Capitalist Innovation

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Punk Johnny Cash’s piece on innovation is a good reminder that the ability to create is not a historical trait unique to the capitalist system. While I agree with the conclusions–of the need for a reorganization of society around cooperation, a society where, as Marx wrote, “the free development of each is the condition for the free development of all”–its worth taking a closer look at the individual points.

First, PJC insists that innovation occurs not because of capitalism, but despite it, as if innovation is held back by capitalism. While the rest of the piece supports this to a point (the idea that an egalitarian economy would allow the free time for all to create for the benefit of all), the notion that capitalism cannot be a genuine place for innovation falls short. This is not meant to be a defense of capitalism, but a critical examination of the system. Why has appeared to be so successful if that is not the case? I am not necessarily countering PJC’s main point when I argue that much of that “success” has been because of a kind of innovation that only capitalism can foster.

As Marx and others stressed, capitalist endeavors require growth in order to stay alive, and the development of new technologies is part of that growth. Capital, as a relation, functions such that a venture’s return must exceed its investment, Marx illustrates this relation as M-C-M. Money-Commodity-Money. The commodity should sell for more money than was invested in it. Generally, that excess money comes from the exploitation of labor, where the productive worker is paid for only a portion of the total time they spend in the firm. The excess may also come from the investment in fixed capital–machines, factory space, etc–that more efficiently use the worker’s time. By paying workers less for their time and their output, the firm is able to extract more excess value (closely related to, but different than, profit) out of the process. In this sense, capitalism relies on innovation in order to grow. In other words, innovation is central to capitalism.

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