IN capitalism the contribution of labour in production is valorised in respect to its contribution to creating surplus value. Labour producing goods and services which are useful but not produced for exchange are not considered as productive work in capitalism neither are they captured in the measurement of GDP. The contribution of labour is recognised only when it creates surplus value, other forms of work are not recognised as productive labour. In this context Marx defines productive and unproductive work in capitalism and the distinction is specific to the mode of production. Marx underlines in this discussion that capitalism is a system of universal production of commodities, it distributes returns based on equivalence of value. The labour that contributes to the production of surplus value is considered productive and those who contribute to the process of consumption, however useful they may be, are unproductive in the eyes of a capitalist. Labour paid out of the variable capital therefore are productive while those paid out of the revenue for circulation and for any other consumption are considered unproductive. Labourers of different skills are involved in marketing, sales of goods and services and a large number of workers are involved in financial activities and other services that create the preconditions for the process of accumulation.

There are two very important dimensions of accumulation that deserves attention in the current phase of capitalist accumulation which are the following: first, increasing share of finance and business services and the rising share of profits emerging out of financial activities and the second of course is the use of new technology particularly AI and IOT and robotics that are likely to displace large number of people from employment. The appropriation of surplus value produced in the process of production is distributed to those who contributed to creating the arrangement and management of surplus value. Apart from profits received by the productive capitalists and cut out of surplus value paid to marketing or advertising agencies, interests as a payment out of surplus value has to be paid to financers who supplied finance or rents to property owners from whom space, intellectual products or technology or land has been hired for production. With increased financialisation and technology use the distribution of surplus value is going to be significantly altered.

FINANCIALISATION AND PRODUCTIVE ACTIVITIES

Capitalist accumulation in the neoliberal regime gave rise to high income and wealth inequality. As income shifts more to the rich, the composition of demand changes. On the one hand as income shifts to the property owners, it reduces consumption demand in proportion to income as the rich use a relatively smaller proportion of their incomes in consumption expenditures. As a result, consumption demand slows down, negatively impacting on investment growth. But due to the same change in income distribution, the demand for financial assets increases. For the rich, as income rises they look for assets that can ensure some future stream of incomes. In response to this growing demand for financial assets, the supply of new assets is being created. One of the ways by which new assets are being created is primary accumulation that is converting assets previously owned collectively in any form like public sector, community property or cooperatives into private properties. New financial assets are created using these privately owned resources generating rental incomes for asset owners. Based on profit earning assets, layers of financial instruments are being created that promise higher returns to asset owners. Speculative profits turn out to be more attractive than profits earned through productive activities. Hence resources increasingly flow toward speculative activities rather than in productive investment. Finance also introduces a governance structure. For companies, maximising shareholders’ return assumes supreme importance rather than long term growth and wellbeing of stakeholders. This finally delinks profit from growth and employment. Since returns on assets gain importance, the stock market emerges as a disciplining device as managers continuously face threats of hostile takeovers if they are unable to ensure expected returns to shareholders. On the other hand, promoters want to align the interest of the shareholders with that of managers’ by making them own shares of companies. This often gives rise to strategies of share buybacks and other manipulations of share prices to inflate and retain share values that are anyway not linked to the productive capacity of the company. As internal resources are increasingly channelised to financial resources, investment for productive capacity tends to suffer. We end up in a scenario such that profits increase without commensurate increase in productive capacities and employment. However, profits accumulated through financial activities is appropriation of surplus value that originates through exploiting workers in other sectors. Financial profits do not originate in the process of circulation. In fact, surplus value can only originate in the realm of production through exploiting labour power. Profits earned through financial transactions are nothing but appropriation of surplus value produced in the productive sector. The distribution of employment also shifts accordingly to unproductive services. This however does not imply that workers employed in the services are not being exploited. Exploitation is measured by the ratio of paid and unpaid labour where the employer extracts more than the value of labour power, but this labour is paid out of the revenue in the process of circulation.

TECHNOLOGY RENT

We are amid a new wave of technological change led by AI, internet of things, solar power, nanotechnology, robotics, drones and so on. Unlike all other previous technologies these are likely to be disruptive. Production process and human engagement in production is going to change drastically which according to different estimates would cause huge displacement in the future. Although all the potential uses of these technologies and the effects on complementary activities cannot be fully predicted in advance, there is no doubt that many repetitive jobs would be replaced by the new technology. More importantly, knowledge goods can be reproduced with near zero additional cost. Hence return on the reproduced knowledge products would largely depend on creating scarcity through restricting access to these goods. In other words, surplus produced in other parts of the economy would be extracted as rents by restricting access to knowledge products. This is the reason why a few tech giants are trying to create a monopoly over data and knowledge processes. Since data and knowledge are created and flowing across the globe these resources are not restricted to particular geographies any more as in the cases of minerals or other natural resources. Hence monopolies must be planetary or global monopolies, and they extract rents through restricting access to knowledge resources created across the world. The production of surplus value in other spheres of activities would be increasingly sucked into knowledge related activities and appropriated as rents. This essentially gives rise to an acute contradiction in capitalism. Firstly, financial speculations of high returns on AI related stocks created a huge flow of financial returns out of asset arbitrage diverting resources from productive capacities. Concentration and centralisation of capital as a result has reached unprecedented levels with tech companies amassing huge rental incomes out of new technology. Secondly it diverts resources from productive activities and redistributes the shrinking base of surplus value to a few hands as technology rents. The production process is increasingly socialised, individuals across the globe are wired through the internet and share their ideas, experiences and findings which contribute to the productive capacity of the economy. New technological capacities increase human productivity at unprecedented levels, but the major challenge is distribution of productivity gains. On that count capitalism has no answer as the society based on private property and exchange value has no other way to distribute but to pay against the sale of labour power. With the use of new technology production is far more socialised and also reduces the need for direct labour but capitalism restricts the growth of knowledge-based technology through restricting access to knowledge goods and appropriate rents while displacing huge numbers of people out of employment depriving them of the purchasing power necessary to buy those knowledge goods. This contradiction can only be resolved by altering the production relations by establishing social control of the new means of production that is data and new technology.