Peer Money

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Discussion

Kevin Carson:

"Christian Siefkes denies that money and markets are “more or less neutral tools which can be used for non-capitalist purposes,” arguing that since money and markets were never the primary means of organizing production in a non-capitalist society, money “cannot become the dominant social form outside of capitalism.”

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I would note, in passing, that that “cannot” is an amazing inductive leap, based as it is on a statistical population of one. We have seen the rise of only one capitalist world system, which is also the only known system in which exchange has been the dominant economic form. To say that the two are necessarily linked, that things could not have developed differently, or that the exchange economy could not have occurred without capitalism, is to erect an enormous superstructure of inference on a very narrow base of fact.

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Siefkes insists that “peer money” (which he puts in quotation marks) is

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a contradiction in terms, because money incorporates the capitalist logic (the logic of exchange), which is totally different from the logic of peer production.

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Stefan Merten, in a post to the Oekonux list, argued that capitalism is inherent in the DNA of market exchange:

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There are those apple trees (aka capitalism or any exchange based system) and these apple trees have lots of drawbacks. Those advocating money trickery basically say: Well, though the apple trees are bad there are these apple tree seeds (aka exchange). If we modify the seeds somehow the problems with the apple trees will vanish. Someone who does not believe in money trickery now says: Well, that position ignores the nature of the apple trees…. In short: It is the nature of the apple tree seed (aka exchange) to end up in an apple tree (aka given the historical circumstances: capitalism).

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The only “capitalist logic” is artificial scarcity. Capitalist DNA is defined primarily by artificial scarcity, not by markets and exchange.

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Exchange, in and of itself, is simply the exchange of equivalents between producers. It is unequal exchange that is at the root of all of the evils of capitalism.

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The purpose of non-capitalist exchange, as of peer production, is to facilitate the transformation of effort into use value. Peer production is a way for cooperatively organized labor to create use value without the impediments of proprietary technology; even if consumption is not directly tied to effort, the purpose of the system is to remove all impediments to collective transformation of effort into the means of subsistence as efficiently as possible—to enable people, collectively, to subsist with a minimum of wasted effort. The non-capitalist market, likewise, is a way for producers to exchange product for product without the interference of false scarcities or the payment of tribute to the holders of artificial property claims.

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Further, even if much or most of production in a non-capitalist society is organized, alongside peer production, for money exchange, there is no reason that the share of production that is organized for reciprocal exchange cannot steadily fall as larger and larger shares of material production experience imploding production costs and take on an increasing character of “free beer” as opposed to “free speech.” And there is likewise no reason that exchange-value (the economic value created by materials and labor, as the basis of commodity price) cannot fall drastically relative to the total use-value, as the costs of required labor and material inputs implode.

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And besides, the assertion that peer money assumes money exchange as the primary organizing logic of economic life is a strawman. Advocacy for peer money does not entail any particular assumptions concerning the relative size of the money and non-money spheres. It simply asserts that money, depending on which of a variety of forms it takes, can coexist harmoniously or inharmoniously with the peer economy—and calls for money systems designed for harmony with the peer economy. The dominant logic of the system may be non-monetary, with a growing majority of all use value possessing no exchange value. But for the portion of use value that remains scarce and carries monetary value, the money system should be designed to eliminate artificial scarcity, and to operate in a non-exploitative manner. Siefkes and Merten argue that this is impossible: since money is inherently capitalistic, the money sector should simply be left as it is—and then minimized, supplanted and replaced as much as possible. The sphere of economic activity amenable to peer production should be expanded as quickly as possible, and the irredeemable money sector quarantined in hopes that it will die out.

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At the root of the disagreement between peer money advocates, on the one hand, and Siefkes and Merten on the other, is a disagreement on the place of credit and interest in the larger capitalist economy (reflected in Merten’s rather obnoxious dismissal as “money trickery” of all attempts to reduce the exploitative character of capitalism through non-capitalist money). For Siefkes and Merten, interest-bearing money is purely instrumental and rational, and carries no innate exploitative character which is not entirely secondary and derivative of the exploitative character of industrial capital. The interest on money reflects the rate of profit it could be expected to earn if invested in productive capital. And the rate of profit on capital is inherent in wage labor, via the difference in value between labor’s product and the price of labor-power.

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For Marxists, capital is the unique factor in that its price is not determined by the cost of supplying it. The mere fact of the capitalist’s owning capital is the source of surplus value.

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For me, an individualist anarchist, the opposite is true. The natural value of labor-power, in a free and non-capitalist market, is the product of labor. Individualist anarchists consider labor to be the unique factor in that it is the one commodity whose price is not determined by the cost of production. It is the natural state of affairs, in a free and non-capitalist market, for the price of labor to be determined by the disutility of supplying it, rather than the cost of reproducing it. And it is the natural state of affairs for the price of capital to be determined by the cost of supplying it. It is artificial scarcity of capital—namely, state restraints on competition among those supplying it, and state restraints on direct worker access to the means of production and subsistence—that enables capitalists to charge a premium for access to capital, and pay workers a wage less than their full labor-product. A major component of the gross rate of interest is an artificial scarcity-premium, resulting from entry barriers and restraints on competition in the supply of credit. This artificial scarcity and artificial expense of capital reduces the bargaining power of labor, and thereby affects the rate of profit on industrial capital. For Marxists, the rate of interest derives from the rate of profit; for individualist anarchists, the reverse is true. And if Bauwens and other advocates of peer money are not individualist anarchists, they share the same understanding that the structure of money itself affects the exploitative character of capitalist production.

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The purpose of open-source and P2P is not to eliminate exchange in and of itself, but to eliminate artificial scarcity. The philosophy of open-source and P2P does not involve only eliminating scarcity and cost in the cognitive realm, where the marginal cost of reproduction is zero (software, music, etc.). It also entails eliminating unnecessary costs of physical production.

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That means, for starters, eliminating the portion of commodity price that results from embedded rents on artificial property rights. This category includes proprietary designs. It includes oligopoly markup from restricted competition resulting from proprietary design, and “intellectual property” restrictions on competition in producing generic spare parts and modular accessories for competitors’ platforms. It includes markup from IP-dependent designs that discourage ease of repair and reuse. It includes markup for patented or contractually mandated accessories (cheap glucometers plus expensive testing strips, cheap printers plus expensive cartridges, cheap phones with expensive service plans, etc.).

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It means a radical reduction in capital outlays for physical production, as the application of the homebrew ethos to the physical realm results in miniaturization and order-of-magnitude cost implosions of miniaturized machine tools and other desktop production machinery.

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It means an implosion of overhead costs as larger and larger shares of our physical production needs are met through the informal and household economies, using spare capacity of ordinary household capital goods most people already own (microbakeries using ordinary kitchen ovens, unlicensed cab services with only a used car and a cell phone, etc.).

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More specifically related to our purposes, in discussing peer money, it means that ordinary people can perform the capital-aggregating functions previously performed by the capitalist financial sector, without paying tribute for them.

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Andreas Wittel, in a post to the P2P Research list, asks

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So why tinkering at the edges of a monetary system, why creating new ones? How could new monetary systems stop or even diminish the exploitation of labour power? If they can’t, why bother? Of course I am not suggesting that work towards a new monetary system should be abandoned in the p2p community. I just don’t see the point. I would like to focus my inquiries on the question how the p2p community can contribute to a fairer system of monetary exchange for labour (= value)

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The answer is that ordinary producers, by using networked, crowdsourced, cooperative forms of social lending to aggregate their own small capitals into larger sums of investment capital, can finance worker-owned enterprises through their own self-organized financial system—thus eliminating the monopoly rents previously paid to the state-privileged, state-licensed banking sector for providing that service.

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We should keep in mind that the primary function of money isn’t to serve as a store of value. For the purposes of local economies, it is more important as a measure of value for facilitating exchange. Local currencies, LETS systems and other barter networks, provide liquidity to facilitate exchange of future products or services between ordinary producers who may not have accumulated stores of past value. Local currencies enable producers to directly exchange their wares within a network, without the intermediary of conventional money from the outside capitalist economy.

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Thomas Hodgskin, writing in the 1830s, demolished the “labor fund”defense of profit by pointing out that wages aren’t paid by the capitalist out of accumulated past production. They are, rather, advanced from current production by some workers against future production by other workers. The same function, of coordinating exchange of future products, could be carried out cooperatively by workers themselves. By preempting the function and monopolizing it through a state-privileged banking system, the capitalist or financier is able to collect tribute for it.

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If the realization of capital follows a circuit, as described by Marx in Capital, the same is also true of labor. The circuit of labor is highly vulnerable to disruption. And the more steps in the circuit, the more likely it is to be broken, and the more likely the realization of labor (the transformation of labor into use-value, through the indirect means of exchanging one’s own labor for wages, and exchanging those wages for use-value produced by someone else’s labor) is to fail. When we participate in the capitalist economy, we must first obtain money by either selling our services to a capitalist wage employer or amassing the startup capital for a high-overhead, high-risk conventional business to sell one’s services to the customer. Then we take the money and use it to hire the services of others, with the a major part of the price going to the overhead costs of a conventional capitalist enterprise, and the capitalist employer perhaps taking his cut as well. Local money systems, by promoting direct exchange between producers, eliminate many of the insecurities and uncertainties of the capitalist economy. By reducing the intermediate steps between production and consumption, they also reduce the contingency involved in consumption.

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Michel Bauwens recently argued, contra Siefkes, that “there are important aspects of monetary transformation that are related to the peer to peer agenda.”

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The most important thing to remember is that the peer to peer dynamic requires free or very easy access to means of production, and that this mostly works for the production of non-rival immaterial goods, but that the production of physical goods, even if the designs can be open and free, need cost recovery mechanisms….

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…For peer to peer self aggregation to occur, we need distributed infrastructures. Only if the individuals have control over their own means of production, can they freely self-aggregate. That we can do peer production of knowledge, software and designs is because knowledge workers have access to computers and a socialized internetwork. If we had distributed machinery, more distributed access to capital, more self-aggregation could occur.

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…Peer to peer is about non-rival goods that can be reproduced at marginal cost and abundantly.

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The more we can engineer abundance, the more this can happen. But classic capitalist money is about engineering scarcity, as are capitalist markets generally. Monetary transformation is aimed at creating sufficient money supplies, accessible by all.

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In Bauwens’ recent debate with Michael Albert at Znet, Albert seemed preoccupied with the idea that peer production applies only in the immaterial realm, where the costs and permissions for obtaining inputs are negligible and the marginal cost of reproduction is zero.

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If some group produces outputs that require inputs, it would have to get the inputs. It would have to get the labor. People could say no. Permissions, and perhaps acquisitions, are involved. More, peer to peer seems to be only about undertaking joint ventures that have no significant costs. Is that right?

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But this misses the whole point, which we have seen above: that the cost of inputs, even in physical production, is not just a given but itself a dependent variable that can be affected by peer organization.

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Rather than there being an impermeable dividing line between qualitatively distinct categories of market and peer production, it is more accurate to say that physical production can become more “peer-like,” even when some aspects of it are governed by market exchange, as the costs of physical production fall. The difference between cognitive and physical production, and between free speech and free beer, is one of degree rather than of kind." (http://blog.p2pfoundation.net/peer-money/2009/06/09)