Expanding Peer Production to the Physical World
Excerpt from Kevin Carson's at http://c4ss.org/wp-content/uploads/2009/01/industrialpolicycarson0109.pdf
"The importance of the informal and household economies for producing the use-value we consume will probably expand by an order of magnitude, operating on essentially the same principle as the open-source community: low cost production using spare capacity of capital equipment that people own anyway. This was already true, to a large extent, when Borsodi wrote on the potential for home machine production. The revolution described by Borsodi is being further intensified by the emergence of the cheap desktop manufacturing technologies for custom machining parts in small batches. The availability of such technology, coupled with the promise of LETS systems and microcredit for aggregating dispersed capital, will greatly lower the overall capital outlays needed for networked physical production of light and medium consumer goods.
Peer production and the open source model were originally developed in the immaterial realm, leading to the stresses on the culture industry described earlier. But as technology for physical production becomes feasible on increasingly smaller scales and at less cost, and as the transaction costs for pooling many dispersed small-scale capitals for a single venture approach zero, there is less and less disconnect between the respective applications of peer production principle in the immaterial and physical realms. In effect, the distinction between Richard Stallman's "free speech" and "free beer" is eroding in the realm of physical production.
Michel Bauwens writes:
*P2P can arise not only in the immaterial sphere of intellectual and software production, but wherever there is access to distributed technology: spare computing cycles, distributed telecommunications and any kind of viral communicator meshwork.
- P2P can arise wherever other forms of distributed fixed capital are available: such is the case
for carpooling, which is the second most used mode of transportation in the U.S....
- P2P can arise wherever financial capital can be distributed. Initiatives such as the ZOPA
bank point in that direction. Cooperative purchase and use of large capital goods are a possibility."
(source: Michel Bauwens, "The Political Economy of Peer Production," CTheory, December 2005 <http://www.ctheory.net/articles.aspx?id=499>.)
This should have an enormous impact, as well, on the total amount of labor required to support our current standard of living. Management guru Thomas Peters likes to gush that some ninety percent of product price these days is "ephemera" or "intellect," as opposed to materials and labor cost. Translated into English, this means that most of commodity price is embedded rents on "intellectual property" and other artificial property rights, over and above the cost of production. When physical manufacturing is stripped of the cost of proprietary design and technology, and the consumer-driven, pull model of distribution strips away most of the immense marketing cost, we will find that the portion of price formerly made up of such intangibles will implode, and the remaining price based on actual materials and labor cost will approach an order of magnitude reduction. In such a world, where the price of the goods we consume no longer included the many embedded rents on privilege, we can likely maintain the existing standard of living with an average work week of one or two days.
The importance of Bauwens' "spare cycles," in particular, is suggested by an exchange between Jed Harris and Charles Johnson.
- The change that enables widespread peer production is that today, an entity can become selfsustaining, and even grow explosively, with very small amounts of capital. As a result it doesn’t need to trade ownership for capital, and so it doesn’t need to provide any return on investment. 
But beyond that, Johnson points out, peer production can take place even when significant capital investments are required, thanks to the way "both emerging distributed technologies in general, and peer production projects in particular, facilitate the aggregation of dispersed capital--without it having to pass through a single capitalist checkpoint, like a commercial bank or a venture capital fund...." 
More importantly, because of the way that peer production projects distribute their labor, peer-production entrepreneurs can also take advantage of spare cycles on existing, widely-distributed capital goods — tools like computers, facilities like offices and houses, software, etc. which contributors own, which they still would have owned personally or professionally whether or not they were contributing to the peer production project, and which can be put to use as a direct contribution of a small amount of fractional shares of capital goods directly to the peer production project. So it’s not just a matter of cutting total aggregate costs for capital goods (although that’s an important element); it’s also, importantly, a matter of new models of aggregating the capital goods to meet whatever costs you may have, so that small bits of available capital can be rounded up without the intervention of money-men and other intermediaries.
In making productive use of idle capacity (or "spare cycles") of capital goods the average person owns anyway, providing a productive outlet for the surplus labor of the unemployed, and transforming the small surpluses of household production into a ready source of exchange value, the informal economy has made the stone which the builders refused into its cornerstone.
Consider, for example, the process of running a small, informal brew pub or restaurant out of your home, under a genuine free market regime. Buying a brewing kettle and a few small fermenting tanks for your basement, using a few tables in an extra room as a public restaurant area, etc., would require at most a bank loan for a few thousand dollars. And with that capital outlay, you could probably service the debt with the margin from a few customers a week. A modest level of business on evenings and weekends, probably drawn from among your existing circle of acquaintances, would enable you to initially shift some of your working hours from wage labor to work in the restaurant, with the possibility of gradually phasing out wage labor altogether or scaling back to part time, as you built up a customer base. In this and many other lines of business, the minimal entry costs and capital outlay mean that the minimum turnover required to pay the overhead and stay in business would be quite modest. In that case, a lot more people would be able to start small businesses for supplementary income and gradually shift some of their wage work to self employment, with minimal risk or sunk costs.
The savings in overhead, in the informal economy, are further compounded by the lack of administrative cost from paying a boss and office staff in addition to those providing the actual services. As described by Scott Burns in The Household Economy, the portion of a tradesman's service call that goes to feed the organization is greater than the portion he takes home. A plumbing firm, temp agency, and the like, typically charges around two and one-times the price for its employee's labor that it pays as an hourly wage. Assuming equal takehome pay, a plumber and accountant must each work two and one-half hours for one hour of the other's work.
Roderick Long speculated, along similar lines, in the November issue of Cato Unbound:
- In the absence of licensure, zoning, and other regulations, how many people would start a restaurant today if all they needed was their living room and their kitchen? How many people would start a beauty salon today if all they needed was a chair and some scissors, combs, gels, and so on? How many people would start a taxi service today if all they needed was a car and a cell phone? How many people would start a day care service today if a bunch of working parents could simply get together and pool their resources to pay a few of their number to take care of the children of the rest? 
All the above is from http://c4ss.org/wp-content/uploads/2009/01/industrialpolicycarson0109.pdf
- Jed Harris, "Capitalists vs. Entrepreneurs," Anomalous Presumptions, February 26, 2007
- Charles Johnson, "Dump the rentiers off your back," Rad Geek People's Daily, May 29, 2008
- Roderick Long, "Free Market Firms: Smaller, Flatter, and More Crowded," Cato Unbound, Nov. 25,
- Scott Burns, The Household Economy: Its Shape, Origins, & Future (Boston: The Beacon Press, 1975)