Business and Management -'Strategy'

Network Capital and Biocapital

This paper will take an in-depth look into the work of two influential authors: ‘Network Culture’ written by Tiziana Terranova and ‘Biocapital’ by Kaushik Sunder Rajan. First of all, the content of both of these books will be examined in detail and comments given on their worth as texts of business and management strategy. However, the bigger questions which plague the modern theorist are whether the changes brought about by current technological changes, more specifically the internet and the digital economy, are permanent changes to the classical understanding of labour and its role in the production function and what, is any, is the exploitative nature of these changes on what Terranova describes as “immaterial” labour.

BIOCAPITAL – BY KAUSHNIK SUNDER RAJAN

Biocapital is a major theoretical contribution to science studies and political economy. Grounding his analysis in a multi-sited ethnography of genomic research and drug development marketplaces in the United States and India, Kaushik Sunder Rajan argues that contemporary biotechnologies such as genomics can only be understood in relation to the economic markets within which they emerge. Sunder Rajan conducted fieldwork in biotechnology labs and in small start-up companies in the United States (mostly in the San Francisco Bay area) and India (mainly in New Delhi, Hyderabad, and Bombay) over a five-year period spanning 1999 to 2004. He draws on his research with scientists, entrepreneurs, venture capitalists, and policymakers to compare drug development in the two countries, examining the practices and goals of research, the financing mechanisms, the relevant government regulations, and the hype and marketing surrounding promising new technologies. In the process, he illuminates the global flow of ideas, information, capital, and people connected to biotech initiatives. Sunder Rajan’s ethnography informs his theoretically sophisticated inquiry into how the contemporary world is shaped by the marriage of biotechnology and market forces, by what he calls techno scientific capitalism. Bringing Marxian theories of value into conversation with Foucaultian notions of bio politics, he traces how the life sciences came to be significant producers of both economic and epistemic value in the late twentieth century and early twenty-first.
Biocapital is excellent. It offers new insight into both late capitalism and the life sciences and also provides material and arguments for rethinking foundational concepts such as ‘valuation’ and ‘exchange’. Biocapital is an innovative study of digital culture, in particular the politics of the emerging digital culture, and especially the cultural and political dimensions of network technologies. Across the cyber cultural landscape of mailing lists, discussion groups, e-zones and the digital press, it sees the emergence of a new collective political subject, a networked intelligence. The author touches on key concepts and debates in cultural theory and cultural politics, and makes use of examples including cyber feminism, activism and cyber organising on the net – such as J18, Seattle, and the anti-war movement.
In terms of the specifics, the author had used India and the |United States as contrasts to the development of the Venture Capital culture and all its constituent elements. There are several themes which he has used and most notable is to define the way organisations and indeed organisational environments evolve. In terms of the |United States he looks at “Salvation” which has become the primary theme in the search for the ~”next big thing” (American euphemism for a path breaking discovery which, like penicillin, has the potential to change the course of societal development ). However this contrasts with the Indian scenario where, given the pace of development, the evolutionary processes normally associated with the development of entrepreneurial culture, has, largely, been bypassed. Instead the primary theme for development is nationalism. In the Hyderabad example, the chief minister, Mr. N. Chandrababu Naidu, is faced with a unique environment i.e. it has vast arid areas with little irrigation facility. To improve the economic condition of such farmers, the state needs money and employment generation opportunities. He is also faced with the need to please a diverse group of people i.e. making the state attractive for investment as well as catering to the needs of his electorate. However, for the chief minister, the challenge was to find an evolutionary shortcut. This was achieved in terms of indirect state subsidy to investment. Like the special economic zones which have fuelled China’s growth in the last 10 years, the chief minister set up Bio-Tech parks in collaboration with another financial institution, ICICI Limited. Along with the relevant incentive package in place, the incentives for the NRI (Non-resident Indians) investors, the enticement was firstly financial, given (in the form of a state sponsored venture capital org.) and secondly, in the form of an appeal to the nationalistic sentiment prevalent in the NRI community. This nationalistic sentiment was also used to win over the electorate by advertising the developments in the state and promoting those as ones which will ultimately benefit the states electorate. The Bombay case study, Well Spring centre located in Parel, is similar to that of Hyderabad. With the active participation of the state machinery (the central government’s premiere research organisation in this case) a lot of the regulatory and “eithical” hurdles were cleared simultaneously. Furthermore, in true capitalist form, the location of the project was chosen as Parel, the site for a multitude of under employed former mill workers. These underemployed workforces, given their precarious economic predicament, would provide ready subjects for drug testing.
The Gen Ed example is not very different, even though there it was more of poor strategic planning by the founders. While the narrative in all these cases becomes a little tedious with unnecessary details thrown in, it does point out a few important issues. The first is that people within organisations and organisations work differently. In the case of GenEd, such a distinction is very apparent as the founder of the company, Mr.Mulick, was supposed to look after the interest of the company, interestingly to which, his own interests were tied. However, the failure to raise venture capital, in spite of a revolutionary idea plus a first mover advantage in the e-learning space, was a costly experience for the company. In the absence of controls, most external ones, the concerned organisations will not work in the interests of the stake holders, Mulick, reluctant to relinquish control, also saw the company forgo other valuable inputs that the venture capitalists would have brought to the table. On the other hand Well Spring hospital, in the absence of controls, and with virtual state support, was all set to exploit the local resident’s situation. It is Ironical that after having brought out Andhra Pradesh to a level where it is a serious contender for the BPO dollar (GE and Microsoft are already based here), and in spite of the nationalistic flavour of the development programme, he does not take into account the popular control (democratic right to vote) which exists in the functioning of any state. He lost his chief ministership in subsequent election. In contrast, without any overt nationalistic agenda’s, Well Spring has continued to flourish without too may problems. It is perhaps important to consider differences within India and between India and the |United States. The first of course is the history, India. As the author points out, India has been keen to shed the Third World label for a while now and the government has stepped in to accelerate the inbound investment (Foreign Direct Investment – FDI) process, albeit at the cost of political profligacy. The ||United States, on the other hand, has had over 200 years to do the same. Furthermore, Hyderabad and Bombay are two different cities. Bombay, a newer city, has always been a trading and manufacturing hub. Even today it is the financial capital of the country where the returns on investment dictate the general flow of life. Hyderabad on the other hand is a relatively older city where, other than small businesses, there were no industries to speak of. Therefore to globalise, was to improve local life. However, it is important to consider the local as a part of the global, if there must be harmonious development.

NETWORK CULTURE – BY TIZIANA TERRANOVA

Terranova studies the transformation in the definition of work (the tradition of wages for work) brought about by the economical expansion largely fuelled by the knowledge economy, and a huge acceleration of informational dynamics. In other words, with network culture. In this literature, information theory, and its interlinkages to the politics of culture are examined before examining the internet and exploring how the flow of information and indeed the socio-cultural exchanges therein impact purely internet areas such as blogging, mailing lists and web rings. Terranova presents a sophisticated argument about what the new forms of communication and organisation mean for politics, democracy, and identity. The book draws on online debates about labour, self-organisation, virtual activism, and future identities to outline some of the features of current societies of control and the political answers that are being formulated within these new digital cultures.
In this beautifully written overview of the socio-political dynamics of networks, Terranova describes the shift from illustration to inflection (in both images and ideas, a technique that foregrounds the communicator’s agenda by replacing positions with explicit expressions of vectors for change), in which the spectators no longer form an amorphous mass, but operate instead in fractal ecology of social niches and micro niches. She studies the use of the internet audience-participants and the the abundance of such free (uncompelled, and unwaged) labour on which most successful internet projects depend, and contrasts such volunteer effort with the level of engagement demanded by (reality) television shows. However, even within the numerous researchers in the field as quoted by the author, there is some debate about the “freedom of labour” and indeed payment. While on one hand the author looks a the changing states of the labour market, the production function and wages where it is categorically stated that lack of wages do not imply unemployment, on the other hand, the internet user (user driven content) is considered free labour which works to fill the pockets of capitalist owners of the portal or site. This argument on free labour is again explored from a cost benefit angle: is the labour really free and are there no benefits to the ubiquitous internet user? Looking back at the beginning of the chapter, the author makes and assumption that “…….this excessive activity that makes the Internet a thriving and hyperactive medium ‘free labour’ – a feature of the cultural economy at large, and an important, yet unacknowledged, source of value in advanced capitalist societies”, is a statement which has, to a large extent, proved unfounded the fears which lead to the meltdown of technology companies in the Y2K crash of 2001. The author touches on these topics, even later on in the book, to illustrate an important issue: labour cannot be classified as free purely on the basis that it is not paid labour. The attempt of the author is not to pass judgement on the internet age. Nor is the stated intention to provide an explanation or to explore the effect that the internet (and associated phenomenon like the digital economy) have had on the society at large. Instead, the author starts this literature with the primary concept of free labour and how this “free labour” interacts with the internet. Unfortunately, the entire literature looks at the whole concept from a theorists perspective and that too one which is limited to the tangible aspects of exchange. This precludes concepts like intangible benefits that the “mass of producers of content” derive from the internet and which is facilitated by private capital albeit for increasing their own profitability.
Even in her subsequent chapters, notably the third chapter, the author turns to the question of ‘free labour’, with user’s actively producing techno-cultural content and software for the internet. She draws in particular on the Marxist idea of the ‘real subsumption’ of society under capitalism, where capital is able to absorb any of the creative powers of labour. This leads on to the problem of ‘control’ and the structures of power operative in the relatively self-organizing system of the internet, which Terranova discusses in Chapter 4. Finally, she looks at the potential of cellular automata models of “soft control” and their application to the upstream battle against entropy and heat-death on the internet, concluding the book with a consideration of the political dimension of network culture, and the implications of the new forms of communication which have become established over the past 15 years or so for our understanding of power and politics.
Interestingly, while providing contra arguments to the very existence of free labour, thereby implying exploitation, the author goes on to say that the exploitation here is the exploitation of a need and not necessarily physical exploitation in terms of servitude, bonded labour or even a top down organization. Instead the author suggests that the exploitation itself has changed because the production function has changed. In the internet economy, there are two forms of labour, the knowledge elite who are basically responsible for putting up websites and providing the infrastructure for interaction, the design of such interactive spaces and perhaps other innovations. The other labour is the user of the internet who, merely by their presence in a specific space, provides free services such as feedback, content (classic examples being the blog sites and social networking sites such as Orkut, MySpace and YouTube). Other than the basic infrastructure, the capitalist makes no contribution to the popularity of the space. Instead the users provide all the inputs for evolution and in turn are also responsible for generating revenue for the capitalist through advertising revenue. In traditional economic theory, this is a service provided to the capitalist, which in turn must have rent implications. However, the capitalist does not pay any rent to the users of the website who provide content, increase traffic through their own networking and provide an opportunity for revenue generation. Furthermore, there is the issue of the ephemeral nature of the commodity being sold and the “knowledge elite” are not immune to this phenomenon. As technology changes, she says, skills become outdated and people are laid off. While retraining may be an option for some, in the interim these workers become exploited as they move to areas which may render them under employed and therefore underpaid. However, for the owners, such turnover does not have any significant impact as the websites, even after the Y2K crash of 2001 and subsequent lay offs, ecommerce in its various forms, has continued thrive. User generated content is bigger than ever before. This implies a lop sided advantage in favour of the owner (capitalist) where he gets free labour from the user, and can upgrade the production “architect” as and when needed.
This brings forth the question as to why this form of voluntary exploitation exist and indeed how can such a lop sided system survive. Some of the explanation of the existence of such systems can be found in the author’s statement that “The great discovery of the biological turn is not only that there exists an abstract machine that can facilitate, contain and exploit the creative powers of a multitude (human and inhuman). It is also about the discovery of the immense productivity of a multitude, its absolute capacity to de-territorialize itself and mutate.” The author uses this statement to drive home a point – that the organization is first and foremost organic i.e. the different elements of this organism are interlinked. Not only that, due to the interactions between the different individuals within this organization, the power of the multitude grown not in an arithmetic progression (as each new member is added) but grown exponentially. Again there are significant advantages of this kind of networking, which the author refers to as “neural networks”. Not only does such a networking provide it with immense power to propagate itself, as the tastes, preferences and opinions of its target audience changes, the organization itself can “mutate” to cater to these changes in its operating environment, a capability which is similar to biological entities which have the ability (albeit over several generations) to adapt to changing environmental parameters. The author refers to these concepts combined as the field of bionomics which look not just at organization, but at the economy as a self organizing entity.
She suggests that a re appropriation of the properties of ‘mass’ may help in unpacking the properties of ‘communication’ and stimulating the emergence of new political modes of engagement. Examples from the recent past include the anti-globalization and anti-war movements. What is new about such computer-linked social movements is intimated by Harry Cleaver’s observation that they are ‘changing constantly and only momentarily forming those solidified moments we call “organizations”. Such moments are constantly eroded by the shifting currents surrounding them so that they are repeatedly melted back into the flow itself’ (cited p. 156). Terranova has written a sober and challenging appraisal of new media and their various political repercussions and possibilities. If its prose is rather dense and opts too readily for terminological jargon, this is compensated for by its breadth of reference and its theoretical acumen.

Comparisons and Contrasts

These two authors have essentially studies two aspects of the same coin i.e. the place of stakeholders in what is known as the new economy. Both have dwelled on and established a relationship between the strategies that organizations adapt its impact on labour (or interaction with labour) and the consequence of all economic activity, profit. While Rajan contrasts the development of economies and organisations within these economies with explanatory socio-cultural and historical differences between them, Terranova has actually looked at the behaviour of organisations as a whole, including the indirect exploitation of free immaterial labour. However, such exploitation is not very different from the activities of Well Spring, which looks at making India a hub for bit technology research or more specifically pharmaceutical research, based purely on the availability of ready test subjects. While there is some merit in locating such a facility which provided ready genetic diversity, such ready access to this diversity will inevitably be available because those sets of population do not have choice. Economics, and rent maximisation behaviour of companies will prevail.
Profit (or economic rent) maximisation is the fundamental purpose of all companies. In classic economic theory, the producer uses inputs like labour and capital to produce goods and services for which he charges rent. In turn, the classic economic theory would also state that labour will also seek rent for providing the service. However, both the authors have highlighted the fact that labour will not necessarily get its due. Furthermore, external interference in the normal economic process, such as indirect government subsidy, freeware (or shareware), open source even, tend to distort the labour market for some of the economic participants. The returns to the labour, in such circumstances, are diminished or non-existent. Classic examples are Well Spring and the Internet, where, in one case the raison d’être is the ready availability of cost effective subjects of all genetic composition and in the other case, its free labour which generates content apart from being the driving force behind the real money, advertising revenue.
These two authors, or indeed modern bionomic theorists, differ a bit in their analysis of the situation. Rajan’s theories revolve around two factors, one being self interest of the economic firm / individual and the other lack of common interest. He states that the firm will perform well only in the exploitative scenario. However, all group contribution will be financially incentivised. With the involvement of the state, as is the case in Hyderabad and Mumbai, the labour wage distortion is a function of this involvement as there comes with state involvement a certain lack of accountability. In his analysis, the power of the multitude isn’t considered a factor in organisational dynamics, instead the organic nature or the firm, suitably influenced by nationalistic interests in India (and salvationary interests in the |United States) and the personal agendas of the people at the helm is what influences organisational strategy, its effect on organisational development and eventually profit.
On the other hand, Terranova has looked at the concept of free labour and organisational behaviour. She has concluded that while superficially appearing so, labour is not entirely free as, in her example; the internet user does get some benefit by using the net. Some of the classic examples are the email facility which, unless corporate, is by and large free – advertising supported. However, she also looks at the power of the multitude in the form of neural networks and decision making taking a bio-turn where the decision regarding organisational evolution as well as structural memory is basically a neural pathway. The collective works as a single large entity where the individuals influence the monolith, unlike Rajan’s cases, where the monolith influences the individual. These two theorists have differences for good reason, Rajan’s analysis is very detailed, follows a case study method, and dwells, perhaps excessively, on the authors personal experiences, perhaps as a means of getting the reader more involved in the study. On the other hand, Terranova’s writings are largely based on an analysis of secondary literature. This would put Terranova’s study, more in the realm of theory whereas Rajan’s study is more of an MBA case study.