Does peer production hamper the monetary economy?

Does peer production hamper the monetary economy?

With Adam Arvidsson, I have been developing the concept of a crisis of value that will increasingly affect the workings of the current money-based system. The way I interpret this trend, is that while peer production causes the creation of use value to grow exponentially, only a part of this is being transformed into monetary value.

Yes, peer production creates value, and yes, a commons usually does create an economy around it, but the kind of value created tends to escape the confines of a capitalist economy.

This is both good and bad news. Value creation is of course good for a society, and current economic players have but little choice to engage in the various forms of social innovation that are emerging, but when that value cannot be captured through the main economic mechanisms, that does create a problem.

The problem is in a nutshell that the new forms of value take an overwhelming post-monetary, and hence, post-capitalist form.

Classic companies are endangered by the new practices, and peer producers do not get adequate benefits to sustain their practice.

I feel a recent number of reports strengthen this case, so hear me out while I marshall the evidence, proving both sides of the argument.

1. On the Use Value Creation side

First of all, a recent study confirms that free and open source software is growing at an exponential rate. It’s not a fluke.

Researchers Amit Deshpande and Dirk Riehle from SAP Research find that ” find that both the growth rate as well as the absolute amount of source code is best explained using an exponential model.

This confirms the thesis of the exponential growth in use value production. Equally on the positive side, even open source hardware business models can now be adequately explained. See Edy Ferreira’s take in the April 2008 issue of the Open Source Business Resource. We can see this as confirmation of the creation of business models around the commons

2. On the Exchange Value Crisis side

However, the crisis of value thesis seems confirmed by the two following items.

Open-source software is successfully displacing proprietary applications in many large companies and eating into the annual revenues of proprietary software vendors by $60bn (£30bn) a year!!

According to the study from the Standish Group called Trends in Open Source , released this week, the losses of proprietary software makers are disproportionate to the actual spend on open-source software, which is a mere six percent of an estimated worldwide spend of $1 trillion per year. The researchers put this difference down to the fact that a large proportion of open source isn’t paid for, an intended result of the open-source licensing structure.

This is a rather striking confirmation of the crisis of value thesis, I would think, in line with Adam and my expectations.

In an earlier intervention, we pointed out that in peer production, being an entrepreneur is divorced from the need to be a capitalist.

Boing Boing gives ammunition to this thesis , citing a Wired article , that concludes that ” Internet startups are so cheap to do these days that venture capitalists can’t find enough companies to take their money — it’s easier just to self-finance or raise the dough from friends and family

3. Conclusion

1. Peer production creates exponential use value generation

2. This creates a certain amount of monetary value

3. But most of the created value is non-monetary

4. The monetary stream thus created may not compensate for the disruptive effects amongst pre-peer production economics

All of these points do not invalidate the law of asymmetrical competition that companies adapting various aspects of peer production will be more competitive that those who do not, and that the former will capture more of the derivative exchange value thus created, harming those who cannot.

But on a macro-scale, our societies need solutions that allow for the social reproduction of the peer producers, since the major part of the use value creation may not be naturally ‘monetized’.

2 Comments Does peer production hamper the monetary economy?

  1. AvatarZbigniew Lukasiak

    This whole rises the question – what do we need money for? And the answer is more and more that we use money as mean for gaining social status – this is why we buy the new cars and houses. If that could be resolved by other means then perhaps we could use money just for buying food?

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