Dmytri Kleiner

Thus, like capitalists, voluntary producers, come to market twice. Fist time as buyers, the second time for the lulz. However, unlike capitalists their circuit is not completed, because the lulz do not enable them to be buyers again, do not allow for them to acquire the inputs they need to repeat such production.

Neither free software, nor crowd funding will save us from capitalism. We can’t overthrow capitalism by undertaking work merely for the Lulz, we need to create new value circuits that allow is to build new means of survival for the planet, and only then can we do away with capitalism. In the stages of capitalist production, the Capitalist comes to market twice. The first time as a buyer, the second time as a seller. Marx described this as M – C – M’ In the first stage the capitalist buys commodities and labour time. In the second stage, the purchased commodities and labour time are put into production. The result is a commodity of more value than that of the elements entering into its production. In the third stage, the capitalist returns to the market as a seller; the new commodities are turned into more money. As the capitalist winds up with more money as a result of the productive process, the capitalist can purchase more labour time and commodities and repeat the process again, and again. Investing in production allows the capitalist to reproduce, increase and accumulate capital. This reproduction cycle is what makes capitalism a thriving, dynamic system, that expands. This very process of capitalist production has many negatives, many of which extend from the inherent exploitation involved in making labour time into a commodity, many others from the practice of allocating productive assets in the interests of profit, instead of social good, still more from the dispossesion and enclosure required to create the social conditions for capitalist production. Yet, capitalism sustains us. Despite it’s social costs, its factories and institutions provide the means of survival that the world depends on, even while it’s contradictions jeopardize our survival. In order to transcend capitalism, we need to find ways to provision the means of survival differently. “Ending” Capitalism, before alternative productive strategies for survival are not only conceived, but actually existing on sufficient scale, would more likely lead to collapse and a new dark ages than it would a fairer and more sustainable society. In order for any such alternative productive strategies to grow to a scale in which they could be a viable alternative to capitalism, they must, like capitalism be thriving, dynamic systems capable of growth. They need to be able to reproduce their productive inputs. Economic alternatives need to have sustainable value circuits to be truly viable. Free Software as well as the goods financed by Kickstarter and similar sites seem like production, after all stuff is produced. One can use free software, just like one can consume a movie, book, album or novelty gadget funded by Kickstarter. Yet, the way the creation of these goods is financed can not reproduce its inputs. In the creation of free software and in the funding of Kickstarter projects, money to sustain the inputs comes from donation, either actual donation of money in the case of crowd funding, or in-kind in the form of free labour in the case of some free software. These donations and in-kind contributions are done voluntarily. Yet such voluntarist production is different from capitalist production.

M – C – LOL

Thus, like capitalists, voluntary producers, come to market twice. Fist time as buyers, the second time for the lulz. However, unlike capitalists their circuit is not completed, because the lulz do not enable them to be buyers again, do not allow for them to acquire the inputs they need to repeat such production. Yes, in the case of Free Software, major corporations do provide funding, lots of it. This is when the Capitalist is coming to market as a buyer, not a seller. Thus it is capitalist consumption, they don’t need to make a profit from Free Software directly, they use it in their production process and make money when they return to the market with the resulting product, which is distributed for more money, not lulz. The source of this money is not a new mode of production, but capitalism. It’s simply part of the investment capital must make in its means of production, it is consumption not production. And yes, recipients of Kickstarter financing can use such financing to make money, but such income does not flow back to those that donated the funds in the first place. The donors, for the most part, need to go back to work to get another paycheck before donating again. Thus the money comes from their Capitalist employers and is spent out of their “disposable income,” in other words, once again it is consumption, not production. Both free software and crowd funding are simply novel forms of distribution within the capitalist mode of production, and therefor not a new mode of production that could potentially disrupt capitalism. In order to transform these practices into genuinely revolutionary forms, we must collectively own the means of production so created, so not only must the software be free, but we must collectively own the wealth that results form using the software in production. We must collectively own the products produced by crowd funding, so that we can use the wealth created to reproduce the cycle, again, and again. So long as our free labour earns only lulz in return, Capitalism has the last laugh.  

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“If Oculus turned into a billion-dollar company on their own by selling hardware, publishing software, and forging strategic alliances with other companies, I don’t think I would have given my Kickstarter money a second thought. But that’s not what happened to Oculus. Instead, the money given by me and my fellow Kickstarter backers served as bait for venture capitalists, who invested three rounds of $29 million and $85 million apiece, leading to an eventual sale to Facebook for $2 billion. “

There is a standing presumption when one backs a Kickstarter project: you may lose your money. But there’s a new—or at least now proven—angle to consider, in light of Facebook’s acquisition of the virtual reality company Oculus: people may use your money to make a lot more money without ever properly starting a successful company in the first place.

I have a lot of emotion tied up in Oculus, I’ll admit. As one of the first 9,500 backers of the original Kickstarter—not to mention the backer of the very first successful Kickstarter ever—I put up $300 of my own money to have access to one of the first development kits. I don’t feel ripped off by that transaction, in and of itself. I’ve written publicly in various outlets about my ardor for the Rift and virtual reality. And I remain convinced that VR is going to be a huge new format for media and interactivity in general.

If anything, I am frustrated with a narrative, not the mechanism of a Kickstarter campaign. It’s implicit when you back a product-based project that they will turn into a profitable company, if their idea and execution are solid. If Oculus turned into a billion-dollar company on their own by selling hardware, publishing software, and forging strategic alliances with other companies, I don’t think I would have given my Kickstarter money a second thought.

But that’s not what happened to Oculus. Instead, the money given by me and my fellow Kickstarter backers served as bait for venture capitalists, who invested three rounds of $29 million and $85 million apiece, leading to an eventual sale to Facebook for $2 billion. It’s safe to presume that the VC involvement accelerated a sale to Facebook; surely Oculus could have gotten a product to market for $100 million, but no sane VC is going to turn down a 20x return on their investment.

The fact that everyone involved made a rational choice to sell out isn’t what I find frustrating, I don’t think. (I don’t even particularly care that Oculus sold to Facebook and not, say, Microsoft. Ultimately a sale is a sale, even if Facebook is the worst possible partner for Oculus of any of the large technology companies.) It’s that I, as a consumer, bought into the narrative that underpins almost every Kickstarter project: that without my contribution, something novel would not exist. And while that remains true—and is a reason that Kickstarter’s owners continue to underline that their goal is to fund “creators” and not “products”—Oculus’ sale to Facebook also highlights the disparity inherent in the current capitalist and investment structure, where small investors are excluded from returns by regulation, but investors with more capital can quickly extract more capital by pushing a quick expansion into untapped markets, even without proving that those markets actually, truly exist.

I mean, I don’t even get to claim my contribution to Oculus on my taxes as a charitable deduction.

At a certain practical layer, caveat emptor still applies. I spent my $300 with no promise of equity in Oculus, only the (not legally binding) promise that I’d get a development kit with which to screw around. Even if they turned my $300 into what was eventually a roughly $250,000 return (by my quick estimation*) they still delivered what they initially promised, which was a fully functional dev kit. (Pity those who donated cash at levels that returned no reward but a “Thanks!” Many backers on Kickstarter are not pleased, to say the least.)

But I still feel as if circumstance removed me from an opportunity to turn my speculative belief in the future of VR and Oculus’s role in it into real money. Their story—a genuine garage hacker does what billion-dollar companies would not—didn’t imply its eventual end: that the barefoot, teenage founder would sell his startup to a giant technology corporation before they sold a single retail product. No injury, perhaps, but plenty of insult.

Until the regulations change to allow venture investments of any amount—something Title III of the JOBS Act, when implemented, will put into place; opposed to the current system, which limits equity-based crowd funding to “Accredited Investors,” or people who make over $200k a year—I won’t be backing any more Kickstarter or crowd-funded projects. It’s not that the risk is too great; it’s that the potential reward is too little.

* People more intelligent than me, from the European equity-based crowd funding company Seedrs, calculated something more like $20,000 on a $300 investment after dilution from the VC rounds.

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