Michel Bauwens on Open Business

This interview, conducted by Michael Holloway, appeared in a shorter edited version at http://www.openbusiness.cc/ during January 2007.

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Pls introduce your criticisms of the neoliberal model for the political economy.

I want to stress I'm not a economist in any professional sense, but here are some observations. Generally, from a 'P2P point of view', the current system is based on two main aspects, based on a illogical treatment of physical and immaterial resources: 1) It treats finite material resources as if they were infinite i.e. it treats nature as an externality from which it can take any resources, and then in turn treats it as a sink into which it can dump waste products. There is no true costing of the natural resources, with the result being a severe disruption of the biosphere, global warming, pollution, and the sixth great extinction of natural species

2) It creates artificial scarcity for immaterial production, where objectively there is none. It has strengthened intellectual property rights to an unprecedented degree; thereby slowing down social and cultural innovation, creating monopolistic rents that are bankrupting our social security systems, impeding research into tropical diseases, and making many medecines too expensive for the poor; as well as creating a flow of money out of developing countries

Peer to peer theory responds specifically to the two first elements of this critique, calling for a new model of society where this logic is reversed, i.e. let's treat immaterial goods as infinitely reproducible, and lets treat finite resources with care.

There are also more general criticisms, like the following:

Neoliberalism is a machine that creates increased inequality both between countries, and inside countries, and has generally led to slower growth as compared to the previous period. It masks a significant transfer of resources from the poorer and middle class people, towards an elite. By destroying the social fabric and the institutions that functioned as a social safety net, it has dramatically increased the tensions in the world, breeding fundamentalisms.

Finally, by solely focusing on a logic of material input-output efficiency, and replacing the stakeholder model by the shareholder model, it also has had dramatic effects in the world of enterprise, creating a precarious and high stress society, leading to increased dissatisfaction within the corporate world itself, while it has de-legitimized the social and human aspects of many caring professions.

Pls introduce your criticisms of corporate governance

It is important to now recognize there are at least 3 basic modes of production:

1) Centralized state planning, using publicly owned capital;

2) Market-based production, mostly through corporations;

3) Production directly through social relations.

The second, corporate mode, can certainly adapt and partially use 'social relations-based cooperation', but the for-profit mode is fundamentally dual. Increasingly, corporations have become dependent on socially produced innovation ( i.e. produced 'outside' of the enterprise), and being commons-dependent, they may behave in dolphin-like ways, trying to develop cooperation ecologies with social production. But, they are primarily driven by the profit motive, so their fundamental nature is to behave as sharks. There will be cooperation, but always salaried dependence to authority; they will enable participatory platforms, but then seek to profit exclusively from the monetization of this cooperation. So, as peer producers, relations will always be contradictory and pressure and care are always needed in the cooperation.

It is also my conviction that the for-profit mode, and its hierarchical allocation of resources, is increasingly outmoded to create optimal value in society. The self-selective aspects of peer production, its communal validation processes, it's continuous improvement for-the-benefit-of-all, its 'passionate' production mode, are - in an increasing number of cases - better suited to immaterial production than the corporate mode. Peer governance also teaches us that there are now better ways to manage. Many corporations are creativity-killers. Corporations will tend to externalise cost, using the environment as a sink. Shareholder governance is too exclusively tied to the interests of a minority, and is better replaced by forms of multi-stakeholder governance, which recognize multiple interests and the social responsibilities.

In conclusion: peer to peer processes can improve corporations, are a necessary corrective, and will also replace them in many instances.

Pls introduce the 3 processes which characterise and distinguish your conceptual framework 'p2p theory'

Peer to peer is the relational dynamic at work in distributed networks . There is a subtle difference between decentralized network, where the power is devolved amongst obligatory hubs, and distributed networks, where hubs arise naturally out of the interactions of free agents. Key to distributed networks is the absence of external or hierarchical coercion, so agents are free to choose their actions and relations.

Such peer to peer networks are becoming the key infrastructure for our technologies (internet, web, etc..), as well as a key organizational format for humans.

It gives rise to 3 fundamental processes.

The first occurs when people decide to produce something in common, i.e. peer production, as evidenced in projects such as Linux or Wikipedia. Such 'passionate production' is based on voluntary self-selection, free cooperation, and results in products that are free to use. Since there is no obligatory hierarchy, no wage dependence; since the resources are not allocated through market mechanisms, and since there are no prices, it is correct to call this a third mode of production.

The process of free cooperation itself, which refers to how these projects are then managed, is peer governance. Again it is not a state or corporate bureaucracy, nor it is based on political representation, so it is correct to call this a third mode of governance.

Finally, it has invented a new form of peer property, which guards against the private appropriation of the common work. Such property is not a form of public property in the hands of the state, nor is it private exclusionary property owned by a corporation. Rather it is a form of distribution which recognizes individual attribution, but says: anybody can use it, provided you respect the common origin, and put your improvements under the same format.

So the three processes give rise to 3 important paradigms: the first, the open and free paradigm, ensures that peer production has access to raw material to work with. The second, the participatory paradigm, refers to the process of cooperation, to ensure maximum participation by the self-selected individuals; the third paradigm refers to the institutional format of the Commons, created by the common production, which in turn becomes the free and open raw material for a new round. Note the spiral or cyclical nature of this process, which we can call (after Nick Dyer-Whiteford), the 'Circulation of the Commons' .

You have stated previously on this site, that OB performs an important function, in terms of documenting and analysing business models that allow peer-producers to earn a living. Could you expand on this please by locating the OB project in the context of your 'p2p theory'?

I fully support the Open Business initiative, which I see as a part of my own concerns. I think that the P2P Foundation wants to make a broader synthesis, and add research and proposals on macro-social change.

I also think that much of what I see as non-reciprocal peer production does not need to be monetized. That it operates outside the market is a unique quality, in terms of what it brings to our world. Many projects are sustainable, not on an individual level, as individuals need a solution to make a living, but on a collective level, as there is a throughput equilibrium between those who leave for the market, and new volunteers who enter the project, with many going back and forth at different points in their lives, as is quite customary in the free and open source software fields. And we must always keep in mind the 'crowding out' effects of introducing for-profit logics in the for-benefit environment. Peer projects have to be extremely careful in the use of such funding, and have learned that extreme care is needed in case of the direct financing of production.

For the societal health of peer production, we need a macro-economic solution. My suggestion would be a universal basic income , which facilitates the existence of the peer sector, so contributes to the social innovation that it generates, and is thereby essential for the market economy as well. However, we should resist the temptation to 'marketize' everything.

But this new use-value indeed creates the possibility for derivative services, and this is where the Open Business initiative comes in, to examine in more detail how the two worlds intersect. That said, I do believe OB needs more formalization, typologies, models etc... so that people engaged in open business, can have a more clear view of the choices.

To clarify, let's distinguish:

1) non-reciprocal peer production, without a direct injection of capital

2) derivative services, i.e. production for the market, which can be either controlled by peer producers themselves (which could use cooperatives for this), or by corporations wishing to enter productively in a mutually beneficial ecology with peer production.

The second is emphatically not peer production. By definition, if it is done for the market, with wages, with prices, and under corporate command and control, it cannot be peer production.

Pls tell us what you mean by the phrase 'Concrete Utopias'.

I believe that P2P is much more about process, i.e. how to find better answers, than an answer itself. Our interest in P2P processes is because when decision-making and production become more participative, the results are better for more of the participants. Many of today's issues could be better solved through such participation, for example open and free cultures, and commons-inspired institutions.

P2P is also pluralist , so it is not about imagining a totally different society for the future, but it is rather about closely observing what is happening today, and further extending/experimenting with such existing practices. P2P is part of a new configuration between peer production, gift economies , exchange-based markets, and the state. Through such conceptual and real checks and balances, it carries no danger of being a totalitarian project. P2P is inherently pluralist and so is the P2P Foundation which explicitly defines itself as a network for research and exchange, rather than as a political movement with a precise blueprint for society.

Pls outline the Hacker Ethic.

I think there are two major sources of inspiration for this concept. One is Pekka Himanen's more practical description of the new ways of working in the free and open source programming communities, and the other is the generalization of the concept as applying to the desires and practices of all knowledge workers, in the Hacker Manifesto by Mackenzie Wark . I have found Pat Kane's Play Ethic to be useful in this context as well. What we are seeing is a seeping out of the original hacker ethic as the new way of working for new generations, "in general", rather than as the specialized way of the free software community.

For me, it essentially describes the shift towards passionate production, a form of production which is not conditioned by the scarcity of work or money, but from an overflow and abundance of creative intellect. The two last generations of workers, Gen X and Gen Y Millenials, have generally speaking a surplus of creativity, a need and desire for expression and collaboration, which cannot fully find its place in a corporate environment. A corporate environment can provide in part both internal motivation (through its remuneration and career schemes, but even there the old ways of hierarchical organization are failing to meet expectations, and are no longer very efficient) and external motivation (which is linked to the goals of the corporations). Yet the latter is very difficult to achieve: how do you truly motivate a person to sell more Coca-Cola or to pollute the environment? So there is a growing desire to work for for-benefit institutions , which are better able to combine both forms of motivation.

The pure forms of the hacker ethic are therefore emerging in the sphere of peer production, where value is created by bubbling up, an a posteriori emergence of working together for a common goal; traditional for-profit organizations are of course trying to adopt it, but it is a big challenge to combine for-profit priorities (the constitutional obligation to act as a 'shark'), with the ("dolphin"-like) requirements of free cooperation. Probably Google's new management style is the best and most successful example of such a marriage.

I would also stress that attempts to use the hacker ethic and network society in a hyper-competitive environment, can result in very dysfunctional ways of life (the obligation to be always connected and available, extremely long working hours as a minimal requirement, the use of stress-inducing open plan environments, generalized precarity of working conditions, and so on....). True passionate production by contrast needs an open temporal environment. When it is coupled with ever higher deadlines, it turns into its opposite, because the higher productivity of passion becomes the minimum standard for permanent behaviour, and that is not humanly sustainable. What is needed is openness to the ebb and flow, the respiration of creativity; the allowance of bubbling up of value (just set the common goal, and some key strategic directions, nothing else). It is under such free conditions that most value can be created under the hacker ethic.

In terms of 'p2p governance', from personal experience there's no substitute for an experienced project manager / facilitatator. Please explain, using examples, how that role is fulfilled in the case of 'distributed leadership'.

I have little direct familiarity with project management in highly technical open projects. In the knowledge projects I'm familiar with, where failure is less critical, we work with 'maintainers'. Projects and sub-projects do seem to need a dedicated leadership. Someone has to have a vision of the project, an interest in its going forward, gently pushing the willingness of people to contribute. At the P2P Foundation, inspired by a moniker of Rajani Kanth, I often, and only half jokingly, use the term of Chief (p)Leader. Such a maintainer, who gains the respect of the other cooperators precisely because of his engagement and dedication to the project, is often used as a kind of arbiter of last resort, but he is definitely not in a commanding role. Of course, different projects use different kinds of such leadership. Next to the benevolent dictator model (who is of course not a dictator at all, this is really an ill-chosen term), some other projects use majority voting, or a rolling roster of voluntary leaders which take turns (I think this is the case for Perl ). George Dafermos , a researcher at the TU Delft who is associated with our work, and co-maintainer of our P2P Governance pages , is following/researching these aspects in more detail.

Holoptism and non-hierarchical participation are useful ideals, but requires both independent motivation from participants and a different form of management than classical models. Can you summarise these practices and point to successful examples in both the public and private sector?

I believe that holoptism and non-hierarchical participation are more than ideals, but already proven practices.

Holoptism should be seen in contrast with hierarchical panoptism, i..e. the organization of information flows so that only the hierarchy has a total vision of what is happening. In contrast, in peer production such as free software or knowledge production, holoptic transparency is inscribed in the very way the technological tools are designed. Every line of code in free software, or line of text in a wiki, can be attributed, and there is extensive version control. This enables these projects to be transparent. Of course, this requires appropriate behaviour from participants.

In more classic hierarchical, or semi-hierarchical environments, those not built from the bottom-up in the first place, this would also require cultural and behavioural adaptation. To give you an example, where there is a lot of verbal communication between a chosen few, then obviously this is not recorded in the system, and this can act as an exclusionary filter for those who are not present in such live proximity. So the technology is a virtuality, a potential, that requires a positive feedback loop of organizational and cultural adaptation to work in different environments.

It is useful to distinguish a triad of organizational formats, which are the hierarchical networks, the decentralized 'heterarchical' networks, and the true distributed networks. Peer to peer functions to its optimal benefit in the latter only, and there participation is coupled to 'responsible autonomy', since all that the individual does is visible and vetted through communal validation.

In public and private sectors, what you actually get is decentralized networks, the division of power amongst different groups, who then use distributed technology, but within a different cultural and organizational environment, and hybrid practices.

Who are the 'netarchists', and where do they fit into your theories?

In any type of society, the question of who rules is an important one. The concept of netarchists is used to explain the new logic of rule in our mixed capitalist / participatory society.

We have long left the dominance of the industrial model and the rule of the industrial owners. So where's the locus of power now, where is it emerging?

The classic model of cognitive capitalism was either based on monopoly rents based on intellectual property rights, think Microsoft and Nike . The key in that process was to protect your innovations, to put them in the context of a brand which could command premium prices, and to maintain artificial scarcity. Another type of power is what Mackenzie Wark calls vectoral capitalism, where the owners of the media control cultural content, which cannot be distributed without their intervention. Finally, the value of both these processes was realized mostly through financial capital, on the stock market and with all kinds of innovative financial instruments.

Both the basis of cognitive capitalism and vectoral capitalism is being undermined by the new peer to peer practices. It becomes increasingly difficult to maintain the artificial scarcities on which monopoly rents are based, and producers of content, which is increasingly 'all of us', no longer have to pass through the classical vectors of the mass media age.

So what is replacing them? My answer is: the enablers of the participatory platforms, the Web 2.0 type of companies. Their role is double, and I often refer to the dolphin/shark dichotomy. As enablers of participatory platforms, they support and enhance peer to peer developments, but as private companies working for shareholders, they seek to monetize it. For peer producers, it is easy now to create use value, but still rather more difficult to monetize it and to make a living from those creations. In some cases, there is a 'third enclosure' going on, with companies like YouTube asking you to sign away your rights to your creation. So the emergence of netarchists creates a whole new set of issues of equity and distribution of value. But one conclusion stands out: it is no longer necessary to rely on strong protection of IP rights in order to make business with content.

Interesting is also the power relationship , the relative strength, of peer producers vs. netarchists. As individuals, we stand very weak, but as conscious communities, such as free software developers, we are far stronger. The latter can also have more beneficial ecologies of mutual support with well-behaving corporations; and there is also the development of new types of for-benefit companies, such as the Mozilla Foundation .

What are your expectations for extension of P2P beyond the immaterial sphere?

Many believe that peer to peer is only appropriate for immaterial production. There are good reasons for this: the abundance and / or distribution aspects that are necessary to have distributed networks, are primarily present in software and knowledge creation. But I would remind your readers of a simple fact: any production process has a design phase, and that design phase is an immaterial process that is similar to knowledge creation. We can therefore imagine many manufacturing processes could have a first phase as peer production, think the open source car, that would then be produced subsequently by market forces. We can also already see that sharing involves physical products: think of file-sharing as using physical computers, of car-pooling, or the bottom-up telco network creation of Skype. These are also user-created capital pools, as are Prosper and Zopa as P2P lending sites.

The general question becomes then: how can we distribute financial and physical resources more, so as to enable more P2P alternatives? Part of the answer is technological, part of the answer is political, as a lot of concentration is maintained through political and economic power. So this is the first part of my answer: to the degree that we can distribute material resources and inputs, we enable more P2P. Another pathway is the intelligent combination of physical objects, logical objects and digital data (this is an insight I got from my friend Martin Springer). Take Bookcrossings : you have a physical book, to which you attach a logical object (it can be used by all), and you give it a digital identifier. This is why there is now a successful white bicycle program in German , because before, such a combination was impossible, and the cycles got stolen. So we have the possibility, through Semapedia-type tools , to create a lot of innovative commons solutions. Peter Barnes , in his new book on Capitalism 3.0 , explains how we could create many such common trusts, based on the principle, one citizen, one share, and vote; and how they could better protect our environmental resources that either the state or the private market could.

My vision of the future is that we'll have a core of non-reciprocal peer production, surrounded by a re-invigorated gift-based service and traditional economy (pre and post-monetary gifting); a peer-informed marketplace no longer solely based on extortion and power relationships; and peer-informed 'multi-stakeholder' forms of governance. In the triad civil society - market - state, the core effecting the most pull, will be civil society, the autonomous production of the social.