Peer Production - Part Two

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Continued from Peer Production

Consequences of Peer Production

Peer Production and Capitalism

Jakob Rigi:

"Peer production does not depends on capitalism for its identity, this identity is defined by its own mode of productivity. In this sense as Matt says capitalism is not relevant for P2P production. The domestic mode of production, feudal mode of production and p2p production are all not capitalism. However, P2p production is distinguished from other non- capitalist mode of productions by being the form of production that corresponds to IT, and hence has a future orientation. It is the negation of capitalism in the same way as the future is the negation of the present. In any case p2p production is something more than being merely not capitalism. Its horizental form of cooperation and its universal form of property separate it from capitalism. In its initial phase , which we live through, p2p MOP relies on capitalism and capitalism is its context. Capitalism also exploit it to extract value. But there is a competition and contradiction between these two modes of production. This contradiction can be approached analytically on different levels of abstractions the most significant of which are : the levels of production, level of political struggle and the level of culture and values.

On the level of production, there is a competition for productive forces between capitalism and p2p modes of production. To the extent that productive forces (humans, nature and technology) are organized under p2p production capitalist mode of production and the market will shrink. If we think globally, we have limited productive force (number of productive individuals, natural and technological resources). There will not be two parallel forces of production one for capitalism the other for p2p production. Land and nature which for ever will remain the main basis of any production are scarce. With expansion of p2p production they need to be transformed to commons, save for the small plots of land that individuals appropriate/fence for private uses. We may compare this with growth of the capitalist mode of production within the feudal mode mode of production. Today the capitalist mode of production dominates the whole world, while in the 16 century there were just a few English farmers who produced things in a capitalist way. In a long historical period p2p production cannot grow together. The growth of one undermines and hinder the growth of the other. Capitalism without growth is unimaginable, it will run into crisis.

The translation of this contradiction into the level politics is a complex issue. On the one hand the horizontal structure of the p2p production negates any top-down form of governmentality (whether of the state, capital, UN, or NGOs). But from this we cannot conclude that some states, UN, particular NGOs or even capitalists will not be interested in promoting p2p production. Some major capitalist companies are involved in the p2p production. This bring me to Mathieu's concrete proposals which I totally agree with. We need, as Matheiu suggests, to focus on concrete and empirically graspable phenomena which are immediately relevant to the p2p production. But the idea of the principal contradiction between capitalism and p2p may help us to relate our researches and debates on these concrete issues to a universal non-capitalist p2p horizon in the future. While we work on issues that are relevant here and now, I think it would be also a good thing to have a direction. Look, in the context of current crisis even numerous capitalists pundits agree that capitalism is profoundly harmful to humanity, but then they add, "there is no alternative". The try to sell capitalism to the rest of humanity as a necessary evil. They equate it to human nature. It is shameful to equate greed, crisis, war and destruction of nature to humanity. We can hold p2p production in the front of their eyes as a viable alternative. P2p production is an empirically materialized example of an alternative world, more favorable to humans, animals, plants and nature in general. what is good about P2P production is not that it is not an utopian design of some visionary thinker but has emerged from the productive practice of producers themselves." (oekonux 'Journal' mailing list, August 2011)

On the difference between capitalists and entrepreneurs

Excerpts from a great post by the Anomalous Presumptions, at

The author argues that “incentives of entrepreneurs (whether they work for free, get consulting fees, or go public and become billionaires) and capitalists (who want to get a return on something they own) diverge in situations that are mainly coordinated through non-monetary incentives.”

For example, Linus Torvalds is a great entrepreneur, and his management of the Linux community has been a key factor in the success of Linux. Success to an entrepreneur is coordinating social activity to create a new, self-sustaining social process. Entrepreneurship is essential to peer production, and successful entrepreneurs become “rock stars” in the peer production world. A capitalist, by contrast, wants to get a return on something they own, such as money, a domain name, a patent, or a catalog of copyrighted works. A pure capitalist wants to maximize their return while minimizing the complexity of their actual business; in a pure capitalist scenario, coordination, production and thus entrepreneurship is overhead. Ideally, as a pure capitalist you just get income on an asset without having to manage a business.

The problem for capitalists in peer production is that typically there is no way to get a return on ownership. Linus Torvalds doesn’t own the Linux source code, Jimmy Wales doesn’t own the text of Wikipedia, etc. These are not just an incidental facts, they are at the core of the social phenomenon of peer production. A capitalist may benefit indirectly, for a while, from peer production, but the whole trend of the process is against returns on ownership per se.”

On the difference between for profit and for benefit

“Historically, entrepreneurship is associated with creating a profitable enterprise. In peer production, the idea of profit also splits into two concepts that are fairly independent, and are sometimes opposed to each other.

The classical idea of profit is monetary and is closely associated with the rate of (monetary) return on assets. This is obviously very much aligned with capitalist incentives. Entrepreneurs operating within this scenario create something valuable (typically a new business), own at least a large share of it, and profit from their return on the business as an asset.

The peer production equivalent of profit is creating a self-sustaining social entity that delivers value to participants. Typically the means are the same as those used by any classical entrepreneur: creating a product, publicizing the product, recruiting contributors, acquiring resources, generating support from larger organizations (legal, political, and sometimes financial), etc. Before widespread peer production, the entrepreneur’s and capitalist’s definitions of success were typically congruent, because growing a business required capital, and gaining access to capital required providing a competitive return. So classical profit was usually required to build a self-sustaining business entity.

The change that enables widespread peer production is that today, an entity can become self-sustaining, 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.

There are examples where a dying business becomes a successful peer-production entity. The transformation of Netscape’s dying browser business into the successful Mozilla open source project is perhaps the clearest case. Note that while Netscape could not make enough profit from its browser to satisfy its owners, the Mozilla foundation is able to generate more than enough income to sustain its work and even fund other projects. However this income could not make Mozilla a (classically) profitable business, because wouldn’t come close to paying for all the contributions made by volunteers and other companies. “


Historically many benefits of entrepreneurship have been used to justify capitalism. However, we are beginning to see that in some cases we can have the benefits of a free market and entrepreneurship, while avoiding the social costs imposed by ensuring returns to property owners. The current battles over intellectual property rights are just the beginning of a much larger conflict about how to handle a broad shift from centralized, high capital production to decentralized, low capital production." (

Criticism of Peer Production

Main Arguments summary

Review of the main arguments of the critics. These are excerpts only.

Tim Lee [1]:

  1. Denying that the decentralized process can work at all (or claiming that their occasional successes were flukes) despite the fact that it obviously does. Peoples’ claims that open source software is “unsustainable”, despite the fact that it’s been growing rapidly for decades, are in the same vein.
  1. Insisting that the process will only work in small-scale or peripheral cases, but that it doesn’t scale as well as centralized mechanisms. It’s sometimes argued that open source software is good for databases and web servers, but that for browsers, or office suites, or whatever, more centralized development processes are needed. Of course, these predictions don’t have a very good track record, as peer-produced products continue to succeed in new markets.
  1. Focusing on failures in individual cases, while ignoring that the average is moving steadily in the right direction. Likewise, when people point to particular open source projects that aren’t very good, or to particular errors in Wikipedia pages, they’re missing the forest for the trees. No one ever claimed that every Wikipedia page would be 100 percent accurate. What we claim is that Wikipedia pages tend to steadily get better (more accurate, more comprehensive, more timely) over time, and so in the long run, we should expect it to be better than more traditionally edited publications.
  1. Demanding a detailed description of how the process will solve a particular problem. A lot of criticisms of Wikipedia rest implicitly on the fact that we can’t predict in advance who will contribute to any given Wikipedia article: “We know that the Brittanica article on the French Revolution was written by an expert. How do I know the Wikipedia article on the French Revolution wasn’t written by a 6th grader who didn’t know what he’s talking about?” Which, of course, we don’t. All we know is that as Wikipedia becomes more popular, the average number of experts that will review any given article will increase. But we can’t necessarily predict who they’ll be or when or how they’ll come across the article in any given case."


Peer Production as Neoliberalism

Mr. Teacup:

"The de-commodification of intellectual labor that we see with the rise of peer production does not represent a countervailing trend to the neoliberalism, it is very much a part of it. Neoliberalism privatizes profits and socializes costs, and peer production is an even more radical implementation of that idea, but taking it one step further. Normally, socializing of costs means government pays for something – for example, bailing out failed banks. Since this money comes out of a tax system that is at least moderately progressive, we can regard it as an attempt by the rich to recover wealth lost to taxation.

As a method for socializing costs on to civil society, peer production is far more radical, a way of appropriating from the people what little remaining resources they have after being exploited in the workplace. It requires a transformation in the ideology of civil society, which is normally used as form welfare provision of the people, particularly the poor, to justify lowering taxes and shrinking the size of the state. P2P ideology takes a radical step by not just being content to relieve the rich of their tax burden, but squeezing civil society even more by turning into a source of corporate profits as free labor.

If the empirical evidence shows that a large role for civil society is associated with greater freedoms for capitalism, the Beachhead Hypothesis is not only false, it points in the opposite direction, to a further rolling back of the social democratic welfare state and intensification of neoliberal exploitation. In Commons-based Peer Production and Virtue Yochai Benkler and Helen Nissenbaum suggest that the use of peer production systems may encourage pro-social and public-spirited virtues – the same virtues that motivate charitable volunteering and giving – but express this tentatively because they can’t find a causal mechanism. But perhaps it may be found in the old-fashioned Marxian observation that morality and social norms are influenced by the prevailing economic system.


Rather than mitigating the problems of neoliberalism, the new charitable ethic makes it function more smoothly by obscuring the true cause of the problem. Similarly, the altruism of individuals participating in P2P gift economies obscures their role as free labor for capitalism.

In 2002, Benkler wrote Coase’s Penguin, or Linux and the Nature of the Firm, a heavily-cited paper that argues that the rise of peer production represents the “emergence of a new, third mode of production in the digitally networked environment.” In fact, this third mode is not new, it is simply the expansion of the so-called Third Sector of civil society after being turned to an even more profitable direction." (

Nicholas Carr on the limited application field of peer production

"The bottom line is that peer production has valuable but limited applications. It can be a powerful tool, but it is no panacea. It’s a great way to find and fix problems, to collect and categorize information, or to perform any other time-consuming task that can be sped up by having lots of people with diverse perspectives working in parallel. It can also have the important added benefit of engaging customers in your innovation process, which not only allows their insights to be harnessed but also may increase their loyalty to your company.

But if peer production is a good way to mine the raw material for innovation, it doesn’t seem well suited to shaping that material into a final product. That’s a task that is still best done in the closed quarters of a cathedral, where a relatively small and formally organized group of talented professionals can collaborate closely in perfecting the fit and finish of a product. Involving a crowd in this work won’t speed it up; it will just bring delays and confusion." (

The Evolution of Peer Production

Franz Narada distinguishes three phases in the development of peer production, based on the intensity of the collaboration between peers, and its relation with the for-profit mode of production.

1. The classical "prosumer mode", in which everybody is working basically for themselves in using and customizing productive abilities created or reinforced by industrial products that enable people do use "embodied potentials" of information and automation. Alvin Toffler has discovered that in the eighties, but only Shosanna Zuboff recently formulated that this will result in a "copernican shift" where the value-creation in the classical sense is replaced by the support economy.

2. The "swarm mode" in which people are loosely aggregated in doing things, either for themselves (ebay,musicsharing) or for an external task that uses the "least effort" way ([email protected] and successors)

3. The "community mode", in which the team up in new forms of voluntary social organisation. (classical example Free Software).

The interesting thing is that this three modes are pretty separated, but there is a "hidden continuum" structurally connecting them, they become "mutual enablers". (


Is Peer Production a User-Mode of Production?

Patrick Anderson, who is a proponent of User Ownership, writes the following:

"the GNU GPL is very clear in it’s goal to insure the virtual Means of Production (source code) should be in the hands of the CONSUMERS.

When RMS speaks of freedom it is always about the User (consumer), not developer, author, producer, worker or owner.

For instance, says “‘Proprietary software is an exercise of power. Copyright law today grants software developers that power, so they and only they choose the rules to impose on everyone else—a relatively few people make the basic software decisions for everyone, typically by denying their freedom. When users lack the freedoms that define Free Software, they can’t tell what the software is doing, can’t check for back doors, can’t monitor possible viruses and worms, can’t find out what personal information is being reported (or stop the reports, even if they do find out). If it breaks, they can’t fix it; they have to wait for the developer to exercise its power to do so. If it simply isn’t quite what they need, they are stuck with it. They can’t help each other improve it.’”

And the recent interview “Three Minutes with Richard Stallman” at,137098-c,freeware/article.html says “‘With free software, the users are in control. Most of the time, users want interoperability, and when the software is free, they get what they want. With non-free software, the developer controls the users. The developer permits interoperability when that suits the developer; what the users want is beside the point.’”

If a “Mode of Production” is defined by who controls the “Means of Production”, then the GNU Mode of Production is one in which the Consumers and NOT the Producers are at the helm."

Key Books to Read

  1. Yochai Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom, Cambridge, MA: Yale University Press, 2006.
  2. Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology, Boston: Harvard Business School Press, 2003.
  3. James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, New York: Doubleday, 2004.
  4. Eric von Hippel, Democratizing Innovation, Cambridge, MA: MIT Press, 2005.
  5. C. K. Prahalad and Venkat Ramaswamy, The Future of Competition: Co-Creating Unique Value with Customers, Boston: Harvard Business School Press, 2004.
  6. Don Tapscott and Anthony D. Williams, Wikinomics: How Mass Collaboration Changes Everything, New York: Portfolio Hardcover, 2006.

More Information

From Michel Bauwens' P2P and Human Evolution:

  1. How far can peer production be extended?
  2. Peer governance in peer production?

The basic essay:

  1. The Political Economy of Peer Production

Aspects of Peer Production:

  1. Peer Production - Funding
  2. Peer Production - Immanence vs. Transcendence
  3. Peer Production - Authority Structures


  1. Peer Production and Education
  2. Yochai Benkler on Peer Production