The digital age has had two primary effects on capitalism: destroying conceptual fungibility and removing tangibility as a quality of materialism.
The latter is far easier to understand, as digital goods don’t need to exist in the physical realm. An “album” released by your favorite performer exists only as a collection of atoms organized and accessible through your device of choice. Gone are the album itself, the wrapping and artwork, and the trappings that traditionally came with a recording. Books lack pages, covers, and heft. Games lack boards, pieces, manuals and boxes. Tools lack specialized buttons, instructions, and their own cases and accoutrements. Our devices of choice have become the ultimate swiss army knives, where a few atoms can create a new tool in moments.
The former is a trapping of economics that is much more ingrained, but has become infinitely more problematic thanks to the shift toward a representative exchange instead of a physical one. My background is not in economics, and my understanding of its precepts purely from a narrow philosophical survey of thought. I apologize if my explanation is terse or less than ample, but I feel it necessary to establish solid grounds for arguments to come even at the cost of thoroughness I am unwilling or incapable of achieving.
Even in Adam Smith’s time, there was a great deal of argument over how things gained a value. Those who argue for a gold standard generally believe in intrinsic value, while those who rail against believe in subjective value. Both of these valuations can allow a market to function, and both require a high level of trust (or ambivalence) to believe that promissory notes and currency can represent a value unseen and untouched. We pass a dollar or euro or yen to another with the understanding that this note is worth X amount of anything, varying solely on market price. We are, by definition, divorced from the exchange of goods we’re making. The rise of the credit market, and, more recently, the credit industry, has further divorced us from this as we no longer see a physical representation of our wealth nor of the cost of goods. Add to this a product that is intangible and the ability to value worth and weigh our purchases becomes even more difficult without mental gymnastics that were unheard of by anyone but accountants.
Which brings us to our current era of absurd valuation.
Facebook, which produces no good, offers services to the public for free; really, what a Facebook user is paying is time, attention, and information. Facebook in turn sells our time, attention and information to companies who believe they can exploit that time, attention and information to gain a percentage of the user’s purchasing power. In other words, Facebook’s stock price is based on you as a commodity. Ultimately, investors are paying each other for the right to a portion of your money far removed.
At the same time, the MPAA and RIAA are making wild claims about profit-lost by piracy without differentiating profit-lost from profit never-gained, resulting in punishments for actions-never-taken based on purchasing power not-used or non-existent. It’s litigation due to a disagreement in value, which the consumers have not been surveyed on and which the producers, who most often have not actually contributed to the production of said goods, don’t have a clue of their goods’ worth.
If large companies who business depends on accurate valuation of current markets can’t figure what things are actually worth, how are poorly trained individuals?
In the last two years, the video game industry, which has railed against piracy since my childhood, has struck gold thanks to digital distribution. Gone are many of the post-production publication costs. Services like Steam, Green Man Gaming, and Impulse have brought a great deal of profitability to a stagnating technological industry. Services like Gamefly, EA’s Origin, and even the Apple iTunes App Store have followed suit in making products more easily and readily available and have adopted many of the techniques such as flash sales and Weekend Deals that have helped the industry thrive.
But the issue of how consumers value these products, the money they’re throwing at them, and the market in which they’re participating has been lost in the shuffle. Instead, media outlets such as Gamasutra and ArsTechnica have focused on how the industry reacts to sales and how companies fight their own interests by installing use-inhibiting DRM. People roll their eyes when they hear about a child racking up thousands of dollars on iphone games because they have no context of what a purchase constitutes assuming that it’s an issue of age and ignorance that intelligent people won’t succumb to. The excellent but long article Who Killed Videogames? (a ghost story) goes so far as to show how social media gaming is designed to create addictive tendencies that exploit this divorce of valuation.
In divorcing ourselves from the true value of wealth, and in not educating ourselves on the ways in which we make internal decisions about worth and value, we end up at the whims of emotion and instinct as our only basis for purchasing choice. We jump at sales as good deals even when in foreign cultures with no relative basis of understanding the market. Simply put, the bright words and fancy tags and the internal belief that we’re getting a good deal can often lead to overspending due to ignorance.
The question becomes how to marry our understanding of value back to the objects we’re trading, be it a currency, a commodity or an ethereal promissory note floating in the digital realm.
Ultimately, the only plausible answer is education. Allowing students to play within a simulated market and gain an understanding of value, worth, price and the way they interplay, coupled with a guiding hand establishing the gravity of the lesson, seems the only means to creating a solid base for social agreement. In essence, only through education can we build a trust that can sustain an economy and rescue a public who have consistently fallen prey to the whims of an exploitative economic system in which the lack of a tangible currency has made ignorance the modus operandi. Above all else, this economic education must begin with a universal and egalitarian understanding of value.