Distributed Capitalism

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Jeremy Rifkin:

"The new era will bring with it a reorganization of power relationships across every level of society. While the fossil fuel-based First and Second Industrial Revolutions scaled vertically and favored centralized, top-down organizational structures operating in markets, the Third Industrial Revolution is organized nodally, scales laterally, and favors distributed and collaborative business practices that work most effectively in networks. The "democratization of energy" has profound implications for how we orchestrate the entirety of human life in the coming century. We are entering the era of "Distributed Capitalism."

The partial shift from markets to networks establishes a different business orientation. The adversarial relationship between sellers and buyers is replaced by a collaborative relationship between suppliers and users. Self-interest is subsumed by shared interest. Proprietary information is eclipsed by a new emphasis on openness and collective trust. The new focus on transparency over secrecy is based on the premise that adding value to the network doesn't depreciate ones own stock, but, rather, appreciates everyone's holdings as equal nodes in a common endeavor.

In industry after industry, cross-sector networks are competing with autonomous transaction-based business models, and peer-to-peer business practices conducted in commercial commons are challenging competitive business operations in siloed markets.

Distributed capitalism ushers in new business models, including 3D printing in the manufacturing of durable goods and performance contracting and shared savings ventures in the service and experiential sectors, which greatly reduces capital, energy and labor costs, and increases productivity. In the new lateral economy, the exchange of property in markets is increasingly subsumed by just-in-time access to goods and services in networks, purchased in the form of leases, rentals, timeshares, retainer agreements, and other kinds of time allotments.

When thousands of businesses -- large companies, SMES, and cooperatives -- connect with one another in vast networks, the distributed power often exceeds the power of standalone giant companies that characterized the First and Second Industrial Revolutions." (http://www.huffingtonpost.com/jeremy-rifkin/the-third-industrial-revo_b_981168.html)

Should We Worry about the Future of Labor within it?

"Before Spinuzzi demonstrates how networks are “enacted”, he describes the transfigurations that have occurred in the time period between the waning of the industrial age and the development (or negotiation) of what Castells has called “informational capitalism.” This new brand of capitalism is different from the modular form that Marx envisioned in that the “deskilling” that occurs when tasks are “broken down into easily learnable and repeatable components” is challenged. No more assembly lines and workers who can’t see the final products. Rather, in information capitalism the complete net work is interpenetrated, deeply rhizomatic: “it has multiple, multidirectional information flows” (137). Because of this characteristic, some folks claim that capitalism will move toward a more distributed form. Distributed capitalism will come to look a lot like shareholders in companies – distributed, desires for “unique support” from vendors, and trustworthy relations among consumers (think Amazon.com’s comment function). This process of co-configuration – whereby producer and consumers configure one another at all times reciprocally – will disrupt supply chains and create “advocates” or “professional relationship workers” who “assemble temporary ‘federations’ of suppliers for each transaction or service. In effect, the layer between producer and consumer will have an individualized shim. While these new ways to describe capitalist paradigms in the information age could be positive, they also have a negative side.

In the move toward this new distributed capitalism, Spinuzzi notes how some negative social practices could come into being. Working through Deleuze, we get a new picture of social interaction that moves society from a Foucauldian pantopticonicism rooted in systems of discipline from above toward a distributed, control-based horizontal & vertical social competition between all workers in the capitalist agora. In this new field of work, laborers who are able to participate in the information economy are in a constant state of competition that renders job security, benefits, and retirement static for only the most successful or sought-after workers. It seems natural that champions of neoliberal economic systems like Milton Friedman and his fellow Chicago School economists would eat this hyper-competitive, cream-rises-to-the-top labor model up . . . and as long as Friedmanites continue to occupy influential positions at the IMF, World Bank, and other organizations, this new model will likely be championed as the future of economic Development.

While I’m not naive enough to believe that unions and collective resistance have near the power that they once levied against big-business capitalism, I see distributed capitalism one of the last steps in the progressive deterioration of collective resistance in labor systems. Once Haraway’s “homework economy” blurs the boundaries between life and work (lifestreaming) and the quest for individual consumptive experiences dissolves mass production (which itself is pretty debatable if you’re a believer in the herd mentality), the consumer is left in a ecstatic state vis-a-vis the instant and constantly individual gratification of extreme commodity fetishism. All the while the worker – now left without affiliation and only existing in the network as a fluid, constantly re/de skilling cog – moves on to new “opportunities.” (http://justinlewis.me/me/2010/02/05/a-world-without-bosses-distributed-capitalism-net-work/)

George Dafermos: Going Beyond Distributed Capitalism to Value Sovereignty and Open Contributory Accounting

George Dafermos:

"Netarchical capitalism does not constitute the only trajectory of evolution of cognitive capital in the age of distributed networks. Like netarchical capitalism, distributed capitalism can be seen as a strategy of adaptation to distributed networks that ‘develops within the context of a new-feudal form of cognitive capitalism’ (Kostakis & Bauwens 2014: 30). As Kostakis and Bauwens (2014: 33) explain, ‘this new iteration of capitalism conforms to the characteristics of the network era’ as it ‘utilizes P2P [i.e. distributed technology] infrastructures.’ But in contrast to netarchical capitalism, in distributed capitalism there is no centralized control of the underlying technological infrastructure.

Bitcoin is the archetypal example of distributed capitalism. To describe it simply without getting into much technical detail, Bitcoin is a software program that allows its users to create virtual coins (called ‘bitcoins’) by using their computers’ processing power. This process is known as ‘mining.’ The significance of the metaphor is clear: Bitcoin users who ‘mine’ new virtual coins out of their computers constitute the ‘gold diggers’ of the digital age. So, that is basically how bitcoins are produced. Then, once they have been produced, bitcoins can also be exchanged. And what is very important, they can be exchanged in a way that is technologically both secure (thanks to cryptography) and distributed, in the sense that bitcoin transactions do not require any kind of ‘trusted intermediaries’ (like the banks or the government). Instead, the validation process of the transactions is distributed to the whole network of logged-in miners. That is, in short, how Bitcoin works.

Now, as regards its history, the first version of Bitcoin was released in 2009 by Satoshi Nakamoto as open-source software. On account of its openness and its reception by the software community as constituting a truly innovative approach towards digital currencies, it soon attracted many users and developers. Due to its increasing popularity, in 2011 bitcoins began to be exchanged through black markets like the ‘dark web’ website Silk Road, which developed into major bitcoin users. In parallel, bitcoins began to be traded on so-called ‘digital currency exchanges’ (aka ‘cryptocurrency exchanges’), many of which were set up in response to the surge of interest in digital currencies (which was largely due to Bitcoin) in this period (Wikipedia 2019a). Most importantly, from that time onwards, the price of Bitcoin skyrocketed. Indicatively, in January 2011, its price started at $0,30. In January 2013, it had risen to $13,30. Six years later (Jan. 2019), it had reached the unbelievable price of $3 747 dollars per bitcoin (Wikipedia 2019b). That increase in the price of Bitcoin is, of course, indicative of the degree of speculation in the bitcoin economy.

To put it simply, some people have made a huge fortune by trading bitcoins on digital currency exchanges, which allow their customers to trade bitcoins for conventional fiat money or other digital currencies. Who are these people? First of all, it is the original developers and the early adopters of Bitcoin. By virtue of its design, Bitcoin has privileged early users. A rule embedded into the design of the software is that the degree of difficulty of mining bitcoins rises in proportion with the number of ‘miners’ who are connected to the Bitcoin network and the volume of the transactions processed through it. In practical terms, this means that the capacity of the average user to produce new bitcoins has decreased dramatically over time; it was much easier for someone to create bitcoins five years ago than it is now. The unequal distribution over time of the capacity to create new bitcoins, in turn, has resulted in a great disparity in the ownership of the virtual coins themselves. That is to say, it has resulted in the formation of a ‘Bitcoin aristocracy.’ As Kostakis and Bauwens (2014: 33) write, the members of this aristocracy are those that got into the Bitcoin game early on, when it was easy to create new units. At the same time, the tendency towards the formation of an aristocracy of bitcoin users has been reinforced by the development of so-called ‘mining pools,’ that is, networks of powerful computers that specialize in Bitcoin mining.

As Pazaitis et al. (2017b: 8) write, ‘in practice, the Bitcoin network is operated by a small number of [such] mining pools, which together control over 75% of the network.’ From the perspective of P2PF theorists, the fact that Bitcoin has led to the formation of a new class of plutocrats is not accidental. As they point out time and again, technologies are not neutral, but reflect the values and the strategic agendas of their creators. Bitcoin is no exception. The ideological principles of its developers are ‘hard-coded’ into the technology itself (Bauwens et al. 2019, Troncoso & Utratel 2019). More specifically, Bitcoin encapsulates the values and the principles of a type of stateless, ‘laissez-faire’ capitalism (sometimes referred to as ‘anarcho-capitalism’) which ‘is premised on the idea that everybody can trade and exchange; or, to put it bluntly, that everyone can become an independent capitalist’ (Kostakis & Bauwens 2014: 31). Although projects like Bitcoin ‘purport to offer individual autonomy from both big business and the state,’ they ‘are driven by an underlying vision that society is just a sum of autonomous individuals’ who transact with each other. But clearly ‘there is no real society and no collectivity in these visions.’ Nor are there ‘any counter-measures that can prevent the creation of inequality and oligarchy’ in this model (Bauwens et al. 2019: 37-38). In any case, as P2PF theorists remark, Bitcoin reflects a model that commoners are practically opposed to. In fact, in much the same way that the new class of distributed capitalists is coalescing around digital currencies like Bitcoin, commoners are partnering with ‘ideologically aligned coders,’ with whom they are developing alternatives for commoners and peer producers (Troncoso & Utratel 2019: 55). In other words, the capitalists are not the only ones who embed their values and principles into the technologies they develop and use. Commoners do exactly the same: they develop and use technologies that promote ‘commons transitions,’ that is, outcomes that are antagonistic to Capital. In this way, commoners emphasize ‘struggle through the construction of alternatives’ (Kostakis & Bauwens 2014: 69). To understand how such alternatives work in practice and how in specific they antagonize bitcoin capitalists, let us look at a few of the examples mentioned in the literature.

To begin with, there is ECO, the digital currency used by more than forty so-called ‘local exchange networks’ in Catalonia. In a sense, each exchange network constitutes a self-organized marketplace for the local community, where one can buy and sell local products and services using ECOs. Unlike Bitcoin, the ECO cannot be converted into regular currencies (like the US dollar or the British pound), effectively precluding the possibility of using it speculatively. Also, in contrast to Bitcoin’s globalized character, the ECO is locally grounded. ECO is designed to serve the purpose of an alternative digital currency for the people who live in Catalonia. It is intended to be used by local communities, which form ‘a horizontally organized network of self-managed exchange networks with their own community currencies,’ rather than by globally distributed online crowds, as in the case of Bitcoin (Dafermos 2017).

Another relevant example is that of Sensorica, which is a Montreal-based network of engineers, researchers and developers who design sensors. All these actors are affiliated with the non-profit Canadian Academy for the Knowledge Economy (CAKE). Sensorica is the CAKE-managed platform through which they ‘organize around projects that produce open hardware technological solutions’ (Bauwens et al. 2019: 21). But Sensorica is not just a commons-based community. It is also an ‘entrepreneurial entity,’ as business projects are often launched by community members, introducing Sensorica’s innovations into the market. That is where ‘blockchain’ (the distributed database technology that is the backdrop for Bitcoin) comes in. With the aim of enabling the equitable and fair distribution of the revenue generated by these business ventures, Sensorica has developed an accounting system based on blockchain technology. This system ensures that ‘all revenue is distributed back to the network and in particular to the people that have been involved’ in the development process. It ‘records and determines every member’s input in every project and redistributes revenues in proportion to each contribution.’ In this way, Sensorica is an example of a commonsbased peer production community which uses blockchain in order to enable the development of a symbiotic relationship between the community and the business projects launched by its members (Bauwens et al. 2019: 21-23).

Sensorica is not the only example of an ‘open-value accounting system,’ as peer production theorists call it. They highlight various cases in which such systems have been supportive of the development of commons-based peer production projects. For example, the OuiShare community, ‘a network of researchers, activists and entrepreneurs’ from France used a similar (blockchain-based) open-value accounting system to organize a large festival in Paris in 2015 (Pazaitis et al. 2017b). In this case, contributors to the organization of the festival were rewarded with a reputation score and digital tokens (which could be used to acquire services offered by OuiShare community members), based on the value of their contribution, as perceived by the OuiShare community. Without getting into much detail, what peer production theorists consider to be most important about the case of the OuiShare festival is that it illustrates the possibility of using distributed technologies like Bitcoin in ways that support peer production (Pazaitis et al. 2017b). This is the point they constantly emphasize in all the examples they mention in their analysis.

Characteristically, in their recently published ‘manifesto,’ Stacco Troncoso of the P2PF and his fellow cooperators at the worker-owned cooperative Guerrilla Media Collective in Spain highlight how tremendously they have benefited from the adoption of such a blockchain-based open-value accounting system. Using the software, the members of the cooperative record all types of contributions which they consider to be valuable to their group, including volunteer labour and ‘care work.’ In this sense, the use of the open value accounting system reinforced the ‘value sovereignty’ of their cooperative, enabling them to determine their own value standards, that is, what types of work are valuable to them and how to reward them (Troncoso & Utratel 2019)." (http://heteropolitics.net/wp-content/uploads/2020/12/Digital-Commons.pdf)

More Information

* Book: Spinuzzi, Clay. Network: Theorizing Knowledge Work in Technical Communication. New York: Cambridge UP, 2008.