Here is the last part of the response to Adam Arvidsson’s essay on the Crisis of Value.

The Ethical Economy, Power, and Common Norms

I may disagree with Adam Arvidsson that this emerging ethical economy, a concept that I consider analogous to what I call the emerging sphere of peer production, is not ‘necessarily better’ than the older monetary production. Of course, peer production will create its own problems and contradictions, and will indeed create a rather rocky transition time. But I believe that there are strong reasons that this new mode will win out.

First of all, the new mode is more productive. More value, more innovation, more usefulness is created for its participants and society and general. For profit companies that rely on proprietary strategies, and where innovation is dependent and limited by competition, will tend to loose out, over time, due to this asymmetric competition, to the for benefit institutions and their associated communities of peer producers which constantly innovate. Second, the process is more participative in the political sense. It provides more meaning, and autonomy in all spheres of human life. Intrinsic motivation is inherently more productive than the extrinsic motivation and neutral exchange on the market. Finally, the new forms of peer property are inherently more distributive. All this means that in the second form of competition, between for profit companies relying on closed proprietary strategies and for profit companies using open/free, participatory and commons-oriented extensions, the former will tend to loose out against the latter. So companies will increasingly choose for their insertion in the new logics. The corollary is that individuals will choose to engage in passionate production whenever they can, and will tend to choose for those companies that have integrated these logics in their own processes. Nations that choose to adopt such strategies, becoming Partner States that enable and empower such processes, will tend to develop faster than those refusing this path. Just as importantly, the same process of miniaturization which changed the structural position of knowledge workers vis a vis capital, as they own their own means of production, their brains and computers, tend to be replicated in the physical economy as well. Trends in desktop manufacturing, in rapid manufacturing and tooling, in easy to localize multi-purpose machinery, in personal fabricators that move from plastic to metals, will tend to distribute physical productive capacity and undermine the industrial model of capitalism. The problem is that as physical production will become more distributed, and associated with financial trends such as social lending and the direct social production of money and wealth acknowledgement systems, any strategy that aims to replace lower rates of physical profit with higher rates of immaterial profit, will tend to be undermined by the generalization of open designs. Here again we have the same crisis of accumulation of capital on the horizon.

Where is the power in this changing world? In the world of immaterial near-zero reproduction costs, neither market pricing, nor hierarchies, nor democratic negotiation, are needed to allocate scarce resources (but they still will be needed wherever there is scarcity). In the distributed production networks, bottom up peer governance processes will emerge more and more. In the sharing networks, their will be a balance of power, and associated conflicts, between the creative users and the platform owners, whereby the former are not powerless. Where there are no overt hierarchies, power becomes expressed in invisible architectures that enable or discourge certain types of social relationships over others. However, as commons-oriented communities become stronger, we expect the literacy of such power to increase. Of course, the platform enablers have power too, as do the commons-oriented businesses and the crowdsourcing operators, and we may expect conflicts over protocols. It is possible that communities with strong business involvement and ecologies, will perform better than communities without such support, a fact which plays in favour of the commercial players. Similarly, Partner State efforts to enable and empower social value creation, may select certain social production processes over others. The conclusion is therefore that this is an open process, and that the process of mutual accommodation, between private and public institutions, versus sharing and commons communities, will be a co-created reality. The future is truly open.

Scenarios for the future

The existing market model is clearly in trouble. It cannot continue to treat nature as both a positive externality from which it can endlessly profit, and in which it can dump the negative externalities of its own operations. A system of infinite growth in a finite environment is a logical impossibility.

At the same time, a simple transfer of its core operations towards the immaterial economy is not a simple proposition. A reliance on intellectual property rents is deeply challenged by the new non-proprietary forms which point to a future of open designs.
The current system which combines pseudo-abundance in the material sphere, thereby destroying the biosphere, and pseudo-scarcity in the immaterial sphere, thereby holding up social innovation, is deeply flawed and not sustainable in the long term.
In terms of value creation, it is now competing with a third mode of production, governance and property, where it is beaten at its own game.

In the first emerging stage of peer production, market forces will embed it in their own operations, just as the imperial slaveholders freed their slaves to become feudal colini (serfs), and as the feudal kings and lords started investing in capitalist merchants and manufacturers, so for profit companies are adapting and investing in the new modes, which they hope to subjugate and integrate. In this they will be partially successful.

But precisely because they are successful, they are also strengthening the new mode and logic. At some point, a parity of influence between the logic of the commodity and the peer to peer logic may be achieved.

Past experience suggests however, that such a transitional period is not sustainable on the long term, and that one logic can and should be the dominant logic of value creation.

In the tribal economy, it was the gift and the attendant symmetrical social relations and processes which dominant. In the hierarchical imperial/feudal systems, it was the tribute of the weak to the strong. In industrial capitalism, and in the first phases of the information economy, it was the commodity.

We therefore strongly suggest that the third phase or scenario will develop around the dominance of the peer to peer logic. This means that most immaterial value creation, i.e. what really matters to a postmaterial civilization, which will produced by value communities, competing for allegiance. They will use non-proprietary formats. For exchange, they will use different kinds of wealth acknowledgement systems.

The physical sphere will be managed by post-capitalist markets for scarce goods. Note how the newest forms of market trading are already being informed by the P2P or partnership principle: the for-benefit institutions enabling peer production communities, the social entrepreneurs using profit as a means only, the fair trade models which put the power-based market relations under the arbitrage of the partnership principle, etc… Methods of ‘markets without capitalism’, ‘natural capitalism’, cradle to cradle production systems and a steady state economy will have to become the format of the market, if the biosphere is not to be further harmed. But clearly, such market mechanisms are already subsumed under the higher logic of partnership with other humans and nature.

There is of course another scenario, whereby the P2P logic is subsumed to the continued dominance of the capitalist market, based on some kind of rent-based proprietary models where nobody really owns anything; this would be an information feudalism kept in place by repressive IP laws and DRM technology. But such a dominance would imply also that the nature-destroying logic remains in place, and hence, points to the dark scenario of a generalized fight for scarce natural resources. This is simply put a recipe for generalized disaster, and hopefully, it is unlikely that humanity will choose for this static and regressive path.