Public Ledgers as the New Institution of the Commons
* Article: The Public Ledger as the New Institution of the Commons. By Michel Bauwens. P2P Foundation, Chiang Mai, April 27, 2022
The Geo-Political Context of Peak Globalization
Many potential readers of this proposal will agree that our current civilization is facing a kind of existential meta-crisis, and that the current institutional order seems to be losing the trust and legitimacy of significant parts of the world population.
- We are facing interlocking ecological crises, such as climate change, biodiversity loss and increasing resource depletion
- The levels of global inequality have increased leading to social tension in many parts of the world, expressed in political unrest and phenomena such as mass migration from the poorer regions of the world to the richest regions
- The geo-political order, once relatively stabilized under American hegemony, has become multipolar, putting descending power in conflict with ascending power
In the past, such meta-crises have regularly been ‘solved’ by phase transitions, i.e. the radical transformation of the institutional order, but also very often marked by a ‘transvaluation’ of the basic priorities and values of our societies.
We are currently living still under the regime of ‘commodity value’, i.e. the ‘capitalist’ economic regime which is facing a serious systemic crisis. In this value regime, value is created through the extraction of scarce resources, be it human labor or natural resources. This value is then ‘taxed’ through the mechanisms of our political regime of nation-states, and is redistributed either through public policy funding or through private philanthropy..
Several systemic issues are related to this value regime:
The economic agents are closed and private entities, who are incentivized to account for their activities by minimizing the cost of positive ecological and social contributions of their wealth acquisition, while maximally ignoring the negative externalities caused by their activities The political agents are competing nation-states, similarly incentivized to manage externalities to the detriment of their weaker competitors
We would argue that the management and valuation of externalities is one of the key weaknesses of the current value regime, and that the likely transvaluation of our civilizational order is going to take the form of a contributory value regime, with ‘impact’ considered as the negative form of contributions. Moreover we believe that this contributory regime will be commons-centric, and not market or state-centric.
Institutions are human social processes that can reproduce themselves independently of the individuals that compose them, and a civilizational, societal, or social order is maintained by interlocking institutions that maintain a certain ‘value’ regime. These institutions are tied to the methods of coordination of economic, political and social activity, strongly related to the value regime, i.e. the means of acquiring value and power, and the capacity to retain and redistribute such value.
Our current society is dominated by the institutions related to the market and state functions.
The market deals with the allocation of scarce resources, and coordinates the allocation of these resources through the pricing mechanism externally, and internally through corporate hierarchies. The state institutions deal with the management of people and resources in a given territory, coordinate their actions ‘politically’, through democratic or not so democratic procedures, and redistribute the resources obtained through the taxation of market activities.
One could argue that the current deglobalizing world order is marked by a geopolitical conflict that is also to some degree a conflict between two forms of relative institutional domination. On the one side there is the maritime anglo-European neoliberal world order, which is very much driven through the logic of market forces, and in which the power of nation-states has been weakened in the last decades. On the other side there is the ‘continental’ Eurasian power nexus, currently consisting of the more state-centric models in Russia and China, in which the market forces are more embedded, disciplined and managed by the state, in the context of national objectives and planning.
In the period prior to Peak Globalization, which may have occurred as the consequence of the systemic crisis of 2008, and has been greatly reinforced by the effects of the pandemic and the Ukrainian conflict, there has been a strong tendency to the inter-nationalization of the state system and the trans-nationalization of global capital. After World War II, a international order of multilateral organizations was created, creating inter-state cooperation; while capital significantly transcended its nation-state limitations. Under the neo-liberal regime since the 1980s’, nation-states were forced to compete to attract this multi-national capital.
In the Western states, a huge political and social conflict has been brewing over the relative power of market vs the state. The Great Reset presented by the founders of the World Economic Forum, proposes a trans-national set of institutions, mainly private-public-NGO coalitions, to frame the development of global domains of cooperation. This represents the model favoured by trans-national capital, that leads to cooperation with weak nation-states and disciplined NGO’s. This model is facing resistance from national-populist movements which want to re-embed market power in a model of reinforced national sovereignty, focusing on inter-national institutional arrangement.
However, it is important to realize that both market and state institutions are competitive and extractive institutions, which have historically frequently over-used their local resource base, and that this over-use has now reached the level of breaching vital planetary boundaries. This Is why it is important to take into account the third set of institutions, the institutions related to the commons, the only human institutions that has been historically been able to manage resources and ecosystems ‘for the long run’
Revitalizing the Institutions of the Commons
As stated, we live in a world order which has prioritized the institutions related to market and state functions, but we have neglected institutions related to the commons.
Commons are shared resources, maintained by a community or set of stakeholders, under their own governance rules. Commons-based institutions have been a vital part of all the pre-modern and pre-capitalist regimes, but have severely retreated under the regime of ‘commodity’ value. Human history has been characterized, until the advent of capitalism, as a ‘pulsation of the commons’ , in which periods dominated by the expansive and extractive power of states and markets, periodically led to collapses of political power, during which revivals of the commons-institutions led to the healing of the affected regions. These periodic revivals are documented for example in Mark Whitaker’s book on Ecological Revolutions, while the ‘pulsing’ is documented in Peter Turchin’s Secular Cycles.
Moreover, the pulsation has taken a different form under the last four centuries. Karl Polany’s ‘The Great Transformation’ documents the lib-lab cycle in the industrial era, when periods of market domination (freeing the markets from state intervention) are followed by periods of re-integrating the market in societal priorities (under the influence of the state).
However, globalization has created a particular problematique:
- The transnational power of capital, coupled with weakened nation-state power and relative weak inter-national institutions, has led to the relative impotence of national change orientations
- Moreover, the ecological crises with their existential threats, cannot be solved at the national level, while state competition for private investment has weakened nation-state social security protections.
This calls for, not just a revival of the commons at the local scale, but to the need to address the ‘Commons Gap’ at a trans-national and trans-local level.
We believe that this points to a shift towards a
Contributory value regime: this is a value regime that recognizes value contributions that are outside of commodity extraction
Commons-centric institutions that can protect the long term survival of vital resources and biotic communitiea
This necessity has to be correlated to the emergence of distributed networks, the subsequent emergence and exponential growth of shared digital commons, and its practice of global scale coordination through ‘stigmergy’, i.e. open and transparent mutual signaling.
The invention of cryptocurrencies and post-blockchain infrastructures point to the nature of technical tools that are able to manage this new level of coordination. Indeed, despite its many issues, Bitcoin represents the creation of the first globally scaled, socially sovereign cryptocurrency and it has ushered a new period of monetary biodiversity. This means the capacity to design domain-specific currencies that are ‘thermodynamically’ informed of the planetary boundaries in which value exchange has to take place. The blockchain, and its successors, as what matters is the capacity for universal cooperative accounting and supply chains, enables the creation of cooperative ecosystems of production at the global scale.
We are now able, technically, organizationally, to create a 3-layered global cooperation in the realm of production:
- A base layer of free cooperation in global knowledge commons, through mutual signaling, as pioneered by the free software and open source movements
- A second layer of regenerative market mechanisms, i.e market mechanisms that work for the shared commons to which market players are interdependent, using ‘intelligent’ current-sees
- A third layer of restrictive framing, which creates context-based knowledge of planetary boundaries for all productive entities
In other words, what pricing is to market allocation and democratic decisions are to planning, open signaling or 'social coordination' is what determines the allocation of effort in the commons. But all three can be used integratively.
Enabling such coordinated cooperation are three new forms of accounting:
- Contributory accounting, which enables cooperative networks to take into account other value contributions and impacts
- Flow accounting, which accounts for interactions into an ecosystem with multiple players
- Thermo-dynamic accounting, which gives access to the flows and limitations of matter and energy
We have a name for this emerging new world order of trans-local and trans-national cooperation: cosmo-localization.
- The smart relocalization of the economy to revitalize all territories and nations in the world
- The generalization of the ‘distributed production and manufacturing model’, which focuses on economies of scope; i.e. local factories work with globally shared designs, biodegradable materials, renewable energies and in circular economy models
The guiding motto of this model is: ‘what is heavy is local, what is light is global and shared’.
We envisage a fractal institutional framework of support in this model, i.e. following the quintuple helix model developed in Italy around the Bologna Regulation for the Care and Regeneration of the Urban Commons, we believe that inter-institutional cooperation, led by territorial governments (city, region, nation-state), are matched at the transnational level. In other words, while institutional coalitions support their territorial developments, transnational coalitions support the ‘protocol cooperatives’ (global open design communities) that enable local production with transnational knowledge.
We have to stress that this model is commons-centric but fully embraces markets and state functions as well. It has to be commons-centric as we are moving to a world when scarcities has to be managed in such a way as to avoid systemic warfare for scarce resources.
So imagine a layered system:
- At the ground level are the local ‘bioregional informed’ territories
- At the political level are the nation-states transformed into a new role of stimulating the regeneration of their territories
- At the trans-national level are the Magisteria of the Commons, this is the name we are giving to these new domain-specific institutions which facilitate the trans-local cooperation and knowledge exchange, cognizant of planetary boundaries and the needs of non-human biotic communities.
Public Ledgers are the Core Institutions of a Contributive Economy
Let’s recapitulate the argument so far:
- Our world is organized around market and state institutions, which are competitive institutions competing in peer polities, growth oriented, and historically extractive
- Commons institutions have been historically successful in protecting resources over the long term and we can document a ‘pulsation of the commons’ in history, as populations react to the ecological overshoot that threatens their survival; as we have reached a ‘global overshoot’ it makes sense to think about cosmo-local forms of societal organization that aligns local and global commons, in interaction with the market and state institutions, creating a framing that protects local and global planetary boundaries
- Our present system is based on the production and exchange of scarce commodities; which systematically ignores positive and negative, social and ecological externalities; it is the task of a commons-centric economy and society, following the logic of a contributive economy, to develop cyber-physical infrastructures that can internalize contributions and impacts to achieve context-based sustainability.
Here is the key issue that needs to be solved:
In the current regime, value is created through extraction, is taxed by state institutions, and redistributed; this means it is impossible to directly fund regenerative activities
This is what the public ledger is designed to solve, i.e. it is a commons-based institutional form that allows for the direct funding of regenerative contributions, it directly rewards positive externalities produced by the citizenry, in individual or collective capacity.
What institution is it intended to replace or at least complement?
Current regenerative projects are generally funded through competitive public procurement, if not by similarly organized philanthropic funding. In this model, a winner-take-all contestant gets the funding, and all the other efforts have become useless. There is no common knowledge available that can learn from all the competitive contributions. Moreover, in order to win such a contest, the projects must be singularly efficient according to limited criteria and are incentivized to externalize positive and negative impacts.
A public ledger works differently:
- It is an open, publicly available accounting system, transparent to the citizenry
- Any citizen, individually or cooperatively, can lodge their contributions in the specific context of the ledger (for example, decarbonization efforts)
- The ledger is connected to a verification system, which validates the entries
- These activities are tokenized, as a public recognition of value
- The tokens obtain value, are ‘financialized’ either through the public purse, i.e. through funded public priorities, programmed through policy; but, more importantly, by any other institution that is benefitting from the positive externalities.
An example can illustrate this. Terre des Liens, a French community land trust, has calculated it saves the French public agencies, for 350 m EURO in water pollution costs, as its organic farmers do not use pesticides and toxic fertilizers. Hypothetically, an agreement can be made, in which these beneficiaries share a percentage of their gains (i.e. the not spending on ecological spending), with the ledger fund. By doing this, they create a virtuous cycle that finances continuing gains.
With such a system, a whole society can be mobilized, permanently; there is still competition for efficiency, as those that perform best, will be able to produce more tokens; but no one is excluded. The system is entirely transparent. The most important achievement is however, the direct financing of regenerative activities, which mean a real transition to the logic if a contributive economy.
The technology for such a social experiment are now available through the post-blockchain technologies. The verification mechanisms can count on several decades of experience.
The public ledger is of course also simply a tool, but it is linked to public authorities, producers and beneficiaries of externalities, verification communities, and commons-centric civil initiatives. As an institution, it continues to exist independently of its temporary users, over time. This is why we also call it a institution, and believe it is a prototype of a new type of commons-based institution.