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Re: Value of software (was: Re: [ox-en] New pages in the introduction)

Hi Stefan,

On Mon, 10 Jun 2002, Stefan Meretz wrote:

Hi Graham and all,

it's hard for me to follow, nevertheless, I try...

I've cut a lot and just left what I hope are the essential parts of
your argument. If I'm wrong, and I cut out something important, please
put it back next time (if there is a next time..)

You seem to be saying that software has a special, immaterial form,
which distinguishes it from other goods. I am saying that there is
nothing special about it in this way: all goods have a design (the
'immaterial' part), and a physical realization. The physical realization
of some goods takes less labour than it does for other goods; the tendency
for most goods is for that labour to decrease, and so for their value to
fall. Software is the most extreme case of this, but it is not 
qualitatively different from many other goods.

You wrote:

However, my argument was: sum up development and production expenses, 
divide them through the number of pieces sold, then you have the 
"value" of the mean specimen (assuming it is on the level of societal 
mean). In my view it doesn't matter how big the material part of the 
"transfered" piece is.
The only difference is: The development expense goes to 1 and
production expense to 0, while in normal products you have, say 0.5
to 0.5 or 0.7 to 0.3 - neclecting all other "expenses" (which could
very, very high: ads, lawyer etc.).

I mean "go to" in the sense of "approach". And, as I explained before, I 
look at all pieces of a "product".

No, I simply meant a single software product, say M$-bullshit 1.0 
(assuming price = value, which is not correct):
- dev-costs 9000 EUR,
- copy-costs 1 EUR per piece (incl. CD, package etc.),
- 1000 pieces sold
- sum: 10000 EUR total and 10 EUR per piece
(- say: sold for 100 EUR / piece or profit 90 EUR / piece)

So, either
1. You accept price as a very rough approximation of value,
and we have an approximate value of 10  per piece. If (as is more
likely, being Microsoft), 20,000 pieces were sold the value would be
around 1.5  per piece. So you have a value which depends on volume
sold, not on labour used in production. This is not value in any of the
classical economists sense. Or, 
2. This price has no connection with labour value, which is exactly my
point. The true value of this software is 1, which is the value
of reproduction, not of development, but the price does not reflect this
at all.
But you cannot look on the copy process in an isolated manner. Producing 
software is foremost development. And under conditions of a commodity 
producing society this takes an amount of labour for money if it this 
thing is produced for marketing.

Yes, true. A strange situation, where labour is being used in capitalist
production, but the result is not a commodity, nor can it possibly be
sold at it's value. It's possible to see this predicted in the Grundrisse 
too :-)

natural one.  And if the core activities of society are not based on
commodities, but on a kind of rent, then this is a big problem for
capitalism as a system, which it will only be able to patch over by
more and more unpleasant laws, destroying more and more of our freedom.


Rent is compatible with capitalism, but can't be the basis for the
whole system without the system becoming something else.

I think "rent" is not a correct term.
I don't know a better one - is there a German word, other than 'rent' to 
describe the situation where you pay for the use of something, but do
not own it, and are not allowed to resell it? It is legally not the same
situation as with books, where you can resell a book you buy, so the 
closest analogy I could think of was land or house rent. 

What do you mean with "something else"?
I don't know! Maybe this could be one possible hypothesis:
When a system of production cannot develop any further, it can happen
that no alternative is yet strong enough to take its place. In this
case, you get a kind of hybrid system which is very hard to classify,
which always depends on very harsh laws to survive. For example, Rome
in the 5th century, with Justinian's code - no longer slavery, but not
feudal. Or the absolutist states of the 18th century - say Prussia,
not feudal, not yet capitalist, but with a reintroduction of forced 
labour, censorship, refusal of any dissidence... 

I read it (some time ago). IMHO it is correct to describe free software as 
an "devaluing movement", because free software has no value, but 
commercial software does. The question is about the consequences...

Another difference: most medicines can be produced very cheaply (the
value of a bottle of pills is mostly very close to the value of a CD of
software), and prices are kept artifically high by IP law. Medicine
should be free (not necessarily as in beer, and not without legal
controls over manufacture and testing, but without restrictions caused
by IP law).

"Should be free" is ok, but "is free (of value)" is not simply not true.

I didn't say 'free of value', but with very small value. Well, if I didn't
say that, I should have ;-). The value of these goods is tending to zero,
not at zero.

The countries asking for the right to make their own AIDS
medicines at their true value are doing so on the same grounds as
people who say software should be free. But if you say
software/medicine have value because of an increased immaterial part,
it is harder to see such common ground.

"Having value" is independent of what I think or want. We cannot "adjust" 
our analysis only to obtain "nicer" arguments. We cannot "declare" some 
products as "value-free" by will.

No, but they can become almost value-free through history. 
The card controls for Jacquard looms in the 18th century were made one
by one using card punches. I don't know how long it took to make one; I
imagine half a day each or so. In the 1950's data entry (including 
programs) was done by women using punch-card systems; there were rooms
full of these women doing nothing else all day. In the 1960s and
1970s, programs were generally transferred on large magnetic tapes costing
(if I remember rightly :-( ) about 30EUR each (at prices then). Now you 
can have programs copied to CD for a euro or so each. The value of 
software has dropped  to the point  where it has nearly vanished because 
the labour input has dropped, but it has not always been so small.
If it had not, and CDs and hard drives cost 1000s of euros each, we would
not be having discussions about software being 'special'.  

This is happening generally, but is not normally as extreme as in the case 
of software. Look at the value of your PC - one of the most complicated
pieces of equipment ever made, but you can afford to buy one (I assume)
after a few weeks saving. The labour value must be less than the number
of weeks you work to save for one.

This weekend, I threw away a broken toaster. It was quite new, but because
of the stupid design I couldn't open it to fix it. I thought of asking a
repair shop to fix it for me; then realised its price was so low, that
it would cost more to pay someone to spend an hour to fix it, than to buy
a new one. 

None of this is magic: the value of goods that can be mass-produced has
fallen as the total labour input needed to make them has decreased. The 
value of some goods has fallen so low that without special laws to allow
monopoly, it would be impossible  to sell them at all.

Oh well, that's my argument.. I guess you can see why I tried to use
a marginalist approach instead.. labour values are broken to describe this
situation, but the break is in reality, not in the theory.

Best wishes


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