They are in effect becoming ‘corporate sovereigns’ with transnational power that dwarfs the power of progressive cities and declining nation-states. Surely, the authoritarian solutions of the emerging national-populists are not the right response to this, and similarly, we believe that left-populist attempts that merely want to revive a more welfare-oriented nation-state are not the right response, especially in the context of global environmental crisis.

In some paradoxical sense, we believe there is a silver lining to this because these practises shed new light on an old debate between the emancipatory traditions of the left, namely the discussion on the ‘withering away’ of the state.

In the 19th century already, anarchists claimed that the state should be abolished forthwith, to be replaced by the ‘free association’ of collectives representing free producers. But the marxists argued, in my view correctly, that in any unequal society, abolishing the systemic role of the state in maintaining equilibrium, is simply a recipe for replacing public power with the raw power of a privately militarized ruling class (paramilitary militias, etc.. ). While anarchists imagined that the homeless would squat empty housing without police opposition, the reality is more likely to be that they would be murdered by paramilitaries in employ of the owner class.

Hence the idea of the withering away of the state. In this scenario, the working class movements would either gradually (the social-democratic version) or more forcefully and directly, take over state power, but with the clear aim of gradually replacing state functions (this was expressed by Marx in his two-stage theory, whereby socialism is still marked by both the logic of exchange and the role of the state, and only the second stage is characterized by a complete disappearance of a separate state function).

Ironically, the paradox today is that this more radical scenario is now echoed in the tactics of the corporate sovereigns AND the libertarian inspired token economy! Through the superior efficiency of their model of ‘privatized mutualization’ ( i.e. private platforms that efficiently bring together supply and demand), their control over user data and capacity to nudge human behavior, as well as their ability to directly syphon ‘surplus value’ through these platforms, they are performing formerly public functions (think about ridesharing competing with public transport or deregulated house-sharing replacing regulated hotels, etc..). The whole world is becoming a shopping mall, with free speech and other rights eroded through the absolute rights of private property.

A “withering of the State” is no longer the sole province of utopian scenarios. In fact, the invasive and deregulatory practises of netarchical platforms show what a dystopian dismantling of the State looks like. In contrast, at the P2P Foundation we contend that there is a way to hack this process toward better futures, futures where emancipatory forces can increasingly take over bureaucratised state functions while solving environmental and equity issues in the process. Indeed, civic initiatives, concerned about the social and environmental equilibrium of urban life, are also showing functional governance at work! Precisely because cooperative forms of governance and ownership can retain the surplus for their own development and to create livelihoods for their contributors, they show promise to outcooperate netarchical platforms, especially if they can form cooperative eco-systems.

We outlined such a scenario in our recent report, Changing Societies through Urban Commons Transitions.

As we discovered in our mapping and study of 500 urban commons in the Flemish city of Ghent, nearly all provisioning systems (mobility, housing, etc.) are now covered by still marginal, but growing emerging commons-centric alternatives. In Ghent and the Flanders, as in other cities and regions of Europe, there is a tenfold increase of commons-based initiatives in the last ten years. However, unlike the private platforms, they are undercapitalized, and often fragmented.

How can this fragmentation be solved ?

Here is our proposal:

• Imagine that for every provisioning system, there exists open source software depositories needed to organize such provisioning, a kind of github for MuniRide and FairBnB type solutions
• In order to finance and scale these solutions, we propose alliances of cities, cooperatives, and even unions, to create the material conditions for global scaling of peer to peer and commons-based solutions
• Locally, say at the city or bioregional levels, the local versions of these coalitions create multi-stakeholder owned and governed platform cooperatives. These platform coops use the global software depositories but adapt and change them to the local contexts and necessities, but also contribute on making the common codebase better and better, adding more and more functionalities over time. Note that all the platform surplus can now be re-invested, not as dividends for remote owners, but in the common development of the infrastructure and in better livelihoods for all contributors.
• The fourth level then, is not just exchange, but actual production. Indeed, at this stage urban commons are distributing differently but not producing the goods themselves. However, we envisage a cosmo-local production system, in which the global commons described above, are matched with local and redistributed production through microfactories, which are also open cooperatives, i.e coops that do not just capture value from their own members, but are committed to create commons that benefit the wider community.

I have no doubt that in these endeavours, we can learn a lot from the development of the private platform and extractive token economies, as we can redesign the tokens for contributory justice, while also being conscious of reducing the human footprint on nature. The good news is that cooperative mutualization can achieve that. Mutualization of physical infrastructures is the golden way to reducing the human footprint, and it can be combined with more just distribution of rewards, while also guaranteeing the full sharing of knowledge.

The key to success, in our opinion, is to think trans-locally and transnationally!

To summarize the spatial or geographic logic of our approach:

• Local, urban, bioregional initiatives produce and exchange for social need close to their user base
• But they use trans-local and trans-national knowledge bases
• Participants produce locally, but can organize trans-national and equitable knowledge-guilds and global transnational entredonneurial coalitions

The role of progressive majorities at the nation-state level is to strengthen these local and trans-national infrastructures, and to create enduring socially just and environmentally balanced provisioning systems that, through their functional — but in this case also democratic — ‘commons governance, can outperform private, extractive, transnational power structures. In order to do this, the state has to be transformed into a partner state, that insures the meta-governance at the territorial level. A ‘partner state’ is not a transition which requires a magical transformation of the current state apparatus from one day to the next. It could take the form of a progressive coalition’s growing commitment to endorse and facilitate functional governance arrangements that are participatory, democratic and managed through public-commons governance arrangements. The Partner State also applies to any interstitial area of governmental structure, at every level, where sympathetic functionaries and politicians can be found to support commons-oriented alternatives; think of Partner towns, cities, bioregions or larger transnational structures To the degree that cooperative and public-commons forms of provisioning are initiated and grow, we will succeed in a withering away of bureaucratic and authoritarian state functions, by more democratic forms rooted in civil society participation.

But note that we stress the role and function of new trans-national structures beyond the nation-state in this process of transformation.

Indeed,

1. classical industrial capitalism can be considered to be a three-in-one integrated structure of capital-state-nation, to which the double-movement logic uncovered by Karl Polanyi applied:
2. Meaning that, whenever the market function ‘freed’ itself from state and civic regulation, it destabilized society, leading to popular mobilizations to re-embed the market into society
3. However, with trans-nationalized capital, nation-state regulation is now enfeebled, and both right-wing national populism and left-wing social populism have failed to show a way forward
4. Then it follows that to substantively re-balance our societies, we need counter-hegemonic power at the trans-national, trans-local level

The good news is that these powers are emerging:

• Global open source communities and other global productive communities based on peer to peer dynamic and the commons are on the rise;
• Global entrepreneurial coalitions have formed around these open source knowledge bases, and a growing fraction of these are consciously generative coalitions, seeking to generate support for the commons and the livelihoods of the commoners
• Global coalitions of cities (and coops, unions, ethical capital) can perform the common good function at this trans-national level, creating global trusts that underwrite these new commons-based global infrastructures

This is Functional Governance 3.0, a withering of the state that is democratically accountable beyond the nation-state level.

Photo by Nathan Laurell

The post Withering Away of the State 3.0. appeared first on P2P Foundation.

However, this doesn’t mean that we are powerless and in a next installment, we will propose a strategy that is also learning from the innovations of platform capitalism. The following extracts have been sourced from Open Democracy:

Frank Pasquale: As digital firms move to displace more government roles over time, from room-letting to transportation to commerce, citizens will be increasingly subject to corporate, rather than democratic, control.

Economists tend to characterize the scope of regulation as a simple matter of expanding or contracting state power. But a political economy perspective emphasizes that social relations abhor a power vacuum. When state authority contracts, private parties fill the gap. That power can feel just as oppressive, and have effects just as pervasive, as garden variety administrative agency enforcement of civil law. As Robert Lee Hale stated, “There is government whenever one person or group can tell others what they must do and when those others have to obey or suffer a penalty.”

We are familiar with that power in employer-employee relationships, or when a massive firm extracts concessions from suppliers. But what about when a firm presumes to exercise juridical power, not as a party to a conflict, but the authority deciding it? I worry that such scenarios will become all the more common as massive digital platforms exercise more power over our commercial lives.

Focusing on the identity and aspirations of major digital firms. They are no longer market participants. Rather, in their fields, they are market makers, able to exert regulatory control over the terms on which others can sell goods and services. Moreover, they aspire to displace more government roles over time, replacing the logic of territorial sovereignty with functional sovereignty. In functional arenas from room-letting to transportation to commerce, persons will be increasingly subject to corporate, rather than democratic, control.

For example: Who needs city housing regulators when AirBnB can use data-driven methods to effectively regulate room-letting, then house-letting, and eventually urban planning generally? Why not let Amazon have its own jurisdiction or charter city, or establish special judicial procedures for Foxconn? Some vanguardists of functional sovereignty believe online rating systems could replace state occupational licensure—so rather than having government boards credential workers, a platform like LinkedIn could collect star ratings on them.

This shift from territorial to functional sovereignty is creating a new digital political economy.

Forward-thinking legal thinkers are helping us grasp these dynamics. For example, Rory van Loo has described the status of the “corporation as courthouse”—that is, when platforms like Amazon run dispute resolution schemes to settle conflicts between buyers and sellers. Van Loo describes both the efficiency gains that an Amazon settlement process might have over small claims court, and the potential pitfalls for consumers (such as opaque standards for deciding cases). I believe that, on top of such economic considerations, we may want to consider the political economic origins of e-commerce feudalism. For example, as consumer rights shrivel, it’s rational for buyers to turn to Amazon (rather than overwhelmed small claims courts) to press their case. The evisceration of class actions, the rise of arbitration, boilerplate contracts—all these make the judicial system an increasingly vestigial organ in consumer disputes. Individuals rationally turn to online giants for powers to impose order that libertarian legal doctrine stripped from the state. And in so doing, they reinforce the very dynamics that led to the state’s etiolation in the first place.

This weakness has become something of a joke with Amazon’s recent decision to incite a bidding war for its second headquarters. Mayors have abjectly begged Amazon to locate jobs in their jurisdictions. As readers of Richard Thaler’s “The Winner’s Curse” might have predicted, the competitive dynamics have tempted far too many to offer far too much in the way of incentives. As journalist Danny Westneat recently confirmed,

• Chicago has offered to let Amazon pocket $1.32 billion in income taxes paid by its own workers.
• Fresno has a novel plan to give Amazon special authority over how the company’s taxes are spent.
• Boston has offered to set up an “Amazon Task Force” of city employees working on the company’s behalf.

Stonecrest, Georgia even offered to cannibalize itself, to give Bezos the chance to become mayor of a 345 acre annex that would be known as “Amazon, Georgia.

The example of Amazon

Amazon’s rise is instructive. As Lina Khan explains, “the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it.” The “everything store” may seem like just another service in the economy—a virtual mall. But when a firm combines tens of millions of customers with a “marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house…a hardware manufacturer, and a leading host of cloud server space,” as Khan observes, it’s not just another shopping option.

Digital political economy helps us understand how platforms accumulate power. With online platforms, it’s not a simple narrative of “best service wins.” Network effects have been on the cyberlaw (and digital economics) agenda for over twenty years. Amazon’s dominance has exhibited how network effects can be self-reinforcing. The more merchants there are selling on (or to) Amazon, the better shoppers can be assured that they are searching all possible vendors. The more shoppers there are, the more vendors consider Amazon a “must-have” venue. As crowds build on either side of the platform, the middleman becomes ever more indispensable. Oh, sure, a new platform can enter the market—but until it gets access to the 480 million items Amazon sells (often at deep discounts), why should the median consumer defect to it? If I want garbage bags, do I really want to go over to Target.com to re-enter all my credit card details, create a new log-in, read the small print about shipping, and hope that this retailer can negotiate a better deal with Glad? Or do I, ala Sunstein, want a predictive shopping purveyor that intimately knows my past purchase habits, with satisfaction just a click away?

As artificial intelligence improves, the tracking of shopping into the Amazon groove will tend to become ever more rational for both buyers and sellers. Like a path through a forest trod ever clearer of debris, it becomes the natural default. To examine just one of many centripetal forces sucking money, data, and commerce into online behemoths, play out game theoretically how the possibility of online conflict redounds in Amazon’s favor. If you have a problem with a merchant online, do you want to pursue it as a one-off buyer? Or as someone whose reputation has been established over dozens or hundreds of transactions—and someone who can credibly threaten to deny Amazon hundreds or thousands of dollars of revenue each year? The same goes for merchants: The more tribute they can pay to Amazon, the more likely they are to achieve visibility in search results and attention (and perhaps even favor) when disputes come up. What Bruce Schneier said about security is increasingly true of commerce online: You want to be in the good graces of one of the neo-feudal giants who bring order to a lawless realm. Yet few hesitate to think about exactly how the digital lords might use their data advantages against those they ostensibly protect.

Photo by thisisbossi

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