A review of Biocapital by Kaushik Rajan and Network Culture by Tiziana Terranova

Organisations are organic

Gone are the days when an economy or an economic firm would be a top down affair, which relied on the strategy (or business idea or cutting edge technology of an individual) from a single source and the implementation of that strategy was the job of the multitude of waged labour. Today, the economic space is vastly different from what it was two decade ago and interestingly the traditional distinctions between the elements of production and consumption have blurred – the consumer is an element in the production process, the strategist is waged labour and the capitalist owner is at best a facilitator with an input in management strategy. This note looks a this modern phenomena by reviewing the works of two authors, Biocapital by Kaushik Rajan and Network Culture by Tiziana Terranova. While essentially studying the nature of capitalism in modern times, Rajan has used case studies to illustrate the functioning of modern capitalistic firms, and governments whereas Terranova has used expositions of theorists of build her case of an understanding of the linkages between the “New Economy” and the labour inputs therein, free and paid. Both these are excellent treatises on the subject although a bit verbose.

1 Kaushik Rajan’s investigations: Hyderabad, Bombay, Silicon Valley, and GenEd: relationship between science and capitalism, and between nationalism and globalisation.

Rajan, in his book has made a basic premise about capital in the modern context: it is neither static nor is it insular from the uses it is put to. It doesn’t just impact the larger production process (whether goods or services), it is also in turn affected by these very processes whereby it serves the role of a catalyst.
The concept of “Biocapital” that Rajan has propounded is not a first in the larger study of organisations (as opposed to the narrower study of economic firms) and such an understanding of organisations was first elucidated by Michael Foucault, when he crystallised the concept of Bio politics. Perhaps referring to the predominance of democratic (or even republican) forms of government, politics he says is again not a top down approach even when there are personal and group agendas and dynamics at work (as opposed to autocratic forms of government such as dictatorship or communism where the smaller group enforces it will on the masses). Politics, policies and political agendas are shaped not just by those in power or those aspiring to be in power, but by those whose mandate is required. While not going into the effectiveness of such systems, elections have been lost and won because of the lesser or greater acceptability of agendas by the voting population.
Similarly, economic firms and the governments which are looking for market based economic development are also subject to the same pressures. The whole system works like a large and complex organism (much like the complex agglomeration of cells which make up modern complex bio-life forms) where the different constituents have different functions to perform and therefore have different impact on the overall direction that the larger economic entity will take.
India and the United States are completely different political geographies. Whereas all innovation and risk capital is a result of the need for salvationary interests (Rajan beautifully juxtaposes the developments in the field of bio technology to show the miracles of modern science where the ubiquitous American is looking for the next big thing not overtly in terms of money but more in terms being the next popular saviour). This doest not just limit itself to the investors and venture capitalists but to the local polity as well. There are however two reasons for the politicians seeking to, for example, debate systemic change. The first would be, of course, to promote oneself as the saviour of the quintessential American dream and more importantly, not doing so would be to admit to the systemic failure of the systems designed to protect the population at large from the profligacy and adventurism of the elite few.
India, on the other hand, has less of a motivation to create an environment for encouraging entrepreneurship, and more to do with getting rid of the third world tag. Reasons for this are numerous and most significant are the colonial past, the socialist past which resulted in severe economic backwardness in most of the last century. Over and above that, there are diverse interests at work when it comes to decision making. The chief minister (the Indian equivalent of the governor of a state in the ||United States) has to cater to the investors requirement who are in a profit maximisation mode, the local population who are clamouring for the politicians to fulfil their profligate election mandates and the politicians themselves who would like to colour themselves as the messiahs of local development.
N.C. Naidu, the ostensible architect of Hyderabad’s economic miracle is a case in point. He has used nationalistic tendencies within not just the local population, but with the Non-resident |Indians to attract investment – not merely by providing indirect attractions such as infrastructure or even developing an educated work force, but through indirect state subsidy. Capitalisation of companies is done through the state owned venture capital firm – which is a contradiction in terms as it provides a risk free capital to the investor. Interestingly, while Mr. Naidu did success in projecting Hyderabad as an alternative to the proverbial outsourcing might of Bangalore, he lost his first elections after the implementation of these digital initiatives.
GenEd is a company which deals with the subject of life sciences in the learning space. All in all, this is one company which was a pioneer in the field and as per Rajan, was into elearning before the concept came into being. Interestingly, the promoter Mr.Mulick was a qualified professional with the other promoter another qualified technocrat. The issues which afflict this firm have a lot to do with the nationalistic approach to business. The CEO of the company has not been able to raise venture capital and according to Rajan, this doesn’t seem to have bothered him very much. While monies have been coming in from various sources, the read growth in the company has been missing for the want of venture capital money. Rajan goes on to suggest that the reason for this is neither the company’s business model nor is it the space that the company operates in (elearning and life sciences courses), it has more to do with the promoter of the company relinquishing partial control because of dilution of equity. Now power for the sake of power in the non political space is meaningless as it will subvert the primary processes (in the economic space) and be the cause of demise of the entity. In this case, as Rajan suspects, it will be the need to display proven success, without external assistance, economic or otherwise. Given that the CEO has globalised, there seems to the element of stubbornness and indeed pride which prevents the chief decision maker in the organisation forgo not just an influx of funds, but also the learnings of external people. The cross fertilisation of ideas which is the key to the success of any enterprise. Perhaps this too is a manifestation of the nationalistic element that one sees in India in Hyderabad, The Andhra Pradesh state venture capital firm, the government involvement in Well Spring – where the over riding need to prove the national competence leads people to try and find shortcuts to invention, innovation and development.

2 Briefly describe his investigations in each of these locations and summarize what he learns about these relationships in each instance.

Rajan has chosen India and the |United States perhaps because he is familiar with both regions. He is from India and largely associated with the American society. He has tried to study the contrasts between Hyderabad, Bombay as well as GenEd in the ||United States – with the common theme being the different environments that firms operate in. Hyderabad and Bombay developed differently. Hyderabad is an old city with myriad traditions, a history of trade and political power. Bombay on the other hand started barely a few centuries ago as a trading post for British and Indian merchants who traded largely with the Europeans. This has proved to be the significant factor in the thinking at these two locations. While on one hand Hyderabad looks at promoting the city itself as a destination and hub for bio tech, Bombay takes on a more pragmatic role in the form of Well Spring where the logic of economics determines the presence of what is essentially an outsourced function for global bio technology and pharmaceutical companies.
However, both these locations are exploitative. It is not personal wealth that is being used to promote and indeed provide subsidy to the investors in Hyderabad. It is the state money. While such a subsidy is not to be frowned upon as it does take various forms across the world (tax incentives, governmental purchase support or even technological partnerships with the government), in the case of Hyderabad, such monies have a direct impact on the suicide rates among the farming community, who, without governmental support, are indebted to money lender(s) (personal or institutional) and see no way out.
On the other hand, the location for well spring is even more calculative and grossly opportunistic: It seeks to cash in on the ready availability of cheap real estate and more importantly the seemingly endless supply of test subjects from the unemployed millions around the former textile hub of Parel in central Bombay. While this may seem like an additional economic opportunity for the local populace, the reason for such a shift by organisations like Well Spring is clear: its economics. Rather than sourcing test subjects from across the world they have them in one location and cheap. Not only that, the great genetic melting pot that is India, it also provides ready access to all the different races which exist across the world – the Negroid races of Africa (found in the Andaman Islands), to the Caucasians in North India to the Mongoloids in East India and a whole host of other permutations and combinations.
Therefore it would be interesting to conclude that the relationships that exist in the world today are largely a function of economics and, growth is also extremely exploitative in nature. While the over all growth may have been very good, there is inevitably someone who will pay a disproportionate high price for this growth, albeit benefiting in the longer run.

3 What does Tiziana Terranova explore in her chapter on ”Free Labour”?

Free labour is defined as that labour for which there is no direct remuneration. In the context of the digital Economy as well as the New Economy, Terranova, investigates this concept of free labour in the form of societal labour or the collective which, while working without wages, works not to its own benefit, but for the benefit of the capitalistic owners of the new economy firms. While this is an overly simplistic way of looking at the issue of labour as a modern means of production and input, it does provide some interesting view points. For instance, the author looks at the very issue of free labour – whether it is actually labour, whether it is really free (not in terms of monetary benefit but more in terms of the ancient system of barter trade – in this case of services). Furthermore the author has also investigated the Marxist interpretation of the current trends in the global economy and market place where there is a sharp contrast between the haves’ and the have not’s. These two groups are described as those who have the technical and creative knowledge to create the websites, internet portals and e commerce machinery which drives the internet today. Whereas the proletariat are the those users of the internet who, through their mere use of the internet provide the owners of the sites with content, feedback as well as all the inputs necessary for survival.
However the author also questions the validity of all these relationships between the producers (the software engineers and designers), the consumers (the users) and the facilitators (the capitalist) as a one way relationship where the one benefits from the other and not the other way round. The classic example is that of the users of the internet who provide content by the creative development of their personal spaces as well as through the use of the internet. Are they really not getting anything in return? Or is the return merely not commensurate with the effort that the consumer puts in developing the internet? Or is it that the classical theory of rent seeking and wage does not hold good in it’s entirely in the modern economy, where, the returns need not necessarily be in the form of physical goods or services or monetary benefits?
Therefore there are several concepts that the author has explored in this literature. These concepts are the nature of free labour, whether it is coerced, or are there other pressures which contribute to its existence. Then there is the need of the collective, the swiftly changing world of the modern internet based economy which mandates the use of the multitudes as the older forms of centralised decision making and planning would be woefully inadequate.

4 How she shows us exploitation is still at work in this new world of information?

Exploitation is defined as returns not commensurate with efforts. The Marxist definition of exploitation would include the production ownership by few, the workers sell labour to the owners to get a wage and the governmental inputs actually work to ensure the survival of such structures. In case of the new economy, it is important to understand who the exploited entity is and who the exploiter is. The relationships are circular. Even in the age of somewhat free labour, the exploitation does not take the form of enforced dictates where the Marxist capitalist society prevails. Indeed the producers are diverse as are the consumers (or users of the internet in this case) and more importantly they do not have a legal or even a contractual control over their audiences. The enslaving force, the author says that these producers use is actually not perpetuated by the producers themselves but by the consumers of the producer’s services. A classic example is the Instant Messaging platforms which talk across the propriety platforms. Users develop their networks on single platforms and then are unable to leave the platform because of the lack of a social or even professional network on another Instant Messaging platform. In addition, users provide feedback and usable data to producers such as Microsoft which in turn is used to hawk advertising space and e commerce portals to other producers. Ultimately, these internet portals and advertising is targeted at the user, using the static provided by the user to enable better targeting and used to entice the very same user to spend monies on related products and services. All this without a single cent being paid to the primary producer in the internet economy, the user. While the current internet user cannot really be equated with the slave labour of the ancient world or even the exploited blue collar workers of the industrial era, nevertheless there is a clear case of lack of wages for an economic service provided.
This exploitation is however not restricted to the users, even the knowledge elite, the web designers, software engineers and others are not immune to the rapid changes in the new economy. A classic example that is taken in the study is that of the producers of websites (not content) who are at the frontline of change. It is the author’s assumption that skill redundancy is a primary cause for exploitation. The fear of redundancy will itself force these knowledge elite to accept lower wages or even move them in the direction of lower priced products. The only entity, by and large which remains the exploiter without any such compunctions, is the owner of capital.

5 What does she mean by ‘biological turn’ about in her chapter of ‘Soft Control’?

While the whole concept of free labour is debatable, one thing is certain: the basic economic structures have changed. These changes, however minor, have far reaching consequences and go further in accelerating the pace of change. In such a scenario the management has little option but to keep renewing talent and retaining that which is best suited to their particular requirement. The economy itself has moved from chains (slavery), to wages, to golden handcuffs onto perhaps something more than monetary benefits. The producers therefore have a tendency to give their talent pools a freer hand in the development of the production systems so that they, the producers, continue to be at the forefront of cutting edge of innovation. However, this too is insufficient as the resources required to constantly update content, and usability as well as collecting and processing systemic feedback would be uneconomical. Therefore, this has lead to what the author describes as the biological turn – combining the power of many to the benefit of the larger conglomeration (or the new economy firm). Singularly and with specified tasks, constant innovation is not possible – variety is best generated by myriad people in different parts of the world. The internet owners use this concept to create spaces where the multitudes keep the place interesting through self generated content, each satisfying a specific need of the larger organism, the firm. This change in the way that the economy is structured, from a rule driven, clearly compartmentalised structure to one where the different elements work for, ostensibly, the common good and where the dividing lines between the producers, consumers and owners are blurred or often non-existent is what the author refers to as biological-turn.

6 Both Rajan and Terranova are concerned with society being subjected to a biological strategy. How do they see the relationship between this strategy and work and profit?

Work must be rewarded and commensurate wages must be paid. This is the basic tenet of the economic firm in the capitalistic world. In the absence of such a concept, there would be no incentive for workers to continue working towards wealth creation for the owners of production systems and would ultimately lead to the collapse of the economic firm. On the other hand, if workers are suitably rewarded, they will produce and the firm will prosper. This strategy assumes that the classical economical models still work. As mentioned in the earlier section, that is not necessarily true. As the authors point out, the classical economic firm is neither fixed in its structure nor its products nor its producers. Instead the rapidly evolving new economy has lead to a lot of experimentation which in turn has forced the capital owners to adopt a “Soft Control” over the production and consumption process. This strategy envisages using inputs from the production and consumption processes, which are out of the capital owner’s control, to design the future shape of the firm as well as its growth. The first step in this is the rapid adaptation to the continuously morphing economic landscape not for purposes of profitability but merely to survive. The authors imply that as time progresses, those who do use this adaptive strategy, which is purely dependent on collective contributions of the mass of users, will perish. Those who are left will profit, however ephemeral that profitability might be.

7 How do their books reinforce each other and help us to understand this moment in capitalism? How, if at all, do they differ in their analysis of this moment?

Firms and organisations are biological in their nature and not rule bound mathematical equations (or even economic theory for that matter). Since the advent of what is euphemistically known as the knowledge age, the distances that inhibited collaboration have disappeared as have the geographical limitations to expanding business. This has resulted in organisations and even distinct business areas which are prevalent globally and work on strategies which are applicable to their entire business. The definition of exploitation too has undergone a change and the interest of the firm will tend to reflect the interest of the owners and not the workers (or Labour). In this sense the knowledge economy has not changed the traditional owner-labour relationship.
There are subtle differences between the approaches that Rajan and Terranova have used. First of course if is the methodology of the study. While it cannot be said that these studies present contrary or even differing analysis (except that Rajan uses live research and Terranova uses more theoretical models), there is some element of juxtaposed conclusions. While Rajan says owners will act in their own selfish interest which may or may not be aligned with the core, long term, economic objectives of the firm; Terranova says that the organisation will work as a whole (what she refers to as bio-turn) where the functions and objectives of the different elements (owners, internet users, web-designers, software engineers, entrepreneurs etc.) will largely remain constant. Read more at: http://www.essaywriter.co.uk/a-review-of-biocapital-by-kaushik-rajan-and-network-culture-by-tiziana-terranova.aspx?id=CdXTBnpCb7GKi