 of 3)
By Class Struggle

There is wide discussion in the media today about the impact of computers on society. Columnists speak of the digital age, and it seems like no copy of a magazine or newspaper is complete without a mention of the Internet. The left too has jumped into this discussion.

One group based in Chicago called the Third Wave Study Group has issued two numbers of a magazine called cy.Rev: A Journal of Cybernetic Revolution, Sustainable Socialism & Radical Democracy. The first issue, with articles by Carl Davidson, Jerry Harris, and Ivan Handler, who once had been active in the New Left and the Maoist movement, was submitted to the founding convention of the Committees of Correspondence. They claim that:

"The microchip's impact is changing everything about our world and the way we live. Civilization is undergoing a quantum leap on the order of the agricultural revolution launched 6000 years ago and the industrial revolution launched 200 years ago. We have now entered a third period of human history. We prefer to call it the information era." These changes are a "revolution in the means of production. New technologies have changed the face of capitalism, affecting the economic base, the relations of production, and are impacting political strategy."

It's true that computers are touching all sectors of economic life. As capital goods, they are employed in product design, drafting, running machines, keeping track of inventory, quality control, monitoring workers' production, in financial accounting and marketing, locating trucks and railcars around the country, taking stock in retail stores and automatically sending new product orders in to manufacturers to re-initiate the productive process. They were used by forty million people at work in 1989 and by even more so today, in every aspect of capitalist production, distribution and finance. Millions of workers have their paychecks automatically deposited to their bank accounts, pay their bills and obtain money through Automatic Teller Machines. Moreover, some thirty-five percent of families have a computer in their homes. Millions use computer networks like Compuserve or Prodigy to play games, send mail, shop, and get news and information. Millions of children play Nintendo and other computer chips are built into TVs and VCRs and their remote controls, and in new models of cars.

This is not the first time a new technology has changed "everything about our world and the way we live." In the last century alone, there were other technological changes which affected every work place and consumer in a manner we can compare with computers today. Electrification brought better light and a flexible power source to every work site. It spread to every home, drastically reducing the amount of household labor through labor-saving machinery, and bringing entertainment and news into the home via radio and TV. Motor vehicles enabled every capitalist firm to get its inputs and distribute its products to market without railroad connections, vastly enlarging the scope of markets. Horse transportation was quickly made obsolete and the entire population obtained a type of mobility that had been accessible only to the rich before. Computerization, in fact, is just the latest of such major technological changes.

Such a change can't compare in historical significance with the prior transformations Davidson, Harris and Handler write about, transformations that resulted in tremendous change in the life of humanity. The agricultural revolution brought an end to the old classless societies based on a hunter-gatherer technology, and led to the development of cities, ruling and exploited classes, the state, and the rise of civilization. The industrial revolution gave rise in a few short years to the modern factory proletariat amidst the ruin of the artisans, and led to an exceedingly rapid development of the productive forces, spreading capitalism around the world. Both the agricultural and industrial revolutions led to a big leap forward in the overall productivity of society and above all changed the relations between producers and the rulers. So far the impact of computers has been in no way so profound. No new social classes have emerged; no classes have been destroyed. Not only that, but they haven't capitalism to resolve its immediate problems. Computers have been introduced widely starting in 1973, but the whole period since that time has been marked by slow economic growth and the lack of productive investment, the opposite of the relative surges of output that occurred in the agricultural and industrial revolutions.

Today the old cash register may have been replaced by a computer that scans bar codes and tells us the bill, but it's the same money that has to be paid for the sale. The Third Wave Study Group says it's changed the face of capitalism, but behind the facelift, it's remained the same old exploitative social system of capitalists and working class. Whether computers are the technology that will inaugurate the "third period of human history" remains to be seen ... to say the least.

The Impact of Computers on Capitalism

The Third Wave Study Group tells us that in the Information Era, the new period we are supposed to be in, "the application of knowledge is now the primary means of new value production." Elsewhere they say, "Physical labor and industrial machinery are now secondary to the value added by information." Perhaps this will be the case in the future, but it's not true now. In this country, which is the most advanced in the use of the new technologies, tens of millions of non-technological workers spend tens of billions of hours a year working in production, extractive industry, transportation, sales and services, creating new value, and far eclipsing the amount of technical labor or "information" expended in society.

Further we are told that computers are now, "the most important tool of production." No method is given for determining what the authors consider most important, but when valued in terms of dollars of accumulated investment, in 1993 computers made up 10.3 percent of all equipment owned by capitalists. A disproportionately high share of these computers is employed in finance, which doesn't produce anything; thus computers make up a lesser share of the tools used in actual production. In the ordinary vulgar terms of what the capitalists pay for them, this hardly makes computers the most important tool of production.

As for the new technology itself, we are told that, "Intellectual capital, developed and held by knowledge workers and encoded in software and smart machines, is the key element of wealth in today's information capitalism." Again no method is given to show how the authors determine what's key. No doubt a computer chip without the circuitry would have no value, but the design by itself doesn't make a chip without the productive process and the employment of various types of labor. In specifying something about the computer industry itself, they say, "computer technology consists almost entirely of intellectual capital, with raw materials costing only one percent and unskilled labor five percent." Such statistics can only mean they ignore the fact that computer chips and computers are produced in factories employing massive amounts of physical capital. IBM has fifty-eight thousand dollars invested in machinery for each worker compared to the forty-five thousand dollars per invested by General Motors. Intel, the major manufacturer of Central Processing Unit chips for personal computers, is building a new factory in Albuquerque, New Mexico that will cost one billion dollars, including the building, automated chip handling equipment and clean rooms, comparable in size to an auto plant. The production of computers includes power supplies, circuit boards, computer chips, video monitors, disk drives and printers, all of which also embody diverse types of labor, both in raw materials and in assembly. More >>

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