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Neo-Corporatism: Early Signs

by Marrick on April 25, 2005

Digital Rights Management is more than just a software device to maintain the copyright of published material. It is a reflection of a new philosophy that will ultimately lead to a society in which consumers own nothing, where the nightmare of the dispossessed comes true and corporate bodies own everything. The logical extension of this is: you lose your home, car, all your possessions and everything you own to some vision cooked up in the boardrooms of America. Their vision of the model citizen is someone who is heavily in debt, but owns nothing, who consumes without assuming ownership, and who is powerless to influence the tide of events because the democratic process is meaningless.

The most fundamental premise of capitalism is the concept of ownership. It is the guiding principle that allows everything else in the market economy to work. Ownership is the idea that an individual is able to possess something exclusively, sell it and use the tokens of exchange to buy other things. It is the primary motivational force of incentive. Take away ownership and you take away capitalism.

This trend towards dispossession is already happening, but it is not the revolutionaries who are making it happen. The few remaining anarchists may wish away the concept of individual property, but they would not envisage the form it is taking as being something they would support or encourage. The corporations are waging a new war on the rights of the individual, a war that has as its aim the ultimate and permanent removal of the ability and rights of individuals to possess property. They are seeking to replace the classic paradigm of capitalism with a new form of corporatism in which everything is owned by worldwide organisations, trans-global corporations who are not subject to the whims of individual governments except in the most superficial ways.

There is no evidence to support the proposition that this is a conspiracy, although the settled coalition of opinion expressed by the major players is sufficiently concerted to indicate a level of collusion. In any case, whether or not a conspiracy exists is a diversion from the essential facts that the concept of private individual ownership is under threat from a multitude of sources, all of whom have one thing in common: they are major corporations.

Digital Rights Management is only the latest of a number of initiatives stretching back to the nineteen seventies, perhaps earlier, that seek to replace the model of personal ownership with unending debt, increased consumerism and a right to use rather than possess, leaving the owners of the means of production as the owners of the product as well.

If you examine the three most significant areas of ownership for most individuals in Western democracies, you will see that the concept of ownership has been eroded. The areas to which I refer are: housing, private vehicles, and personal financial products.

Personal financial products were amongst the first segments of the market to move away from the ownership paradigm to the concept of a provided service. Centuries ago, being a partner in a business changed in many cases into being a stockholder as companies grew and this, in turn, weakened the link between the activities of the company and the ownership. You no longer had to be a builder to be the owner of a building company; you merely had to have enough money.

This concept persisted until institutions started “investing” in the stock of companies, and in some cases taking an interest in a company in return for funding.

Then an important shift in the way in which companies are owned took place. Instead of shareholders being people, ownership transferred to institutions such as banks and investment corporations like pension and assurance funds.

This, in turn, allowed the owners of the companies to “sell” personal financial products to individuals such as share investment portfolios, which lessened the risk of share ownership, but removed the providers of funding away from actual ownership.

It is an amazing concept from the perspective of the investment companies. They use consumer money to buy shareholdings in companies. The ownership and hence control of the companies remains in the investment companies’ hands, even though they have brought nothing to the table, except a conduit through which funds are channelled. The consumer ends up owning nothing, having no guarantees as to any return, and no influence over the direction or activities of the companies in which their money is invested.

Promotion of the concept of “share holding democracies” is a token of faith that has no basis in fact. Even though there has been an increase in the number of people owning shares, their value as a proportion of the overall value of the market has fallen and is continuing to decline: most shares are owned directly or indirectly by corporate bodies, bought with money supplied by consumers of their financial or banking products.

Until recently, it was the ultimate expression of corporatism. They got to buy things with your money, you got a piece of paper that said they owed you nothing and never would. Obviously, there has to be an incentive to invest in their bits if paper, and that incentive is a track record of giving a reasonable return on your investment, or at least the appearance of giving a reasonable return.

Now, even that is changing. A significant number of governments around the world are talking about making investment in personal pension products compulsory for all wage earners. So, the companies not only get to use your money to make themselves richer, and you still do not get to own anything, or have any guarantees as to how much of a return you will get, but now you will have no choice about it.

This, in turn, will remove the only reason the investment companies have to offer a reasonable return, and the long strategy of lowering the expectations of the consumer will begin.

In a similar vein, house ownership has moved away from the simple concept of buying land, and building a house on it, to buying a property with a mortgage, and then to buying a property with a mortgage that you never finish paying. Interest only mortgages, longer term mortgages, and mortgages that are guaranteed against financial products such as those discussed above, have become the norm.

All these mortgages move the possibility of an individual actually owning their property further over the horizon.

Exacerbating this situation still further has been the greater availability of mortgages, which has fuelled a worldwide acceleration of house prices. This has, in turn, had the effect of pushing the cost of actually starting on the house ownership ladder further away, increasing debt levels and reducing the possibility of ever owning a property still further.

A similar situation exists with personal vehicles. The imperative of owning your own vehicle is reinforced by clever marketing and peer pressure. Wide availability of finance products facilitating easy consumerism has induced far wider vehicle ownership, or at least, attempts at ownership. The fact is, few people ever actually own their cars, they change them before they finish paying for them, or the balloon payment is too big for them to have sufficient equity to do anything other than just go back to the dealer and turn the car in, or they are on a lease plan that gives them no choice other than to return the vehicle. Vehicle ownership is becoming a thing of the past.

In some of the more advanced consumer countries such as Japan, increasing the roadworthiness certification requirements for used vehicles has resulted in fewer vehicles being available to the second-hand market, creating increased demand in the new vehicle market.

Now, having tied up the big-ticket items, the first forays into not so significant purchases are being seen. Microsoft’s license model, which only offers the purchaser a limited right to use, but no rights of ownership or of disposal, or, indeed, of remedy should the product prove to be defective, has been further developed by the software giant. In their new licensing model, Microsoft has moved to a service contract in which the copyright owner solely retains ownership and you continue to pay… forever. Curtailment of the contract results in the product ceasing to function. Already, the market for Microsoft’s products is completely distorted by the simple fact that it is virtually impossible to buy a computer without Windows installed. Now they are shifting the goal posts to exclude the possibility of you ever being able to break away from their products.

This model has been expanded to include distribution of home entertainment products, hence the development of Digital Rights Management. Copyright, in its simplest form, used to mean that the author of a written work, a work of art or a piece of music had control over the rights to reproduce, distribute or perform their creation. Recordings complicated this inasmuch as the artists performing the recording had additional rights, and by the process of contractual obligation, so did the companies distributing the recordings. Even in this area where the ownership of a piece of art is so complicated, ownership of a distributed recording, or piece of writing is not in doubt. The artist owns the rights to reproduction, and the consumer owns the right of disposal. So if you want to sell your old records, CDs, DVDs or books, then you are free to do so.

Now with Digital Rights Management this has changed. Music or books that have been downloaded from the Internet can only be played on the equipment for which they have been licensed. You have no rights of disposal, so you would expect that the price would be lower to offset your lost opportunity to sell. You might expect the price to be lower because the costs of distribution and marketing are massively lower than would otherwise be the case. You may even expect to pay less because the quality of reproduction is not as good as a DVD, CD or hard copy book. In fact, in most cases, buying the conventional equivalent is cheaper. This, you might suppose, will lead to market forces acting to bring down the price of the DRM encoded goods. This might be the case if the copyright holders were not acting in concert, but they are. Not only that, they also control the means of production and distribution of the other media. So, they can potentially close it when they feel the time is right. In the meantime they simply will not sell many of their products through the new medium.

In a proper, market driven, capitalist economy, this kind of action would be anathema, but the modern economics governing the new media companies have no relationship with such old fashioned ideas. They are part of the new corporatist culture, and instead of responding to the market, they condition the consumer’s expectations and dictate to the market.

The precursors to this form of price manipulation are the ways in which CDs and DVDs have had their prices maintained. Both forms of media are cheaper to produce and distribute than the forms they replaced: tapes and records, yet their retail prices have been consistently thirty percent higher than their ancestors. In the case of DVDs, the excuse given is the cost of including additional material that was never included with VCR tapes. This is disingenuous, because a choice to exclude the additional material is never given, so the value of the additional material has never been tested. Instead, the consumer has been conditioned to accept the price.

As available bandwidth increases, so will the pressure on consumers to move away from “real” to virtual products. As soon as the potential market for download is big enough, then the real distribution channels will disappear, and yet another aspect of market driven capitalism will disappear, replaced by a voracious corporatism which is increasingly governing our lives.

Somebody commented that we will soon be required to pay a royalty to someone to sing Happy Birthday at a party; I’m beginning to wonder if they were joking.

Resistance, it seems, is futile.

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