In the essay below, Yochai Benkler answers convincingly in our opinion, to some standard critiques such as 1) that peer production did not occur or ‘failed’ and 2) that Yochai Benkler’s writings ignored power and 3) insufficiently predicted the emergence of new market powers.

In his response, Prof. Benkler shows that the emergence of peer production is amply verified empirically (the extraordinary expansion of FLOSS production is now accompanied by a very rapid and documented rise in urban commons!), but he also refers to his detailed treatment of power issues in his earlier writings. Very much worth reading in our opinion.

Yochai Benkler: In Why Coase’s Penguin didn’t fly, Henry follows up his response to Cory’s Walkaway by claiming that peer production failed, and arguing that the reason I failed to predict its failure is that I ignored the role of power in my analysis.

Tl;dr: evidence on the success/failure of peer production is much less clear than that, but is not my issue here.  Coase’s Penguin and Sharing Nicely were pieces aimed to be internal to mainstream economics to establish the feasibility of social sharing and cooperation as a major modality of production within certain technological conditions; conditions that obtain now.  It was not a claim about the necessary success of such practices.  Those two economist-oriented papers were embedded in a line of work that put power and struggle over whether this feasible set of practices would in fact come to pass at the center of my analysis.  Power in social relations, and how it shapes and is shaped by battles over technical (open/closed), institutional (commons/property), ideological (cooperation/competition//homo economicus/homo socialis), and organizational (peer production & social production vs. hierarchies/markets) systems has been the central subject of my work.  The detailed support for this claim is unfortunately highly self-referential, trying to keep myself honest that I am not merely engaged in ex-post self-justification.  Apologies.

The premise of the argument, that commons based peer production has failed (the Penguin “didn’t fly”) is empirically problematic.  Extensive case studies collected by the P2P Foundation, the European P2P Value project, the research communities collected around terms like constructed cultural commons, wealth of the commons, collective intelligence,  the breathtaking amount of work on Wikipedia and FOSS in computer supported cooperative work and HCI, as well as efforts to measure the economic value of Digital Dark Matter, offers plenty of evidence.  What didn’t happen is expansion of peer production into the role of critical infrastructure far beyond FOSS and Wikipedia—the failure of Diaspora being the standard story.  I acknowledged that challenge in Practical Anarchism: Peer Mutualism, Market Power, and the Fallible State, where I wrote:

The real utopias I observe here are perfect on neither dimension. Internally, hierarchy and power reappear, to some extent and in some projects, although they are quite different than the hierarchy of government or corporate organization. Externally, there are some spectacular successes, some failures to thrive, and many ambiguous successes. In all, present experience supports neither triumphalism nor defeatism in the utopian project. Peer models do work, and they do provide a degree of freedom in the capabilities they provide. But there is no inexorable path to greater freedom through voluntary open collaboration.

That’s still where I think we stand empirically.  But that’s not what moved me to write a response.

Henry’s core criticism is that I failed to predict the rise of powerful market actors controlling information, knowledge, and cultural production (Read Google, Facebook, Amazon…) due to the fact that I bought too completely into Coase’s new institutionalist framework.

“I want to focus on a third reason why things went wrong – that Benkler borrows his argument from Coase, and hence is vulnerable to a basic flaw in Coase’s way of understanding the world.”[paraphrasing to shorten: Coase’s insight, that when market transactions costs are high and intra-organizational costs lower, activities will be organized within firms (hierarchies) and as market transactions costs are lower while organizational costs are higher (e.g. larger firms & more efficient markets), activities will migrate to markets,] “is a powerful insight, which provided a platform for the work of Oliver Williamson and many other organizational economists, as well as Benkler. Yet it has buried within it a crucial assumption – that change is driven by efficiencies.”

Benkler buys into this argument, suggesting that his new mode of decentralized organization too will expand or contract in given areas of activity, depending on its relative efficiency to markets or hierarchy. Where markets are more efficient than Wikipedia style systems, people will turn to markets. Where hierarchy is more efficient they will turn to hierarchy. Nonetheless, Benkler argues that a variety of factors (including the burgeoning of the Internet) might lead us to believe that decentralized production is rapidly becoming more efficient than competing modes such as markets and hierarchies, across a significant spectrum of activities. Thus, we may expect to see a lot more decentralized production happening as the technology continues to develop.”

“As already discussed, this didn’t happen. But it also highlights an important problem which isn’t really discussed by Coase, and hence is not discussed by Benkler – power. Power relationships often explain who gets what, and which forms of organization are taken up, and which fall by the wayside. In general, forms of production that are (a) more efficient, but (b) inconvenient or unprofitable for powerful actors, are probably not going to be taken up, since those powerful actors will block them. Yet if one starts from an efficiency perspective, it is very hard to build power relations in, since one believes that change in practices and institutions is not driven by power relations but by efficiency.”

To compound this criticism, Henry emphasizes that I made this same argument in Wealth of Networks and still hold to it (citing a current paper in Strategic Organization).

I first introduced the term “peer production” a few months before I completed the first draft of Coase’s Penguin, in a 2001 piece in the Communications of the ACM entitled “The Battle Over the Institutional Ecosystem in the Digital Environment.”  I concluded that essay with the words: “We are in the midst of a pitched battle over the spoils of the transformation to a digitally networked environment and the information economy. Stakeholders from the older economy are using legislation, judicial opinions, and international treaties to retain the old structure of organizing production so they continue to control the empires they’ve built or inherited. Copyright law and other intellectual property, broadcast law, spectrum-management policy, and e-commerce law are all being warped to fit the size of the hierarchical organizations of yesteryear. In the process, they are stifling the evolution of the distributed, peer-based models of information production and exchange.”

Power, and how technology intersects with institutions to shape it, was always the central theme of my analysis.  My job talk, which I gave at several law schools in 1995-1996, resulted in a publication in Telecommunications Policy in 1998 entitled Communications infrastructure regulation and the distribution of control over content.  I opened the theoretical framework section with: “The confluence of three lines of theoretical writing: the political economy of communications, institutional economics, and the economics of path dependency, suggests a feedback effect among technology, institutional framework, and organizational adaptations, that produces a historically contingent, but robust, distribution of power over the knowledge environment of a society. Different societies, introducing the same technology at different times and within different institutional parameters, are likely to experience different social distributions of the capacity to affect information flows.” The rest of the paper describes an interaction and lock-in process whereby battles over control, played out in technological design, regulation, and organizational strategy result in more or less concentrated control over information and knowledge production, and offers examples from then-live, still-critical debates over spectrum commons (now 5G transition) and common carriage of last mile Internet access infrastructure (now net neutrality).

This framework was an application to communications policy of a framework I had earlier developed to property law, focused on a re-interpretation of the Homestead Act of 1862 as an effort by labor advocates in the 1840s and 1850 to use the public domain (the West) to decommodify land and labor, and how it failed.  The central point of Distributive Liberty: A Relational Model of Freedom, Coercion, and Property Law  was that market relations were expressions of power relations structured by institutional choices around control of productive resources.  I turned to studying the Internet after that piece precisely because I realized that it was the space in which power over resources, the means of production, and the freedom to use them was being fought for the coming decades.  And that is, after all, precisely what Cory’s novel is about.

This basic commitment to studying how legal and regulatory choices, primarily around commons vs property, as well as internal design of other institutional mechanisms that shaped control of the information environment by shaping power in markets was my whole focus in the years before Coase’s Penguin:  Overcoming Agoraphobia: Building the Commons of the Digitally Networked Environment (1998) (the history of radio regulation as jostling by powerful businesses to control the industry at the expense of amateurs and smaller stations replicated in the choice between spectrum auctions and spectrum commons), The Commons as a Neglected Factor of Information Policy (1998), Intellectual Property and the Organization of Information Production (1999), Free as the Air to Common Use: First Amendment Constraints on Enclosure of the Public Domain (1999) (which attacked the constitutionality of the DMCA and DRM, and explained how the new enclosure movement and in particular DRM shifted power to centralized, commercial producers), and From Consumers to Users: Shifting the Deeper Structures of Regulation Towards Sustainable Commons and User Access (2000).  All these papers were about battles, from early radio to unlicensed wireless, patents and copyrights to DRM (and other papers I wrote during the same period on EULA enforcement, data exclusivity, etc.), waged by powerful market actors to shape the institutional and organizational environment of markets to allow them to extract higher rents and exclude competitors, both market and non-market.

In Wealth of Networks, right in the introduction about the role of technology in human affairs, I say:

Different technologies make different kinds of human action and interaction easier or harder to perform. All other things being equal, things that are easier to do are more likely to be done, and things that are harder to do are less likely to be done. All other things are never equal. That is why technological determinism in the strict sense—if you have technology “t,” you should expect social structure or relation “s” to emerge—is false. Ocean navigation had a different adoption and use when introduced in states whose land empire ambitions were effectively countered by strong neighbors—like Spain and Portugal—than in nations that were focused on building a vast inland empire, like China. Print had different effects on literacy in countries where religion encouraged individual reading—like Prussia, Scotland, England, and New England—than where religion discouraged individual, unmediated interaction with texts, like France and Spain. This form of understanding the role of technology is adopted here. Neither deterministic nor wholly malleable, technology sets some parameters of individual and social action. It can make some actions, relationships, organizations, and institutions easier to pursue, and others harder. In a challenging environment—be the challenges natural or human—it can make some behaviors obsolete by increasing the efficacy of directly competitive strategies. However, within the realm of the feasible—uses not rendered impossible by the adoption or rejection of a technology—different patterns of adoption and use can result in very different social relations that emerge around a technology. Unless these patterns are in competition, or unless even in competition they are not catastrophically less effective at meeting the challenges, different societies can persist with different patterns of use over long periods. It is the feasibility of long-term sustainability of different patterns of use that makes this book relevant to policy, not purely to theory. The same technologies of networked computers can be adopted in very different patterns. There is no guarantee that networked information technology will lead to the improvements in innovation, freedom, and justice that I suggest are possible. That is a choice we face as a society. The way we develop will, in significant measure, depend on choices we make in the next decade or so (pp. 17-18).

The entire part three of the book is a catalog of policy and political debates and battles that we were engaged in at the time precisely over whether powerful market actors would succeed in bending the technological-economic ecosystem to their interest or not.  Again, from the introduction:

If the transformation I describe as possible occurs, it will lead to substantial redistribution of power and money from the twentieth-century industrial producers of information, culture, and communications—like Hollywood, the recording industry, and perhaps the broadcasters and some of the telecommunications services giants—to a combination of widely diffuse populations around the globe, and the market actors that will build the tools that make this population better able to produce its own information environment rather than buying it ready-made. None of the industrial giants of yore are taking this reallocation lying down. The technology will not overcome their resistance through an insurmountable progressive impulse. The reorganization of production and the advances it can bring in freedom and justice will emerge, therefore, only as a result of social and political action aimed at protecting the new social patterns from the incumbents’ assaults. It is precisely to develop an understanding of what is at stake and why it is worth fighting for that I write this book. I offer no reassurances, however, that any of this will in fact come to pass. (p. 23)

My primary mistake in my work fifteen years ago, and even ten, was not ignoring the role of power in shaping market patterns, but in understating the extent to which the new “market actors who will build the tools that make this population better able…” will themselves become the new incumbent market actors who will shape the environment to increase and lock-in their power.  That is certainly a mistake in reading the landscape of power grabs, and I have tried to correct over the intervening years, most recently by offering a map of what has developed in the past decade in my 2016 Daedalus piece Degrees of Freedom, Dimensions of Power, whose abstract reads:

The original Internet design combined technical, organizational, and cultural characteristics that decentralized power along diverse dimensions. Decentralized institutional, technical, and market power maximized freedom to operate and innovate at the expense of control. Market developments have introduced new points of control. Mobile and cloud computing, the Internet of Things, fiber transition, big data, surveillance, and behavioral marketing introduce new control points and dimensions of power into the Internet as a social-cultural-economic platform. Unlike in the Internet’s first generation, companies and governments are well aware of the significance of design choices, and are jostling to acquire power over, and appropriate value from, networked activity. If we are to preserve the democratic and creative promise of the Internet, we must continuously diagnose control points as they emerge and devise mechanisms of recreating diversity of constraint and degrees of freedom in the network to work around these forms of reconcentrated power.


Others who have worked on peer production, most explicitly and comprehensively Vasilis Kostakis and Michel Bauwens identified that threat and theorized it in detail. Mayo Fuster Morell early saw the difference between firm-hosted and community hosted peer production, and how they differed fundamentally on the power dimension.  And many others identified and criticized the specific threats of the newly-emerging powerful actors before I did, not in the context of peer production: pretty much everyone who worked on privacy, a topic that was long a blind spot for me; Introna and Nissenbaum on the politics of search engines in 2000; Niva Elkin Koren and Michael Birnhack The Invisible Handshake in 2003 on the emerging alliance between these new companies and the rising security state were very early, and later Siva Vaidhyanathan’s Googleization of Everything.

Coase’s Penguin, and like it Sharing Nicely in 2004, were efforts to develop a fully internal-to-the-economics-profession account of peer production and sharing.  The effort to speak across disciplines, and in particular to develop a case for a given proposition fully within the mainstream of the then-very-much-still “queen of the social sciences,” required selection and translation.

When I started working on this in 2000, the idea that it was even possible for a large collection of individuals to coordinate and achieve effective outcomes without price signals or hierarchy was practically inadmissible in that discipline.  Early efforts were focused very heavily on software specifically, and what made it special to allow FOSS to develop.  I saw that as a mistake, and developed a framework that, even taking all the standard assumptions of mainstream economics (and Coase by then was as mainstream as it gets), peer production (and sharing) was possible, and likely more efficient and innovative under certain conditions—which happen to obtain now.  I combined transactions costs theory, advances in the empirical study of prosocial motivation, and information economics to provide a reasonably good explanation of why peer production could emerge now, and why sharing of certain classes of goods could emerge now.  But, as I wrote in Sharing Nicely, “Technology does not determine the level of sharing. But it does set threshold constraints on the effective domain of sharing as a modality of economic production.”

These papers indeed did not integrate the power and political economy with the internal-to-economics arguments because they were written as building blocks, and specifically as building blocks that could be accepted even by those who would reject a power analysis but accept a mainstream economics argument.  But, as I tried to show earlier, once I integrated these building blocks into Wealth of Networks, I certainly did identify the attractive patterns as a possibility space that would be a battlefield over the distribution of power, and would only be won through the persistent application of political mobilization around the politics of technology and technological adoption.

And let’s not forget this all started as a comment on Cory’s Walkaway.   Anyone who reads that book as a story that does not put power at the heart of the question of whether technology will turn to a utopian or dystopian future, power in its most raw sense of violent enforcement of property rights by owners against potential users, can’t possibly have read the same book I did.  And he just wrote no less eloquently about the way power relations shape technology which locks in power in the very real life context of DRM in browsers.

Photo by bmjames

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