Rise of the Commons: Fundamentals of P2P Economies


A brilliantly succinct summary of Michel Bauwens recent talk in New Zealand written by Alina Siegfried.

Last night I had the pleasure of seeing peer-to-peer and commons theorist Michel Bauwens present at the BizDojo on his speaking tour of New Zealand. Having followed his thought leadership for some time, seeing him speak in person provided an immediate impetus towards action, and had me wondering why peer-to-peer models of production haven’t become a dominant force in our current political and market discourse?

Put simply, peer-to-peer (P2P) is the capacity that we now have to connect to each other, to create value together and to organise ourselves. It cuts out the middle man, and instead adopts a model of decentralised peer production, whereby value is delivered back to the place where it largely came from in the first place?—?the commons.

In capital markets, labour is viewed as a commodity to be bought and sold. Within peer production labour is viewed as a shared resource for the community. People bring their own skills and services?—?teaching people, facilitating the transfer of data or goods, and creating value-added products.

Contrary to the capitalist market, P2P gives you access to the full economic resource, rather than just those pieces that you created yourself, or have the rights to use. You don’t have the same tension between supply and demand, as knowledge and goods are abundant in commons communities. When building a company, you design for competition and scarcity. When you design for communities, you design for cooperation and abundance.

“Capitalism has become a scarcity-engineering system.” Michel Bauwens

From left: Sophie Jerram (Letting Space), Michel Bauwens (P2P Foundation) and Alanna Krause (Enspiral Foundation)

This makes commons-based economies hyper-productive, as people aren’t having to waste time and resources reinventing the wheel. In recent years, we have seen examples of commons-based models replacing traditional models that value competition: Encyclopedias are all but obsolete in the western world thanks to Wikipedia (as if substantiating this claim, Medium doesn’t even recognise the word, with a big red line under “encyclopedias”); while Microsoft no longer enjoy the near-monopoly they once had due to the open source movement.

The commons-movement is not just a group of hackers and hippies?—?the Fair Use in the US Economy report indicates that one sixth of U.S. GDP can be attributed to open and shared knowledge. The Pentagrowth report examined 50 high-growth tech companies over a period of five years, and found that levers such as sharing, enabling and connecting were key to their exponential growth. Commentators such as Jeremy Rifkin speculate that we are moving quickly towards the rise of the collaborative commons, as an alternative economic model that makes sense.

“One sixth of U.S. GDP can be attributed to open and shared knowledge.”

There are three components to adopting a fully commons-based economy.

1. Mutualising Ideas — Open Economies

At the root of commons-based economies, is knowledge and ideas. Through sharing ideas, pathways towards innovation are available for anyone. Whether it’s code, art, music, policy, democratic process, or data, opening up your intellectual “property” means that others can pick up where you left off and iterate.

This creates what Michel Bauwens calls “Economies of Scope”. Essentially, anything you make is based on the entire knowledge base of everyone who has ever worked on it. Taking a civic state analogy, the coming together of people and exchange of ideas can be viewed as the Assembly of the Commons.

2. Mutualising Physical Infrastructure — Sharing Economies

Peer-to-peer value creation is not new, it is all around us. We are constantly creating value: the communication we engage in, the documents we create, the ideas we share. Yet we are experiencing a “value crisis”. We have a highly productive system, but the within many pieces of infrastructure, the system exploits human co-created value.

Michel used the example of Facebook. It is the Facebook users that create value?—?an empty social media platform with no users is worth nothing. Facebook is just the middle man who captures the value. This is not to pick on Facebook?—?other social media platforms, and indeed supply chains and other intermediaries operate the same way. We sell our attention, and offer up our creations, our ideas and our data; and we get no compensation for the value we create. This situation bears a stark resemblance to medieval peasants toiling the land for the benefit of wealthy landowners.

“We are living in an age of digital feudalism, where value is not held by those that create it.”

We need to embrace generative infrastructure systems, to replace the extractive models of co-created human value. One such model is that of the foundation. Involved as a third party, foundations such as the Wikimedia Foundation or the Enspiral Foundation enable the cooperative infrastructure to exist. They play the role of editor, facilitator or maintainer of the database, to which contributors share their knowledge or resources.

It’s important to note that foundations are different from NGOs. The latter thinks about the world like companies do, with a scarcity mindset?—?they attempt to direct resources to the problem. Foundations on the other hand have abundance mindset?—?they provide the central infrastructure, but don’t command the operation of it.

Using another civic state analogy, foundations providing the physical infrastructure could be considered the Chamber of the Commons.

3. Circular Economies — Re-Localised Production

While economies of scale are efficient in a financial sense in today’s globalised world, they are rarely efficient in a societal or ecological sense. Capitalism in it’s purest form externalises all environmental or social costs, and many of our consumer goods and technologies are designed for planned obsolescence.

The biggest danger with this system is that it is based on pseudo-abundance?—?we act as if the world’s resources are abundant and infinite, whereas in reality they are not. We even kill natural abundance?—?think of genetically modified, patented, self-terminating seeds which yield only one crop, and do not produce further seeds.

Re-localising our systems of production can provide great efficiencies, economically, socially and environmentally. A circular economy uses outputs from one system, as inputs into other systems. The example of distributed manufacturing through 3D printing means that we can create products to suit our immediate needs. Consider that up to two-thirds of production costs go not towards matter or energy, but towards transportation. Particularly for heavy products, peer production makes sense. Of course, we can’t have this type of economy unless our supply chains are open (see points 1 and 2).

“What is light can be produced globally, and what is heavy should be local”

Using sharing models and peer production, we could maintain our lifestyles, reduce inequality and revitalise local economies.

The key takeaway from all of this is that it is no longer only within the reach of businesses and markets to produce and capture value. The rise of sharing economies and peer production has shown that civil society can also productive and efficient.

“We can prefigure the world we want through our own actions.”

1 Comment Rise of the Commons: Fundamentals of P2P Economies

  1. AvatarMike Riddell (@mikeriddell62)

    Greetings from Manchester!

    Excellent piece. Thanks for sharing and helping to guide.

    Mike Riddell

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