Political Economy of Crypto Social Networks

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Felix Fritsch:

"The explicit acknowledgment of hitherto exploitative platform-user relations makes a strong case for the critique raised by the free labour orthodoxy and against rents approaches explicitly rejecting notions of labour and exploitation. Given CSNs’ rejection of data stock accumulation through excessive surveillance practices, approaches focusing on data as a new resource likewise lose ground. What remains is the market power of dominant web 2.0 platforms, which for emerging web 3 platforms may constitute a restraining factor – if they base their business model on participation in that market. Rent may further be located in the interest (delegated) Proof-of-Stake consensus mechanisms offer; however, these are located on the protocol level of blockchains and, with exception of Steem, are indifferent to the kind of dApp running on them. Other than that, rents approaches do not seem to bear much relevance for the analysis of CSNs.

While CSNs acknowledge the free labour orthodoxy’s critique of exploitation, they refute its insistence on time as base of measurement. Incentive systems reward specific actions and reactions – they do not measure input in time but in instances. Their metrics relate to different forms of bio-labour – the cognitive, symbolic and affective labour enshrined in user-created content, the cognitive and emotional labour users apply when curating content, or the relational labour of sharing. The role of social media metrics in the evaluation of financial assets highlighted by Arvidsson and Colleoni (2012) shows in the prominent position leading CSN platform Steem has for circulating crypto market analysis. Their focus on increasingly finance-centered accumulation likewise reflects in the business model of the companies developing CSNs as autonomous entities, which predominantly relies on token value appreciation as source of profit. Cockayne’s depiction of platforms as “affective apparatus of capture” (2016:2) then opens the question how token value relates to a CSN’s ability to capture user affect towards advertisements. Given these cross connections, affect-centered approaches, particularly ones that acknowledge the exploitative dimension of prosumption, appear as promising advancement of the free labour orthodoxy in the age of blockchain.

The open source nature of public blockchains and thus of Smart Contracts deployed on them commands that copying and modifying these emerging institutional frameworks (Hayes 2019) comes at negligible cost. Competitive pressure towards their optimization (at least theoretically) forecloses any long-term rent-seeking strategies based on ownership or central control of this infrastructure. Institutions come to exist as dApps which cannot be enclosed and thus constitute new forms of digital commons. On the other hand, decentralized structures that possess internal capital – decentralized organizations, decentralized autonomous organizations and decentralized autonomous corporations (Buterin 2014) – potentially constitute “the enabling framework for the digital rule of capital: the total commodification of global society” (Garrod 2016:71). Atzori and Ulieru concede the former by referring to “the advent of blockchain-based digital platforms running on commons principles via self-enforcing contracts” (2017:2). However, they also acknowledge the latter as they warrant that under capitalist conditions, “digital platforms and the Internet at large cannot cease to be a medium of insatiable commercial appetites” (Ibd.:3) ingraining themselves in new organizational forms. They thus propose to scrutinize the specific architectural design of individual platforms in terms of decision rights, token issuance and value distribution through incentive systems to determine their relation towards contemporary capitalism. In an inquiry of the dApp ‘Swarm City’, Beck et al. (2018) likewise use decision rights, accountability and incentives as central analytical dimensions derived from IT governance literature and principal-agent theory.

Accordingly, this empirical investigation of CSNs as more or less owned, or at least to some degree controlled, by its users will focus on three governance mechanisms: Permission-less token issuance allowing the creation of post-corporate economies; Binding decision making tools giving network members power over rules and financial flows; and rewards schemes based on micro-transactions realigning incentives to support a common goal. The former not only allows project developers to raise initial funding and bind a core community, but also to construct such projects as fully decentralized economies not under their control nor generating permanent income flows for them, while still generating them profit from appreciating token prices. Decision rights depend on their distribution and can be differentiated into management rights to propose, execute, or implement decisions and control rights to ratify and monitor. Incentives encounter monetary and non-monetary rewards that motivate agents to act in predetermined and observable ways to obtain incentive alignment (Beck et al. 2018). In this regard, Atzori and Ulieru highlight the alignment of long-term interests through reputation games and inscription of “rights and privileges in social organizations through cooperative currency designs” (2017:7) as key to blockchain cooperatives that embody a ‘real’ sharing economy beyond platform capitalism. However, even in their ideal configuration, they warrant, the reliance of such platforms on incentive systems to shape human behaviour results in its rationalization and robotization and voids human interaction of spontaneity and much of its depth. What remains, even under conditions of post-capitalist collaborative exchange, is “the hyperrational, positivist mentality of the Homo Economicus – an “anthropological monster”” (Atzori and Ulieru 2017:12; see also Atzori 2015)." (https://www.researchgate.net/publication/347390602_The_Common_Factory_Governance_and_Incentive_Systems_of_Blockchain-based_Social_Networks)

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