Value in the Commons Economy
"This is a report about what we believe is a ‘value crisis’ affecting the current world system, and which is in our opinion indicative of an underlying transformation of the ‘value system’. Our main thesis is that we are moving from a system based on the creation of value through labor and capital in a market system, to a system which recognizes broader value streams, which are experienced as ‘contributions’ to systems that are based on the co-construction of shared resources, i.e. commons. While this emerging new system of value creation and distribution operates at present mostly within the confines of the mainstream value system, we show how a number of pioneering communities are also working on expanding the new system within those confines, with the potential to eventually escape those confines.
Throughout the document, we attempt to answer three fundamental questions:
- What is value, generally in the context of the allocation of resources in human societies, but more specifically in our ‘digitalized’, ‘networked’ societies where emerging knowledge commons are playing an increasingly vital role?
- What ‘should’ value be in a world marked by ecological and resource constraints presently operating at a global scale? Can we imagine a value system that rewards generative instead of extractive activities and exchanges?
- In a world of social, cultural and institutional diversity, can a new ‘value system’ incorporate the multiple values that are not recognized by capitalism, such as the care economy and domestic work?
This report looks at the issue of potential rent extraction from contributory communities, and attempts to solve or mitigate it through open and contributory accounting practices. It focuses on the internal value practices within productive communities and their entrepreneurial coalitions.
The first section frames our research topic with reference to approaches about value shifts in earlier historical development drawing on the works of Kojin Karatani, David Ronfeldt, Alan Page Fiske, as well as the P2P-theoretical approaches of the P2P Foundation network.
The second section focuses on the open and contributory value practices of pioneering peer production communities, namely Enspiral, Sensorica and Backfeed, looking at their value practices, i.e. how to maintain autonomy, how to create value sovereignty beyond the pressures of the capitalist market, how to generate value flows from the old economy to the new, advances and changes in their accounting practices, etc.
The third section explores the potential policy recommendations of their pragmatic approaches, and how it can affect society as a whole, and the furtherance of commons-based peer production models through policy frameworks such as the Commons Transition Plan, and others."
1. Theoretical Framework 3
1.1 Background 3
1.2. Analysing the value crisis 6
1.3. A historical approach to shifts in modes of exchange 10
2. Case Studies 13
2.1. The Enspiral Network 13
2.2. Sensorica 18
2.3. Backfeed 23
3. Policy Recommendations 30
3.1. Economic Infrastructure 31
3.2. The Political Infrastructure
THE VALUE CRISIS
Vasilis Niaros and Michel Bauwens:
"Our common world is faced with significant questions regarding the evolution of value. We consider the following to be among the most important:
What is value, generally in the context of the allocation of resources in human societies, but more specifically in our ‘digitalized’, ‘networked’ societies where emerging knowledge commons are playing an increasingly vital role? What ‘should’ value be in a world marked by ecological and resource constraints presently operating at a global scale? In a world of social, cultural and institutional diversity, can a new ‘value system’ incorporate the multiple values that are not recognized by capitalism, such as the care economy and domestic work? This report does not offer complete answers to these questions, but it looks at how the new commons-based approaches attempt to deal with them.
There is no consensus about what value is nor from where it is derived, neither cross-historically nor amongst analysts and commentators of contemporary capitalism. What individuals and societies are willing to put their attention and energy toward varies amongst cultures, regions, ideological and social groups within a society, and throughout historical times.
An intense debate persists on whether what determines value is located in the objective sphere (reflecting an amount of labor, energy, capital, resources etc.), such as is claimed by the labor value theory. Another approach is questioning whether it is located in the subjective sphere (the marginalist school, Austrian economics and its influence on mainstream neoclassical economics), whether as a simple correlation of individual desires or as a conscious collective decision and social contract.
There are, of course, major differences between these fundamental approaches. However, according to many authors, there seems to exist an increasing consensus that we are going through a ‘value crisis’ and that a new value regime must be invented. This crisis is characterized by an increased capacity to create common value through commons-based peer production and other practices of the collaborative economy. In these open and contributory systems, many contributors co-create value as a commons which can be used by all those that are connected to networks, but the income is generated by a fraction of the contributors connected to the marketplace.
The current value regime rewards ‘extractive’ production and consumption activities. Indeed, issues like the free labour of digital workers and social media users, the non-recognition of care work, and the ongoing ecological degradation of our planet and its resources are interlinked to the dominance of a system based on extractivism. Therefore, the key underlying shift needed is one from extractive models, practices that enrich some at the expense of the others (communities, resources, nature), to generative value models, practices that enrich the communities, resources etc., to which they are applied. This is what we could call the Value Shift.
Rather than discussing what the new value means for capitalism, the authors of this report ask: What does that new value represent for a shift towards post-capitalist practices? What if the commons represents a new economy that is being born within the old? If one adopts this perspective, two main avenues would be open to us.
The first avenue would be to think about ‘reverse co-optation’ of value, from the ‘old’ system to the new. Can the emerging commons-centric economy, which creates value in and through the commons, use capital from the capitalist or state system, and subsume capital to the new logic?
The second avenue goes one step further within the confines of the already existing commons economy: Can broader streams of value be recognized, and become the basis of a new distribution of value that recognizes the commons and its distinct species of value-creation?
One of the observed reactions is that some productive communities and the entrepreneurial coalitions allied with them are experimenting with generative business models, in which the entrepreneurial entities co-create the commons and create livelihoods for the contributors. An open cooperative that follows the first avenue (reverse cooptation) is Enspiral, through its ‘transvestment’ strategy, i.e. the transfer of value from one modality of value creation to another. This is implemented through the use of external investments with capped returns and the insulation of their purpose-driven activities from capitalist extraction. The second avenue (new value distribution strategies) is followed by Sensorica, which internally creates a value-sovereign distribution through its open value accounting system.
The underlying operating concept here is therefore a quest for ‘value sovereignty’. Communities that are already engaged in the value transition are operating within a dominant capitalist market economy. Thus, they must protect their value sovereignty through membranes that safeguard them from capture by extractive forces, and create reciprocity mechanisms to protect their networks. Finally, they must work at the eco-systemic level, i.e. create connections between value-sovereign meta-networks.
This report explores the open and contributory value practices of three pioneering peer production communities, namely Enspiral, Sensorica and Backfeed. The focus is on their value practices, i.e. how to maintain autonomy, how to create value sovereignty beyond the pressures of the capitalist market, how to generate value flows from the old economy to the new, advances and changes in their accounting practices, etc.
Enspiral is an entrepreneurial coalition of mostly mission-driven entities. These entities provide a wide range of services, including custom development of websites and applications, project management and creative services, all specialized for projects that aim to create social value. Enspiral’s infrastructure is managed by a cooperative Foundation that has a strong open source ethos in the documentation of its practices, along with a participatory design orientation to its structures. More specific, Enspiral calls itself an ‘open cooperative’ because of its commitment to both the production of commons, and an orientation towards the common good.
In the context of our description of a value shift, Enspiral is clearly pioneering a new ‘ethical’ value regime but also finding innovative solutions for what has previously been called ‘transvestment’. The Enspiral culture is coalesced around creating value for the society rather than for shareholders. It is statutorily oriented towards the common good and is pro-actively developing the conditions to serve this purpose. One of its core elements that illustrate this approach on value is ‘capped returns’. The general idea is that the total returns that investors may receive on the equity of a business are capped. For this, the shares issued by a company would be coupled by a matching call option which would require the repurchase of the shares at an agreed upon price. Once all shares have been repurchased by the company, it will be free to re-invest all future profits to its social mission. Through this mechanism, external and potentially extractive capital is ‘subsumed’ and disciplined to become ‘cooperative capital’.
Sensorica is an open collaborative network committed to the design and deployment of sensors and sense-making systems, utilizing open source software and hardware solutions. It is partially a commons-based community and partially a market-oriented entity. On one hand, individuals and organizations mutualize resources to initiate projects, driven primarily by intrinsic motivations. On the other hand, the innovative solutions developed in Sensorica can be exchanged in the market to generate income. In other words, it is experimenting with new ways of interaction between commons and market forms. To directly connect an open contributory system to potential income from the market and other sources, Sensorica has pioneered a complex form of a ‘value accounting system’. This system constitutes a reward mechanism that records and evaluates every member’s input and fairly redistributes revenues in proportion to each contribution to the related projects.
In our interpretation of their value practices, they differ in one essential aspect from the Enspiral model. In Enspiral, there is no direct linkage between the open and free contributions to their common resource base, and the creation of a livelihood through membership in their entrepreneurial entities. There is a ‘wall’ between the commons and the market. In the case of Sensorica, however, they have created independent entrepreneurial entities that have the sole right to commercialize their products and services. The income is directly linked to the priori commons contributions as measured through the open value accounting system.
Unlike our two previous examples, Backfeed is not a really operating peer production community, but its innovative and integrated design features warrants a special discussion. Backfeed is a system based on the use of the blockchain ledger, which imagines itself as a full infrastructure for decentralized production, which comes with sophisticated capabilities to develop incentives and express them through crypto-currencies. By doing this, they address the capacity to more easily create ‘value sovereign’ communities, and make technical tools available for their management of value. If Enspiral has a full wall between the market and the commons, which Sensorica aims to bridge through its open value accounting system, then Backfeed is even more directed towards the market polarity, by an intensive use of ‘incentives’ for the commons-based production.
Whether that is a desirable option is a fundamental question, as commons-based production is said to be based on ‘intrinsic’ motivation, and there is a potential danger that ‘extrinsic’ market-based incentives may ‘crowd out’ commons-based motivations. But with these reservations in mind, Backfeed remains an innovative way to think through the future of commons-based production with much more emphasis on extrinsic incentives and crypto-currency based monetization. Politically, the polarity represented by Enspiral follows a strong commons-based, common good oriented, and community centric approach, while Backfeed’s vision is based much more on the aggregation of individuals, who contractually align with each other, and with more stress on the exchange mechanisms. At this stage of non-implementation, the Backfeed protocol and design should be read as a possible future scenario for value exchange.
POLICY RECOMMENDATIONS AND CONCLUSIONS
The third section of the report explores some policy recommendations related to the aforementioned approaches, and how they could affect society as a whole, and the furtherance of commons-based peer production models. The report summarizes a set of proposals that deal respectively with an ‘economic’ and ‘political’ infrastructure for the new commons-based value regime.
Regarding the economic infrastructure, two aspects of suggested practice and policy are discussed. The first one is related to the protection of the ‘internal value regime’ that is distinct from the external one. This is what we call the practices that insure ‘value sovereignty’. The second aspect concerns the measures against external extractive and rent-seeking activities of profit-maximizing entities towards the commons, but also the positive capacity of reverse cooptation of the means available in the dominant external system.
The policy recommendations related to the political infrastructure aim at building a counter-power at the urban, regional and global level. To this end, a number of proposals is introduced which focus on the creation of the appropriate institutions to support commoners and commons-oriented enterprises on both the local and global level.
Our proposals describe the requirements for a new mode of exchange and production that integrates the requirement of shared knowledge and mutualization of physical infrastructures, fair distribution of value, and compatibility with the ecosystems on which we depend.
To conclude, we believe that a strategy for a multi-modal commons-centric transition offers a positive way out of the current crisis, and a way to respond to the new cultural and political demands of the commons-influenced generations. The commoners are already here and so are the commons, and the prefigurative forms of a new value regime. The time has come for an integrated strategy that both strengthens their economic networks, and the emergence of a new value regime." (http://commonstransition.org/value-commons-economy/)
- a finnish language translation of the Executive Summary is available at http://kapitaali.com/arvo-yhteisvauraustaloudessa/