Text by Michel Bauwens.
This short essay was written in Dornbin, Austria, where I was residing with the Net Culture Lab managed by the OS Alliance, after reading Adam Arvidsson's remarkable essay, The Crisis of Value and the Ethical Economy, which to my knowledge is the first one to so clearly identify a key problem of our current societal model. The increased discrepancy between the creation of social value, and the limited ways to monetize it, and thus to make it sustainable for the individuals involved.
There remarks were inspired by the first version of Adam's essay, and some have been incorporated in the second version, which is the one published in our wiki.
This is an absolutely remarkable text, to which I do not have much to add, but perhaps I could restate some of the issues in a somewhat different language, and confront it to my own concerns and research at the P2P Foundation.
1. You are absolutely right that there is a new post-monetary ‘economy’ evolving. In my view, it takes three main forms. One, the sharing economy, which is primarily about sharing one’s creative expression, not geared to the production of common value directly. Such individuals or groups generally produce for their own use value and enjoyment, for the alternative recognition systems that you mention (knowledge, relationship, reputational value). Expected monetary returns are marginal to the main motivation. In this scenario, I believe that the individuals have weak links to each other, and they are happy to accept that the platforms that enable such sharing are created by others, presently by the Web 2.0 proprietary platforms. These in turn, use the aggregated attention to fund and profit from these platforms. In my opinion, it is governed by a social contract which says, from the point of view of the users: it is fine that you provide such a platform, and that you profit from it, provided our freedom to share is respected as well. Such netarchical platforms are then driven to the contradictory positioning of having to stimulate community and freedom (let’s call it the dolphin type of behavior, based on the notion of the abundance of sharing), with the fight for marketshare with other attention aggregators (let’s call it the shark type of behavior). The tendency to protect the turf through closure, as against the total freedom of movement of the users, has to be kept in balance with the kind of freedom demanded by the users, who could move away to another platform.
Two, the commons economy. Here there is a much more conscious collective construction of common value, think of Linux or Wikipedia. Such construction is only possible by forging stronger links, driven for example by the need for consensus on Wikipedia pages. Such more strongly linked communities often have their own infrastructure. Nevertheless, such communities, and the individuals involved, also tend to appreciate, under certain conditions, the involvement of commercial entities, which can strengthen the project. Such companies create derivate business strategies, based on creating relative scarcities around the common pool, in return for some kind of support for the common efforts. This is in my view the underlying social contract of this second form, i.e. the need for the profiting parties to create some kind of return flow to the commons and their communities.
Third, the crowdsourcing economy (more generally, the co-creation economy whereby for-profit entities integrate the demand and opportunity participation in their own business models and value chains). Given that both the sharing and commons oriented value creating models show that innovation is becoming social, it is normal that existing institutions, in particular the for-profit business companies, seek to integrate such social innovation in their own value chains.
What does it mean that innovation is becoming social? It means that innovation is less and less an internal affair, paid for by corporate funds and their R & D departments. It means that it is more and more an emerging quality of the networks itself, arising from the multitude of interactions within and between individuals and communities. It means that it can arise without the intervention of capital or the state, or for that matter, academia. It means, amongst other things, that the capital needed for starting an internet company has decreased by 80% in 8 years. The role of capital therefore shift to being an a priori enabler of such social innovation, such is the role and strategy of crowdsourcing, and of a posteriori captation of value, as is the case with the sharing and the commons models. Dare we say that capital is more parasitical in such context. To return to the crowdsourcing model, this is the most direct model of trying to integrate these innovation processes right in the value chain of the corporations, but it is also the one were the underlying social contract is the shakiest, because the ‘exploitation’ is the most visible. It is in this context that the value creators, the participating public, most clearly sees that the value they are creating is being used with the most little return.
We must also note that monetary value that is being realized by the capital players, is – in many if not most of the cases, not of the same order as the value created by the social innovation processes. The user-producers-participants are creating direct use value, videos in YouTube, knowledge and software in the case of commons-oriented projects. This use value is put in common pool, freely usable, and therefore, does not consist of scarce products for which pricing can be demanded. The sharing platforms live from selling the derivative attention created, not the use value itself. In the commons model, the abundant commons can also not be directly marketed, without the creation of additional ‘scarcities’. Finally, as Adam Arvidsson shows, even in crowdsourcing, the value may often not be in the product design themselves, but in other forms of value, such as branding, etc…
2. Does this not create a crisis of accumulation of capital?
We can already posit a number of conclusions from our comments above. One, it is now possible to create all kinds of use value without, or with only a minimal, intervention of capital. We are dealing with post-monetary, post-capitalist modes of value creation and exchange, that are both immanent, i.e. embedded, to the market, but also transcendent to it, i.e. operating outside its boundaries. Two, capital is increasingly dependent, and profiting in all kinds of ways, from the positive externalities of such social innovation. Three, the full , partial, or hybrid peer production models that we discuss above, may be collectively sustainable as value creation processes, but do not offer a direct solution for the income and survivability of the participants.
So the challenge can be described as follows: 1) we have a process of social innovation which creates mostly non-monetary value for the participants; 2) we may have an increasingly huge gap between the possibility of creating post-monetary value, and the derivative exchange values that are realized by enterprise; 3) the participants engaged in such passionate production and innovation, mostly cannot find in such processes an answer to their own sustainability.
Hence, the impossibility to realize more than just a small partial monetary value, from the point of view of most commercial players. Increasing precarity for the participants of social innovation. In other words, the current market model does not have a reverse process of redistribution for the value that is being created.
This might of course be a temporary crisis, but we do not believe it is. The reason is that the market can only indirectly and partially provide monetary compensation for processes which are not motivated by such compensation. What we need therefore are more general redistributive processes that allow society and the market to give back part of the value that is being so created. One possibility is the further development of transitional labour market measures (protect the worker, not the job), which recognize the flexibility and mobility of contemporary careers. But this needs an important add-on development: the realization that contemporary workers are moving not just from job to job, but also from jobs to non-jobs, and that in fact, what is most useful and meaningful for them (and the market, and society) are not the paid jobs for the market, but the episodes of passionate production. It seems to me therefore that a more general measure, not linked to the job, but conceived as a repayment for, and enabler of, social innovation, is needed. The name of that general measure is most probably some form of basic income.
3. Different value systems, different economies, different measurement systems
Whether or not such measures materialize, peer production and social innovation are there to stay. We will in all likelyhood have at least two competing economies, or even three.
The first one is the market economy for scarce physical goods. It is likely that this part of the economy will have to cope with the increasing presence of open designs, and therefore, will be more and more a form of built-only capitalism, based on commons-derivate business models. Note that in this sector, the property rents (copyright, etc…) might dramatically decline, and hence the associated profit rates as well. The second part of the market economy will be the market for attention, that will realize part of the value of the sharing economy, and can provide some kind of return to the peer producers.
Then there will be the non-market, non-monetary part of the economy. It will increase in value and scope, but not create additional monetary streams. In other words, no matter how many reputation schemes, wealth acknowledgement systems, or collective quality-control schemes might be developed, this is not directly linked to any monetization by the market economy. It will feed it indirectly, but will never be fully monetized. This is a fact we have to learn to deal with, and have to reorganize our political economy around. As I argue above, I expect that communities will develop various forms of gifting, sharing and exchange, as well as a number of affinity or community based currencies to measure such value. And in addition to that, some general form of redistribution or monetary repayment may have to be created.
4. The Ethical Economy, Power, and Common Norms
I may disagree with Adam Arvidsson that this emerging ethical economy, a concept that I consider analogous to what I call the emerging sphere of peer production, is not ‘necessarily better’ than the older monetary production. Of course, peer production will create its own problems and contradictions, and will indeed create a rather rocky transition time. But I believe that there are strong reasons that this new mode will win out.
First of all, the new mode is more productive. More value, more innovation, more usefulness is created for its participants and society and general. For profit companies that rely on proprietary strategies, and where innovation is dependent and limited by competition, will tend to loose out, over time, due to this asymmetric competition, to the for benefit institutions and their associated communities of peer producers which constantly innovate. Second, the process is more participative in the political sense. It provides more meaning, and autonomy in all spheres of human life. Intrinsic motivation is inherently more productive than the extrinsic motivation and neutral exchange on the market. Finally, the new forms of peer property are inherently more distributive. All this means that in the second form of competition, between for profit companies relying on closed proprietary strategies and for profit companies using open/free, participatory and commons-oriented extensions, the former will tend to loose out against the latter. So companies will increasingly choose for their insertion in the new logics. The corollary is that individuals will choose to engage in passionate production whenever they can, and will tend to choose for those companies that have integrated these logics in their own processes. Nations that choose to adopt such strategies, becoming Partner States that enable and empower such processes, will tend to develop faster than those refusing this path. Just as importantly, the same process of miniaturization which changed the structural position of knowledge workers vis a vis capital, as they own their own means of production, their brains and computers, tend to be replicated in the physical economy as well. Trends in desktop manufacturing, in rapid manufacturing and tooling, in easy to localize multi-purpose machinery, in personal fabricators that move from plastic to metals, will tend to distribute physical productive capacity and undermine the industrial model of capitalism. The problem is that as physical production will become more distributed, and associated with financial trends such as social lending and the direct social production of money and wealth acknowledgement systems, any strategy that aims to replace lower rates of physical profit with higher rates of immaterial profit, will tend to be undermined by the generalization of open designs. Here again we have the same crisis of accumulation of capital on the horizon.
Where is the power in this changing world? In the world of immaterial near-zero reproduction costs, neither market pricing, nor hierarchies, nor democratic negotiation, are needed to allocate scarce resources (but they still will be needed wherever there is scarcity). In the distributed production networks, bottom up peer governance processes will emerge more and more. In the sharing networks, their will be a balance of power, and associated conflicts, between the creative users and the platform owners, whereby the former are not powerless. Where there are no overt hierarchies, power becomes expressed in invisible architectures that enable or discourge certain types of social relationships over others. However, as commons-oriented communities become stronger, we expect the literacy of such power to increase. Of course, the platform enablers have power too, as do the commons-oriented businesses and the crowdsourcing operators, and we may expect conflicts over protocols. It is possible that communities with strong business involvement and ecologies, will perform better than communities without such support, a fact which plays in favour of the commercial players. Similarly, Partner State efforts to enable and empower social value creation, may select certain social production processes over others. The conclusion is therefore that this is an open process, and that the process of mutual accommodation, between private and public institutions, versus sharing and commons communities, will be a co-created reality. The future is truly open.
5. Scenarios for the future
The existing market model is clearly in trouble. It cannot continue to treat nature as both a positive externality from which it can endlessly profit, and in which it can dump the negative externalities of its own operations. A system of infinite growth in a finite environment is a logical impossibility.
At the same time, a simple transfer of its core operations towards the immaterial economy is not a simple proposition. A reliance on intellectual property rents is deeply challenged by the new non-proprietary forms which point to a future of open designs. The current system which combines pseudo-abundance in the material sphere, thereby destroying the biosphere, and pseudo-scarcity in the immaterial sphere, thereby holding up social innovation, is deeply flawed and not sustainable in the long term. In terms of value creation, it is now competing with a third mode of production, governance and property, where it is beaten at its own game.
In the first emerging stage of peer production, market forces will embed it in their own operations, just as the imperial slaveholders freed their slaves to become feudal colini (serfs), and as the feudal kings and lords started investing in capitalist merchants and manufacturers, so for profit companies are adapting and investing in the new modes, which they hope to subjugate and integrate. In this they will be partially successful.
But precisely because they are successful, they are also strengthening the new mode and logic. At some point, a parity of influence between the logic of the commodity and the peer to peer logic may be achieved. Past experience suggests however, that such a transitional period is not sustainable on the long term, and that one logic can and should be the dominant logic of value creation.
In the tribal economy, it was the gift and the attendant symmetrical social relations and processes which dominant. In the hierarchical imperial/feudal systems, it was the tribute of the weak to the strong. In industrial capitalism, and in the first phases of the information economy, it was the commodity.
We therefore strongly suggest that the third phase or scenario will develop around the dominance of the peer to peer logic. This means that most immaterial value creation, i.e. what really matters to a postmaterial civilization, which will produced by value communities, competing for allegiance. They will use non-proprietary formats. For exchange, they will use different kinds of wealth acknowledgement systems.
The physical sphere will be managed by post-capitalist markets for scarce goods. Note how the newest forms of market trading are already being informed by the P2P or partnership principle: the for-benefit institutions enabling peer production communities, the social entrepreneurs using profit as a means only, the fair trade models which put the power-based market relations under the arbitrage of the partnership principle, etc… Methods of ‘markets without capitalism’, ‘natural capitalism’, cradle to cradle production systems and a steady state economy will have to become the format of the market, if the biosphere is not to be further harmed. But clearly, such market mechanisms are already subsumed under the higher logic of partnership with other humans and nature. There is of course another scenario, whereby the P2P logic is subsumed to the continued dominance of the capitalist market, based on some kind of rent-based proprietary models where nobody really owns anything; this would be an information feudalism kept in place by repressive IP laws and DRM technology. But such a dominance would imply also that the nature-destroying logic remains in place, and hence, points to the dark scenario of a generalized fight for scarce natural resources. This is simply put a recipe for generalized disaster, and hopefully, it is unlikely that humanity will choose for this static and regressive path.
Here is statistical evidenceof the 'value crisis' we outline above, via Michael Roberts:
"Research productivity is declining at a rate of about 6.8 per cent per year in the semiconductor industry. In other words, we’re running out of ideas. That’s the conclusion of economic researchers from Stanford University and the Massachusetts Institute of Technology Innovation. They reckon that in order to maintain Moore’s Law – by which transistor density doubles every two years or so – it now takes 18 times as many scientists as it did in the 1970s. That means each researcher’s output today is 18 times less effective in terms of generating economic value than it was several decades ago.
Thus we have the position where the new leading sectors are increasingly investing in intangibles while investment overall falls along with productivity and profitability. Marx’s law of profitability is not modified but intensified.
The rise of intangibles means the increased concentration and centralisation of capital." (https://thenextrecession.wordpress.com/2017/12/10/capitalism-without-capital-or-capital-without-capitalism/)