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[S1 E1] Primitive or Original Accumulation Prof. Harvey talks about how capital came to power, the brutality and the violence with which capital came to be, and what it is.

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The post David Harvey on Primitive Accumulation and the Enclosure of the Commons appeared first on P2P Foundation.

This essay was written by Tiziana Terranova and originally published in Euromade.info

Tiziana Terranova: This essay is the outcome of a research process which involves a series of Italian institutions of autoformazione of post-autonomist inspiration (‘free’ universities engaged in grassroots organization of public seminars, conferences, workshops etc) and anglophone social networks of scholars and researchers engaging with digital media theory and practice officially affiliated with universities, journals and research centres, but also artists, activists, precarious knowledge workers and such likes. It refers to a workshop which took place in London in January 2014, hosted by the Digital Culture Unit at the Centre for Cultural Studies (Goldsmiths’ College, University of London). The workshop was the outcome of a process of reflection and organization that started with the Italian free university collective Uninomade 2.0 in early 2013 and continued across mailing lists and websites such as Euronomade, Effimera, Commonware, I quaderni di San Precario, and others. More than a traditional essay, then, it aims to be a synthetic but hopefully also inventive document which plunges into a distributed ‘social research network’ articulating a series of problems, theses and concerns at the crossing between political theory and research into science, technology and capitalism.

What is at stake in the following is the relationship between ‘algorithms’ and ‘capital’—that is, the increasing centrality of algorithms ‘to organizational practices arising out of the centrality of information and communication technologies stretching all the way from production to circulation, from industrial logistics to financial speculation, from urban planning and design to social communication.¹ These apparently esoteric mathematical structures have also become part of the daily life of users of contemporary digital and networked media. Most users of the Internet daily interface or are subjected to the powers of algorithms such as Google’s Pagerank (which sorts the results of our search queries) or Facebook Edgerank (which automatically decides in which order we should get our news on our feed) not to talk about the many other less known algorithms (Appinions, Klout, Hummingbird, PKC, Perlin noise, Cinematch, KDP Select and many more) which modulate our relationship with data, digital devices and each other. This widespread presence of algorithms in the daily life of digital culture, however, is only one of the expressions of the pervasiveness of computational techniques as they become increasingly co-extensive with processes of production, consumption and distribution displayed in logistics, finance, architecture, medicine, urban planning, infographics, advertising, dating, gaming, publishing and all kinds of creative expressions (music, graphics, dance etc).

The staging of the encounter between ‘algorithms’ and ‘capital’ as a political problem invokes the possibility of breaking with the spell of ‘capitalist realism’—that is, the idea that capitalism constitutes the only possible economy while at the same time claiming that new ways of organizing the production and distribution of wealth need to seize on scientific and technological developments². Going beyond the opposition between state and market, public and private, the concept of the common is used here as a way to instigate the thought and practice of a possible post-capitalist mode of existence for networked digital media.

Algorithms, Capital and Automation

Looking at algorithms from a perspective that seeks the constitution of a new political rationality around the concept of the ‘common’ means engaging with the ways in which algorithms are deeply implicated in the changing nature of automation. Automation is described by Marx as a process of absorption into the machine of the ‘general productive forces of the social brain’ such as ‘knowledge and skills’³,which hence appear as an attribute of capital rather than as the product of social labour. Looking at the history of the implication of capital and technology, it is clear how automation has evolved away from the thermo-mechanical model of the early industrial assembly line toward the electro-computational dispersed networks of contemporary capitalism. Hence it is possible to read algorithms as part of a genealogical line that, as Marx put it in the ‘Fragment on Machines’, starting with the adoption of technology by capitalism as fixed capital, pushes the former through several metamorphoses ‘whose culmination is the machine, or rather, an automatic system of machinery…set in motion by an automaton, a moving power that moves itself’⁴.The industrial automaton was clearly thermodynamical, and gave rise to a system ‘consisting of numerous mechanical and intellectual organs so that workers themselves are cast merely as its conscious linkages’⁵. The digital automaton, however, is electro-computational, it puts ‘the soul to work’ and involves primarily the nervous system and the brain and comprises ‘possibilities of virtuality, simulation, abstraction, feedback and autonomous processes’⁶. The digital automaton unfolds in networks consisting of electronic and nervous connections so that users themselves are cast as quasi-automatic relays of a ceaseless information flow. It is in this wider assemblage, then, that algorithms need to be located when discussing the new modes of automation.

Quoting a textbook of computer science, Andrew Goffey describes algorithms as ‘the unifying concept for all the activities which computer scientists engage in…and the fundamental entity with which computer scientists operate’⁷. An algorithm can be provisionally defined as the ‘description of the method by which a task is to be accomplished’ by means of sequences of steps or instructions, sets of ordered steps that operate on data and computational structures. As such, an algorithm is an abstraction, ‘having an autonomous existence independent of what computer scientists like to refer to as “implementation details,” that is, its embodiment in a particular programming language for a particular machine architecture’⁸. It can vary in complexity from the most simple set of rules described in natural language (such as those used to generate coordinated patterns of movement in smart mobs) to the most complex mathematical formulas involving all kinds of variables (as in the famous Monte Carlo algorithm used to solve problems in nuclear physics and later also applied to stock markets and now to the study of non-linear technological diffusion processes). At the same time, in order to work, algorithms must exist as part of assemblages that include hardware, data, data structures (such as lists, databases, memory, etc.), and the behaviours and actions of bodies. For the algorithm to become social software, in fact, ‘it must gain its power as a social or cultural artifact and process by means of a better and better accommodation to behaviors and bodies which happen on its outside’.⁹

Furthermore, as contemporary algorithms become increasingly exposed to larger and larger data sets (and in general to a growing entropy in the flow of data also known as Big Data), they are, according to Luciana Parisi, becoming something more then mere sets of instructions to be performed: ‘infinite amounts of information interfere with and re-program algorithmic procedures…and data produce alien rules’¹⁰. It seems clear from this brief account, then, that algorithms are neither a homogeneous set of techniques, nor do they guarantee ‘the infallible execution of automated order and control¹¹.

From the point of view of capitalism, however, algorithms are mainly a form of ‘fixed capital’—that is, they are just means of production. They encode a certain quantity of social knowledge (abstracted from that elaborated by mathematicians, programmers, but also users’ activities), but they are not valuable per se. In the current economy, they are valuable only in as much as they allow for the conversion of such knowledge into exchange value (monetization) and its (exponentially increasing) accumulation (the titanic quasi-monopolies of the social Internet). In as much as they constitute fixed capital, algorithms such as Google’s Page Rank and Facebook’s Edgerank appear ‘as a presupposition against which the value-creating power of the individual labour capacity is an infinitesimal, vanishing magnitude’¹². And that is why calls for individual retributions to users for their ‘free labor’ are misplaced. It is clear that for Marx what needs to be compensated is not the individual work of the user, but the much larger powers of social cooperation thus unleashed, and that this compensation implies a profound transformation of the grip that the social relation that we call the capitalist economy has on society.

From the point of view of capital, then, algorithms are just fixed capital, means of production finalized to achieve an economic return. But that does not mean that, like all technologies and techniques, that is all that they are. Marx explicitly states that even as capital appropriates technology as the most effective form of the subsumption of labor, that does not mean that this is all that can be said about it. Its existence as machinery, he insists, is not ‘identical with its existence as capital… and therefore it does not follow that subsumption under the social relation of capital is the most appropriate and ultimate social relation of production for the application of machinery’.¹³ It is then essential to remember that the instrumental value that algorithms have for capital does not exhaust the ‘value’ of technology in general and algorithms in particular—that is, their capacity to express not just ‘use value’ as Marx put it, but also aesthetic, existential, social, and ethical values. Wasn’t it this clash between the necessity of capital to reduce software development to exchange value, thus marginalizing the aesthetic and ethical values of software creation, that pushed Richard Stallman and countless hackers and engineers towards the Free and Open Source Movement? Isn’t the enthusiasm that animates hack-meetings and hacker-spaces fueled by the energy liberated from the constraints of ‘working’ for a company in order to remain faithful to one’s own aesthetics and ethics of coding?

Contrary to some variants of Marxism which tend to identify technology completely with ‘dead labor’, ‘fixed capital’ or ‘instrumental rationality’, and hence with control and capture, it seems important to remember how, for Marx, the evolution of machinery also indexes a level of development of productive powers that are unleashed but never totally contained by the capitalist economy. What interested Marx (and what makes his work still relevant to those who strive for a post-capitalist mode of existence) is the way in which, so he claims, the tendency of capital to invest in technology to automate and hence reduce its labor costs to a minimum potentially frees up a ‘surplus’ of time and energy (labor) or an excess of productive capacity in relation to the basic, important and necessary labor of reproduction (a global economy, for example, should first of all produce enough wealth for all members of a planetary population to be adequately fed, clothed, cured and sheltered). However, what characterizes a capitalist economy is that this surplus of time and energy is not simply released, but must be constantly reabsorbed in the cycle of production of exchange value leading to increasing accumulation of wealth by the few (the collective capitalist) at the expense of the many (the multitudes).

Automation, then, when seen from the point of view of capital, must always be balanced with new ways to control (that is, absorb and exhaust) the time and energy thus released. It must produce poverty and stress when there should be wealth and leisure. It must make direct labour the measure of value even when it is apparent that science, technology and social cooperation constitute the source of the wealth produced. It thus inevitably leads to the periodic and widespread destruction of this accumulated wealth, in the form of psychic burnout, environmental catastrophe and physical destruction of the wealth through war. It creates hunger where there should be satiety, it puts food banks next to the opulence of the super-rich. That is why the notion of a post-capitalist mode of existence must become believable, that is, it must become what Maurizio Lazzarato described as an enduring autonomous focus of subjectivation. What a post-capitalist commonism then can aim for is not only a better distribution of wealth compared to the unsustainable one that we have today, but also a reclaiming of ‘disposable time’—that is, time and energy freed from work to be deployed in developing and complicating the very notion of what is ‘necessary’.

The history of capitalism has shown that automation as such has not reduced the quantity and intensity of labor demanded by managers and capitalists. On the contrary, in as much as technology is only a means of production to capital, where it has been able to deploy other means, it has not innovated. For example, industrial technologies of automation in the factory do not seem to have recently experienced any significant technological breakthroughs. Most industrial labor today is still heavily manual, automated only in the sense of being hooked up to the speed of electronic networks of prototyping, marketing and distribution; and it is rendered economically sustainable only by political means—that is, by exploiting geo-political and economic differences (arbitrage) on a global scale and by controlling migration flows through new technologies of the border. The state of things in most industries today is intensified exploitation, which produces an impoverished mode of mass production and consumption that is damaging to both to the body, subjectivity, social relations and the environment. As Marx put it, disposable time released by automation should allow for a change in the very essence of the ‘human’ so that the new subjectivity is allowed to return to the performing of necessary labor in such a way as to redefine what is necessary and what is needed.

It is not then simply about arguing for a ‘return’ to simpler times, but on the contrary a matter of acknowledging that growing food and feeding populations, constructing shelter and adequate housing, learning and researching, caring for the children, the sick and the elderly requires the mobilization of social invention and cooperation. The whole process is thus transformed from a process of production by the many for the few steeped in impoverishment and stress to one where the many redefine the meaning of what is necessary and valuable, while inventing new ways of achieving it. This corresponds in a way to the notion of ‘commonfare’ as recently elaborated by Andrea Fumagalli and Carlo Vercellone, implying, in the latter’s words, ‘the socialization of investment and money and the question of the modes of management and organisation which allow for an authentic democratic reappropriation of the institutions of Welfare…and the ecologic re-structuring of our systems of production¹³. We need to ask then not only how algorithmic automation works today (mainly in terms of control and monetization, feeding the debt economy) but also what kind of time and energy it subsumes and how it might be made to work once taken up by different social and political assemblages—autonomous ones not subsumed by or subjected to the capitalist drive to accumulation and exploitation.

The Red Stack: Virtual Money, Social Networks, Bio-Hypermedia

In a recent intervention, digital media and political theorist Benjamin H. Bratton has argued that we are witnessing the emergence of a new nomos of the earth, where older geopolitical divisions linked to territorial sovereign powers are intersecting the new nomos of the Internet and new forms of sovereignty extending in electronic space¹⁴. This new heterogenous nomos involves the overlapping of national governments (China, United States, European Union, Brasil, Egypt and such likes), transnational bodies (the IMF, the WTO, the European Banks and NGOs of various types), and corporations such as Google, Facebook, Apple, Amazon, etc., producing differentiated patterns of mutual accommodation marked by moments of conflict. Drawing on the organizational structure of computer networks or ‘the OSI network model, upon with the TCP/IP stack and the global internet itself is indirectly based’, Bratton has developed the concept and/or prototype of the ‘stack’ to define the features of ‘a possible new nomos of the earth linking technology, nature and the human.’¹⁵ The stack supports and modulates a kind of ‘social cybernetics’ able to compose ‘both equilibrium and emergence’. As a ‘megastructure’, the stack implies a ‘confluence of interoperable standards-based complex material-information systems of systems, organized according to a vertical section, topographic model of layers and protocols…composed equally of social, human and “analog” layers (chthonic energy sources, gestures, affects, user-actants, interfaces, cities and streets, rooms and buildings, organic and inorganic envelopes) and informational, non-human computational and “digital” layers (multiplexed fiber optic cables, datacenters, databases, data standards and protocols, urban-scale networks, embedded systems, universal addressing tables)’¹⁶.

In this section, drawing on Bratton’s political prototype, I would like to propose the concept of the ‘Red Stack’—that is, a new nomos for the post-capitalist common. Materializing the ‘red stack’ involves engaging with (at least) three levels of socio-technical innovation: virtual money, social networks, and bio-hypermedia. These three levels, although ‘stacked’, that is, layered, are to be understood at the same time as interacting transversally and nonlinearly. They constitute a possible way to think about an infrastructure of autonomization linking together technology and subjectivation.

Virtual money

The contemporary economy, as Christian Marazzi and others have argued, is founded on a form of money which has been turned into a series of signs, with no fixed referent (such as gold) to anchor them, explicitly dependent on the computational automation of simulational models, screen media with automated displays of data (indexes, graphics etc) and algo-trading (bot-to-bot transactions) as its emerging mode of automation¹⁷. As Toni Negri also puts it, ‘money today—as abstract machine—has taken on the peculiar function of supreme measure of the values extracted out of society in the real subsumption of the latter under capital’¹⁸.

Since ownership and control of capital-money (different, as Maurizio Lazzarato remind us, from wage-money, in its capacity to be used not only as a means of exchange, but as a means of investment empowering certain futures over others) is crucial to maintaining populations bonded to the current power relation, how can we turn financial money into the money of the common? An experiment such as Bitcoin demonstrates that in a way ‘the taboo on money has been broken’¹⁹ and that beyond the limits of this experience, forkings are already developing in different directions. What kind of relationship can be established between the algorithms of money-creation and ‘a constituent practice which affirms other criteria for the measurement of wealth, valorizing new and old collective needs outside the logic of finance’?²⁰

Current attempts to develop new kinds of cryptocurrencies must be judged, valued and rethought on the basis of this simple question as posed by Andrea Fumagalli: Is the currency created not limited solely to being a means of exchange, but can it also affect the entire cycle of money creation – from finance to exchange?²¹.

Does it allow speculation and hoarding, or does it promote investment in post-capitalist projects and facilitate freedom from exploitation, autonomy of organization etc.? What is becoming increasingly clear is that algorithms are an essential part of the process of creation of the money of the common, but that algorithms also have politics (What are the gendered politics of individual ‘mining’, for example, and of the complex technical knowledge and machinery implied in mining bitcoins?) Furthermore, the drive to completely automate money production in order to escape the fallacies of subjective factors and social relations might cause such relations to come back in the form of speculative trading. In the same way as financial capital is intrinsically linked to a certain kind of subjectivity (the financial predator narrated by Hollywood cinema), so an autonomous form of money needs to be both jacked into and productive of a new kind of subjectivity not limited to the hacking milieu as such, but at the same time oriented not towards monetization and accumulation but towards the empowering of social cooperation. Other questions that the design of the money of the common might involve are: Is it possible to draw on the current financialization of the Internet by corporations such as Google (with its Adsense/Adword programme) to subtract money from the circuit of capitalist accumulation and turn it into a money able to finance new forms of commonfare (education, research, health, environment etc)? What are the lessons to be learned from crowdfunding models and their limits in thinking about new forms of financing autonomous projects of social cooperation? How can we perfect and extend experiments such as that carried out by the Inter-Occupy movement during the Katrina hurricane in turning social networks into crowdfunding networks which can then be used as logistical infrastructure able to move not only information, but also physical goods?²².

Social Networks

Over the past ten years, digital media have undergone a process of becoming social that has introduced genuine innovation in relation to previous forms of social software (mailing lists, forums, multi-user domains, etc). If mailing lists, for example, drew on the communicational language of sending and receiving, social network sites and the diffusion of (proprietary) social plug-ins have turned the social relation itself into the content of new computational procedures. When sending and receiving a message, we can say that algorithms operate outside the social relation as such, in the space of the transmission and distribution of messages; but social network software places intervenes directly on the social relationship. Indeed, digital technologies and social network sites ‘cut into’ the social relation as such—that is, they turn it into a discrete object and introduce a new supplementary relation.²³

If, with Gabriel Tarde and Michel Foucault, we understand the social relation as an asymmetrical relation involving at least two poles (one active and the other receptive) and characterized by a certain degree of freedom, we can think of actions such as liking and being liked, writing and reading, looking and being looked at, tagging and being tagged, and even buying and selling as the kind of conducts that transindividuate the social (they induce the passage from the pre-individual through the individual to the collective). In social network sites and social plug-ins these actions become discrete technical objects (like buttons, comment boxes, tags etc) which are then linked to underlying data structures (for example the social graph) and subjected to the power of ranking of algorithms. This produces the characteristic spatio-temporal modality of digital sociality today: the feed, an algorithmically customized flow of opinions, beliefs, statements, desires expressed in words, images, sounds etc. Much reviled in contemporary critical theory for their supposedly homogenizing effect, these new technologies of the social, however, also open the possibility of experimenting with many-to-many interaction and thus with the very processes of individuation. Political experiments (se the various internet-based parties such as the 5 star movement, Pirate Party, Partido X) draw on the powers of these new socio-technical structures in order to produce massive processes of participation and deliberation; but, as with Bitcoin, they also show the far from resolved processes that link political subjectivation to algorithmic automation. They can function, however, because they draw on widely socialized new knowledges and crafts (how to construct a profile, how to cultivate a public, how to share and comment, how to make and post photos, videos, notes, how to publicize events) and on ‘soft skills’ of expression and relation (humour, argumentation, sparring) which are not implicitly good or bad, but present a series of affordances or degrees of freedom of expression for political action that cannot be left to capitalist monopolies. However, it is not only a matter of using social networks to organize resistance and revolt, but also a question of constructing a social mode of self-Information which can collect and reorganize existing drives towards autonomous and singular becomings. Given that algorithms, as we have said, cannot be unlinked from wider social assemblages, their materialization within the red stack involves the hijacking of social network technologies away from a mode of consumption whereby social networks can act as a distributed platform for learning about the world, fostering and nurturing new competences and skills, fostering planetary connections, and developing new ideas and values.

Bio-hypermedia

The term bio-hypermedia, coined by Giorgio Griziotti, identifies the ever more intimate relation between bodies and devices which is part of the diffusion of smart phones, tablet computers and ubiquitous computation. As digital networks shift away from the centrality of the desktop or even laptop machine towards smaller, portable devices, a new social and technical landscape emerges around ‘apps’ and ‘clouds’ which directly ‘intervene in how we feel, perceive and understand the world’.²⁴). Bratton defines the ‘apps’ for platforms such as Android and Apple as interfaces or membranes linking individual devices to large databases stored in the ‘cloud’ (massive data processing and storage centres owned by large corporations).²⁵

This topological continuity has allowed for the diffusion of downloadable apps which increasingly modulate the relationship of bodies and space. Such technologies not only ‘stick to the skin and respond to the touch’ (as Bruce Sterling once put it), but create new ‘zones’ around bodies which now move through ‘coded spaces’ overlayed with information, able to locate other bodies and places within interactive, informational visual maps. New spatial ecosystems emerging at the crossing of the ‘natural’ and the artificial allow for the activation of a process of chaosmotic co-creation of urban life.²⁶ Here again we can see how apps are, for capital, simply a means to ‘monetize’ and ‘accumulate’ data about the body’s movement while subsuming it ever more tightly in networks of consumption and surveillance. However, this subsumption of the mobile body under capital does not necessarily imply that this is the only possible use of these new technological affordances. Turning bio-hypermedia into components of the red stack (the mode of reappropriation of fixed capital in the age of the networked social) implies drawing together current experimentation with hardware (shenzei phone hacking technologies, makers movements, etc.) able to support a new breed of ‘imaginary apps’ (think for example about the apps devised by the artist collective Electronic Disturbance Theatre, which allow migrants to bypass border controls, or apps able to track the origin of commodities, their degrees of exploitation, etc.).

Conclusions

This short essay, a synthesis of a wider research process, means to propose another strategy for the construction of a machinic infrastructure of the common. The basic idea is that information technologies, which comprise algorithms as a central component, do not simply constitute a tool of capital, but are simultaneously constructing new potentialities for postneoliberal modes of government and postcapitalist modes of production. It is a matter here of opening possible lines of contamination with the large movements of programmers, hackers and makers involved in a process of re-coding of network architectures and information technologies based on values others than exchange and speculation, but also of acknowledging the wide process of technosocial literacy that has recently affected large swathes of the world population. It is a matter, then, of producing a convergence able to extend the problem of the reprogramming of the Internet away from recent trends towards corporatisation and monetisation at the expense of users’ freedom and control. Linking bio-informational communication to issues such as the production of a money of the commons able to socialize wealth, against current trends towards privatisation, accumulation and concentration, and saying that social networks and diffused communicational competences can also function as means to organize cooperation and produce new knowledges and values, means seeking for a new political synthesis which moves us away from the neoliberal paradigm of debt, austerity and accumulation. This is not a utopia, but a program for the invention of constituent social algorithms of the common.

In addition to the sources cited above, and the texts contained in this volume, we offer the following expandable bibliographical toolkit or open desiring biblio-machine. (Instructions: pick, choose and subtract/add to form your own assemblage of self-formation for the purposes of materialization of the red stack):

— L. Baroniant and C. Vercellone, Moneta Del Comune e Reddito Sociale Garantito (2013), Uninomade.

— M. Bauwens, The Social Web and Its Social Contracts: Some Notes on Social Antagonism in Netarchical Capitalism (2008), Re-Public Re-Imaging Democracy.

— F. Berardi and G. Lovink, A call to the army of love and to the army of software (2011), Nettime.

— R. Braidotti, The posthuman (Cambridge: Polity Press, 2013).

— G. E. Coleman, Coding Freedom: The Ethics and Aesthetics of Hacking (Princeton and Oxford: Princeton University Press, 2012).

— A. Fumagalli, Trasformazione del lavoro e trasformazioni del welfare: precarietà e welfare del comune (commonfare) in Europa, in P. Leon and R. Realfonso (eds), L’Economia della precarietà (Rome: Manifestolibri, 2008), 159–74.

— G. Giannelli and A. Fumagalli, Il fenomeno Bitcoin: moneta alternativa o moneta speculativa? (2013), I Quaderni di San Precario.

— G. Griziotti, D. Lovaglio and T. Terranova, Netwar 2.0: Verso una convergenza della “calle” e della rete (2012), Uninomade 2.0.

— E. Grosz, Chaos, Territory, Art (New York: Columbia University Press, 2012).

— F. Guattari, Chaosmosis: An Ethico-Aesthetic Paradigm (Indianapolis, IN: Indiana University Press, 1995).

S. Jourdan, Game-over Bitcoin: Where Is the Next Human-Based Digital Currency? (2014).

— M. Lazzarato, Les puissances de l’invention (Paris: L’empecheurs de penser ronde, 2004).

— M. Lazzarato, The Making of the Indebted Man (Los Angeles: Semiotext(e), 2013).

— G. Lovink and M. Rasch (eds), Unlike Us Reader: Social Media Monopolies and their Alternatives (Amsterdam: Institute of Network Culture, 2013).

— A. Mackenzie (2013), Programming subjects in the regime of anticipation: software studies and subjectivity in In: Subjectivity. 6, p. 391-405

— L. Manovich, The Poetics of Augmented Space, Virtual Communication 5:2 (2006), 219–40.

— S. Mezzadra and B. Neilson, Border as Method or the Multiplication of Labor (Durham, NC: Duke University Press, 2013).

— P. D. Miller aka DJ Spooky and S. Matviyenko, The Imaginary App (Cambridge, MA: MIT Press, forthcoming).

— A. Negri, Acting in common and the limits of capital (2014), in Euronomade.

— A. Negri and M. Hardt, Commonwealth (Cambridge, MA: Belknap Press, 2009).

— M. Pasquinelli, Google’s Page Rank Algorithm: A Diagram of the Cognitive Capitalism and the Rentier of the Common Intellect(2009).

— B. Scott, Heretic’s Guide to Global Finance: Hacking the Future of Money (London: Pluto Press, 2013).

— G. Simondon, On the Mode of Existence of Technical Objects (1958), University of Western Ontario

— R. Stallman, Free Software: Free Society. Selected Essays of Richard M. Stallman (Free Software Foundation, 2002).

— A. Toscano, Gaming the Plumbing: High-Frequency Trading and the Spaces of Capital (2013), in Mute.

— I. Wilkins and B. Dragos, Destructive Distraction? An Ecological Study of High Frequency Trading, in Mute.

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1. In the words of the programme of the worshop from which this essay originated: http://quaderni.sanprecario.info/2014/01/workshop-algorithms/ 
2. M. Fisher, Capitalist Realism: Is There No Alternative (London: Zer0 Books, 2009); 2009, A. Williams and N. Srnciek, ‘#Accelerate: Manifesto for an Accelerationist Politics’, this volume XXX-XXX. 
3. K. Marx, ‘Fragment on Machines’, this volume, XXX–XXX. 
4. Ibid., XXX. 
5. Ibid., XXX. 
6. M. Fuller, Software Studies: A Lexicon (Cambridge, MA: The MIT Press, 2008); F. Berardi, The Soul at Work: From Alienation to Autonomy, Cambridge, Mass: MIT Press, 2009)  
7. A. Goffey, ‘Algorithm’, in Fuller (ed), Software Studies, 15–17: 15. 
8. Ibid. 
9. Fuller, Introduction to Fuller (ed), Software Studies, 5 
10. L. Parisi, Contagious Architecture: Computation, Aesthetics, Space (Cambridge, Mass. and Sidney: MIT Press, 2013), x. 
11. Ibid., ix. 
12. Marx, XXX. 
13. C. Vercellone, ‘From the crisis to the “commonfare” as new mode of production’, in special section on Eurocrisis (ed. G. Amendola, S. Mezzadra and T. Terranova), Theory, Culture and Society, forthcoming; also A. Fumagalli, ‘Digital (Crypto) Money and Alternative Financial Circuits: Lead the Attack to the Heart of the State, sorry, of Financial Market’ 
14. B. Bratton, On the Nomos of the Cloud (2012). 
15. Ibid. 
16. Ibid. 
17. C. Marazzi, Money in the World Crisis: The New Basis of Capitalist Power 
18. T. Negri, Reflections on the Manifesto for an Accelerationist Politics, (2014), Euronomade 
19. Jaromil Rojio, Bitcoin, la fine del tabù della moneta (2014), in I Quaderni di San Precario. 
20. S. Lucarelli, Il principio della liquidità e la sua corruzione. Un contributo alla discussione su algoritmi e capitale (2014), in I Quaderni di san Precario 
21. A. Fumagalli, Commonfare: Per la riappropriazione del libero accesso ai beni comuni (2014), in Doppio Zero 
22. Common Ground Collective, Common Ground Collective, Food, not Bombs and Occupy Movement form Coalition to help Isaac & Kathrina Victims (2012), Interoccupy.net  
23. B. Stiegler, The Most Precious Good in the Era of Social Technologies, in G. Lovink and M. Rasch (eds), Unlike Us Reader: Social Media Monopolies and Their Alternatives (Amsterdam: Institute of Network Culture, 2013), 16–30. 
24. G. Griziotti, Biorank: algorithms and transformations in the bios of cognitive capitalism (2014), in I Quaderni di san Precario; also S. Portanova, Moving without a Body (Boston, MA: MIT Press, 2013 
25. B. Bratton, On Apps and Elementary Forms of Interfacial Life: Object, Image, Superimposition  
26. S. Iaconesi and O. Persico, The Co-Creation of the City: Re-programming Cities using Real-Time User-Generated Content 

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Virtuous rent: a rudder that can transform our economy.

Peter Barnes: The London Underground abounds with warnings to “mind the gap,” referring to the space between station platforms and train doors. In our larger society similar warnings could be issued for the gaps between rich and poor and between humans and nature. These gaps must not only be minded, they must also be narrowed. The persistent question is how to do this, and I con­tend that a form of rent may be the best possible tool. But before we get to that, we must first become familiar with rent.

The term was first used by classical economists, including Adam Smith, to describe money paid to landowners. It was one of three income streams in the early years of capitalism, the others being wages paid to labor and interest paid to capital.

In Smith’s view, landlords benefited from land’s unique ability to enrich its owners “independent of any plan or project of their own.” This ability arises from the fact that the supply of good land is limited, while the demand for it steadily rises. The effect of landowners’ collection of rent, he concluded, isn’t to increase society’s wealth but to take money away from labor and capital. In other words, land rent is an extractor of wealth rather than a contributor to it.

A century later, a widely-read American economist named Henry George (his magnum opus, Progress and Poverty, sold over two million copies) enlarged Smith’s insight substantially. At a time when Karl Marx was blaming capital­ists for expropriating surplus value from workers, George blamed landlords for expropriating rent from everyone. Such ­rent­ extraction operated like “an immense wedge being forced, not underneath society, but through society. Those who are above the point of separation are elevated, but those who are below are crushed down.” George’s proposed remedy was a steep tax on land that would recapture for society most of landowners’ parasitic gains.

More recently, the concept of rent was expanded to include mono­poly pro­fits, the extra income a company reaps by quashing com­pe­tition and raising prices. Smith had written about this form of wealth extraction too, though he didn’t call it rent. “The interest of any particular branch of trade or manufac­tures is always to widen the market and to narrow the competition…To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can only serve to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.”

It’s important to recognize that the tax Smith spoke of isn’t the kind we pay to government; rather, it’s the kind we pay, much less visibly, to businesses with power. That’s because prices in capitalism are driven by four factors: supply, demand, market power and politi­cal power. The first two, which are omnipresent in economics texts, deter­mine what might be called fair market value; the last two, which are prevalent in the real world, determine rent. Actual prices charged are the sum of fair market value and rent. Another way to say this is that rent is the extra money people pay above what they’d pay in truly com­pe­titive markets.

More recently, the term has been further extended to include income from privileges granted by government—import quotas, mining rights, subsidies, tax loop­holes and so on. Many econo­mists use the term “rent-seeking” to describe the multiple ways special interests use govern­ment to enrich them­selves at the expense of others. If you’re wondering why Washington, D.C. and its envi­rons have grown so prosperous in recent decades, it’s not because govern­ment itself has become gargantuan, it’s because rent-seeking has.

In short, traditional rent is income received not because of anything a person or business produces, but because of rights or power a person or business possesses. It con­sists of takings from the larger whole rather than additions to it. It redis­tributes wealth within an econ­omy but doesn’t add any. As British economist John Kay put it in the Financial Times, “When the appropriation of the wealth of others is illegal, it’s called theft or fraud. When it’s legal, it’s called rent.”

Because rent isn’t listed separately on any price tag or corpor­ate in­come statement, we don’t know exactly how much of it there is, but it’s likely there’s quite a lot. Consider, for example, health care in America, about one-sixth of our economy. There are many reasons the U.S. spends 80 percent more per capita on health care than does Canada, while achieving no better results, but one of the biggest is that Canada has wrung huge amounts of rent out of its health care system and we haven’t. Every Canadian is covered by non-profit rather than profit-maximizing health insurance, and pharmaceuti­cal prices are tightly controlled. By contrast, in the U.S., drug companies overcharge because of patents, Medicare is barred from bargaining for lower drug prices, and private insurers add many costs and inefficiencies.

Or consider our financial sector. Commercial banks, the kind that take depo­sits and make loans, receive an immensely valuable gift from the federal gov­ernment: the right to create money. They’re allowed to do this through what’s called fractional reserve bank­ing, which lets them lend, with interest, about ten times more than they have on deposit. This gift alone is worth billions.

Then there are commercial banks’ cousins, investment banks, which are in the business of trading securities. They can’t mint money the way commercial banks do, but they have tricks of their own. For one, they charge hefty fees for taking private companies public, thus seizing part of the liquidity pre­mium public trading creates. For another, they make lofty sums by creat­ing, and then manipulating, hyper-complex financial “products” that are, in effect, bets on bets. This pumps up the casino economy and extracts capital that could otherwise benefit the real economy.

We could wander through other major industries—energy, tele­com­muni­ca­tions, broadcasting, agriculture—and find similar ex­tractions of rent. What percentage of our economy, then, consists of rent? This is a question you’d think economists would explore, but few do. To my knowledge, the only prominent economist who has even raised it is Joseph Stiglitz, a Nobel laureate at Columbia University, and he hasn’t answered it quantitatively.

The amount of rent in the U.S. economy, Stiglitz says, is “hard to quantify (but) clearly enormous.” Moreover, “to a significant degree,” it “redistributes money from those at the bottom to those at the top.” Further, it not only adds no value to the economy, it “distorts resource allocation and makes the econ­omy weaker.” 

So far I’ve described rent as a negative force in our economy. Now I want to introduce the concept of virtuous rent, a form of rent that would have distinctly positive effects.

A perfect example of virtuous rent is the money paid to Alaskans by the Alaska Permanent Fund. Since 1980, the Permanent Fund has distributed equal yearly divi­­dends to every person who resides in Alaska for one year or more. The divi­dends—which have ranged from $1,000 to $3,269 per person —come from a giant mutual fund whose beneficiaries are all the people of Alas­­ka, present and future. The fund is capitalized by earnings from Alaska’s oil, a commonly owned resource. Given the steady flow of cash to its entire pop­u­la­tion, it’s not surprising that Alaska has the highest median income and one of the lowest pover­ty rates of any state in the nation.

Broadly speaking, virtuous rent would be any flow of money that starts by raising the cost of harmful or extractive activity and ends by increasing the incomes of all members of society. Another way to think of it is as rent that we, as collective co-owners, charge for private use of our common assets. Think, for example, of charging polluters for using our common atmosphere and then sharing the proceeds equally.

There are two key differences between traditional and virtuous rent. The first has to do with how the rent is collected, the second with how it’s distributed.

Traditional rent is collected by businesses whose market and/or political power enables them to charge higher-than-competitive prices. It leads to higher prices that serve no economic, social or ecological function. Virtuous rent, by con­trast, would be collected by not-for-profit trusts that represent all mem­bers of a polity equally. It would be generated by charging private busi­nesses for using common assets that most of the time they use for free. Such rent would also lead to higher prices, but for good reasons: to make business­es pay costs they currently shift to society, nature and future genera­tions, and to offset traditional rent.

The second difference is distributional. Traditional rent flows upward to the small minority that owns most of the stock of rent-extracting businesses. Virtuous rent would flow to everyone equally.

When collection and distribution are merged, the effects of traditional rent are doubly negative: it diminishes the efficiency of our economy and the in­comes of all those who pay it but don’t get any. The effects of virtuous rent, by con­trast, are doubly positive: it increases the health and fairness of our economy and the security of our middle class.

At this moment, of course, traditional rent totals trillions of dollars a year, while virtuous rent (out­side of Alaska) is more of a concept than a reality. But virtuous rent can and should grow. To understand how this could hap­pen, it’s necessary to ex­plore two other concepts: common wealth and exter­nalities.

Common wealth has several components. One consists of gifts of nature we inherit together: our atmosphere and oceans, water­sheds and wetlands, forests and fertile plains, and so on. In almost all cases, we overuse these gifts because there’s no cost attached to using them.

Another component is wealth created by our ancestors: sciences and techno­lo­gies, legal and political systems, our financial infra­structure, and much more. These confer enormous benefits on all of us, but a small minority reaps far more financial gain from them than do most of us.

Yet another chunk of common wealth is what might be called “wealth of the whole”—the value added by the scale and syner­gies of our economy itself. The notion of “wealth of the whole” dates back to Adam Smith’s insight two-and-a-half centuries ago that labor specialization and the exchange of goods —pervasive features of a whole system—are what make nations rich. Beyond that, it’s obvious that no business can prosper by itself: all busi­nesses need cus­­tomers, suppliers, distributors, highways, money and a web of comple­men­tary products (cars need fuel, software needs hardware, and so forth). So the economy as a whole is not only greater than the sum of its parts, it’s an asset without which the parts would have almost no value at all.

The sum of wealth created by nature, our ancestors and our econ­omy as a whole is what I here call common wealth. Several things can be said about our common wealth. First, it’s the goose that lays almost all the eggs of private wealth. Second, it’s extremely large but also (like the dark matter of the universe) mostly invisible. Third, because it’s not cre­ated by any indivi­dual or business, it belongs to all of us jointly. And fourth, because no one has a greater claim to it than anyone else, it belongs to all of us equally, or as close to equally as we can arrange.

The big, rarely asked question about our current economy is who gets the benefits of common wealth? No one disputes that private wealth creators are entitled to the wealth they create, but who is entitled to the wealth we share is an entirely different question. My contention is that the rich are rich not so much because they create wealth, but because they capture a much larger share of common wealth than they’re entitled to. Another way to say this is that the rich are as rich as they are—and the rest of us are poorer than we should be—because extracted rent far exceeds virtuous rent. If that’s the truth of the matter, the solution is to diminish the first kind of rent and increase the second kind. 

Externalities are a better-known concept than common wealth. They’re the costs businesses impose on others—workers, communities, nature and fu­ture generations—but don’t pay themselves. The classic example is pollution.

Almost all economists accept the need to “internalize externalities,” by which they mean making businesses pay the full costs of their activities. What they don’t often discuss are the cash flows that would arise if we actually did this. If businesses pay more money, how much more, and to whom should the checks be made out?

These aren’t trivial questions. In fact, they’re among the most momentous questions we must address in the twenty-first century. The sums involved can, and indeed should, be very large—after all, to diminish harms to nature and society, we must internalize as many unpaid costs as possible. But how should we collect the money, and whose money is it?

One way to collect the money was proposed nearly a century ago by British economist Arthur Pigou, a colleague of Keynes’ at Cam­bridge. When the price of a piece of nature is too low, Pigou said, government should impose a tax on using it. Such a tax would reduce our usage while raising revenue for government.

In theory Pigou’s idea makes sense; the trouble with it lies in imple­mentation. No western government wants to get into the business of price-setting; that’s a job best left to markets. And even if politicians tried to adjust prices with taxes, there’s little chance they’d get them “right” from nature’s perspective. Far more likely would be tax rates driven by the very corporations that domi­nate government and overuse nature now.

An alternative is to bring some non-governmental entities into play; after all, the reason we have externalities in the first place is that no one represents stakeholders harmed by shifted costs. But if those stakeholders were repre­sent­ed by legally accountable agents, that problem could be fixed. The void into which externalities now flow would be filled by trustees of common wealth. And those trustees would charge rent.

As for whose money it is, it follows from the above that payments for most externalities—and in particular, for costs imposed on living creatures present and future—should flow to all of us together as beneficiaries of common wealth. They certainly shouldn’t flow to the companies that impose the exter­nalities; that would defeat the purpose of internalizing them. But neither should they flow to government, as Pigou suggested.

In my mind, there’s nothing wrong with government taxing our individual shares of common wealth rent, just as it taxes other personal income, but government shouldn’t get first dibs on it. The proper first claimants are we, the people. One could even argue, as economist Dallas Burtraw has, that government capture of this income may be an unconstitutional taking of pri­vate property.

This brings us back to virtuous rent. There are several points that can be made about this sort of rent.

First, paying virtuous rent to ourselves has a very different effect than paying extractive rent to Wall Street, Microsoft or Saudi princes. In addition to dis­couraging overuse of nature, it returns the money we pay in higher prices to where it does our families and economy the most good: our own pockets. From there we can spend it on food, housing or anything else we choose. Such spending not only helps us; it also helps businesses and their employees. It’s like a bottom-up stimulus machine in which the people rather than the government do the spending. This is no trivial virtue at a time when fiscal and monetary policy have both lost their potency.

VIRTUOUS RENT

Second, virtuous rent isn’t a set of government policies that can be changed when political winds shift. Rather, it’s a set of pipes within the market that, once in place, will circulate money indefinitely, thereby sustaining a large middle class and a healthier planet even as politicians and their policies come and go.

And third, though virtuous rent requires government action to get started, it has the political virtue of avoiding the bigger/smaller government tug-of-war that paralyzes Washington today. It thus can appeal to voters and politicians in the center, left and right.

A trim tab is a tiny flap on a ship or airplane’s rudder. The designer Buck­minster Fuller often noted that moving a trim tab slightly turns a ship or a plane dramatically. If we think of our economy as a moving vessel, the same metaphor can be applied to rent. Depending on how much of it is collected and whether it flows to a few or to many, rent can steer an economy toward extreme inequality or a large middle class. It can also guide an economy toward excessive use of nature or a safe level of use. In other words, in addi­tion to being a wedge (as Henry George put it), rent can also be a rudder. An economy’s outcomes depend on how we turn the rudder.

Think about the board game Monopoly. The object is to squeeze so much rent out of other players that you wind up with all their money. You do this by acquiring monopolies and building hotels on them. However, there’s another feature of the game that offsets this extracting of rent: all players get a cash payment when they pass Go. This can be thought of as virtuous rent.

As Monopoly is designed, the rent extracted through monopoly power greatly exceeds the virtuous rent players receive when pass­ing Go. The result is that the game always ends the same way: one player gets all the money. But sup­pose we tip the scale the other way. Suppose we decrease the extracted rent and increase the virtuous kind. For example, we could pay players five times as much for passing Go and reduce hotel rents by half. What then happens?

Instead of flowing upward and concentrating in the hands of a single winner, rent flows more evenly. Instead of the game ending when one winner takes all, the game continues with many players remaining.

The point I wish to make is that different rent flows can steer a game—and more importantly, an economy—toward different outcomes. Among the out­comes that can be affected by differing rent flows are the levels of wealth co­n­centration, pollution and real investment as opposed to specu­lation.

Rent, in other words, is a powerful tool. And it’s also something we can fiddle with. Do we want less extracted rent? More virtuous rent? If so, it’s up to us to build the pipes and turn the valves.

Photo by Paul Housberg

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We talk to Brett Scott the alternative financial activist about the opportunities and challenges of transforming the economy.

Your work can be described as economic anthropology, an attempt to explore the historical origins and current approaches to economics. How cultural is our economic system?

I come from an anthropology background and one of the main ways anthropologists try to understand systems is by immersing themselves in them to understand the perspective of those involved. Sometimes that is called participant observation – participating in something while observing it. You can blend those elements in different ways: Hardcore anthropology can be weighted towards extreme participation with less structured observation, really immersing yourself. Some old-school anthropology is more weighted towards observation than participation, making it more prone to a ‘judging’ outlook.

The discipline of Economics has traditionally tried to fit economic activity into universal theories. The attempt to fit all societies over time into a single theory requires a level of abstraction that is often quite disconnected from actual practice, or how people experience themselves in economies. Anthropology, on the other hand, is more attuned to describing the differences between people – the specificities and variations – and more interested in showing the ways people have provisioned themselves over time, rather than just asserting that people have always traded as ‘self-interested agents’ on markets. In essence, Economics takes one form of economic activity, forged in a particular historical and political context, and implies that this is the only form of economic activity.

Also, economics as a discipline tends to make a strange distinction between economics and politics, as if the political sphere and economic sphere can be meaningfully separated from each other. Holistic forms of anthropology, though, would explore how different economic systems are formed in or imply different political or cultural systems – how they are all interlinked.

One of the insights that came out of anthropology and historical studies is that states cannot be meaningfully separated from our modern concept of markets. That is to say, market-based thinking was enabled by, or expanded by, modern states. Within traditional Economics, self-interest is presented as natural, timeless, and inevitable. If you look at the economist Adam Smith, he makes this assumption that people have always traded with each other since the beginning of time. Whereas, history and anthropology point out many instances of societies that do not rely on trade, or do not even have private property regimes, and that have completely alternative ways to provision themselves.

It is only in the context of modern state formations that you see the emergence of the modern conception of ‘markets’. In the time of Adam Smith, modern states had already formed and he was blind to the fact that many features of economies he was observing couldn’t really exist outside of that context. So economic anthropology and history will try to situate the economy within specific political and cultural epochs.

Modern academia has attempted to create discrete disciplines to describe and understand reality, such as politics, economics, psychology, and so on. But in your everyday life no-one experiences these things as separate from each other. You don’t experience your psychology as distinct from a decision to participate in a particular form of economic activity. They are all fused into one experience. So all economic activity is intensely cultural and political. It is concerned with the distribution of resources, your ability to act in a society. The idea that there is some realm of economic activity that is separate from culture is, frankly, bullshit.

If we change our culture, can we then transform the economy?

If you come from a strict Marxist background, you’d probably tend to say the material world conditions culture, or that the underlying relations of production support a ‘superstructure’ of beliefs and institutions. So the tendency – more or less – is to see cultural systems as being a reflection of the underlying economic situation. The question then is, “Can you change your underlying economic situation by altering your culture?” And yes, it probably is possible. But it is a complex process and I’m not sure I have a coherent answer. Within economic reform movements you have some people who say things like ‘all we need to do is make people think differently to effect change’, but that jars against the reality that every single day people need to enter an economy that has a particular structure, regardless of what they think. It’s not obvious what the link between changing people’s worldviews and changing economic structure is.

Take a look at small credit unions or local currencies. People are trying to think and behave differently – act out a different culture – but in reality they remain stuck within the vortex of a much more powerful economy. Sure, if everyone, at once, changed the way they behaved, you could probably change an economic system, but there is a huge coordination problem there. It seems more likely that change is a messy and contradictory process, driven by some things we consciously choose – like small changes in behaviour – and others that we do not, such as technological changes. It’s unpredictable. The Internet, for instance, has opened up new possibilities, but also created opportunities for new monopolies of power.

To shift the question slightly, we could ask, “How do you shift culture within a large financial institution, such as Goldman Sachs?” These institutions are huge, with like 35,000 employees. They have to go into work every day and keep doing the same thing. Even if individuals within the institution want to change their own personal behaviour, the day to day pressures and requirements won’t allow it. So if you wanted to change the culture you would have to press pause on the organisation for, say, three weeks, and then go around and convince everyone in it to behave differently. But there’s no way in hell that they can press pause, so any attempt to change culture has to happen on the fly, incrementally. But these cultures get locked into these institutions, and when it gets toxic they find it very hard to change it. Here’s an analogy: imagine you have a computer that has a load of viruses, but to get rid of them  will require a complete time-consuming reformatting. Now imagine you need to use it every day, and it’s not an option to be without it for a week, so you just keep using it. Likewise, we need to reformat financial institutions, but often we’re just superficially patching them up.

Access to capital is probably the most powerful dimension of our financial system. How can communities have more control over the circulation of capital at this stage?

The financial system as it stands, in most countries, operates at a large scale. It has centralising tendencies that give financial institutions lots of market power, and these large banks are also closely connected to government. In general, these banks find it easier and more profitable to deal with other large-scale players, directing capital to large corporations or large infrastructure projects, for example. Or else they invest in large numbers of standardised financial products that can be sold at scale, such as mortgages. They don’t have much ability, or desire, to sensitively respond to the niche needs of small-scale communities.

So how do you change that? Short of restructuring the entire system so such power does not exist, there are interim approaches such as banking regulation and reform. For example, you might lobby for quotas on banks to get them to support the real economy and smaller businesses.

Then there are attempts to bypass or augment the mainstream banks. This includes, for example, building community banking systems or municipal banks. Local banking advocates will insist that if you have a small financial institution rooted in an area, it is far more likely to serve local interests. In this debate, countries like Germany are often mentioned, as they have an older and more established system of local and regional banking. Co-operative banks are another approach. The idea is to change the ownership structure of banks to produce better outcomes, bearing in mind that co-operative banks often work at large scales and need not be local in orientation.

Then there are the local currency movements. This approach is not necessarily about accessing or raising capital, but creating economic exchange between people. This is different to raising money for a business. That said, mutual credit systems are currency systems, but they also provide access to short-term small-scale credit. They don’t solve the problem of accessing large-scale investment, but they can be very effective at allowing small businesses to trade on credit. Sardex in Sardinia is a good example.

A mutual credit system is when a network of people create an economic network and then set up a system to record when members give energy, labour or goods to another member of the network. The member who receives the labour goes negative, and the person who gave it goes positive. It’s essentially a ledger system for recording obligations between people. Members go in and out of credit and debt with each other. Over time, this is basically what a monetary system is: I contribute things, but I also needs things. When I contribute to the system I get positive credit, when I need things I am using up my credits or going into debt. This creates a cycle between members.You can create these networks with, say, 150 people, and I think they are one of the most undervalued approaches within local currency movements.

So there is local banking, local currencies, mutual credit, but there are also systems like community shares, which allow you to raise equity finance by offering shares to your local community. These have been relatively successful on a small scale.

You also have to bear in mind that is has been quite a while since there have been coherent communities in the UK. We often talk about ‘community’, but in London people often don’t know each other in their own neighbourhoods. There is a whole raft of work around community cohesion that is required before we even start to develop ways for communities to finance themselves.

I think with all of these things you have to have serious commitment. There are a lot of people trying to design local economic strategies that are volunteer-led or part-time. I’m not against small timebanks or other volunteer-led schemes, but they are not a serious challenges to the economic system. In the case of Sardex, it is a serious attempt to build a parallel currency system, and one that also integrates into the normal system. Recently I’ve become interested in the Greater London Mutual, and the network of new regional banks supported by the Community Savings Bank Association, which look like serious attempts to build local and co-operative banking.

If you can combine these alternatives with banking reform and policy changes, putting pressure on the existing banking system, you can then start to make a difference.

More recently you’ve been exploring what you call the ‘dash to a cashless society’. Could you explain how this offers new surveillance opportunities to private companies and governments, and how you understand the social consequences?

The term cashless society is a euphemistic way of saying the ‘bank payment society’. Within this system you need a bank account and you have to ask banks to facilitate payments. In a cashless society you always have to go through a financial institution.

Think about the traditional story given in any Economics course. A market is made up by two basic players – a buyer and a seller. The buyer gives money tokens to the seller who hands over tangible goods or services. In a cashless society, however, there is the introduction of a third player between every transaction – the money-passer, who moves money between the buyer and the seller in exchange for a fee. These payments intermediaries include the card companies and banks, who run the underlying infrastructure to allow this. So the ‘cashless society’ is an economic system that is predicated on every transaction passing through the banking system and groups like Visa and Mastercard.

There are a lot of institutions lobbying for this system – the banks themselves and digital payment companies who facilitate the movement of money between bank accounts. Then there is the state that can see many advantages to this. In particular it allows them to monitor all transactions. If you’re forced to use digital payment systems, all of your transactions are recorded and leave a data trail. This data can then be analysed. They are interested in this for anti-terrorism and crime detection, but also to monitor tax. There are also monetary policy interests, in particular the ability to introduce negative interest rates.

So the implications are far more than data about transactions, and it’s not just states that find this useful, but corporations, too. Large technology companies, like Google and Amazon, are trying to build payment infrastructure to expand their data monopolies and gain ever deeper insights into people’s economic behaviour. For example, big web platforms often are in the advertising business, but struggle to prove whether adverts convert into sales. So one endgame for some of these large technology companies is to discover the correlation between the adverts you see and how much you spend. So they have an obvious interest in receiving and analysing that data, and if they can track what you spend, they can also develop more efficient advertising.

Another endgame is machine learning and predictive analytics that try to predict, and ultimately steer, people’s behaviours. Banks themselves are interested in this approach, using data to influence behaviour.

There is no cashless society at present, but there is a big political push for it. In this context, it is interesting to explore crypto-currencies that create some form of counter power.

Blockchain technology has been offered up as one of the most recent transformative technologies, with use in supply chains, payment exchange, and its ability to decentralise the control of data. How do you see the political implications of this technology?

Blockchain is multi-layered. At its base, the original version, blockchain technology is essentially a means for a network of strangers to keep track of their positions relative to each other, without a central intermediary. In the case of Bitcoin, it is about keeping track of money tokens. The concept can be applied more broadly though.

Why is blockchain seen as a profound shift in technology? If you walk out in the street, right now, wherever you are, you are going to see a group of people you do not know – strangers. You don’t necessarily distrust them, but there is no easy way to extend your trust. Traditionally, the way we would deal with this is through state law – such as consumer protection laws – and big third-party institutions and corporations who mediate between these interactions. I can walk into a shop and buy something without needing to know the seller personally.

Then blockchain emerged as a technology that could facilitate transactions between people without requiring intermediary institutions. People have historically been able to do that in small-scale situations, but blockchain tech enables this at large scale. The first version of this was Bitcoin, which is a system that enables people to move tokens between each other without relying upon banks. Unlike the banking system, where transactions are recorded on private ledgers controlled by an oligopoly of banks, whose permission you require to move money around, Bitcoin is based on a public ledger that is updated by special players in a peer to peer network.

The second wave of blockchain – such as the Ethereum system – took the same concept, but moved towards developing more complex interactions between people beyond the exchange of money tokens. In particular they added the ability to deploy automated agents onto the network, which they – somewhat misleadingly – refer to as ‘smart contracts’. In Bitcoin you assume all players on the network are humans who make their own decisions about whether to send tokens. The automated ‘smart contract’ agents of Ethereum though, are like robots, forced to do certain things when members of the network interact with them. For example, if you want to raise money for a company, you can programme a smart contract to automatically send a share to someone who sends it money. To understand this, imagine a vending machine. It is an automated agent. You give it money and it gives you a drink. It has no choice. Now imagine this kind of thing in digital form. If you start to link these ‘smart contract’ entities together you can automate all sorts of interactions.

The third wave of blockchain tech – which is being hyped right now – is the corporate use of the technology. The first two waves were open systems in which anyone could join and, theoretically, everyone had the same rights. In wave three, which is known as private, closed or ‘permissioned’ blockchains, institutions or groups of institutions control who is able to join the system, and can give users different rights and powers within the system. This fundamentally changes the entire ethos. They’re just trying to make more efficient versions of business as usual. Banks, for example, already collectively run certain shared systems for things like payments, and they currently see private blockchain systems – or ‘distributed ledger technology’ – as just a more efficient way to do the same thing. So if American Express says it’s ‘using blockchain’, they’re going to be building a closed system, and this makes it confusing for the public, who often don’t know there is a difference between the open systems and closed systems.

So, to give an example, when I was working within the derivatives market, two traders would agree a deal – let’s say a trader at Goldman Sachs would do a deal with a trader at Barclays – but once they’d done that they report it to their separate back office staff, who would do all the dirty work of having to make the transfers and make sure both traders had recorded the same details about the deal. This takes time, and each bank has different systems that don’t necessarily jive with each other. So the interest for large banks is in finding ways to automate the coordination between themselves, so that they can fire all their back office staff who do the reconciliation work.

What is important here is the distinction between open public and closed private blockchain systems. That said, you could also use closed systems to launch co-operatives. If you were trying to create a co-operative version of Uber, a closed blockchain system could be very useful. So drivers could get together to coordinate themselves. So there is interesting potential.

With the Paradise Papers we are reminded again how tax policy and legislation is often written by the legal teams of large companies who are offshoring their assets and profits. This is a clear example of big finance’s political power. What are the opportunities for us to transform the policy and legal environment?

We are used to this tacky distinction between ‘states vs markets’, but I start from the assumption that there has always been a symbiosis between states and markets. The state creates the underlying structures that enable large-scale markets to operate. If you accept that, you can then think about which market players the state prioritises. Do they favour the large corporate players or the small players and ordinary citizens? This is kind of the historical battle between conservatives and labour: is the state there to facilitate the owners of capital, the CEOs, the elite entrepreneurs, or is it there to protect those with less market power, the employees and marginalised? The state is always going to be captured – the question really is who has captured it? Is it a corporate state, or a citizen’s state? This is a dynamic that goes back and forth.

I do think there are opportunities to transform the policy and legal landscape, and it has happened over the years. It is a fickle system, though. A positive policy change can be reversed by a new government, like a law to separate safe banking to risky banking that then gets repealed. In the long-term the ideal is to try build systems that do not rely on external regulation, but that have positive principles built into their DNA. I’d not give up on financial reform, but it’s difficult. I’ve just come back from spending time with Finance Watch in Brussels: they lobby for the public interest in finance, but they are outnumbered by highly paid private lobbyists that the financial industry deploys. They have to fight day to day against the odds.

In terms of the Paradise Papers, I feel there has been a political turn in the tax avoidance debate. I think there have been gains for tax justice groups. At the same time, there has also been a fatigue among the general public. We hear about new scandals frequently, but there is only so much outrage people can express. This is a long-term fight, not something you can win in quickly. So stick in there and enjoy the ride.

Alternative financial activists, such as the Robin Hood Co-operative and Debt Jubilee, use ‘traditional’ financial tools to challenge the system. How do you understand the strategic relationship between financial protest, financial reform, and the creation of new financial institutions, tools, and services?

Finance activism, financial reform, and alternative financial should, like you say, align with each other. I think they do, but those within these groups do not often attempt to overtly work together. Partially because of funding structures. If you are a critical artist exploring finance, like Paolo Cirio, his funding stream will come from arts funding bodies. And then if you’re FinanceWatch, your funding comes from NGOs and EU sources. This means they’re often having to play into different institutional spheres that don’t allow much overlap.

Also the energy required to work towards different campaigns means focusing obsessively on certain priorities. If your whole world is lobbying in Brussels or Westminster, you may become dismissive or intolerant of the direct action strategies of activists scaling the Houses of Parliament. There are cultural differences within financial reform and they don’t always recognise each other’s value. Sometimes because they are competing for media attention, funding and legitimacy.

But when I zoom out and think about how we will create financial change, I see all of these approaches playing a role. Financial activism and protest is very effective at getting media attention – Occupy Movement, Move your Money campaign, UK Uncut were very good at getting headlines and asking for extreme changes. This then creates space for more centrist organisations to draw up more technical proposals for financial reform. They come through with more palatable demands, which can create change.

The same with climate change movements. Earth First or Greenpeace open space for less overtly activist sustainable finance groups – like CarbonTracker – to come and make technical proposals. You have to zoom out to see the politics – take alternative finance platforms like peer-to-peer lending. Mainstream policymakers struggle to directly attack big banks, and may find it easier to support the alternative finance sector as a way to indirectly weaken banks. The alternative finance sector in the UK has actually been quite good at ‘playing the state’, presenting themselves as a useful alternative to address the shortcomings of the traditional finance giants.

On the extreme end of financial activism, there is little crossover with more ‘respectable’ alternative finance entrepreneurs. If you take Enric Duran, or the Robin Hood Co-op, they have no interest in reforming finance. They are trying to create parallel systems that do not rely on the current system. It’s not like the divestment campaigns, or ethical banking system, which are trying to reform the current system, and that’s an important distinction.

The divestment campaigns are an interesting case study. These campaigners are often criticised by those within more mainstream sustainable finance circles as lacking nuance or being counterproductive. But the divestment organisations have been great at driving the debate on unsustainable investment in a more public way. They actually indirectly support the work done by the technical sustainable finance community. The student activists are creating a space for more technical changes to be introduced.

Since I specialise in not specialising, it makes it easier for me to to see the points of intersection. There needs to be more people who hop between different approaches, overtly spending more time in different communities. The technology community, the localist community, the policy community, the artistic community, and so on. Hybrid approaches are often the most interesting.

Brett Scott is a journalist, campaigner and the author of The Heretic’s Guide to Global Finance: Hacking the Future of Money (Pluto, 2013). He writes for publications such as the Guardian, New Scientist, Wired Magazine and CNN. He is a Senior Fellow of the Finance Innovation Lab, and helps facilitate a course on power and design at the University of the Arts London.

Links

Follow Brett on Twitter at @suitpossum

Order ‘Power’, Issue 20 of Stir Magazine

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Published in STIR magazine no.20, Winter 2018

Illustration by Nick Taylor

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By recognising and rewarding these six capitals, a more ethically grounded concept of wealth guides our human endeavours to create, distribute and reinvest forms of capital to meet a wide variety of needs.

The FairShares Model V3.0 is implemented through:

• five values and principles (01);
• six key questions (02);
• five learning and development methods (03);
• four legal identities (04)
• seven ICT support platforms (05).

They were initiated through a research programme on democratising charities, co-operatives and social enterprises involving academics at Sheffield Hallam University and Manchester Metropolitan University in the UK, and developed as part of an EU Erasmus+ project to create FairShares Labs. The model promotes cooperative social entrepreneurship that recognises and enfranchises the providers of different types of capital contribution.

Memberships (and shares in companies and cooperatives) can be offered to investors of every type of capital by redesigning companies, cooperatives, associations and partnership to fully recognise and reward enterprise founders, workforce members, users/customers and the creators/providers of financial capital.

First, we devised a set of values and principles based on a definition of social enterprise created in January 2012 by Social Enterprise International Ltd.  We link these values and principles to key questions for enterprise incubation and development.

Second, we identify who is best able to answer each question to develop a design philosophy and governance model.  Social auditing and diagnostic tools can help develop the architecture for ongoing development of ownership, governance and management systems.

Lastly, to encourage the social systems to endure, we apply the design principles to model constitutions for companies, co-operatives, associations and partnerships.  The model constitutions provide a kind of social DNA for the replication of the five principles by implementing them through new approaches to ownership, governance and management. We believe these systems will make it easier to achieve UN 2030 sustainable development goals.

From 2019, you will be able to obtain support for developing your FairShares ideas by joining a local or virtual FairShares Lab. Each lab will provide workshops and support tools to help you consider the questions in a FairShares Canvass.

Through workshops, learning processes and with coaching and support, you will be able to design your multi-stakeholder co-operative enterprise by answering the questions in your FairShares Canvass.

Photo by Gog Llundain

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Four years ago, Thomas Piketty published his best-seller that tried to provide a working model for capital in the twenty-first century. The reasons why Piketty failed to accomplish some of his goals have been well explained by David Harvey.

I’d like to shed light on a new process that has been neglected by both Piketty and Harvey. For those who wish to understand “capital in the twenty-first century”, studying a rising form of production is of paramount importance. Following the format of ‘capital’, I call this emerging phenomenon ‘phygital’.

What is capital?

Capital is a process, not a thing, which results in social relations. Put simply, it is a process in which money is used to make more money. This process is situated in a specific context where the capital owners develop multifaceted relations with the rest of the people and their habitat.

The owners of a company profit by developing relations with their employees, partners, suppliers, customers, natural environment etc. How value is created and wealth is accumulated in the hands of the very few is a complex process. However, to quote the Encyclopedia of Marxism, “the issue is to understand what kind of social relation is capital and where it leads”.

I shall argue the same for another process, named ‘phygital’.

What is phygital?

‘Phygital’ is a process whereby ‘physical’ (material production) meets the ‘digital’ (production of knowledge, software, design, culture). It encapsulates digitally enhanced physical reality and production, to show how the influx of shared knowledge changes and improves production.

First it was Wikipedia and the myriads of free and open-source software projects. They demonstrated how people, driven by diverse motives, can produce complex ‘digital artefacts’ if they are given access to the means of production. Now we are also observing a rich tapestry of initiatives in the field of manufacturing.

For example, see the Wikihouse project that produces open source designs for houses; the OpenBionics project that produces open source designs for robotic and bionic devices; or the FarmHack and L’Atelier Paysan communities that produce open source designs for agricultural machines. Digital technologies enable people to cooperate in a remote and asynchronous way, and produce designs that are shared as digital commons (open source). Then the actual manufacturing takes place locally, often through shared infrastructures (from 3d printing and CNC machines to low-tech tools and crafts) and with local biophysical conditions in mind.

Similar to capital, phygital is a process that results in social relations. However, it is a process in which shared resources (commons) are used to produce more shared resources (commons). The kind of social relations can thus be very different to capitalism. And it may lead to a post-capitalist economy and society.

Do we really need another new term?

No, not necessarily. But we need a new paradigm, informed by the past, which can address most of the problems that capitalism has been creating, for the benefit of the many and of the environment. Towards that end, discussions around and experimentation with post-capitalist alternatives are necessary.

I believe that new ideas should ideally be described by using already widely understood terms so that the message is effectively communicated. However, I cannot come up with a better term that would describe this conjunction of the digital with the physical. If someone can, may this brief essay serve as inspiration.

Originally published in Open Democracy.

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This post is part of our series of articles on the Commons sourced from the Green European Journal Editorial Board. These were published as part of Volume 14 “Finding Common Ground”:

GEJ: What would your definition of the commons be?

Ugo Mattei: The concept of the commons cannot be defined in straight terms; I simply use the following definition: commons are resources managed in the interest of future generations.

Molly Scott Cato: I agree; it is the use that defines whether a resource is commons or not. Let’s take for example the provision of livelihood: you can use your resources to secure the basic necessities, such as food, water, shelter, and clothing in many different ways; if you approach it in a form of ‘enclosure for exchange’ that means that you have done it in a market way, if you approach it in form of use for subsistence, then you have done it in a commons way.

What is the connection between the commons and ecology?

UM: The connection is pretty straightforward. We are used to living in a legal and socioeconomic system that is based on the extreme individualisation of society; an individualisation that favours technological transformations and capitalist extraction. The way in which this process has evolved throughout modernity is clearly not sustainable, as it assumes infinite resources on a finite planet. Any attempt to change direction, and to create new forms of social organisation requires us to create new intellectual categories. The idea of the commons has been certainly the most promising effort to overcome the capitalist mindset.

MSC: In the market model, resources are privately owned and scarce, while a commons model adopts a framing in which resources are abundant and shared socially. The reason we want to shift from the market model is that once you enable the enclosure of resources and their transformation into saleable units of goods and services, and once you create an incentive to exploit them more, serious ecological problems will follow. Whereas if you accept that the resources we all depend on are common property, and that we have a social incentive to cooperate in order to share them, we will obviously manage them in a more sustainable way.

UM: We are challenging the assumption that value corresponds to exchange and capitalist accumulations, and the alternative that we are looking for is a view that puts the ecological community and the sharing of resources at the centre, in a model in which satisfaction is derived from use, rather than exchange. This of course requires us to completely rethink the free trade agreements, for example, that are based on the opposite presumption, as well as many other capitalistic structures.

Are the commons that we find in nature different from those in the digital world?

MSC: Not really. As the examples of pollenating insects, wind, or sunshine show, almost every commons can be conceptualised as something that has a market value, and this works both ways: anything that you can make money out of, you can also conceptualise as a commons.

The classic example of the commons in the digital world is Wikipedia. Everybody uses Wikipedia, many of us write new Wikipedia articles, and we also often donate money to Wikipedia so that it can keep on working. It is a very good example of a platform that works because people are sharing. The opposite of the digital commons is something like Facebook, where we all put our photos online, but the platform is enclosed, and the money that is made goes to Mark Zuckerberg and his team. Imagine how much money Wikipedia founder Jimmy Wales could have gotten if he had decided to privatise Wikipedia, but he deliberately didn’t do it.

If you accept that the resources we all depend on are common property, and that we have a social incentive to cooperate in order to share them.

~ Molly Scott Cato

UM: Pretending that there is an ontological difference between nature, science, technology, and politics in the current era is nothing more than an ideology. Due to the project of modernity, today we have an enormous amount of capital in the world, but almost no commons anymore. So the next project should be to transform some of this capital into commons. And clearly the information economy, such as the internet, is the first kind of capital that we can win back in the form of the commons. But this requires a huge transformation, because even Wikipedia, the only significant example of commons on the web, is dwarfed by Twitter or Facebook.

You said that with the commons we need to find an alternative to the market model. But don’t we also need an alternative to the state model?

MSC: I disagree with the three-way distinction of public, private, and social enterprise models. For me, we are all living in a world that is shaped by the market, and the fact that we provide some services through a public system doesn’t really take us away from this basic concept. So when I talk about the market model, I don’t just mean the private sector, I am talking about an economic model in which we are focused on exchange rather than production for subsistence, and the state is an accomplice.

Anything that you can make money out of, you can also conceptualise as a commons.

~ Molly Scott Cato

Is a commons regime an exclusive regime, or should it coexist with capitalism?

UM: If we started with a blank sheet I would say that the whole notion of the commons is a foundational notion, as foundational as the notion of individual rights for today’s capitalist economy. It is a completely different way to conceptualise law and social organisations – and in a utopian world, the commons could actually be seen as an alternative to today’s economic system.

There is, however, a more realistic perspective in which neither the public nor the private sector can yield to the commons easily. These sectors are very resilient. Since the Nobel-prize winning economist Elinor Ostrom started talking about the commons, things have gone in a completely different direction than we would have desired. There has been even more ‘technologisation’ and digitalisation, and the only way for the commons to prevail would be to live together with the capitalist organisation of things. In order to do so, commons have to be very smartly steered into some of the institutional settings that we have out there. We have to use what we have, in a way that exposes the contradiction of the capitalist economy, in the hope that it will fall at some point.

MSC: Here I think we have a bit of a disagreement, because the Green approach would be to say that you don’t wait for the collapse of the capitalist system, but you create commons-based alternatives wherever you have the chance to do so. That in itself provides us with a sense of learning and understanding, and a different consciousness around those economic activities that facilitate the transcendence of the capitalist system into something better. There are already some smaller examples, all over Europe. In Stroud, the town that I live in, we have set up a community-supported agriculture system that provides food for 200 contributing families; we pay rent for the land, but that is only a minimal rent. It is an example of a system that is based on a commons approach to provide vegetables to the community. It operates within a capitalist society, but it has a different understanding of how the economy should work.

The millennial kids are cyborgs, they think about themselves as individuals, rather than parts of a community, and are living their lives connected to these machines.

~ Ugo Mattei

UM: I don’t think there is a fundamental disagreement. We look at our possibilities, and try to construct a new form of consciousness which is necessary for a larger, revolutionary enterprise.

MSC: I agree, but instead of “revolutionary”, I would rather use the word “transformative”. And the internet could be a good terrain for this transformation, as today’s young people intrinsically understand how a commons economy might work. When they use and share digital goods, they are outraged by restrictions such as geoblocking (when access to content is restricted to users in some geographical areas). The internet also provides lots of opportunities to learn and conceptualise. Just look at Facebook: the value of Facebook is created by the users who contribute their content, there is only a very tiny amount of innovation involved in creating the algorithm and coming up with the initial idea. Nevertheless, this initial innovation was rewarded a million times over. I think we now need to make a claim that Facebook should be owned by the people who use it – like in the case of the Wikipedia model. I think it is outrageous that Zuckerberg can pretend to be a great philanthropist who solves the problems of the world, using money he enclosed from stuff I put on Facebook.

UM: It would be very important to look openly at the fact that Zuckerberg controls those large servers that store our data, and to figure out how to get back control over them. The governments are not going to do that for us, because they are in the pocket of corporations. So you have to use people power but that would require a level of consciousness and activity that the young people you are talking about don’t have.

The millennial kids are cyborgs, they think about themselves as individuals, rather than parts of a community, and are living their lives connected to these machines. It seems very unlikely that critical thoughts can come out of that generation. I think the wide use of smart phones and computers has a similar effect on people as heroin had in the 70s: it keeps complete control over generational aspirations, they are addicted to these things, and now they don’t talk, and don’t organise anymore. Don’t tell me the Arab Spring was something that proves this statement wrong, after five years we have a clear understanding of how little the Arab Spring has achieved.

Can the commons be useful for the European project? Can they be a driver for further integration?

MSC: The majority of European politicians are in support of an economic model that clearly isn’t working, while many citizens are losing confidence. Today, we can find two groups in the European Parliament who are advocating for a new economic model, but there is an important difference between the two of them: the GUE/NGL – Confederal Group of the European United Left/Nordic Green Left would see a bigger role for public ownership and social ownership, while we [the Greens/EFA Group] would advocate for commons, community ownership, and the social management of resources.

UM: I have been very perplexed about this for quite some time. One part of me wants to think that the EU is still worth saving, and believes that the commons could be used to gain some kind of constitutional balance. But it is not going to be easy. Today there is a very bad constitutional balance in liberal Western constitutional democracies. If tomorrow we wanted to socialise Facebook, we would have to go over many phases of social litigation, and the likelihood of losing would be extremely high. On the other hand, if any European government decided to privatise something they could do that without any form of control. If for example the Italian government is selling the post offices, there is no legal action possible for me to stop the process, even though it is my property as a taxpayer. An important role of the commons would therefore be to ensure that public assets are entitled at least to the same protection as private assets. This is why we need to advocate for a fundamental transformation in the constitutions of Europe, changes that would allow some kind of reconfiguration of the relationship between the people of Europe and their belongings.

A major worry for me concerning the EU is that I don’t know whether the commons are compatible with a system in which the centre of power  is so far away from where things actually happen; half a billion people in a single market, governed by the same laws and the same institutions seems too much to me. The commons are based on the philosophy of ‘small is beautiful’, whilst in contrast the European project is huge.

MSC: I disagree, I think that we need citizen participation at all levels: at the global level we need to solve climate issues, set common rules for corporations, and so on, then we can start with tax-policy at the European level, in order to stop corporations from making profits by avoiding taxes. Part of what we need to do is find out which powers should be exercised at which levels.

There is a liberal argument according to which most people only start caring about the environment once they become rich with the help of capitalism – and indeed we can see that Green parties are most successful in the richer Member States of the EU. How can we overcome this problem when advocating for the commons?

MSC: I think this is rubbish; if we look at where the environment has been destroyed less, those are the poorer countries of the world, and even the destruction that has happened there is due to the Anglo-Saxon and other European colonisers and post-colonisers. I think it is a complacent Eurocentric view to say that. But I take the point about our own societies; in Europe we haven’t been really successful in reaching out to working-class communities, but I think that’s mainly due to the way Greens speak and debate, and I think it is also patronising to say that that the poor are not concerned about the environment, because they absolutely are, and if they haven’t found a way to express that through politics that’s because the political system is failing them.

UM: This is a new, revamped form of the old, disproven trickle-down argument.1 I think claiming that only the rich care about the environment is completely unfounded. California, where the environmentally-friendly Tesla electric cars were invented, has an ecological footprint of six, which means if everybody else in the world were to live like the Californians, we would need six planets to reproduce the resources that we use. Burkina Faso, in contrast, has an environmental footprint of 0.1. These are the facts; all the rest is bullshit.

If the Greens are doing poorly in some countries that’s because of their poor leaders, at least in Italy, where the Greens existed as a small clique of people who had no capacity to talk to anyone who was different from them. But I admit that there is a problem due to the very strong relationship between the structure of representative democracy and the capitalist society, due to which a movement that doesn’t follow a capitalist mindset – someone who, for example, thinks in terms of the commons, rather than of the individual – will find it very difficult to be represented by the process of representative democracy. It is very difficult to impose commons from the top down, as the commons are a bottom-up platform, it has to come from the people, and the most conducive thing we can do now is to create some commons literacy, to talk to people, and to free them from the technological cage in which their heads are stuck.

The Green European Journal, published by the European Green Foundation, has published a very interesting special issue focusing on the urban commons, which we want to specially honour and support by bringing individual attention to several of its contributions. This is our 5th article in the series. It’s a landmark special issue that warrants reading it in full.

Photo by Magalie L’Abbé

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“Under the aegis of a feverish entrepreneurial spiritualism and redoubled post-crisis capitalism of the fourth industrial age, the radical transparency and openness once promised by blockchain is in retreat.  We are witnessing blockchain-as-enclosure; enclosure through the proliferation of private permissioned ledgers, which are indicative of capitalism’s generalized tendency towards the imposition of property definitions on common (cyber)-space, and the promotion of non- or anti-relationality via forms of withdrawal, exclusivity and privatization.

In the first part of this two part essay, I argued that the oft-quoted notion of blockchain as “disruptive” was a fallacy.  In particular, when disruption confers upon blockchain a revolutionary character that attempts, falsely, to sustain the idea of it as a radical alternative to long-standing and well-rehearsed modes of financialization.  Moreover, it is the same global financial corporations who caused the 2007/08 global financial crisis, and who thus helped accelerate the birth of cryptocurrencies and blockchain as an attempt to negate centralized financial control, who have now taken firm control of the blockchain-as-disruption narrative.¹ And, it is those same corporations who now lead the charge on blockchain enclosure.

The Enclosure Thesis

If we take seriously the importance of the dichotomy between the public (open, unpermissioned) and private (permissioned) blockchains that lies at the heart of the enclosure thesis, then it is a shift in cyberspace at the ideological level via an intentional withdrawal into exclusivity, and the erosion and impoverishment of technological potential, which is at stake in the future development of blockchain.

We have, of course, seen this recently with the internet and World Wide Web, the inventor of which, Tim Berners Lee, has been vocal in his opposition to, among other things, the issue of net neutrality.² But as various Fintech consortia, including global accounting firms and large technology corporations like Microsoft and IBM, consolidate their grip on both the prevailing narratives and modes of implementation of blockchain architectures, the loss or collapse of the blockchain’s potential as a counter or foil to the hegemony of global financial capital (call it blockchain egalitarianism) seems likely.  And the echoes of the fate of the internet and World Wide Web only seem to get louder as the hyperbole surrounding blockchain continues to grow.

Tim Berners-Lee’s concerns over the future of his invention remain strident, and the parallels with blockchain are noteworthy. As the following report from The Guardian demonstrates:

[I]n spreading from the grassroots up, his invention has arguably lost many of the egalitarian principles Berners-Lee hoped for. It has become less straightforwardly a force for good. Earlier this month, Charles Leadbeater, former policy adviser to the Labour government and a champion of the web’s potential to give power to hitherto deprived groups, published a report called A Better Web for the Nominet Trust pointing to the pervasive misogyny of the web as an example of how the democratising potential of the internet has not been fulfilled.³

Enclosure was the sine qua non of early stages of capitalism and the first tentative steps of what Marx calls primitive accumulation and David Harvey has latterly called accumulation by dispossession. To be clear, however, a direct comparison between 18^th century land enclosure and blockchain would be nonsense, or, at the very least, exceedingly hard to justify in the round.  Accordingly such a comparison is not the intention here.  Rather, enclosure is evoked primarily because it is indicative of capitalism’s desire to impose private-property definitions on common (cyber)-space, which leads, amongst other things, to the promotion of non- or anti-relationality via withdrawal, exclusivity and privatization.  Something, it should be noted, that in this instance only has a marginal impact upon the nature of the technology itself.  In other words, blockchain appears much the same whether in a private or public form.  Fintech consortia are busy ploughing a furrow in which to lay the seed for future development of exclusive and privatized blockchains capable of generating new and recycled revenue streams on behalf of large private commercial interests.  In other words, the Fintech ideology is monolithic in its concern to impose, indelibly, on the blockchain phenomenon the mark of capitalist property definitions.

“'[E]nclosures’ under the private and general Enclosure Acts”, Eric Hobsbawm reminds us, “broke up some six million acres of common fields and common lands from 1760 onwards, transformed them into private holdings, and numerous less formal arrangements supplemented them”.⁴  “[T]he social violence of enclosure consisted”, argues E.P. Thompson, “precisely in the drastic, total imposition … of capitalist property definitions”.⁵ Enclosure occurs therefore, not as a single event, but as a violent series of “less formal arrangements”.  In other words, there is more occurring outside of plain view of blockchain enclosure (in spite of the rhetoric!), and it effects are potentially far greater.

And, indeed, this would appear to be the case.  As a corollary to enclosure there are also calls to deregulate the financial and market landscape in which blockchain is already operating or being primed to operate in the near future.⁶  As a product of enclosure, this threat of further deeper deregulation of financial markets is arguably potentially more dangerous in the long term.  Enclosed permissioned blockchains therefore are not only being re-orientated and re-mobilized towards a contentious ideological (privatized) sphere, but in doing so a backdoor to further deregulation of markets is being opened.  Using blockchain to inaugurate further market deregulation, we might argue, returns us to the fallacy (the smoke and mirrors) of blockchain as disruptive.  But it also suggests that blockchain is a proxy for the realisation and actualization of new markets and the deeper entrenchment of financialization at a global level, through a scarification of the existing regulatory and legal landscape.

Traditionally law plays a key role in shaping long-term behaviours across both public and private social domains.  But in this instance (in the UK at least) law or rather regulation has by and large left the evolution of blockchain well alone.  This is due to a number of factors, including governmental promotion and celebration of innovation and the feverish entrepreneurial spiritualism that has been unleashed by the neoliberal age.  This does not mean there is a legal vacuum where blockchain is concerned.  Far from it.  The global financial arenas in which blockchain is now beginning to be deployed already have significant levels of regulation able to capture any potential problems in the deployment and use of blockchain and associated technologies, such as smart contracts, without having to resort to direct legislation and regulation.  This is, however, precisely the legal and regulatory landscape that some would like blockchain to “disrupt” to their advantage.  Law must therefore remain critical where blockchain is concerned, and avoid being seduced by the sand-box fantasies of capitalism.

Blockchain Provenance as Counter-Enclosure?

Provenance is a domain in which blockchain can be, and to some extent already is, primed to serve a purpose that is not exclusively for the benefit or advantage of global financial capital.  Although it must be pointed out that this domain is already compromised.  In other words, a perverse entrepreneurialism has already begun to capitalize on blockchain provenance.  The question, therefore, is whether or not any viable possibility of an open and egalitarian blockchain, counter or post-enclosure, remains?

Provenance, as a general concept, is presently the strongest exemplar of a blockchain use case that is not exclusively geared towards benefiting capitalist modes of production and satisfying the imposition of capitalist property definitions.  Provenance is able to hold the exploits of capital to account by creating, among other things, immutable records of commercial supply chains.  In the name of “social enterprise” and corporate social responsibility (CSR), however, this concept of provenance has already been compromised through a bridging of commerciality with egalitarian principles.  In this spurious concept of free-market fairness we find both a conflicted and watered-down mode of social good.  In their white paper, Provenance.org, who fall into the category of social enterprise, claim that:

There is a growing rallying call by customers and governments demanding more transparency from brands, manufacturers, and producers throughout the supply chain. In the UK, 30% of consumers are concerned about issues regarding the origin of products but struggle to act on this through their purchasing decisions. The market for products of proven origin is growing. In the future, regulations like the European directive on non-financial reporting or the UK Modern Slavery Act will require companies to transparently disclose reliable information about their business footprint⁷.

Provenance.org, I argue, precisely advocate for the type of neoliberal values, not least on the front page of their website, which are highly problematic and serve to undermine provenance as a tool to counter the hegemony of global financial capital.  Does this perfectly demonstrate how something as vital as provenance can be soured – especially when it comes with a price plan?  The concern here is obvious: why leave determinations of the quality of commercial transparency to the very actors who ought ultimately to be being scrutinized?  No matter if those interests are related to global multinationals or local entrepreneurial start-ups, the mantra of incessant growth recited by any commercial interest who take seriously their commitments and responsibilities to the cause of capitalism will, indeed must, ultimately see past any and all modes of regulation and critique that threatens their survival.  That is the nature of capital.

As a tool for transparency and provenance blockchain could provide a secure way in which to monitor and check the exploits of global financial capital without having to be subsumed, neck-deep, in it.  But, as suggested previously, the pendulum swings both ways.  Blockchain transparency and provenance can clearly also strengthen capitalism by painting upon it a trusted and friendly face.  Trust thus becomes nothing more than a commercial prosthesis, a marketing strategy for leveraging new markets.  Rather than a foundational, first principle of social relations.

In precisely these terms are seeing blockchain provenance drawn into the fashion for “circular economy”.  A strategy that allows business to appear to take seriously the need to manage supply chains for the social good through, for example, mitigation of physical waste, as well as waste in terms of time and energy.  But while the concept of circular economy appears socially and, perhaps more importantly, ecologically focused, we must not disregard the fact that commercial interests, by and large, begin and end with the company balance sheet.  This truism of capitalism underscores the focus on blockchain, largely because blockchain can help lend legitimacy to business practice and thus the exploits of capital.  The appearance of blockchain’s “disruptive-ness” provides a tabula rasa, and chance for capital to claim a new saintliness.

Blockchain provenance can be a radical answer to enclosure if it remains in an open and public blockchain able to bring together hard monitoring, recording and reporting of the exploits of capital.  At present provenance appears to be heading towards the nonsense of onanistic forms of commercial self-regulation.  This will not provide an egalitarian outcome.  Capital is not self-correcting; it is self-perpetuating.  Thus critical examinations of blockchain are needed to reclaim the initial promise of transparency and those latterly of provenance.  Blockchain, under such conditions, could provide a highly reliable witness to the exploits of capital, with a view to maintaining a critical, honest and true disruption of capitalism.  Contrary to the prevailing mainstream narratives that would be blockchain as disruptive, and that is why enclosure must be resisted.”

Part I here.

The post Anything but disruptive: Blockchain, capital and a case of fourth industrial age enclosure – Part II appeared first on P2P Foundation.

“A critical turn is needed in discussions of blockchain — the tech that underpins the virtual currency bitcoin – especially with respect to it as a phenomenon of the so-called fourth industrial age.¹ Many have been swept-up in (if not duped by) the swell of excitement around a technological architecture which appeared, at first sight, to puncture the power and hegemony of global financial capital. By “at first sight” I am of course referring to Satoshi Nakamoto’s infamous white paper which gave birth to Bitcoin and exposed blockchain – a distributed ledger and means of immutably timestamping digital and digitized information – to consciousness beyond that of computer science.²

Published at the very point that the scale of the 2007/08 financial crisis was coming to light, it is the opening line of the abstract to Satoshi’s paper that demands attention: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution” (my emphasis).³ In this brief and arresting statement Satoshi points to two important but, I argue, now essentially debased characteristics of blockchain: decentralization and disruption. Moreover, captured in Satoshi’s words is a clear ideological intent to circumvent the authority of (centralized) global financial capital. But, against a backdrop of accelerating advances in blockchain technology, this ideological intent is now in palpable decline in the face of a resurgent post-crisis Fintech industry under the sway of the same corporations Satoshi was so keen to avoid.

So, should we still take seriously the possibility that blockchain might still evolve into something other than capitalism’s latest technological fetish? Perhaps not. Blockchain is, after all, arguably a product of the capitalist imagination, albeit a marginal and anarchic species of capitalism outside the mainstream. And yet, within the origin myth of blockchain captured by Satoshi is the clear sense that the technology does not exist exclusively for the advantage of capitalism.

Accordingly, what is at stake here is political and ideological. Blockchain is the opening of a new contestable horizon in the cyber-social field, which is largely informed by the proliferation of enclosed blockchains (private permissioned ledgers), interpreted here as the latest (re)enactment of an imposition of capitalist property definitions on common cyber-space.⁴ By definition enclosed blockchains reject the concept of a permission-less, open and public blockchain, and thus erode the potential for radical transparency through blockchain-as-commons. The answer is to resist to this trend by using the capabilities and promise of the technology itself to counter enclosure.

The following two-part discussion will explore the ideological evolution of blockchain, marked by this recent stage in its development: the proliferation of private permissioned ledgers. In part one I will discuss how decentralization and in particular disruption are wholly inappropriate terms to apply to the context of blockchain as we presently find it, as well as in terms of the direction in which blockchain is heading under the control and cognizance of multiple Fintech consortia. In part two attention will turn more specifically to the matter of enclosure.

The Fallacy of Disruption

Somewhat against my nature I will begin with a sporting example as a means of explaining why I believe that talk of disruption surrounding blockchain (as well as other technologies in the Fintech domain and beyond) is nonsense. The example is short and to the point (the explanation will be a little longer): in football when a player has the ball and is tackled by a member of the opposing team, this does not change the fundamental nature of the game. Rather, it is part and parcel of the game as such. No one, spectators and players alike, is under any illusion that that particular tackle, or any tackle before or after, disrupts the game. Quite the reverse in fact. In watching a game of football spectators expect to see tackles. Similarly, players (or their managers or coaches) expect to make tackles and, in reply, be tackled.

Now, some might argue that something approaching disruption occurs in the momentum of the team that loses possession. But a tackle nevertheless remains a transient event or moment within the norms and expectations of ninety minutes of football. Of course, it might reasonably be said to disrupt the game if the tackle breaches the norms of the game, for example if it is overly physical and breaks the leg of a player. Although, even in that instance the game fundamentally remains the same into the future, it is simply the case that the injured player is replaced by another, or in an extreme event the game simply stops (and may even be replayed at a later date). A tackle might be considered game changing therefore, but it is not disruptive.

If, in our game of football, a player should suddenly decide to pick the ball up and run with it, this is something quite different. It may still be a game, but it is not football. In the first instance we recognise yet another transient and momentary breach of the norms of football for which the player will likely be penalised. The effect however will be that the game will revert to type soon thereafter (possibly minus the offending player). But what if, in the aftermath of that game, a critical mass of spectators and players decide that they actually liked the fact that the player picked the ball up and ran with it? That it was actually more fun for spectators to watch, and more enjoyable or meaningful a game to play? On the one hand you get the story of William Web Ellis and an origin myth for the game of rugby. For present purposes, however, you get a useful metaphor for what disruption actually is: an entirely new game, realised and actualised as a new set of norms and expectations. This new game is not something that occurs within an existing set of norms, nor can it rightfully be called anything as clichéd as “game changing”. Why? Because game changing events can still occur within the boundaries of existing norms. Thus, to step outside or break free from a prescribed set of norms (to handle a ball meant only to touch the feet) is to be truly disruptive, not least because it radically alters expectations within certain social conditions.

Blockchain as we presently find it, and based on where it appears to be heading given all the signals at the time of writing, is a mere a tackle in the game of capitalism; it is capital playing with capital and all other social concerns are essentially excluded. Blockchain, in that sense, is not radical but just another technological fetish, a play-thing in the hands of capital. Arguably, Satoshi tried to invent rugby (although that is not entirely clear and certainly open to debate – with or without the sports metaphor). But what we are now seeing is a resurgent premier league of global financial institutions intent on ensuring that blockchain remains a part of their game, whether as a substitute bit player or a key striker.

Having, I feel, well and truly exhausted the football metaphor, hopefully the point is clear. Disruption, so-called and preached by many of the major global banks, to the extent that IBM are now claiming that more than half of those banks will be using the technology in the next three years, is anything but disruption because it leaves unchanged the conditions (norms and expectations) in which it occurs, namely those in which global financial capital has exclusive dominion over the social.⁵ That is, the very same conditions Satoshi claimed blockchain (and Bitcoin) would, indeed must, circumvent as a part of a radically new decentralized global financial framework. An idea which is now fast losing traction in any meaningful way, and will doubtless end up as nothing more than a feature of blockchains own origin myth in years to come.

I accept that in reading Satoshi’s outline for a peer-to-peer electronic cash system there is no express suggestion that the intention was a counter or foil to capitalism as such. Indeed, many high-libertarians who believe in the incontrovertible good of free market competition would likely argue that attenuating or even dismantling the modes of centralized clearing, transaction and exchange that we presently see manifest in the financial services sector would free society and allow it to move towards a purer form of capitalism. The pendulum, therefore, swings both ways.

Libertarian perspectives certainly seem a good fit for the blockchain envisaged by Satoshi. Therefore, as a site for the implementation of (crypto)-currency exchange, the avowedly transparent public blockchain created by Bitcoin is an example of ultra-capitalism, not anti-capitalism, and indeed that general tenor is plain to see in blockchain development trends. Blockchain in that regard is the stuff of high-libertarian and anarcho-capitalist fantasies, and a long way from being the source of or basis for any entirely new post-capitalist games along egalitarian lines. That does not mean that blockchain should be disregarded yet by thinking that seeks either to check or go beyond capitalism. For example, in part two of this essay I will discuss one domain impacting social and ecological relations, provenance, in which blockchain is being mobilized, albeit in something of a comprised form, as a record to check the exploits of capitalism.

Blockchain, like most innovations in the capitalist domain of Fintech, is therefore not disruptive if we understand that term to mean a radical break from the existing norms of a particular form of socio-economic organization. Indeed, far from being disruptive blockchain is, on these terms, actually ultra-normative, especially in financial terms. In many ways this ultra-normativity can also help explain why lawyers, especially from major global firms used to dealing with equally major global financial institutions, who are drawn into frothy exchanges about the revolutionary potential of blockchain tend, quickly, to fall back into exceedingly banal explanations of where blockchain fits into existing legal/economic paradigms.⁶ In other words, some (high-powered) lawyers are baited by entrepreneurs and those further up the capitalist food-chain to engage in the idea that blockchain is forging a wholly new socio-economic reality, when indications are that blockchain is merely the latest pillar being used to prop-up the same old financial institutions. Hence, conclusions, at least from the point of view of doctrinal law, tend to pour cold water on the revolutionary fervour largely because blockchain, in the eyes of the law at least, is little more than indicative of the old adage, “nothing new under the sun”. Law, in that sense, is well placed to cut through the rhetoric.

Yet, we cannot underestimate the significant commercial potential blockchain presents, and thus the forceful desire of Fintech in particular to enjoy its latest technological fetish and have law structure this desire. This leads lawyers to engage, all too often, with blockchain innovation as if they were judges of a beauty pageant, their lustful gaze fixed on a pure entrepreneurial spirit that parades before them and exposes itself in all its lascivious financialized glory.⁷ Thus, in the end, law fails to call-out the nonsense it sees behind the rhetoric, and settles for a profitable dialogue with the entrepreneurial spirit on classic litigation concerns and how best, like the generations of risk-aware capitalists before them, the average entrepreneur might avoid liability when things go wrong, and live to profit another day.

What of the concept of decentralization – another of the foundational blockchain characteristics outlined by Satoshi? Here we find a strange twist in proceedings, because the signs are that leagues of financial and technological institutions want to promote decentralization, even as that appears to undermine the authority and control over the movement and flow of global finance and information of which they have become accustomed in the last twenty years or so. And yet, like disruption decentralization as talked about by the likes of Thomas Jordan, the president and chairman of the board of Switzerland’s central bank, is really nothing of the sort because it is, to all intents and purposes, a small and elite centralized dictate which is determining the form and substance that decentralization will ultimately take.⁸

Whether directly, through large research and development consortia consisting of global financial and technology corporations who are forging and shaping the myriad paths of decentralization in their own image, or indirectly, via investment in entrepreneurs and start-ups keen to promote and develop blockchain along manifold “decentralized” lines, decentralization is only ever occurring within the boundaries of existing capitalist norms and expectations. That is, decentralization is accepted as a method for the creation of new markets and enforcing longstanding (conservative) modes of productions. Indeed, the role of “start-ups” in respect of blockchain (and perhaps more broadly as well), is little more than outsourced research and development on behalf of the global financial and technological elites concerned with mitigating their direct exposure to the risks of backing new and potentially lacklustre technologies.

Moreover, decentralization is a canard because the general blockchain trend is not towards continuing to support decentralization per se in the form of the public blockchain. Rather it is towards private or permissioned ledgers against which the concept of decentralization means nothing. In other words, far from circumventing the institutions of global finance, these permissioned ledgers are set to become the sine qua non of future banking, even if this means, as the Bitfury Group and Jeff Garzik claim, ending up with a “third way” of merged or meta-chains incorporating public and private entities that soften the effects of privatization.⁹

Beyond the public and transparent blockchain, and thus any hope of preserving a common space if not exactly or politically-speaking a “commons”, we see a potent indication of the victories of normative liberal and, to a greater extent, global financial capitalism over the blockchain narrative. An ideological victory which is in no small part manifesting itself through the proliferation of permissioned enclosed ledgers which are altering the dynamic of blockchain development in ways that need resisting. As will discussed in part two of this essay, as ideological events these enclosures re-enact the enclosures of the first industrial age, but are also notable in the fate of a far more recent commons, the world Wide Web. Could this rejection of the commons signal a final strangulation of the concept of blockchain as a radically disruptive technology, or as in any way other to the needs and desires of capitalism?¹⁰“

The post Anything but disruptive: Blockchain, capital and a case of fourth industrial age enclosure – Part I appeared first on P2P Foundation.

Kelly McCartney: As more and more consumers get savvy about where they put their money, how do cooperatives expand their supply to meet the demand? After all, worker-owners each have a stake in the co-op’s future and a vote on the co-op’s decisions. And that can be a problem if a business needs to secure a bank loan in order to scale up operations. Individuals within the group can’t—and shouldn’t—be singled out as loan applicants.

Enter the Working World, a financial services organization that invests in worker- and community-owned operations using the principles of non-extractive capital that eschews collateral and ties “loan returns to project success to minimize risk, both for our fund and the enterprises we help thrive.” Businesses “based in and built to serve low-income neighborhoods” are the Working World’s specialty, and loans are repaid from income generated by expanded operations. In a nutshell: no profits, no pay back. Though the Working World has a $5 million loan fund, it isn’t trying to get rich off the labor of its loan recipients. In fact, it’s a non-profit, with a revolving door of capital investment and repayment.

After getting a start in Argentina in 2004, the Working World has established a Peer Network of 27 locally controlled funds that support worker co-ops in New York, Chicago, Spokane, Los Angeles, Baltimore, and other cities in the U.S., as well as across Argentina and Nicaragua. The Working World will even help a business form as or convert to a cooperative model, or partner an existing co-op team in the Peer Network with an emerging one that needs some expertise.

Further still, while non-extractive capital managed by a financial cooperative is clearly still the exception, the Working World aims to make it the rule by fostering regional hubs around the world that can fund co-ops within their commmunities. As each local fund grows through loan repayments and capital investments, it can lend bigger and bigger sums, where appropriate.

One such hub is happening in Baltimore, after the folks at Red Emma’s Coffeehouse partnered with other local co-ops an advisor from the Democracy at Work Network and some sharing economy attorneys in the Baltimore Roundtable for Economic Democracy (BRED). Additionally, the Southern Reparations Loan Fund and the L.A. Co-op Lab are also early entrants in the field. These local groups will work in tandem, initially, with the Working World, though loan payments will stay within the hub groups to be portioned back out to other cooperatives.

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