In the meantime, the token economy has exploded, and despite its many faults and weaknesses, it has brought open and contributive accounting to the mainstream as a practice, via programmable tokens that are divided up exactly as the open source communities decide. We have moved from an economy based on capitalist enterprises, which extracted all the surplus value from the developers, to an eco-system in which contributory competency networks, prepare white papers, crowdfund through tokens, and distribute the value much more widely amongst the contributors.

While much remains to be done, this is a major milestone in showing a possible future of or work and reward systems. The two following extracts bring testimonies about how the ‘developer working class’ is looking at these advances.

The question now is, can other sections of workers, those that do not belong to the aristocracy of labor that do software work, also learn and benefit from these new systems, and a second question is, We will be working on these very questions this summer and publish a report about it.

(excerpted from): How App Tokens Changed the Life of the Developer Working Class

Richard Burton: A month of work for the protocol (Ethereum) has completely changed my life. I am free to travel the world and work on whatever I want. It is hard to overstate the mental freedom afforded by having a cash buffer and not having to work all the time to make ends meet. It has had a profound effect on my mental health and freed me up to do the best work of my life. The people who built this protocol took a chance on me and I am incredibly grateful.

Vitalik and his team gave birth to a protocol that over 7,000 people committed to. They effectively held an IPO for their protocol at the start of the project. Since then, thousands more have got involved by trading Ether, writing code, and helping the protocol to flourish.

– “Bitcoin is not just a protocol or money, it’s a new business model for Open Source Software. Prior to Bitcoin, you had to raise money, write software, distribute your product, build a business model, and work towards liquidity. Angels, VCs, salespeople and bankers guided you the entire way, through a maze of tolls and controls.”

Naval Ravikant saw this coming months before the Ether sale. The coins that protocols distribute to contributors are like shares in a company. The key difference is that these shares are not locked up by startup founders and venture capitalists.

There are a thousand nightmarish stories about startup employees not being able to afford to exercise their stock options and missing out on millions of dollars. Alex MacCaw and I wrote about this problem in 2013 after seeing many of our friends go through the stressful process of trying to borrow money to buy the stock they had earnt.

The current stock option system is totally broken. It forces people to stay at companies longer than they want to in the hope that a liquidity event is just around the corner.

App Coins are totally different from stock options. I was paid for my month’s work and I was rewarded for my belief in the protocol at an early stage. There was no cliff, no vesting schedule, no liquidation preferences, no VC ratchets, no exercise window, just coins. I helped the Ethereum team when they had no money and they rewarded me for that.

The moment I decided to move on to a freelance job, I was free to do so. I didn’t have to stick around in the hope that I would make some huge pile of money in the future.

This model is going to completely change the war for talent. If you’re a smart engineer, you can go and join a rocketship startup and work crazy hours. Alternatively, you can head over to Thailand, live cheaply, and work for App Coins.

Protocol creators need your help: They need people to write clear documentation, teachers to help people learn, designers to work on the user interfaces, customer support staff to handle the swelling inboxes, investors to raise capital, and a whole range of other talent to help them build a successful protocol. It doesn’t matter if you don’t write code—you can still contribute.

Protocols will follow the startup power law: millions will be started and only a few hundred will change the world forever.

In the future, billions of people will be working for a protocol. They will define themselves by the protocols they work for and how much they can contribute.

Protocolism might be the solution we need. It harnesses human ingenuity and distributes the benefits far and wide. It can help us build an economy for the 99%.

When a startup succeeds, a handful of people get insanely wealthy. When a protocol succeeds, thousands of people profit. In the future, the great protocols could lift millions of people out of poverty.

(excerpted from): Decentralization as a Means for Developers and other Stakeholders to Take Back Control from Centralized Platforms

Chris Dixon: Let’s look at the problems with centralized platforms. Centralized platforms follow a predictable life cycle. When they start out, they do everything they can to recruit users and 3rd-party complements like developers, businesses, and media organizations. They do this to make their services more valuable, as platforms (by definition) are systems with multi-sided network effects. As platforms move up the adoption S-curve, their power over users and 3rd parties steadily grows.

When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. The easiest way to continue growing lies in extracting data from users and competing with complements over audiences and profits. Historical examples of this are Microsoft vs Netscape, Google vs Yelp, Facebook vs Zynga, and Twitter vs its 3rd-party clients. Operating systems like iOS and Android have behaved better, although still take a healthy 30% tax, reject apps for seemingly arbitrary reasons, and subsume the functionality of 3rd-party apps at will.

For 3rd parties, this transition from cooperation to competition feels like a bait-and-switch. Over time, the best entrepreneurs, developers, and investors have become wary of building on top of centralized platforms. We now have decades of evidence that doing so will end in disappointment. In addition, users give up privacy, control of their data, and become vulnerable to security breaches. These problems with centralized platforms will likely become even more pronounced in the future.

Cryptonetworks are networks built on top of the internet that 1) use consensus mechanisms such as blockchains to maintain and update state, 2) use cryptocurrencies (coins/tokens) to incentivize consensus participants (miners/validators) and other network participants. Some cryptonetworks, such as Ethereum, are general programming platforms that can be used for almost any purpose. Other cryptonetworks are special purpose, for example Bitcoin is intended primarily for storing value, Golem for performing computations, and Filecoin for decentralized file storage.

Early internet protocols were technical specifications created by working groups or non-profit organizations that relied on the alignment of interests in the internet community to gain adoption. This method worked well during the very early stages of the internet but since the early 1990s very few new protocols have gained widespread adoption. Cryptonetworks fix these problems by providing economics incentives to developers, maintainers, and other network participants in the form of tokens. They are also much more technically robust. For example, they are able to keep state and do arbitrary transformations on that state, something past protocols could never do.

Cryptonetworks use multiple mechanisms to ensure that they stay neutral as they grow, preventing the bait-and-switch of centralized platforms. First, the contract between cryptonetworks and their participants is enforced in open source code. Second, they are kept in check through mechanisms for “voice” and “exit.” Participants are given voice through community governance, both “on chain” (via the protocol) and “off chain” (via the social structures around the protocol). Participants can exit either by leaving the network and selling their coins, or in the extreme case by forking the protocol.

In short, cryptonetworks align network participants to work together toward a common goal — the growth of the network and the appreciation of the token. This alignment is one of the main reasons Bitcoin continues to defy skeptics and flourish, even while new cryptonetworks like Ethereum have grown alongside it.

Photo by Marco Verch

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Featuring real world case studies, such as Enspiral (a New Zealand based entrepreneurial coalition of mission-driven entities), Sensorica (a commons-based “Open Value Network” with partial market interfaces) and Backfeed (a blockchain-based prospective infrastructure for encouraging and rewarding peer production), “Value in the Commons Economy” addresses significant questions regarding the evolution of value.

Bauwens and Niaros explore how new value regimes can represent a shift towards post-capitalist practices. What if the commons represents a new economy that is being born within the old? We invite you to learn more about this powerful societal shift documented in this report.

Click image to read “Value in the Commons Economy” by Michel Bauwens and Vasilis Niaros.

Executive Summary

The value crisis

Our common world is faced with significant questions regarding the evolution of value. We consider the following to be among the most important:

• What is value, generally in the context of the allocation of resources in human societies, but more specifically in our ‘digitalized’, ‘networked’ societies where emerging knowledge commons are playing an increasingly vital role?
• What ‘should’ value be in a world marked by ecological and resource constraints presently operating at a global scale?
• In a world of social, cultural and institutional diversity, can a new ‘value system’ incorporate the multiple values that are not recognized by capitalism, such as the care economy and domestic work?

This report does not offer complete answers to these questions, but it looks at how the new commons-based approaches attempt to deal with them.

There is no consensus about what value is nor from where it is derived, neither cross-historically nor amongst analysts and commentators of contemporary capitalism. What individuals and societies are willing to put their attention and energy toward varies amongst cultures, regions, ideological and social groups within a society, and throughout historical times.

An intense debate persists on whether what determines value is located in the objective sphere (reflecting an amount of labor, energy, capital, resources etc.), such as is claimed by the labor value theory. Another approach is questioning whether it is located in the subjective sphere (the marginalist school, Austrian economics and its influence on mainstream neoclassical economics), whether as a simple correlation of individual desires or as a conscious collective decision and social contract.

There are, of course, major differences between these fundamental approaches. However, according to many authors, there seems to exist an increasing consensus that we are going through a ‘value crisis’ and that a new value regime must be invented. This crisis is characterized by an increased capacity to create common value through commons-based peer production and other practices of the collaborative economy. In these open and contributory systems, many contributors co-create value as a commons which can be used by all those that are connected to networks, but the income is generated by a fraction of the contributors connected to the marketplace.

The current value regime rewards ‘extractive’ production and consumption activities. Indeed, issues like the free labour of digital workers and social media users, the non-recognition of care work, and the ongoing ecological degradation of our planet and its resources are interlinked to the dominance of a system based on extractivism. Therefore, the key underlying shift needed is one from extractive models, practices that enrich some at the expense of the others (communities, resources, nature), to generative value models, practices that enrich the communities, resources etc., to which they are applied. This is what we could call the Value Shift.

Rather than discussing what the new value means for capitalism, the authors of this report ask: What does that new value represent for a shift towards post-capitalist practices? What if the commons represents a new economy that is being born within the old? If one adopts this perspective, two main avenues would be open to us.

The first avenue would be to think about ‘reverse co-optation’ of value, from the ‘old’ system to the new. Can the emerging commons-centric economy, which creates value in and through the commons, use capital from the capitalist or state system, and subsume capital to the new logic?

The second avenue goes one step further within the confines of the already existing commons economy: Can broader streams of value be recognized, and become the basis of a new distribution of value that recognizes the commons and its distinct species of value-creation?

One of the observed reactions is that some productive communities and the entrepreneurial coalitions allied with them are experimenting with generative business models, in which the entrepreneurial entities co-create the commons and create livelihoods for the contributors. An open cooperative that follows the first avenue (reverse cooptation) is Enspiral, through its ‘transvestment’ strategy, i.e. the transfer of value from one modality of value creation to another. This is implemented through the use of external investments with capped returns and the insulation of their purpose-driven activities from capitalist extraction. The second avenue (new value distribution strategies) is followed by Sensorica, which internally creates a value-sovereign distribution through its open value accounting system.

The underlying operating concept here is therefore a quest for ‘value sovereignty’. Communities that are already engaged in the value transition are operating within a dominant capitalist market economy. Thus, they must protect their value sovereignty through membranes that safeguard them from capture by extractive forces, and create reciprocity mechanisms to protect their networks. Finally, they must work at the eco-systemic level, i.e. create connections between value-sovereign meta-networks.

Case Studies

This report explores the open and contributory value practices of three pioneering peer production communities, namely Enspiral, Sensorica and Backfeed. The focus is on their value practices, i.e. how to maintain autonomy, how to create value sovereignty beyond the pressures of the capitalist market, how to generate value flows from the old economy to the new, advances and changes in their accounting practices, etc.

Enspiral is an entrepreneurial coalition of mostly mission-driven entities. These entities provide a wide range of services, including custom development of websites and applications, project management and creative services, all specialized for projects that aim to create social value. Enspiral’s infrastructure is managed by a cooperative Foundation that has a strong open source ethos in the documentation of its practices, along with a participatory design orientation to its structures. More specific, Enspiral calls itself an ‘open cooperative’ because of its commitment to both the production of commons, and an orientation towards the common good.

In the context of our description of a value shift, Enspiral is clearly pioneering a new ‘ethical’ value regime but also finding innovative solutions for what has previously been called ‘transvestment’. The Enspiral culture is coalesced around creating value for the society rather than for shareholders. It is statutorily oriented towards the common good and is pro-actively developing the conditions to serve this purpose. One of its core elements that illustrate this approach on value is ‘capped returns’. The general idea is that the total returns that investors may receive on the equity of a business are capped. For this, the shares issued by a company would be coupled by a matching call option which would require the repurchase of the shares at an agreed upon price. Once all shares have been repurchased by the company, it will be free to re-invest all future profits to its social mission. Through this mechanism, external and potentially extractive capital is ‘subsumed’ and disciplined to become ‘cooperative capital’.

Sensorica is an open collaborative network committed to the design and deployment of sensors and sense-making systems, utilizing open source software and hardware solutions. It is partially a commons-based community and partially a market-oriented entity. On one hand, individuals and organizations mutualize resources to initiate projects, driven primarily by intrinsic motivations. On the other hand, the innovative solutions developed in Sensorica can be exchanged in the market to generate income. In other words, it is experimenting with new ways of interaction between commons and market forms. To directly connect an open contributory system to potential income from the market and other sources, Sensorica has pioneered a complex form of a ‘value accounting system’. This system constitutes a reward mechanism that records and evaluates every member’s input and fairly redistributes revenues in proportion to each contribution to the related projects.

In our interpretation of their value practices, they differ in one essential aspect from the Enspiral model. In Enspiral, there is no direct linkage between the open and free contributions to their common resource base, and the creation of a livelihood through membership in their entrepreneurial entities. There is a ‘wall’ between the commons and the market. In the case of Sensorica, however, they have created independent entrepreneurial entities that have the sole right to commercialize their products and services. The income is directly linked to the priori commons contributions as measured through the open value accounting system.

Unlike our two previous examples, Backfeed is not a really operating peer production community, but its innovative and integrated design features warrants a special discussion. Backfeed is a system based on the use of the blockchain ledger, which imagines itself as a full infrastructure for decentralized production, which comes with sophisticated capabilities to develop incentives and express them through crypto-currencies. By doing this, they address the capacity to more easily create ‘value sovereign’ communities, and make technical tools available for their management of value. If Enspiral has a full wall between the market and the commons, which Sensorica aims to bridge through its open value accounting system, then Backfeed is even more directed towards the market polarity, by an intensive use of ‘incentives’ for the commons-based production.

Whether that is a desirable option is a fundamental question, as commons-based production is said to be based on ‘intrinsic’ motivation, and there is a potential danger that ‘extrinsic’ market-based incentives may ‘crowd out’ commons-based motivations. But with these reservations in mind, Backfeed remains an innovative way to think through the future of commons-based production with much more emphasis on extrinsic incentives and crypto-currency based monetization. Politically, the polarity represented by Enspiral follows a strong commons-based, common good oriented, and community centric approach, while Backfeed’s vision is based much more on the aggregation of individuals, who contractually align with each other, and with more stress on the exchange mechanisms. At this stage of non-implementation, the Backfeed protocol and design should be read as a possible future scenario for value exchange.

Policy Recommendations and Conclusions

The third section of the report explores some policy recommendations related to the aforementioned approaches, and how they could affect society as a whole, and the furtherance of commons-based peer production models. The report summarizes a set of proposals that deal respectively with an ‘economic’ and ‘political’ infrastructure for the new commons-based value regime.

Regarding the economic infrastructure, two aspects of suggested practice and policy are discussed. The first one is related to the protection of the ‘internal value regime’ that is distinct from the external one. This is what we call the practices that insure ‘value sovereignty’. The second aspect concerns the measures against external extractive and rent-seeking activities of profit-maximizing entities towards the commons, but also the positive capacity of reverse cooptation of the means available in the dominant external system.

The policy recommendations related to the political infrastructure aim at building a counter-power at the urban, regional and global level. To this end, a number of proposals is introduced which focus on the creation of the appropriate institutions to support commoners and commons-oriented enterprises on both the local and global level.

Our proposals describe the requirements for a new mode of exchange and production that integrates the requirement of shared knowledge and mutualization of physical infrastructures, fair distribution of value, and compatibility with the ecosystems on which we depend.

To conclude, we believe that a strategy for a multi-modal commons-centric transition offers a positive way out of the current crisis, and a way to respond to the new cultural and political demands of the commons-influenced generations. The commoners are already here and so are the commons, and the prefigurative forms of a new value regime. The time has come for an integrated strategy that both strengthens their economic networks, and the emergence of a new value regime.

“Value in the Commons Economy” was co-published by Heinrich Böll Foundation and the P2P Foundation

Lead image by Aotoro

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