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Book of the Day: The Good of Everyone. The Sharing Economy as a Way Out of the Crisis

photo of Michel Bauwens

Michel Bauwens
31st January 2012


This is a very important book, in the process of being translated from the Italian:

Enrico Grazinni:

“The thesis of this book is that, to overcome the current dramatic economic and ecological crisis, it is necessary to create and develop a polycentric economy based on common goods and not just on market monoculture or state intervention1. We firmly believe that neither the spontaneous market forces nor a public intervention alone can solve the problems created by this double crisis. Quite the contrary, things could even get worse. It is necessary to promote a different type of economy based on the sharing and the self management of common goods, that is, those goods that need to be shared by communities due to their very nature – such as science, the Internet, information, the environment, air and water, currency, natural resources, means of communication, transport, etc.. It is also necessary to encourage economic democracy and the workers’ participation on company boards to thwart speculation and develop a stronger, fair, sustainable economy.”

A Summary

“Grazzini’s book is inspired by Nobel prize Elinor Ostrom’s studies on the Commons, and is based on the seminal works of some preeminent authors, such as: Peter Barnes, who, in his book Capitalism 3.0, sustains that non profit trusts should own and manage the Commons in behalf of public interest and concerned communities; Yonchai Benkler, who advocates a new horizontal mode of production that rests upon “peer to peer” relationship; David Bollier, co-founder of the Commons Strategy Group, a partnership to help advance the commons as a paradigm in diverse settings, both in theory and practice; Lawrence Lessig, who promotes Creative Commons, Open Science and more balanced intellectual property rights.

The essay argues that, in order to come out of the current dramatic crisis – wich is both economic and enviromental –, we need to develop a polycentric economy which should comprise three main sectors: the commons, the market and the public sector. The new sector of the commons – which includes the resources that are shared by large communities, such as knowledge, Internet, information, water and environmental resources, software, communications and networks – should be open to everyone without discrimination. The new economic sector should acquire a pivotal role (and not a subsidiary one, as the current so called Third Sector). The basic common resources should be safeguarded and available to everyone and allow a real market competition.

On the contrary, privatization of the Commons leads to monopoly, opacity, crisis; their nationalization leads to privilege, corruption and inefficiency. Grazzini argues that the spontaneous market forces and the state intervention cannot solve the problems which caused the economic and environmental crisis: quite the opposite, it is very probable that these problems will worsen. It will be necessary to promote the sharing economy, economic democracy and cooperative management of the Commons by the interested communities. Anyway, the Internet, Wikipedia, free software and open source, are already managed by non profit institutions in behalf of the concerned communities.

To get out of the crisis, to curb speculation and develop a more fair, sustainable and intelligent economy, it will be also necessary to encourage industrial democracy and provide for co-determination and employees’ representation at company board level – as it already happens in Germany and Sweden -.

In short, Grazzini’s essay:

* analyzes critically the roots and dynamics of the global crisis, which so far proceeds in two different ways: on the one hand, Europe and USA suffer badly and, on the other, Asia and emerging countries drive the markets. Until unemployment decreases and society does not acknowledge the right (and central) value of work, we won’t go out of the crisis.

* finds out three structural causes of the global crisis: the severe and growing inequality in income distribution; the information asymmetry and the opacity which pervades financial market; the concentration of political power by élites who are strongly related to financial groups and very biased in favor of deregulation.

* affirms that no one structural problem which caused the crisis has been faced and solved.

* harshly criticizes the neoliberal theory of “self-regulating markets” because, according to Karl Popper criteria, it is falsified by hard facts. This false ideology legitimized complete deregulation of financial markets and growing inequalities, and contributed to fuel the global crisis (that anyway was easily predictable, if one would have considered many national and regional crisis which occurred in the last 20 years);

* solicits more open mindedness in economics – against the “pensée unique”, which dogmatically transforms the market into a fetish – and more openness towards to different (and until now marginalized) schools of thought – such as the Sharing Economy;

* proposes the reconciliation of economics with other human sciences – such as sociology, history, politics and ethics – and focuses its analysis on the value of work – and particularly on intellectual and creative work, the main force of production in the knowledge economy;

* states that in the advanced economies the role of the Commons is absolutely crucial: in fact pure public goods – that is, following Ostrom’s criteria, non exclusive and non rival goods such as knowledge and information – are strategic not only to compete but also to develop economy and society in a sustainable way; and effective management of the common environmental resources is becoming more and more essential to survive

* affirms that the current production and consumption models are becoming more and more unsustainable, and that the environmental crisis is bound to worsen because billions of new consumers in the developing countries are entering into the global market. The effects of the energy crisis are already evident: oil price volatility and wars caused by oil.

* ecology is an evident case of “market failure”. Indeed market is not able to solve pollution problems, which are considered by the dominant economic science as “externalities”, that is unexpected consequences of private contracts: in fact market sets lower prices for products which pollute compared with non-polluting goods.

* any ecological policy will necessarily affect a reduction in the sphere of market to curb “negative externalities” and will involve the crucial state intervention to finance scientific research, promote alternative technologies, tax the production of carbon dioxide, transfer technological resources to the developing countries in order to defend environment.

* the current pattern of market economy will be necessarily modified from its very foundations. But state intervention can be positive or negative for economy and society. Without control from the bottom and without transparency, state intervention implies very high risks of corruption, privileges, wastes and inefficiencies.

* the hope is that communities of scientists, researchers and citizens will organize themselves autonomously and become key players in the environmental policy: this is the only way for communities to become really effective in defending the “common garden” and public interest.

communities should manage environmental resources setting up non profits economic organizations, such as trusts and cooperatives, in order to get sustainable development.

Furthermore, Grazzini’s book:

* foresees three scenarios as result of the current crisis: the “everything almost like before” scenario (unfortunately, the one which is currently happening); the “progressive scenario”, exemplified by Obama politics and by the scandinavian pattern of “sustainable capitalism”; the “alternative scenario”, in which Commons economy gains a central role. In the last scenario, the Commons would be democratically managed by concerned communities.

The reform proposals which characterize “the alternative scenario” foresee: strict regulation and deep democratization of finance thanks to international cooperation led by the UN; increase of the value of work, especially of knowledge and creative work; expansion of the sharing economy, of the economic democracy and the Internet democracy; defense of the welfare system and promotion of the green economy and renewable technologies; anti-trust policy to develop competitive and regulated market

The alternative scenario envisages some kind of direct democracy in the economic field. It foresees the management of the commons by the interested communities thanks to the creation and empowerment of non profit organizations at local, national and international level; and it advocates for industrial democracy – as it currently happens in Germany and Sweden, where workers elect their own representatives in company boards.

There is a remarkable difference between tangible and intangible commons that consequently should be managed in different ways. In fact knowledge economy is an economy of abundance based on cooperation and on increasing returns; on the contrary, the economy of physical goods is grounded on scarcity, competition and decreasing returns.

Intangible goods could be managed by the interested communities much more easily than the material goods, because they are cooperative and no rival resources. It’s not by chance that the Internet, Wikipedia, free software, open source and scientific knowledge, are already managed by the concerned communities and by non profit organizations, and that these commons are expanding despite the strong privatization trends. On the contrary, the collective management of rival and scarce commons – such as water, forestry, pastures and other natural resources – is more difficult and complex.

Since advanced economic systems are more and more based on knowledge, knowledge workers will play an essential role both in global competition and in the domain of economic democracy and management of the commons. In the advanced economies knowledge workers – that is workers with a medium or high level of education – are already the majority of the employed people – that is more than the 45% of the total workers – and control the most important means of production: knowledge. These workers have the expertise to run the economy, and, especially because they are badly affected by the current economic crisis, could also be eager to manage industrial democracy to develop a more sustainable, equitable and innovative economy.

A polycentric economy – based on Commons, market and state intervention – is strongly needed to face the economical and ecological crisis and to prevent and stop the spreading of crisis’ viruses. A fair and sustainable economy cannot develop from the anarchy of competitive forces (as it happens in the market economy) or if depends on the decisions of only one sovereign, the state. The commons should be managed by civil society and its non profit organizations, such as trusts and cooperatives.”

Go here for excerpts.

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2 Responses to “Book of the Day: The Good of Everyone. The Sharing Economy as a Way Out of the Crisis”

  1. Charles van der Haegen Says:

    Hi Michel,

    I still have your mail requiring me to write down a post on u.a. Cultural Theory.
    The argumants in Enrico’s essay would fit very well in Cultural Theory’s framework,

    “Plural rationality
    The theory, developed originally by anthropologist Mary Douglas and expanded by Thompson and his colleagues, argues that there are just four ways of organizing, perceiving, and justifying social relations: hierarchy, individualism, egalitarianism, and fatalism.
    These four “ways of life” conflict in every conceivable social domain because each will define both the problem and the solution in a way that contradicts the others. ”

    I’m really frustrated not being able to read Enrico’s essay (Italian?). I will have to wait patiently for the translation. In the meantime, I do benefit from your masterfull discussion of it.
    Cheers,

    Charles
    But your book

  2. Michel Bauwens Says:

    Hi Charles, if you email me this, I can put you in touch with Enrico so he can send the english translation, not sure if it is publicly available, but the manuscript (or at least big parts of it) is floating around,

    Michel

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