Does cooperativism work?

Since ‘political economy’ became a subject in the 18th century, the predominant political dichotomy has been framed as labour versus capital. Marx talked about ‘control of the means of production’ as the essential political power that the workers needed to wrest from the capitalists. A great deal of activism and political theory continues in that vein: Gar Alpowitz work What then must we do? is all about rebuilding worker-owned coops and similar institutions. We have 150 years of history testifying to their effectiveness.

The movement has waxed and waned, but never (yet) overcome its antithesis; capitalists have the power to issue almost unlimited credit, and social movements, however popular, seem always to be on the back foot. I am dubious whether worker-owned institutions will ever dominate the economy. On the one hand we see economic justice trying to break out in many forms and places, and on the other dark and powerful forces are suppressing them: laws are being changed to make coops less competitive, and occasionally countries which swim against the neoliberal flow suffer a CIA-led regime change. The Power that controls property also controls the law, the media, the security forces, the military and the banks.

The industrial age needed machinery and factories and hence empowered those with capital and property to invest. That thinking has carried through to the digital era in which a Silicon Valley start-up needs huge amounts of money to engage a raft of skilled people to create (and create a market for) a plethora of unneeded tools, one of which might survive and be sold for a massive profit. Yet there is nothing about the internet that necessitates that capital-centric way of creating wealth. Platform cooperativism is the notion that the digital ‘means of production’, the platform, should be owned by, governed by and should enrich the participating value creators. As an approach and as a tactic, it is a straight extension of rudimentary 19th Century cooperativism into the digital age and cyberspace. In which case we should anticipate it working as it always has on the sidelines but never to impact the wider economy.

Why Protocols?

I believe another strategy shows promise. Let us not focus on property and ownership and control, but on relationships and protocols and collaboration. There are plenty of precedents to work with, but I haven’t seen this thinking applied in the platform cooperativism space.

By protocol I mean a language, convention, or standard. Use of such things cannot be restricted, prevented or monetised any more than use of a word, gesture, or social code. The Internet is essentially a set of protocols such as TCP/UDP, http, HTML, which led to a highly egalitarian participative infrastructure. That need not have been so: in a parallel universe, Microsoft R&D invented the web and now every page is a visual-basic-enhanced word document; MS Office is the only tool for authoring web-pages, and it costs $5000 for a licence and still looks wrong on Firefox!

Fortunately that particular dystopia was avoided because we had those open protocols. I think that is why the early Web inspired a great deal of optimism about the levelling of the socio-economic playing field – recall John Perry Barlow:

We are creating a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth. We are creating a world where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity. Your legal concepts of property, expression, identity, movement, and context do not apply to us… We believe that from ethics, enlightened self-interest, and the commonweal, our governance will emerge. A cyberspace Independence Declaration

The basic internet remains free as designed: we still pay nothing for example for sending an email or retrieving a web page but something has gone wrong. The Internet continued to grow, as with all technologies, as new layers were built; the internal logic of each layer is entirely independent of the others just as the stable atomic model of protons, neutrons and electrons owes nothing to the fuzzy quantum reality on which it is based. Gradually the capitalist interests worked out how to replicate their own logic and structures in cyberspace. On top of the open protocols they built pay walls, monetised services and enclosed spaces. The rules are different at every level. In 2017 it seems normal that platforms large and small, own data and control economic territory for the benefit of private investors. The biggest platforms have the most users and the most money and the most political power and that is why I find it hard to imagine any platform like competing head-to-head with Facebook, and winning.

Beyond platforms to protocols

I want to expand upon this argument:

A platform cooperative or a platform company model is not one that takes full advantage of the potential to have a truly distributed network. They still have a central platform operator at their core, providing coordination, quality assurance and, most essentially, trust. However, it is possible to go beyond platforms to protocols – to commonly agreed ways of operating. Thus anyone who agrees to the rules can become a part of the network.Mikko Dufva

Ride-sharing is the poster child of the sharing economy, the pressure point chosen by platform cooperatives, and the current fiefdom of Uber. It could be considered a natural monopoly, which is to say it involves infrastructure which need not be duplicated – users don’t want to have multiple identities, apps, user interfaces, price structures etc. PayPal creator Peter Thiel is being lauded by businessmen for arguing that these monopolies are desirable and that competition is for losers. Since he doesn’t address the social question of how monopolies should be owned or governed, we should assume from his investment strategies that he intends to own as many as possible himself.

So Uber’s near monopoly, won as a direct result of having unimaginable access to money, is an invaluable commercial advantage in itself because without serious competition it can squeeze the market for all it is worth. But be careful what you wish for; should Uber fall from grace, the market would probably splinter into many incompatible pieces, which benefits neither the people with cars nor those who need rides.

A platform cooperative ride-sharing service sounds like an attempt to form a cooperative and compete with Uber by recycling profits and remunerating workers better. Its not a very convincing business plan even if the allegations about illegally to sabotaging its enemies are not true because Uber has resources to undercut any competitors until they choke.

But an open protocol for ride-sharing changes the game completely. Anyone could sign up to the network and announce their intention to travel or willingness to chauffeur. A simple algorithm would connect them and at journey’s end they might remunerate each other in cash, Bitcoin, home-brewed cider or anything; the line between giving a friend a favour and earning a crust would be very grey. There would be no middle men collecting rent or dictating how drivers should behave as representatives of the company. The open protocol creates a free market – not in the neoliberal sense of Wall Street being able to flush out the economy of any country it likes with imaginary dollars, but in the sense that suppliers and customers can meet without middlemen, regulators or rentiers. This is less optimal for collecting taxes and running protection rackets, but more optimal for granting everyone access to the economy, and probably much more efficient in terms of using underutilised transport infrastructure.

This article’s title suggests that a protocol could replace a platform as a basis for a cooperative infrastructure. More accurately, it seems to me that an open protocol diminishes the role of the platforms and changes the operating environment by:

  • the main benefit to users of a monopoly is built in to the protocol, so there is no benefit to users of having the market dominated by a monopoly.
  • suppliers and customers can interact without paying middlemen (which was one of the early promises of the internet)
  • users benefit from no longer being captured inside walled gardens
  • the question of data ownership is probably handled in the protocol, not in law, and not by a 3rd party, which reduces costs.
  • the platform owner is no longer responsible for what happens between suppliers and customers, reducing the need for surveillance and fees.
  • the law of the land applies only to the traders behaviours, and thus is much simpler

A changed economy

In short, most of the functions of the platform are no longer necessary and in its absence there is room for new kinds of organisations to fulfil new kinds of function. The new kinds of organisations could compete on the basis of what value they can add to the protocol, or they could just cooperate to make the users lives easier. To stay with the concrete example of ridesharing.

  • Companies could develop paid apps which compete on the best user experience
  • Drivers of old bangers could organise to ensure constant supply and that they don’t undercut each other.
  • Drivers could organise mutual insurance and/or finance.
  • A system could be built on top of the protocol to help set up multiple passengers with multiple destinations in the same car, perhaps taking a small cut of the savings.
  • A private ambulance service could be imagined, along with haulage companies, a postal service, long distance travel and regular commuter ridesharing.
  • if the protocol didn’t handle it, a 3rd party service would be needed to ensure that drivers and/or passengers were identified or had a certain reputation.

Likely such a protocol widely deployed would render our transport ecosystem unrecognisable. It might obviate most full time driver jobs in favour of hitch-hiking 2.0 approach. The free market would level out the full time driving jobs and the unemployment of drivers and costs and revenues, leading presumably to a more equal society (at least until driver-less cars took over!)

The role of blockchains

The blockchains are already making this happen because blockchains are basically protocols which allow open participation. Blockchains can perform some of the critical functions of platforms without being owned by any one institution, namely:

  • store data
  • execute contracts
  • manage payments.

This article about Arcade City makes it clear:

In the end, Arcade City will be a protocol composed of Ethereum smart contracts supporting a global logistics network with an entire ecosystem of apps and businesses running on top of our infrastructure. What SMTP is to email, Arcade City will become for distributed logistics.

For all the bluster about Arcade City being an upcoming platform coop, to me it seems there is no platform in the sense of a thing which can be owned & sold. What then does the brochure site mean when it claims to be owned and operated by its members? It seems to me that the language is wrong.

The human factor

The benefits and challenges of co-owning and operating a legal entity such a cooperative within a legal jurisdiction, are quite different to the benefits and challenges of using, governing and stewarding a universal protocol. Regrettably Arcade City has now forked after a disagreement in the board, which poses serious questions about the claim that its members were in control. Technology alone will not create the society we want; at a more fundamental level, we have to learn to work together.

Professor Jem Bendell and I have explored these ideas further in our new paper Thwarting an Uber Future for Complementary Currencies: Open Protocols for a Credit Commons especially as they relate to payment systems, which we argue is the ultimate Death Star platform.

Photo by Glassholic

Photo by Glassholic

10 Comments From Platform Cooperativism to Protocol Cooperativism?

  1. Astrid Scholz

    Great article! A few of us are working on a version of this in the context of distributed infrastructure for mobilizing solutions and capital to achieve the Sustainable Development Goals. Tactics of implementation aren’t for the faint of heart, but we see a way. Would be happy to chat.

  2. Matthew Slater

    Hi Bob
    I’m not an expert in protocols or network software. None the less, as the needs of my partners dictate, I’ve started work on a couple of parts of an ecosystem for community exchange. I have defined 3 APIs which I’m struggling to get anyone to write the software for.
    Sol-search allows any group to list its market ads in one space and search the whole space.
    I’ve also described a transaction storage API which would be an accounting service for any group.
    I hope that, the difference between a protocol and API notwithstanding, this shows a bit better what I’m talking about. Open free services could be building blocks for a bottom up, inclusive economy.

  3. Bob Haugen

    Thanks, Matthew. Perfect! To me, API is related to both vocabulary and protocol: what can we say to each other that each of us will understand? And where and how can we say it? Level 8 (or 10) protocol is how you interact with the API to get something done, or even better, how different nodes in a protocol-driven economic network interact with each other to accomplish some shared purpose. For example:

  4. Nathan Schneider

    I’m interested in your argument, but I’m concerned that you’re too quick to write off ownership and democratic governance as old-fashioned when they still wield tremendous power in the online economy. I’d like to see more details about what you’re actually calling for—and, in particular, more about what you believe cooperation for protocols could like.

    The internet is an open protocol, and what turned it toward centralization was ownership models, suggesting protocols alone are not enough (eg, decentralized email has become surveillance gmail). We see this again with the all-holy blockchain, which had much potential, but without democratic structures it is mainly reinforcing the speculative and unequal economy of the outside world. I’m also unsure about why what you’re talking about should be referred to as “cooperativism” at all, since there’s little trace of the international definition of that term, which involves democratic economic participation and governance.

    Already, it’s worth noting, we’re seeing platform co-ops use federation to spread; in a sense, federation is a protocol strategy very familiar to the cooperative tradition.

    Barlow’s world never happened. Decentralized tech will centralize without decentralized ownership. This is the world we’re contending with now.

  5. Stacco Troncoso

    I pretty much agree with Nathan here. We need counter-property as a prophylactic against enclosure. Michel wrote a relevant post about this last year called “The Commons as Property”. Here’s an excerpt.

    “If we look at the enclosures we see that people’s with no property or common property, were considered to have no property (terra nullius) and were therefore appropriated, as were the lands of the indigenous people colonized by the West. This is also often done with immaterial resources such as knowledge and culture, which are appropriated and then copyrighted or patented (the biopiracy of traditional Indian seeds for example). We also have the very strong tradition of totalitarian state-socialism, where so-called collective public property created absolute power in the state and its managerial class. Although property was the instrument of monopolisation by private or state forces, non-property was clearly not a protection against this.

    On the other hand, if we look at the successes of the contemporary commons movement, in free culture, in free software, in open design; and the relative success and staying power of cooperative ventures, they are all done by ‘hacking’ property or distributing property. The GPL license for free software is a form of common property, protected by law; Creative Commons similarly protect the sharing of cultural goods by law. In the case of cooperatives it is done by distributing shares and guaranteeing one share, one vote.”

    Source: The Commons as Property.

  6. Bob Haugen

    Stacco and Nathan, I think you are missing a point. I (and I think also Matthew, although he can speak for himself) believe strongly and work on cooperative organizations on the ground.

    We want a protocol where they can all join together in a larger cooperative economy. We don’t think one platform will work for that, but a common protocol and vocabularies might.

    It’s more federation than total decent, in my opinion

  7. Daniel Harris

    Hi Matthew,

    An awesome article indeed. So glad that you (and others) are starting to take open protocols seriously in applying them to creating a better world for all.

    You say you “haven’t seen this [open protocols] thinking applied in the platform cooperativism space”. Actually, I think you possibly have but perhaps didn’t know it at the time. During the Impact Economy Summit in Whistler October 2015 I created a brief document to answer some issues that Michel Bauwens was grappling with. I wrote about an “Open Protocol to Interoperate People”. You may have not seen it. Michel did get what I was talking about after some explanation. You can see it here:
    Unfortunately, I have yet to upload my presentation from the Summit but you’ve kicked me to work on it and get it up there hopefully next week! But in the meantime you can see what I was saying back then here:
    Many of the original ideas came from CollabCamp in Amsterdam 2014, by the way.

    As you know I run Freewheelers, an international ride-share website. At OuiShare, in previous years, I have spent many days talking to other ride-share companies about creating an open protocol for ride-sharing. Unfortunately there has been little enthusiasm. I am so excited that you have similar ideas. There is a lot of work that has been done already by many, many, many organisations and groups to formulate the technology. So much effort for so little results. But at least we can build upon their technology. And I have 50K users we can play with. What do you say?!

    The fact is that open protocols are part of the solution. But the real issue; the real gremlin in the ointment is not the technology, it’s the adoption. I’ve seen far too many projects (Kendraio included) have amazing dreams and/or amazing technology but without people actually using it, what’s the point? Although, of course, even ruins can be built upon. I love Floris Koot’s quote “leave good ruins”!

    A point to note, just before everyone jumps on the “open protocol panacea solves everything” bandwagon (hold on a mo, we haven’t finished the “blockchain panacea solves everything” bandwagon yet! 😉 services cost money/resources/something to run. I ran an ISP (Internet Service Provider) back in the mid 90s. [Yes, I sold it with my partners for 4 odd million. Yes, I am a raving capitalist. And before that I studied art at Camberwell for a year. So, I’m also an uneducated artist! ;-)] Anyway, to the point, we ran an ISP and it used an open protocol TCP/IP. But the open protocol had to run over copper or fibre and sometimes the roads had to be dug up and all that cost money. And we had to pay our staff to provide customer support when things broke or got dug up by mistake. Running an ISP is actually a very grounding experience which puts you back in touch with the earth and cable ducting! 😉 Anyway, open protocols are just part of the solution. You also need software and infrastructure and neither of those are free baby!

    So, my task now is to drive adoption to the ideas that I was talking about in Whistler. By some miracle Kendraio has just received European and Google grants totalling 690K EUR for the next 3 years. So, I’ll have some resources to build it after all. And also my task over the next 3 years is to raise a lot more funding to ensure our ruins are good!

    Have fun!

    Cheers Daniel

  8. Astrid Scholz

    We imagine something akin to a mutual structure, with a distributed infrastructure for mobilizing innovations and capital for world-positive solutions owned by its customers and members. The latter can be users, organizations, others platforms, or indeed anyone creating value in the system.

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