Republished from JOPP, Issue #10: Peer Production and Work

Arwid Lund: This article examines the relation between peer production and capitalism on a systemic and theoretical level. One problem with understanding peer production as an alternative and potentially competing mode of production in relation to capitalism is that the main bulk of economic theory deals only with capitalism. Alternative economic theories from an emerging theoretical P2P movement have done important pioneer work on commons-based peer production, and in discussing its sustainability as a mode of production both on a systemic and individual level (for the peer producers) within capitalism. This article argues that the disadvantages of the P2P movement’s theoretical framework, compared to a Marxist one, have their roots in an evolutionist motif, and the article aims to situate peer production more clearly in relation to the workings of capital, and in relation to a Marxist understanding of the potential for political agencies and counter-powers to emerge from capital’s outside.

Photo by Mantissa.ca

The post A Critical Political Economic Framework for Peer Production’s Relation to Capitalism appeared first on P2P Foundation.

The disappointments of the online economy – for instance, user surveillance and systemic labor abuses – stem at least in part from its failures to meaningfully share ownership and governance with relevant stakeholders. Under the banner of ‘platform cooperativism’, an emerging network of cooperative developers, entrepreneurs, labor organizers and scholars is developing an economic ecosystem that seeks to align the ownership and governance of enterprises with the people whose lives are most affected by them. This represents a radical critique of the existing online economy, but it’s also a field of experimentation for alternative forms of ownership design. This essay presents and analyzes some of the ways platform cooperativism has begun to generate ownership designs that could serve the platform economy of the future differently than the investor-owned structures that currently prevail.

Acknowledgments
This essay stems from an ongoing collaboration with Trebor Scholz, and while he is innocent of my oversights, I am indebted to his insights. The following has also benefited from the input and feedback of Devin Balkind, Josef Davies-Coates, Enric Duran, Daniel Hu, Brent Hueth, Tim Kuhn and Keith Taylor, in part through an open review process at https://ioo.coop.

On March 18, 2016, at a press conference with US Secretary of Labor Thomas E. Perez on his right and a platform user named Ty Lane on his left, Managed by Q CEO Dan Teran announced, ‘Over the next five years, Managed by Q will give 5 percent of the company to the operators working in the field’.¹ On the backdrop behind them, Managed by Q’s logo – a futuristic, sans-serif grey Q repeated over a black background, much like Uber’s U – evoked the company’s status as one of the many trying to be ‘the Uber for x’ – in this case, the Uber for office-cleaning. But Teran’s announcement represented a departure from Uber’s notorious disavowal of employment responsibility for its drivers, whom it seems impatient to supplant with self-driving cars. In addition to full-time jobs and benefits, Managed by Q was welcoming the platform’s worker-users as genuine co-owners.

Co-ownership has mostly been missing in the implicit social contracts of online platforms – the Internet-enabled, multi-sided markets that employ networked forms of connection and transaction to transform industries, workplaces and livelihoods (Parker et al., 2016). The principal owners of platforms, along with founders, have been the investors who inject capital in expectation of generous returns. Technology companies may offer stock options to early employees; users, in contrast, have been treated like external customers. Yet in many cases they don’t pay the company any money while contributing essential content (e.g., virtually everything one encounters on platforms like Facebook or Reddit), even entrusting to the platform their personal data and their livelihoods. Platforms train users to think of themselves as participants in ‘peer production’ (Benkler, 2007) and a ‘sharing economy’ (Schor, 2014). But the online economy’s ownership structures habitually fail to reflect either the platforms’ stated aspirations or their social realities.

Managed by Q’s directors, however, recognized that its office-cleaning ‘operators’ were a class of users that served as the company’s face to the office-owning clients who provided revenue; co-ownership, therefore, seemed like an appropriate way to incentivize operators to take their responsibility seriously. The announcement also made for good press.

Canonical notions of corporate structure and governance, even when they encompass a wide variety of stakeholders, tend to affirm the practice of granting ownership and control to investors, since they bear direct financial risk (Jensen, 2000; Monks and Minow, 2008; Parmar et al., 2010). But when platforms hold near-monopoly status and wield control over urban transportation networks or data about intimate relationships, their risk profile is more complex than a share price. Platforms increasingly act as infrastructure, enabling productive activity among users – from individuals to large organizations. They’re not just a means of production but a means of connection. These webs of dependency, however, have not reached the platforms’ boardrooms. Managed by Q’s experience, together with a growing body of research on cooperative models, suggests that platform builders may be missing out on opportunities shared ownership could present – from retention, loyalty and diversity among their users to untapped potential for financing and public benefit (Albæk and Schultz, 1998; Davidson, 2016; Hueth, 2014; Molk, 2014; Pérotin, 2016).

The platforms now vying for dominance have tended not to maintain high labor standards among user-workers and other contractors, even bending the law in the process (Scholz, 2016b, Slee, 2016). Platform-based workers typically lack the expectation of coverage for illness, injury and retirement. The allure is real, as platforms offer the possibility of independent livelihoods, a departure from the drudgery and discipline of an old-fashioned job. But platform owners enjoy the far more lucrative benefits of having a fluid workforce without a large, fixed payroll. Investor-owners have little to lose and much to gain from sidestepping the conventional responsibilities of employment.

Less visibly, the mismatch between the interests of platform owners and users presents itself in the realm of data. Ubiquitous platforms like Facebook and Google, as well as others that operate more discreetly, gather reams of data about Internet users and offer it as a product. This data supplies a growing surveillance economy based on targeted advertising and pricing, which, intentionally or not, easily bleeds into discrimination of already marginalized populations (Bernasek and Mongan, 2015; Couldry, 2016; Pasquale, 2015). Although a platform like Facebook may insist that users retain ownership of their data, immense and illegible service agreements grant the platform such sweeping rights over that data as to render user ownership close to meaningless. Additionally, the prospect that one’s online activity might affect a credit rating, or find its way into the database of a spy agency, has already dampened the free speech that the Internet once promised.

As the platform economy reorients how industries operate, it should also challenge taken-for-granted corporate ownership models. Cooperative ownership not only shares wealth more equitably among participants, but it also unlocks efficiencies by reducing the costs of transacting and contracting with an enterprise’s essential stakeholders (Bogetoft, 2005; Hansmann, 2000; Hueth, 2014; Molk, 2014; Taylor, 2015). Online platforms have yet to enjoy the value and benefits of this model. The time seems especially ripe to take up the challenge that Marjorie Kelly (2012) has described as ‘ownership design’: What ownership structures are appropriate, competitive and just for an economy orchestrated through platforms? How can corporate structure better align the feedback loops of actual online sociality?

One collective effort to address these questions, and one in which I have been involved, has come to be called ‘platform cooperativism’. As well as a rhetorical insurgency, this initative has opened a space of experimentation in online ownership design, taking inspiration from the legacy and ownership designs of the mostly offline cooperative movement. I will present and analyze here some of the ways platform cooperativism has begun to generate ownership designs that may serve the platform economy of the future differently than have the investor-owned structures that currently prevail.

‘The next sharing economy’

Cooperative economies of some kind have probably existed as long as human economies in general. But in parallel with the rise of industrial capitalism, they have formed a distinct and transnational sector, with shared values and business practices of its own. From local food and housing co-ops to vast co-ops of farmers, retail stores, or electric utilities, this sector generates over $2.2 trillion in turnover worldwide, often in ways that serve needs unmet by investor-owned businesses.² It’s a part of the global economy widely relied upon yet overlooked, a ‘sharing economy’ before Silicon Valley adopted the term.

The prospect of platform cooperativism is at once new and old among the cultures surrounding the Internet. Early software and hardware hackers employed certain cooperative-like practices as they assembled the rudiments of the personal computer and the means of networking them. They shared source code; they developed structures of democratic governance across great distances; they resisted corporate enclosure in the process (Benkler, 2007; Coleman, 2012; Kelty, 2008). Small groups of software developers have formed successful worker-cooperatives.³ Some of tech culture’s innovations deserve to be studied more closely by the offline cooperative movement, as they demonstrate the plausibility of, and some proven techniques for, highly distributed and productive self-management; many co-ops emerging among young people today are organized around tech culture’s flexible, networked forms of connection rather than recreating industrial-era jobs and membership societies. Platform cooperativism, therefore, is not starting from scratch in tech culture.

Still, true cooperative business models have been almost entirely absent from the online economy. One can at least speculate about the reasons why. The disruptive efficacy of the venture-capital financing mechanism has rendered it a go-to blueprint to the exclusion of other approaches. The technological sophistication necessary to build online enterprises has also proved prohibitive for the often-marginalized communities that tend to adopt cooperative strategies. And until recently the Internet could be considered an optional realm of activity; co-ops tend to appear when people have an unmet need, not to furnish a mere accessory or curiosity. But it is becoming harder and harder, around the world, to secure a livelihood without taking part in the online economy. Perhaps this is why, in the past few years, recognizable platform co-ops have begun to appear.

The Spanish collective Las Indias distinguished platforms as one type of cooperative in a 2011 blog post (de Ugarte). In 2012 the Italian federation Legacoop promulgated a manifesto for ‘Cooperative Commons’, stressing the need for cooperative business models to manage the growing stores of data that users feed to online platforms.⁴ Stocksy United, a stock-photo platform owned by its photographers, went online the following year. By 2014, Janelle Orsi, founder of the Sustainable Economies Law Center in Oakland, was calling for ‘the next sharing economy’⁵ – the sharing of cooperative ownership – and was helping to design the bylaws for Loconomics, a gig platform owned by its workers. I began documenting such projects in collaboration with the online newsletter Shareable (Schneider, 2014); meanwhile, drawing on the lessons of his Digital Labor conferences at The New School, Trebor Scholz coined the term ‘platform cooperativism’ as an alternative to the systemic abuses of investor-owned platforms (Scholz, 2014 and 2016a). In consultation with labor organizations and platform workers, Scholz and I co-organized the 2015 Digital Labor conference, ‘Platform Cooperativism: The Internet, Ownership, Democracy’, and co-edited a subsequent book, Ours to Hack and to Own (2017). People around the world trying to develop online platforms through democratic ownership and governance began to coalesce their scattered efforts into a new economic ecosystem.

Since early 2015, along with Devin Balkind of Sarapis and others, I have maintained The Internet of Ownership⁶, the most exhaustive directory to date of the platform co-op ecosystem, and I lean heavily on that experience here. The directory includes not only ‘co-op platforms’ (which adhere to the International Co-operative Alliance’s standards for cooperative identity, detailed below) and various tools and organizations that support them, but also ‘sharing platforms’ (like Managed by Q) that practice shared ownership or governance with platform users, at least in part.

Platform cooperativism can likewise be taken to mean a broad invitation to a fairer online economy through shared ownership and governance; platform co-ops, however, are strictly those platforms that are also bona-fide co-ops by widely agreed-on standards (Sutton et al., 2016). The most recent revision of the principles that the International Co-operative Alliance holds,⁷ adopted in 1995, is as follows:

1. Voluntary and Open Membership
2. Democratic Member Control
3. Member Economic Participation
4. Autonomy and Independence
5. Education, Training and Information
6. Co-operation among Co-operatives
7. Concern for Community

To clarify these, the ICA promulgates the accompanying ‘values’ of self-help, self-responsibility, democracy, equality, equity and solidarity.

Most of the cooperative principles resonate somewhat with the social contracts of the platform economy. ‘Voluntary and open membership’ is a default practice among platforms, which typically enable anyone (with access to requisite technology) to create an account; ‘autonomy and independence’, too, is a value that platform owners often assert while disrupting incumbent industries, even while proclaiming a well-meaning ‘concern for community’. There is much ‘co-operation’ among platform companies as well, such as through API protocols and standards-setting organizations like the World Wide Web Consortium. Practices of ‘education, training and information’ often happen on platforms through much the kind of mutual education – in online forums and in-person meetups – that cooperatives encourage among their members.

The resonance, however, only goes so far. Principles two and three above – democratic governance and ownership, crucially – are almost wholly absent from the platform economy. Online user-experience design often seeks to divert users’ attention from matters of governance and ownership, such as by rendering opaque the processes of revenue generation through apparently ‘free’ services. Consultation with users on changes to features or policies is, at best, superficial.

Democracy itself has taken on a new meaning online. A Web search for ‘democratize internet’ or the like reveals that in tech culture ‘democracy’ has come to signify merely an expansion of access to various tools and resources, rather than the collective governance and joint stakeholdership to which the word, in other contexts, refers. That old kind of democracy is illegible to the Internet’s dominant ownership designs. The contention of platform cooperativism is that the design of platform businesses, and thus of the online economy generally, can and should allow for democracy in the fullest sense. There is no one-size-fits-all solution, and cooperation won’t necessarily produce the appropriate response to every design challenge. But these kinds of designs are worth at least considering far more than they have been in the online economy thus far.

I hope I can be forgiven for leaving the necessary, important task of raising objections about the value and prospects of platform cooperativism to others. I look forward to learning from them. But it has seemed to me a better use of this space to offer a broad sketch of the movement’s progress. I hope, also, that the critiques of this nascent movement might come in the form of challenges rather than repudiations that could cut it at the root. It should be a foregone conclusion, but is too often not, that in a society that claims to be democratic, the advancement of democracy into new spheres of social life should be a question of how, not whether.

Ownership designs

In the following I introduce some of the design patterns (Alexander et al., 1977) that have so far arisen in the experimentation of platform cooperativism and related undertakings. Most of the projects referred to can be found in The Internet of Ownership directory, as well as the ‘showcases’ in Ours to Hack and to Own. I draw from published material on their websites and my conversations with their participants. While nearly all are too early-stage for a thoroughgoing evaluation, the patterns they embody at least trace the outlines of a new palette of options for ownership design in the online economy.

Work: Value creators as value owners

Amazon’s Mechanical Turk platform, which enables posting and carrying out piece-work tasks (tag some images, transcribe a recording, fill out a survey), gets its name from an eighteenth-century curiosity in which a human chess player sat discreetly inside a machine, dazzling the public and contemporary notables alike with its apparently mechanical intelligence. The reference is too apt for comfort; the human beings working on Mechanical Turk appear through the platform almost as if they were just another algorithm. Starting in 2014, these workers mounted a widely publicized email-writing campaign called ‘Dear Jeff Bezos’, alerting the Amazon CEO to the fact that ‘Turkers are not only actual human beings, but people who deserve respect, fair treatment and open communication’.⁸

Workers on Mechanical Turk, for instance, enjoy no minimum wage or ability to rate the behavior of the pseudonymous employers who meanwhile rate theirs. And while this case is egregious, it is not unique. In 2016, as many as 24 percent of US adults reported earning income on platforms (Smith, 2016). The prevailing platform business model is to achieve scale while reducing labor costs and interference in management, automating tasks wherever possible.

Platform cooperativism inclines toward another approach, one in which the people contributing value co-own the platforms and help decide to what ends they operate. The aforementioned Loconomics, for instance, is a platform co-op for short-term gigs in which the workers are co-owners; unlike ‘Turkers’, who rarely receive replies from Amazon when they submit complaints, Loconomics is designed to benefit from worker participation in governance. Its worker-owners invest in the platform through periodic dues. Also in the San Francisco area, the SEIU United Healthcare Workers West union is backing the Nursing and Caregivers Cooperative, through which the nurses collectivize and co-mange the terms under which they deploy their labor on their app, NursesCan. The stock-photo platform Stocksy United, incorporated as a Canadian cooperative, has found that including the photographers as members (alongside staff and founders) is a way of recruiting more talented contributors than might otherwise be possible, and of prioritizing artistic quality over ruthless expansion.

Part of securing fair work-lives on platforms is the development of ‘portable benefits’ that don’t rely on any one employer, but that better suit the promiscuous connectivity of a platform economy. This, too, is a job well suited to co-op models – hearkening back to the cooperative mutuals that gave birth to the modern insurance industry. The Freelancers Union in the United States and SMart in Europe are membership organizations that have delivered benefits to many thousands of independent workers, relying heavily on online tools. This kind of model, often in cooperative forms, is proliferating rapidly (Conaty et al., 2016).

The storied successes of twentieth-century worker cooperativism – such as the Mondragon Corporation in the Basque Country and the Emilia-Romagna region of Italy – sought to secure full-time industrial jobs. But many in the latest generation of co-ops seem designed to free their members from the need for a job altogether. Prime Produce, for instance, is a cooperative co-working space in New York City that prefers the language and ethic of ‘craft’ over ‘work’; the New Zealand-based cooperative network Enspiral aspires to redefine work as ‘stuff that matters’. ‘Open companies’ (such as Gratipay, a crowdfunding platform) or ‘open value networks’ (such as Sensorica, which develops scientific instruments) have sought to rely on no employees at all, but to create products by rewarding the contributions of participants through a distributed platform. In Barcelona and the surrounding region, the Catalan Integral Cooperative draws member-owners in first by facilitating freelance work, and then by enabling them to obtain food, housing and services through internal trade and mutual credit rather than relying on euros. Some of its members have been involved in creating FairCoop, which proposes to do much the same on a global scale by connecting local ‘nodes’ through online tools, including a cryptocurrency called FairCoin (Schneider, 2015b).

Platforms need not regard those who contribute value through them as temporary stand-ins for algorithms. By orienting their business models around such contributors, platforms can provide not only decent livelihoods, but also a means of bypassing dependency on employment relations altogether.

Data: Treat it like it’s someone’s stuff

Much as Mechanical Turk disguises value-contributing workers behind a platform, business models based on so-called ‘big data’ often seek to disguise the fact that they’re capturing value from those contributing it. Facebook, for instance, provides extensive privacy controls by which users can customize what other users see about them – few of which affect, however, what Facebook itself sees, records and claims license to monetize. The economic power and promise of large pools of human data depend on the relinquishment of certain ownership rights by the humans involved, such as through opaque service agreements. These pools, in turn, can become outsourced repositories for government intelligence and law-enforcement agencies.

What would less duplicitous ownership designs for data look like? Commodify.us, for instance, has pioneered a model by which users can download a copy of their data from Facebook, then re-upload it, selecting which license they would like to apply to each data set – allowing them to monetize their data on their own terms. A more developed version of that general idea is TheGoodData, a London-based co-op, which allows users to monetize their browsing data with a browser extension and donate the proceeds to charitable causes. Meanwhile, under the aegis of MIT and the Qatar Computing Research Institute, an ambitious initiative called Solid (‘SOcial Linked Data’) proposes a framework for a new species of social applications based on modular, consensual data-sharing agreements, granting users granular control over what they share.

Given the centrality of trust and ownership in matters of data, particularly highly personal data, cooperative business models may be especially well suited to building data economies that are both transparent and competitive. Starting with highly sensitive medical data, the Swiss platform MIDATA.coop is developing a business model for personal data storage based on cooperative ownership and governance, together with secure open-source software. In the United Kingdom, a research project called OurData.coop is exploring the potential for a widespread system of such data co-ops, through which people could both retain control over and selectively monetize data that they produce.

A further use-case for data co-ops is in practicing the sixth cooperative principle of cooperation among cooperatives. Already, established co-ops like Ringlink Scotland (which supports agricultural business development) facilitate data-sharing among their members. Newer projects, such as the U.S.-based Data Commons Cooperative and CoopData.org, seek to provide platforms for data-sharing among co-ops that can help them find each other and work together. The promise of big data need not depend on ambiguous or misleading ownership arrangements.

Code: Keep the lords’ hands out of the commons

At least since the Charter of the Forest that accompanied the Magna Carta, people who live by and co-manage common resources have found the need to protect them from the acquisitive tendencies of those at the top of the social pyramid (Linebaugh, 2009). In order to protect the code-sharing habits of early hacker culture from the proprietary urges of corporations and universities, Richard Stallman inaugurated the Free Software movement with the GNU Public License in 1989. This and similar ‘copyleft’ licenses were quintessential hacks, turning intellectual-property law against itself by employing an author’s copyright privileges in order to liberate her code into a commons, free for anyone – with the requisite skills, equipment and time – to use, adapt and improve. Legal scholar Lawrence Lessig pioneered the transfer of this same hack to non-software cultural production through the array of Creative Commons licenses (Bollier, 2008). The accomplishments of this movement have been remarkable; copyleft practices have insinuated themselves into the modus operandi of the mainstream tech industry, creating many billions of dollars worth of freely available, world-class software in the process.

The tradition of hacking intellectual-property law, however, has not extended to the challenge of hacking corporate structure and corporate profits; as a result, there has been a disconnect between production, governance and ownership. The terminology of ‘open source’, which emerged about a decade after Stallman’s GPL, advertised collaborative code-sharing as an opportunity for low-cost, crowdsourced corporate innovation. Many of the large open-source projects now operate through foundations guided and funded by corporations that benefit from the community-developed code. Google, for instance, has been able to redeploy the open-source Linux kernel as Android, the world’s most popular mobile operating system, which also happens to be an effective tool for transmitting lucrative user data to the company’s proprietary databases.

The leading online peer-production communities, like Wikipedia and Linux, have also remained troublingly homogeneous, with low rates of participation among women and (at least in the United States) non-white ethnicities. Explanations for this in such communities range from instructive to denialist. But the reality is that those engaged in peer production must either be paid to do so or have surplus leisure time – a surplus that less-privileged populations are less likely to have (Dryden, 2013). By relinquishing ownership of intellectual property to this kind of commons, peer producers may have actually amplified some of the inequalities of the society around them, while allowing corporations to reap the profits. Corporate-led open-source development, too, has cultivated highly sophisticated back-end tools while leaving the features that are user-facing – that is, customer-facing – far less well developed, rendering them unable to compete with commercial counterparts.

Many of platform cooperativism’s early advocates have been advocates, too, of Free Software and the open-source movement. Stallman, as well as Free Software partisan Micky Metts, spoke at the 2015 New School conference. Some insist that platform cooperativism should include a commitment to the exclusive use and production of the GPL and similar licenses. Others in the community have embraced a new generation of intellectual-property hacks specifically attuned to corporate ownership design as well as the intellectual property itself.

Dmytri Kleiner’s Telekommunist Manifesto (2010) outlined a proposal for a ‘Peer Production License’, which adapted the Creative Commons Attribution-NonCommercial-ShareAlike license by adding a clause that permits commercial use by worker-owned enterprises that distribute surpluses solely to the worker-owners. If Linux were licensed in this way, Google couldn’t make use of it but a worker-owned company developing mobile devices could. Lost is the mainstreaming effect of corporate adoption, but the value conjured by peer-producers is not so easily captured by capital. Co-ops gain a competitive advantage. The Peer Production License has been promoted by P2P Foundation founder Michel Bauwens (in Scholz and Schneider, 2016), and the platform co-op Guerrilla Translation has adopted it as a general policy – though it remains marginal and largely untested in practice.

A more restrictive experiment in license innovation is the ‘Co-op Source License’ of the Co-op Source Foundation, a software-development platform co-op.⁹ This license assigns profits from commercialized software to contributors based on “commitment level and peer review.” CoMakery, while not itself a cooperative, is a startup developing a tool for distributing profits in this kind of arrangement with the aid of blockchain technology.

Even without adopting additional restrictions, platform co-ops have sought to develop new strategies for connecting the immense value in the open-software commons with end-users. Snowdrift.coop, for instance, is a cooperative platform designed to provide sustainable financial support for projects that contribute to such commons; platforms like this could incentivize open-source developers to focus more attention on user interfaces that can compete with closed-source alternatives.

Platform cooperativists seek to add a more fair and explicit economic layer to peer-production, prevent corporate value capture and facilitate cooperation among cooperatives. Some of the more restrictive proposals could come at the cost of losing the broad user and contributor base that corporate adoption can offer. Yet each of these experiments represents a plausible innovation in its own right as well as a constructive critique of the Free Software and open-source legacies.

Protocols: No decentralization without representation

Defenders of a free and open Internet also cherish the network’s decentralized design. While working at the RAND Corporation in the 1960s, Paul Baran developed the concept of distributed packet-switching as the basis of a communication system that wouldn’t rely on any single node that could be vulnerable to Soviet attack (Baran, 2002). Despite notable exceptions such as the Domain Name System, this distributed logic pervades the Internet’s protocols. The liberating promise of decentralized networks, in turn, seems to have inclined Internet denizens to seek further liberation through further decentralization. Technologies like peer-to-peer file sharing have allowed users – by relying on no central server – to share copyrighted music and video files without interference from the copyright holders. Platform cooperativism is in a sense a call for decentralization as well, in particular the decentralization of ownership.

The Internet as many people experience it has become remarkably centralized. They gain access through the monopolistic broadband providers that have replaced the small-scale, local ISPs that were common in the days of dial-up (although some regions co-own their broadband through cooperative utilities). Much of their online lives takes place through a small number of monolithic companies such as Facebook and Google – which track browsing habits through cookies, embedded buttons and mobile surveillance. But decentralization is also undergoing a revival, as early Internet architects like Tim Berners-Lee and Brewster Kahle call for re-decentralizing the Web.¹⁰ These initiatives seek to challenge the centralized platforms with a new generation of decentralized protocols. The cryptographic blockchain technology that enabled the Bitcoin digital currency system, meanwhile, makes possible a bewildering array of decentralized possibilities, from a replacement for the Domain Name System (e.g., Namecoin) to ‘distributed autonomous organizations’ made of ‘smart contracts’ (e.g., Ethereum). Advocates revel in the ambition of a ‘trustless’ ‘decentralized society’ that cryptography will allegedly enable (Frank, 2015). And in many respects the promise is real.

Bitcoin, however, has become a cautionary tale. While the underlying cryptography has held up according to spec, the social outcomes are less encouraging. Wealth distribution in the Bitcoin economy is massively stratified – much more so than in the conventional economy – and a small cabal of ‘mining’ pools have come to dominate the creation of new coins and the governance of the system. In effect, Bitcoin has become centralized yet ungovernable.

The urge to decentralize and distribute authority across networks risks neglecting the necessary work of reconstituting that authority in democratic ways. But decentralization and democracy can go hand in hand, too. For some years now, federated social networks like Diaspora, Friendica and GNU Social have implemented features familiar to users of Facebook and Twitter through decentralized networks of independently owned and governed nodes. I am a member of the ‘democratic membership organization’ May First/People Link, which finances, owns and manages a GNU Social node; my data for the network is managed, therefore, by an organization accountable to me, while enabling me to interact freely with the global network. This model, while less lucrative for investors than a centralized social network, is well suited to democratic organizations. Scale occurs through the protocol, not the platform.

The democratic potential of blockchain technologies, also, is considerable – even if it has rarely prevailed in practice. While Ethereum smart contracts could implement a digital autocracy governed by an absolute monarch or an unaccountable robot, they’re just as capable of facilitating highly democratic structures. Some projects have turned to cooperative models to solve problems that vex other blockchain systems; Rchain uses a co-op as a means of scalability, while Moeda turns to credit unions as partners for expanding financial inclusion.

To those who regard decentralization as a liberatory end in itself, platform cooperativism adds the qualification that having a decentralized system doesn’t remove the challenge of governance – it just alters where and how governance takes place. For decentralization to have democratic consequences, it needs democratic design.

Finance: Rent capital, don’t be rented by it

Some assume that cooperatives are incompatible with large-scale financing, that they must forego the growth and innovation that investor ownership enables. A glance at the global cooperative sector, however, belies this. It is true that cooperatives cannot cede the powers of governance and ownership that investors typically expect, but in areas where co-ops have flourished, they have formed quite formidable financial institutions – such as credit unions and cooperative banks – to hold capital and make it available to the sector for growth. José María Arizmendiarrieta, founder of the Mondragon Corporation, insisted that co-ops have a responsibility to capitalize: ‘A cooperativism without the structural ability to attract and assimilate capital at the level of the demands of industrial productivity is a transitory solution, an obsolete formula’ (2013).

Rather than ruling out the possibility of financing, cooperative models require a different kind of ownership design in their financing schemes than businesses that invite investor control. Thus far, however, the online economy has relied on a venture-capital investment model based on granting considerable rights to early investors, followed by an eventual ‘exit’ through either selling the company to another company or trading shares on speculative markets. For platform cooperativism to take hold as a live option for enterprises, other designs are needed.

Loomio is a New Zealand-based worker co-op that produces a popular online decision-making platform. Venture capital was not an option, and the team members considered adopting non-profit status, but found it incompatible with their ambitions for scale. By early 2016, however, they had raised a round of $450,000 from investors who supported their mission and regarded their worker-owned structure as adequate assurance. The investors purchased non-voting, redeemable-preference shares, assuring a return based on the company’s revenue without compromising its cooperative model. While the investment remains a modest one by Silicon Valley standards, it beckons toward more sizable promise.

Cooperatives were, in a sense, the original crowdfunding, allowing communities to self-fund enterprises that served them. And while online crowdfunding has been an effective enabler of new initiatives, it lacks the shared ownership of co-ops. New platforms want to bring that back. Seedbloom is building an blockchain-based equity crowdfunding tool, enabling contributors to become co-owners of the projects they support; it has already helped enable the development of Resonate, a cooperative music-streaming platform owned by fans, musicians, and labels. Open Collective, while not a cooperative, is a crowdfunding tool that enables groups to form online cooperatives and manage their budgets without need for formal incorporation or a bank account. Tools like these can help significantly lower the barriers to co-op formation.

A vibrant platform co-op sector will require a variety of financing mechanisms. Purpose Ventures is an emerging investment firm designed from the start to specialize in ‘self-owned’, ‘purpose driven’ companies that seek sustainable growth, not a rapid exit; as the companies grow, their success enables new companies to join a mutually supporting ecosystem. FairCoop is attempting to create a global cooperative financial system with several concurrent mechanisms, including its own cryptocurrency, a mutual-credit network, a savings service and a variety of mission-driven funds.

A further source for platform co-op investment is the existing offline cooperative sector. While some large, well-capitalized co-ops have begun investing in platforms, they often face a learning curve in doing so. Just as the tech sector has yet to learn what it takes to systematically develop co-ops, the cooperative sector must learn how to apply its financial resources and know-how online. One promising approach may be to forge collaborations between successful tech accelerators and cooperative financial institutions.

What unites these various forms of cooperative-friendly financing is how they reverse the conventional corporate model, in which capital rents workers’ time and seeks to extract profit from customers. In co-ops, online and off, participants find capital when they need it and rent it without relinquishing their business in exchange.

Education: Train owners, not just workers

The promotion of education has been a pillar of cooperative enterprise at least since the Rochdale Society of Equitable Pioneers’ famous store in mid-nineteenth-century England, and it remains a basic principle for the global cooperative movement. Business shapes the people who engage in it as an implicit education; cooperativism seeks to make that education explicit, and to educate members as informed, empowered stewards and owners. Some of the world’s most important co-op networks, including the Mondragon Corporation and the Antigonish movement in Nova Scotia, grew out of schools. It is an irony of Silicon Valley’s history that Leland Stanford, founder of the tech industry’s flagship university, was a passionate advocate of cooperative enterprise and included in his Grant of Endowment a directive ‘to have taught in the University the right and advantages of association and co-operation’; it’s an intention that the university, and the tech industry it helped spawn, has largely ignored (Altenberg, 1990).

In Scholz and Schneider (2016), a chapter by Karen Gregory asks in its title, ‘Can Tech Schools Go Cooperative?’ By ‘tech schools’, she refers to the recent proliferation of unaccredited, often for-profit ‘bootcamps’ that offer intensive curricula designed to produce students ready for well-paying jobs for software companies in a matter of only weeks or months. Gregory proposes, instead, a kind of tech school that sets the bar higher, to ownership: ‘a curriculum that explores the possibilities of new forms of collectivities, organizing and worker agency’. Gregory calls for locating such schools in public universities, for the sake of accessibility for populations currently underrepresented in tech jobs. New programs in cooperative business at public institutions – such as the City University of New York and Laney College, a community college in Oakland, California – are currently in development, but by and large their orientation is toward offline cooperatives.

A model partly along the lines Gregory describes, meanwhile, has emerged through the New Zealand-based cooperative network Enspiral, which is home, among other enterprises, to Loomio. In 2014 members of the network formed Enspiral Dev Academy, a coding school that equips students with marketable skills while also introducing them to the opportunities for co-ownership in Enspiral itself. The academy offers scholarships and priority for applicants from underrepresented populations (as some more conventional tech schools do as well). Likewise outside the sphere of public education, the educational arms of cooperatives like Mondragon Corporation and Co-operatives UK offer distance-learning programs that could prefigure platform co-op models for massive open online courses (MOOCs) and the like.

Whether in public or private forms, education will be an essential component of a platform co-op sector. Some of the most important education likely takes place through the platforms themselves, in the ways by which a platform presents itself to members as a medium of co-ownership and elicits from them responsible decision-making and stewardship.

Governance: Kumbaya won’t do

In co-ops and investor-owned companies alike, shared governance can turn into a caricature. Those with limited experience in the cooperative sector might assume that just because an enterprise is, say, legally owned by its workers, cumbersome consensus-based processes must be the norm. And in companies where the workers are not owners, managers might try similarly cumbersome performances to instill a fictional ‘sense of ownership’ intended to encourage more productive behaviors. Platform cooperativism has challenged both versions of superficial communalism by seeking to align appropriate ownership and governance structures rather than hiding one behind the other.

The task of efficiently balancing the stakeholdership relationships of the platform economy is far from straightforward. Traditional lines that distinguish worker-owned, consumer-owned, or producer-owned co-ops tend to blur in a platform economy where much of a platform’s value comes from the contributions and resources of people who are not the company’s employees. Many emerging platform co-ops have opted for multi-stakeholder models that encompass various classes of co-owners, such as employees, users and customers. The FairShares model, for instance, is a recent effort to facilitate and codify a multi-stakeholder structure. Platform co-ops like Loconomics, Resonate and Stocksy United use multi-stakeholder structures for both ownership and governance.

There are lessons to be drawn from the distributed governance models of foregoing tech culture. Open-source software communities have developed sophisticated governance practices, ranging from the formality of the Debian Constitution, which manages a popular version of Linux, to the free-for-all of an IRC channel. These hackers’ commitment to transparency, also, can offer correctives to a cooperative movement that has too often been opaque, even to its members. Holacracy and sociocracy are governance structures that conventional companies have used to distribute authority and empower employees; they’re even better suited to cooperative models in which that empowerment extends to ownership of the company itself.

Experiments that have emerged from civic and political innovation have proved useful for economic democracy, too. Loomio – which translated the decision making processes of Wellington, New Zealand’s 2011 Occupy encampment into a platform – serves as a primary governance tool for Enspiral and other co-ops worldwide, along with schools, government programs and businesses. The ‘liquid democracy’ model pioneered among alternative political parties in Europe and South America could be well-suited for large-scale platform co-ops.

There is potential for governance, also, in the now-reflexive daily practices of online platforms – Facebook ‘likes’, Reddit ‘upvotes’ and so forth. These features of user experience could become the rudiments of meaningful shared governance. If this were the case, we might see a reduction in the often careless behavior found on social media. Could the Reddit uprising of 2015, which ousted a CEO, have proceeded more constructively if Reddit users had levers for self-governance besides conspiring to shut down the platform?

Not every wheel of governance must be reinvented. For all the radical governance models on offer, platform co-ops need not necessarily reject every practice that conventional platform companies already employ – while retaining the significant difference that the managers are ultimately accountable not to outside investors but to the platforms’ actual participants, as well as to the communities in which participants live.

Policy: Local value for local benefit and control

Confronting the platform economy’s onrush of disruptions, policymakers have found themselves in the position of trying to say ‘no’, in various and sometimes futile ways, as they attempt to retain appropriate control over their economic infrastructures. Ride-sharing platforms destabilize structures for taxi regulation, and room-renting platforms unsettle tourism policies. Both bypass established compromises in labor relations. Industries that were once more or less locally governed and owned are now orchestrated from the platforms’ headquarters far away – and those platforms’ investors insist on taking a sizable cut. Platform cooperativism gestures toward a new set of options to consider, toward something policymakers can say ‘yes’ to.

Co-ops have long represented this kind of constructive alternative, and in many parts of the world their flourishing has been made possible through proactive policy. In the United States, for instance, the Department of Agriculture provided grants and loans for the creation of electric utility co-ops in rural areas that investor-owned companies opted not to electrify, starting in the 1930s; today, federal agencies have begun helping some of those same co-ops offer user-owned broadband service. Co-ops are a tool not only for meeting needs that capital markets fail to meet, but for doing so justly, in a way that keeps wealth among the constituencies that create it. To this effect, Michel Bauwens and others have theorized the ‘partner state’ as a framework for governments that enable, but do not control or direct, the flourishing of cooperative and commons-oriented enterprise (Kostakis and Bauwens, 2014). The city of Barcelona has taken early steps to enshrine platform cooperativism into its economic strategies. And in August 2016, UK Labour Party leader Jeremy Corbyn issued a ‘Digital Democracy Manifesto’ that included ‘platform cooperatives’ among its eight planks.

In her statement for the 2015 Platform Cooperativism conference,¹¹ New York City Council member Maria del Carmen Arroyo wrote, ‘Worker cooperatives offer a viable method to address the long-term challenge of reducing the number of chronically unemployed and underemployed residents and the number of workers trapped in low-paying jobs’. To this end, she had already supported legislation to fund worker-cooperative development in the city, as well as steps toward preferential treatment for co-ops in city infrastructure contracting. She added that platform cooperativism ‘can put the public in greater control of the Internet, which can often feel like an abyss we are powerless over’. Another City Council member, Ben Kallos, made a last-minute appearance at the conference to announce his proposal for a ‘Universal E-Hail App’ with an open protocol that would level the competition between taxis and ride-sharing drivers.

Taking the example of the accommodations-rental platform Airbnb, Janelle Orsi has proposed three kinds of cooperative alternatives, outlining a distinct role for government in the ownership design of each (Schneider, 2015a). What she calls ‘Co-bnb’ would be a co-op owned by the renters of rooms in a given area; ‘Munibnb’ would be owned and operated by cities as a public good, enabling them to set controls and caps on short-term rentals; similarly city-managed, ‘Allbnb’ would add the principle of redirecting the profits from the platform back to residents as dividends, recognizing the fact that, when visitors come, their hosts are all the city’s residents, not just those from whom they rent a room.

Such municipal ownership models have been pioneered by so-called ‘sharing cities’ such as Seoul, South Korea, which has restricted certain platforms while promoting the development of local alternatives. Municipal ownership is not strictly cooperative – it violates the cooperative principle of ‘autonomy and independence’, among others – but this approach recognizes that, as stewards of common infrastructure, governments are essential stakeholders in the platform economies that rely on such infrastructure to operate.

When a business serves the role of organizing and enabling the transactions throughout an entire sector of the economy, it has historically been regarded as either a monopoly or a public utility. Just as the monopolies of connective railroads inspired the U.S. antitrust laws of a century ago, a recognition is growing that new strategies of enforcement, and perhaps new laws, are needed to regulate the emerging online super-platforms (Khan, 2016). Enabling transitions to more democratic ownership designs may be a way to help these platforms better self-regulate, rather than inviting more stifling regulatory regimes.

Designing for the future

Cooperatives have often formed from a posture of reaction, of meeting unmet and essential needs, rather than anticipating desires or advertising them into existence. The growing movement for platform cooperativism, too, has tended toward imagining co-op versions of existing models, rather than wholesale innovations. While conservatism can be a strength and a source of stability, it will also be a liability in an evolving online economy of capital-rich enterprises competing for winner-take-all market share. Leading offline cooperatives have made a point of investing in innovation, and platform co-ops will need to do so all the more. To this end, Trebor Scholz has formed the Platform Cooperativism Consortium at The New School to orchestrate research and funding specifically for this emerging sector. The Internet of Ownership maintains a library of legal templates and bylaws. And research initiatives like the EU’s P2Pvalue project are starting to incorporate platform cooperativism into their work as well. Such efforts face plentiful challenges.

Among the most visible platform co-ops in development, for instance, are cooperative taxi companies vying to compete with the likes of Uber. Companies like Green Taxi Cooperative in Denver, Alpha Taxis in Paris and ATX Coop Taxi in Austin are betting that they can provide better service with drivers fully committed to their work through various degrees of equity sharing, combined with their own app-based hailing technology. In the short term this strategy may have promise. However, Uber’s longer-term outlook appears to be premised on an eventual transition to self-driving cars – and an economy in which human driver-owners could turn into a cumbersome liability.

The question at hand, really: How do we cooperativize robots? It’s a challenge for domains well beyond transportation. The ‘internet of things’ – the growing industry of automated, networked gadgets, from watches to home temperature controls – poses problems of trust and surveillance that cooperative ownership could be especially well suited for, but only if they move into that new market quickly enough. Platform co-op researchers need to investigate more deliberately what potential innovations and business models investor-owned companies aren’t seeing because of the limitations of their own ownership structures.

Matters of intellectual property ownership take on fresh urgency as people invite artificial intelligence more fully into their lives through systems like Amazon’s Alexa. Silicon Valley titans Elon Musk and Sam Altman, among others, have formed an organization called OpenAI to develop open-source artificial intelligence technoloegy, but, as with open-source software generally, this does not prevent value from flowing mainly to corporate investors. Peter Barnes (2006), on the other hand, has suggested that those who monetize our information commons could pay fees that would be redistributed equally to the population in the form of a universal dividend. And a team of computer scientists has proposed a preliminary model for artificial intelligence owned by the people whose data-labor trains it (Sriraman et al., 2017). The nature of democratic ownership design for a more automated future is by no means obvious, but investor control need not be a foregone conclusion.

Finally, an honest platform cooperativism should extend its gaze beyond the platform economy itself to its material substrates – in particular, the human conditions surrounding the mineral extraction and assembly of the hardware on which platforms depend. This has been neglected territory for the emerging platform co-op ecosystem, which has remained software-oriented. But there are some promising points of departure to consider. Fairphone is a Dutch smartphone, available in Britain through The Phone Co-op; it is designed with an ethical supply chain in mind, including decent working conditions and conflict-free minerals. The Indonesian co-op KDIM is building its own locally produced smartphone. In China, Huawei, the world’s largest telecommunications hardware manufacturer, is significantly employee-owned – though it is neither a formal co-op nor a model for worker rights. Perhaps platform co-ops, by building other co-ops into their supply chains, can help set high standards for sourcing and labor. Further research is needed, however, to develop more democratic ownership designs for the hardware, natural resources and human labor on which any future platform economy will depend.

Ownership transitions

What would it take to have an economy in which a can-do entrepreneur with an idea for a platform – the kind of person who wants nothing more than to create something new and excellent and receive some fair compensation for succeeding – will conclude that her best way to proceed is by practicing democracy? The answer, of course, is that it would take a lot of things at once. Ownership design is best considered a process of open-ended choices, based on patterns that we test and apply iteratively. Integral to the designs themselves, therefore, are the processes for instantiating them.

There are two basic kinds of co-op development: startups and conversions. Startups that begin as co-ops from their inception have the chance to hard-wire cooperative values into their structures and cultures; they typically rely on the widespread recognition of an unmet need. Conversion, meanwhile, involves transitioning an existing enterprise to democratic ownership and governance, combining a proven business model and its existing momentum with a structure better aligned to serve the people who rely on it.

Startups might come in several forms. Some will be bootstrapped – drawing on existing communities of users to finance and populate a platform that meets their needs, perhaps through equity crowdfunding. Along these lines, venture capitalist Brad Burnham of Union Square Ventures envisions a new generation of less risky ‘skinny platforms’ that deliver lower returns to investors and higher returns to labor. He told Shareable in 2015, ‘We can generate a return participating in that, and we think that’s what we should be doing’ (Geraci, 2015). Other kinds of startups, meanwhile, might spin off from existing cooperatives, online or off, perhaps connected by a federation or other forms of ongoing cooperation. For instance, the German cooperative marketplace platform Fairmondo is spreading to the UK through the aid of two existing cooperatives – Fairmondo itself and Worth Cooperating in the UK – with the intention of creating a freestanding multi-stakeholder co-op. Rather than growing as a multinational company, they’re replicating and sharing a common pool of open-source software.

Conversions, too, can come in various forms. One is a mature-stage transition. Especially when a product is unproven or lacks a ready community of users, a cooperative structure may not be the appropriate ownership design early on; it makes sense, then, that forward-thinking founders and investors should hold the risk, as well as the opportunity for reward. Once a community of users forms, however, the nature of the business changes, and cooperative ownership models become more appropriate – such as to govern labor policies or the use of personal data. A loyal and active community can provide founders with a fair return for their early innovation and investment; shared ownership, meanwhile, can help keep that community loyal and active and interested in their platform’s success. Another kind of conversion – more speculative and challenging, to be sure – could take place once a platform has achieved the sort of ubiquity that makes it, in essence, a monopoly-utility. For instance, as former Harvard Library director Robert Darnton contends (2009 and elsewhere), Google Books has created a unique and essential information commons by scanning and making available documents that may never be scanned again; a company whose chief responsibility is shareholder profit, however, does not seem to be the appropriate steward for an archive of such immesurable value. Similar concerns in the platform co-op networks have spurred a ‘BuyTwitter’ campaign, which calls on the company to convert to some form of user ownership. A new generation of antitrust policy might finance and aid transfers of platform ownership to the users who depend on them. Cooperative models are both proven and adaptive enough to merit consideration as we design and adopt – so far with too little foresight – the platform utilities of the twenty-first-century economy.

The extent of platform cooperativism at present remains limited to a rallying cry, a few success stories, and a cluster of far-flung, early-stage experiments. Merely saying that it should take hold more widely, as we advocates have attempted to do, is not enough to overcome the formidable barriers of financing, market access, public education and competition that this kind of model faces. Even a brief glance at the existing, offline cooperative economy – the credit unions, the electric utility co-ops, the farmers’ marketing and supply firms – makes clear that a more cooperative online economy would not guarantee utopian outcomes. But the achievements of past co-op sectors do at least suggest that such models are capable of scaling to reach and shape significant portions of economic life. When they do so, they furnish more resilient, institutionally diverse societies, impacting the behavior of non-cooperative enterprises as well as the lives of their members.

Insofar as platform cooperativism has been a scholarly project, it introduces questions that have been too often neglected in research on internet cultures and economies. How are platforms owned and governed, and how could they be owned and governed differently? How does their ownership shape the platforms’ structures of accountability? How do ownership models organize and limit the kinds of technologies available to people?

Thankfully, this has not been merely a scholarly project, but a participatory one. The emerging experiments have not merely followed the path called for or imagined by theory. That dynamism only reinforces the supposition, however, that when we reorient systems of ownership and governance toward democracy, transformative things can occur.

References

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Photo by Photographing Travis

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Since Bitcoin appeared in 2009, the digital currency has been hailed as an Internet marvel and decried as the preferred transaction vehicle for all manner of criminals. It has left nearly everyone without a computer science degree confused: Just how do you “mine” money from ones and zeros?

Don’t miss this forthcoming book, co-authored by P2P Foundation affiliate Primavera De Filippi. The following is taken from the publisher’s page:

Since Bitcoin appeared in 2009, the digital currency has been hailed as an Internet marvel and decried as the preferred transaction vehicle for all manner of criminals. It has left nearly everyone without a computer science degree confused: Just how do you “mine” money from ones and zeros?

The answer lies in a technology called blockchain, which can be used for much more than Bitcoin. A general-purpose tool for creating secure, decentralized, peer-to-peer applications, blockchain technology has been compared to the Internet itself in both form and impact. Some have said this tool may change society as we know it. Blockchains are being used to create autonomous computer programs known as “smart contracts,” to expedite payments, to create financial instruments, to organize the exchange of data and information, and to facilitate interactions between humans and machines. The technology could affect governance itself, by supporting new organizational structures that promote more democratic and participatory decision making.

Primavera De Filippi and Aaron Wright acknowledge this potential and urge the law to catch up. That is because disintermediation—a blockchain’s greatest asset—subverts critical regulation. By cutting out middlemen, such as large online operators and multinational corporations, blockchains run the risk of undermining the capacity of governmental authorities to supervise activities in banking, commerce, law, and other vital areas. De Filippi and Wright welcome the new possibilities inherent in blockchains. But as Blockchain and the Law makes clear, the technology cannot be harnessed productively without new rules and new approaches to legal thinking.

Reviews

“At long last—a deeply researched, thoughtful, and measured analysis of blockchain technology and the policies that could help us harvest its opportunities and avoid its pitfalls. Blockchain and the Law should be required reading for anyone serious about understanding this major emerging element of our technological ecosystem.”—Yochai Benkler, author of The Wealth of Networks

“A well-written and comprehensive book that cuts through the blockchain hype. It not only highlights the powers and limitations of blockchain technology, but solidly grounds it in a larger social and legal context.”—Bruce Schneier, author of Data and Goliath

“Blockchain and the Law perfectly links technical understanding with practical and legal implications. Blockchains will matter crucially; this book, beautifully and clearly written for a wide audience, powerfully demonstrates how.”—Lawrence Lessig, Harvard Law School

Table of Contents

• Introduction
• I. The Technology
  • 1. Blockchains, Bitcoin, and Decentralized Computing Platforms
  • 2. Characteristics of Blockchains
• II. Blockchains, Finance, and Contracts
  • 3. Digital Currencies and Decentralized Payment Systems
  • 4. Smart Contracts as Legal Contracts
  • 5. Smart Securities and Derivatives
• III. Blockchains and Information Systems
  • 6. Tamper-Resistant, Certified, and Authenticated Data
  • 7. Resilient and Tamper-Resistant Information Systems
• IV. Organizations and Automation
  • 8. The Future of Organizations
  • 9. Decentralized Autonomous Organizations
  • 10. Blockchain of Things
• V. Regulating Decentralized, Blockchain-Based Systems
  • 11. Modes of Regulation
  • 12. Code as Law
• Conclusion
• Notes
• Acknowledgments
• Index

Photo by Jennifer Stylls

The post Book of the Day: Blockchain and the Law: The Rule of Code appeared first on P2P Foundation.

Bart Grugeon Plana: After the breakthrough of the internet, Yochai Benkler, a law professor at Harvard University, quickly understood that new online forms of collaboration such as Wikipedia or Linux responded to a completely new economic logic. Specializing in the digital culture of the networked society, Benkler worked on a coherent economic vision that guides us beyond the old opposition between state and markets.

According to Benkler, we may be at the beginning of a global cultural revolution that can bring about massive disruption. “Private property, patents and the free market are not the only ways to organize a society efficiently, as the neoliberal ideology wants us to believe,” Benkler says. “The commons offers us the most coherent alternative today to the dead end of the last 40 years of neoliberalism.”

Bart Grugeon Plana: In the political debate today, it seems that world leaders fall back to an old discussion whether it is the free market with its invisible hand that organizes the economy best or the state with its cumbersome administration. You urge to step beyond this old paradigm.

Yochai Benkler, law professor at Harvard University: Both sides in this discussion start from an assumption that is generally accepted but fundamentally wrong, namely that people are rational beings who pursue their own interests. Our entire economic model is based on this outdated view on humanity that goes back to the ideas of Thomas Hobbes and Adam Smith, philosophers from the 17th and 18th centuries. My position is that we have to review our entire economic system from top to bottom and rewrite it according to new rules. Research of the past decades in social sciences, biology, anthropology, genetics, and psychology shows that people tend to collaborate much more than we have assumed for a long time. So it comes down to designing systems that bring out these human values.

Many existing social and economic systems — hierarchical company structures, but also many educational systems and legal systems — start from this very negative image of man. To motivate people, they use mechanisms of control, by incorporating incentives that punish or reward. However, people feel much more motivated when they live in a system based on compromise, with a clear communication culture and where people work towards shared objectives. In other words, organizations that know how to stimulate our feelings of generosity and cooperation, are much more efficient than organizations that assume that we are only driven by self-interest.

This can work within a company or an organization, but how can you apply that to the macro economy?

Over the past decade, the internet has seen new forms of creative production that hasn’t been driven by a market nor organized by the state. Open-source software such as Linux, the online encyclopedia Wikipedia, the Creative Commons licenses, various social media, and numerous online forms of cooperation have created a new culture of cooperation that ten years ago would have been considered impossible by most. They are not a marginal phenomenon, but they are the avant-garde of new social and economic tendencies. It is a new form of production that is not based on private property and patents, but on loose and voluntary cooperation between individuals who are connected worldwide. It is a form of the commons adapted to the 21st century — it is the digital commons.

What is so revolutionary about it?

Just take the example of the Creative Commons license: It is a license that allows knowledge and information to be shared under certain conditions without the author having to be paid for it. It is a very flexible system that considers knowledge as a commons, that others can use and build on. This is a fundamentally different approach than the philosophy behind private copyrights. It proves that collective management of knowledge and information is not only possible, but that it is also more efficient and leads to much more creativity than when it is “locked up” in private licenses.

In the discussion whether the economy should be organized by the state or by the markets, certainly after the fall of communism, there was a widespread belief that models starting from a collective organization necessarily led to inefficiency and tragedy, because everyone would just save their own skin. This analysis has been the responsibility for the deregulation and privatization of the economy since then, the consequences of which have been known since 2008.

The new culture of global cooperation opens up a whole new window of possibilities. The commons offer us today a coherent alternative to the neoliberal ideology, which proves to be a dead end. After all, how far can privatization go? Trump and Brexit prove where it leads to.

Image by Bart Grugeon Plana

The commons is a model for collective management, which is mainly associated with natural resources. How can this be applied to the extremely complex modern economy?

The commons are centuries old, but as an intellectual tradition it was mainly substantiated and deepened by Elinor Östrom, winner of the Nobel Prize in Economics. Over the past decades the commons have gained a new dimension through the movement of open source software and the whole culture of the Digital Commons. Östrom demonstrated on the basis of hundreds of studies that citizens can come together to manage their infrastructures and resources, often in agreement with the government, in a way that is both sustainable ecologically and economically. Commons are capable of integrating the diversity, knowledge, and wealth of the local community into the decision-making processes. They take into account the complexity of human motivations and commitments, while market logic reduces everything to a price, and is insensitive to values, or to motivations that are not inspired by profit. Östrom showed that the commons management model is superior in terms of efficiency and sustainability to models that fall back on a strong government — read: socialism or communism, or on markets and their price mechanism.

Examples of commons in the modern economy include the management model of the Wi-Fi spectrum, for example, in addition to the previously mentioned digital commons. Unlike the FM-AM radio frequencies that require user licenses, everyone is free to use the Wi-Fi spectrum, respecting certain rules, and place a router anywhere. This openness and flexibility is unusual in the telecommunications sector. It has made Wi-Fi an indispensable technology in the most advanced sectors of the economy, such as hospitals, logistics centers, or smart electricity grids.

In the academic, cultural, musical, and information world knowledge or information is increasingly treated as a commons, and freely shared. Musicians no longer derive their income from the copyright of music, but from concerts. Academic and non-fiction authors publish their works more often under Creative Commons licenses because they earn their living by teaching, consultancy, or through research funds. A similar shift also takes place in journalism.

An essential feature of the commons management model is that all members of the “common” have access to the “use” of goods or services, and that it is jointly agreed how access to those goods and services is organized. Market logic has a completely different starting point. Does this mean that markets and commons are not compatible?

Commons are the basis of every economic system. Without open access to knowledge and information, to roads, to public spaces in the cities, to public services and to communication, a society can not be organized. The markets also depend on open access to the commons to be able to exist, even though they try again and again to privatize the commons. There is a fundamental misconception about the commons. It is the essential building block of every open society. But commons and markets can coexist.

If today it is mainstream to think that a company should maximize its financial returns in order to maximize it shareholder value, it isn’t a fact of nature, it’s a product of 40 years of neoliberal politics and law intended to serve a very narrow part of the society. Wikipedia shows that people have very diverse motivations to voluntarily contribute to this global common good that creates value for the entire world community. The examples of the digital commons can inspire to set up similar projects in real economy, as happens with various digital platforms in the emerging collaborative economy.

A society that puts the commons at the center, recognizing the importance of protecting them and contributing to them, allows different economic forms of organization to co-exist, both commons and market logic, private and public, profit-oriented and non-profit-making. In this mixture, it is possible that the economy as a whole is oriented towards being socially embedded, being about the people who generate the economic activities, and who can have very different motivations and commitments. The belief that the economy would be driven by an abstract ideal of profit-oriented markets is no more than a construction of neoliberal ideology.

You seem very optimistic about the future of the commons?

I was more optimistic ten years ago than I am today. The commons are so central to the organization of a diverse economy that they must be expanded and protected in as many sectors of the economy as possible. There are many inspiring examples of self-organization according to the commons model, but it is clear that their growth will not happen automatically. Political choices will have to be made to restructure the economy beyond market logic. Regulation is necessary, with a resolute attitude towards economic concentration, and with a supportive legislative framework for commons, cooperatives and various cooperation models.

At the same time, more people need to make money with business models that build on a commons logic. The movement around “platform cooperativism” is a very interesting evolution. It develops new models of cooperatives that operate through digital platforms and that work together in global networks. They offer a counterweight to the business models of digital platforms such as Uber and Airbnb, which apply the market logic to the digital economy.

This brings us to the complex debate about future of work.

In the context of increasing automation, there is a need for a broader discussion that can see “money” and “work” as separate from each other, because the motivations to “work” can be very diverse. A general basic income is an opportunity to build a more flexible system that makes these various motivations possible, but also a shorter working week is an option.

We are facing an enormous task and we do not have a detailed manual that shows us the way. However, the current economic crisis and the declining acceptance of austerity means that the circumstances are favorable to experiment with new forms of organization.

When Wikipedia began to grow, it was told that it “only works in practice, because in theory it’s a total mess.” I believe, however, that today we have a theoretical framework that allows us to build a better life together without subjecting ourselves to the same framework that gave us oligarchic capitalism. The commons is the only genuine alternative today that allows us to build a truly participatory economic production system. The commons can cause a global cultural revolution.

This piece has been edited for length and clarity.

Photo by Ratchanee @ Gatoon

The post Yochai Benkler on the Benefits of an Open Source Economic System appeared first on P2P Foundation.

Tom Llewellyn: The People’s Disruption: Platform Co-ops for Global Challenges kicks off this weekend at The New School and Civic Hall in New York City, New York. The annual event — now in its third year — will bring together a diverse group of experts who are pushing the platform co-op movement forward. While past conferences have sought to popularize the concept of platform co-ops and develop an ecosystem to support their growth, this year the goal will be to “zero in on ways that platform cooperatives can help to address some of the world’s most urgent challenges.”

What exactly is a platform co-op? It’s a digital platform — a website or mobile app that is designed to provide a service or sell a product — that is collectively owned and governed by the people who depend on and participate in it. That includes those who deliver the underlying service by contributing labor, time, skills, and/or assets. Where corporate “sharing” platforms extract value and distribute it to shareholding owners who seek a return on their investment, platform co-ops distribute ownership and management of the enterprise to its participants — those working for the platform or those using the service. You can read more about it in our in-depth explainer. We also published a feature story this year that explored the emerging funding models for platform co-ops.

There’s still time to buy tickets to the conference. Key events at this year’s event include:

Friday, Nov. 10:

Lecture: Joseph Blasi: How to reform existing Federal and State tax and credit policies to encourage new broadly owned businesses. | 2-2:45 p.m. ET

Public Event: “What happened to the future?” A discussion aimed at reclaiming a story of the future, economic justice, and a social economy built on platforms we can co-own and co-govern featuring Alicia Garza, Douglas Rushkoff, Felicia Wong, and Yochai Benkler. | 7-9 p.m. ET [This event is free and open to the public]

Saturday, Nov. 11:

Lecture: Juliet Schor: Surprising new findings from in-depth interviews with earners on six platforms. | 9-9:45 a.m. ET

Panel: Next Tech: AI and Big Data | 10-11:30 a.m. ET

Panel: Next Labor: Designing platform cooperatives in a worker-centered way | 1:30-3:00 p.m. ET

The full schedule can be found here: https://platform.coop/2017/schedule

The post Join Us at the Platform Co-ops for Global Challenges Conference appeared first on P2P Foundation.

“Platform Cooperativism: Building the Cooperative Internet” Link Mega-List

With November’s event come and gone, we have assembled a list of some of the articles and media resulting from “ Platform Cooperativism: Building the Cooperative Internet.” We want to thank everyone in attendance — in person and watching via live stream — for their dedication and passion. For those of you who did not get a chance to attend, we encourage you to check out the materials linked below which include post-conference write-ups, live coverage, image galleries, and archived recordings of every lecture given at the event.

Articles

• Writeup by Darren Sharp (@dasharp), including the launch of the Platform Cooperativism Consortium
  
• Event highlights by Jonas Algers (@JonasAlgers)
• Enric Senabre (@esenabre) and Ricard Espelt (@ricardespelt) offer a summary of approaches to the design and development of platform cooperatives with a focus on the final day’s “unconference”
  
• Live coverage by Dorothy Howard (@DorothyR_Howard), reporting for e-Flux, with a host of links mentioned by different speakers
  
• Discussion of the conference and a collection of passages from important texts about platform cooperativism by Ewen Chardronnet (@ewenchardronnet) in English and French
  
• A published transcript of the talk by Wolfgang Kowalsky (@kokowo1) mounting a critique of platform capitalism
  
• The conference experience of Peter Bosmans (@febecoop), Febecoop, Belgium (Dutch)
  

Media

• All recorded footage, filmed by the Internet Society, can be found on the Internet Archive. You can also download a torrent file of all video files. These recordings also remain on the Internet Society’s Livestream channel where they were first broadcast.
  
• Collection of photos on Flickr
  
• Images posted to Twitter with the #platformcoop hashtag during the conference
• Radio feature about the event by Deutschlandfunk produced by Patrick Stegemann (@petterich) (in German)
• All image tweets and text tweets made on Twitter with the #platformcoop hashtag during the conference

Selected Presentations

Green Taxi

Jason Weiner of Colorado Cooperative Developers discusses the success of Green Taxi Cooperative, a new union taxicab cooperative in the Denver/Boulder metro area. The company’s app has the convenience and functionality of its venture-capital backed competitors, shares 100% ownership among its members, and is now the second largest worker cooperative in the country.

The Union-Coop Model

This panel, moderated by Trebor Scholz, featured speakers from a number of different unions: Palak Shah of the National Domestic Workers Alliance, Dawn Gearhart of Teamsters Local 117, Lieza Dessein and Frisia Donders of SMart Coop, Annette Mühlberg of United Services Union in Berlin, Michael Peck of 1worker1vote.org and Mondragon, and Christian Sweeney of the AFL-CIO. They discussed the union-coop model and the challenges it will have to overcome to succeed.

Towards an Open Social Economy

In this talk, Yochai Benkler elaborates the economic conditions that have resulted in a crisis for democratic capitalism. Arguing that recent far-right populism is a response to an oligarchic capitalism which was born in the 1970s, Benkler claims that platform cooperatives have the potential to be a core component of an alternative, left-wing trajectory into a market economy re-embedded with social relations. He stresses the importance of winning an ideological war in this time of uncertainty, not on paper but through real-world organizations engaging in cooperative social production.

The Digital Democracy Manifesto

A cheeky and informative talk by Richard Barbrook discussing the path to the inclusion of platform cooperatives as a key point in the Digital Democracy Manifesto proposed by UK Labor Party leader Jeremy Corbyn.

MIDATA.coop

In his short presentation Ulrich Genicke introduced MIDATA.coop, a project that enables citizens to securely store, manage and control access to their personal data by helping them to establish and own national/regional not-for-profit MIDATA cooperatives. MIDATA’s initial focus will be on health related data since these are most sensitive and valuable for one’s personal health. MIDATA cooperatives act as the fiduciaries of their members’ data. As MIDATA members, citizens can visualize and analyze their personal data.

There were so many remarkable talks; these is merely a small selection. Here are a few more talks

• Thomas Doennebrink’s report from Berlin and Mexico City
• Nathan Schneider Interviews Professor Esther N. Gicheru
• Mayo Forell Fuster

The post Looking back on “Platform Cooperativism: Building the Cooperative Internet” appeared first on P2P Foundation.

In his response, Prof. Benkler shows that the emergence of peer production is amply verified empirically (the extraordinary expansion of FLOSS production is now accompanied by a very rapid and documented rise in urban commons!), but he also refers to his detailed treatment of power issues in his earlier writings. Very much worth reading in our opinion.

Yochai Benkler: In Why Coase’s Penguin didn’t fly, Henry follows up his response to Cory’s Walkaway by claiming that peer production failed, and arguing that the reason I failed to predict its failure is that I ignored the role of power in my analysis.

Tl;dr: evidence on the success/failure of peer production is much less clear than that, but is not my issue here.  Coase’s Penguin and Sharing Nicely were pieces aimed to be internal to mainstream economics to establish the feasibility of social sharing and cooperation as a major modality of production within certain technological conditions; conditions that obtain now.  It was not a claim about the necessary success of such practices.  Those two economist-oriented papers were embedded in a line of work that put power and struggle over whether this feasible set of practices would in fact come to pass at the center of my analysis.  Power in social relations, and how it shapes and is shaped by battles over technical (open/closed), institutional (commons/property), ideological (cooperation/competition//homo economicus/homo socialis), and organizational (peer production & social production vs. hierarchies/markets) systems has been the central subject of my work.  The detailed support for this claim is unfortunately highly self-referential, trying to keep myself honest that I am not merely engaged in ex-post self-justification.  Apologies.

The premise of the argument, that commons based peer production has failed (the Penguin “didn’t fly”) is empirically problematic.  Extensive case studies collected by the P2P Foundation, the European P2P Value project, the research communities collected around terms like constructed cultural commons, wealth of the commons, collective intelligence,  the breathtaking amount of work on Wikipedia and FOSS in computer supported cooperative work and HCI, as well as efforts to measure the economic value of Digital Dark Matter, offers plenty of evidence.  What didn’t happen is expansion of peer production into the role of critical infrastructure far beyond FOSS and Wikipedia—the failure of Diaspora being the standard story.  I acknowledged that challenge in Practical Anarchism: Peer Mutualism, Market Power, and the Fallible State, where I wrote:

The real utopias I observe here are perfect on neither dimension. Internally, hierarchy and power reappear, to some extent and in some projects, although they are quite different than the hierarchy of government or corporate organization. Externally, there are some spectacular successes, some failures to thrive, and many ambiguous successes. In all, present experience supports neither triumphalism nor defeatism in the utopian project. Peer models do work, and they do provide a degree of freedom in the capabilities they provide. But there is no inexorable path to greater freedom through voluntary open collaboration.

That’s still where I think we stand empirically.  But that’s not what moved me to write a response.

Henry’s core criticism is that I failed to predict the rise of powerful market actors controlling information, knowledge, and cultural production (Read Google, Facebook, Amazon…) due to the fact that I bought too completely into Coase’s new institutionalist framework.

“I want to focus on a third reason why things went wrong – that Benkler borrows his argument from Coase, and hence is vulnerable to a basic flaw in Coase’s way of understanding the world.”[paraphrasing to shorten: Coase’s insight, that when market transactions costs are high and intra-organizational costs lower, activities will be organized within firms (hierarchies) and as market transactions costs are lower while organizational costs are higher (e.g. larger firms & more efficient markets), activities will migrate to markets,] “is a powerful insight, which provided a platform for the work of Oliver Williamson and many other organizational economists, as well as Benkler. Yet it has buried within it a crucial assumption – that change is driven by efficiencies.”

“Benkler buys into this argument, suggesting that his new mode of decentralized organization too will expand or contract in given areas of activity, depending on its relative efficiency to markets or hierarchy. Where markets are more efficient than Wikipedia style systems, people will turn to markets. Where hierarchy is more efficient they will turn to hierarchy. Nonetheless, Benkler argues that a variety of factors (including the burgeoning of the Internet) might lead us to believe that decentralized production is rapidly becoming more efficient than competing modes such as markets and hierarchies, across a significant spectrum of activities. Thus, we may expect to see a lot more decentralized production happening as the technology continues to develop.”

“As already discussed, this didn’t happen. But it also highlights an important problem which isn’t really discussed by Coase, and hence is not discussed by Benkler – power. Power relationships often explain who gets what, and which forms of organization are taken up, and which fall by the wayside. In general, forms of production that are (a) more efficient, but (b) inconvenient or unprofitable for powerful actors, are probably not going to be taken up, since those powerful actors will block them. Yet if one starts from an efficiency perspective, it is very hard to build power relations in, since one believes that change in practices and institutions is not driven by power relations but by efficiency.”

To compound this criticism, Henry emphasizes that I made this same argument in Wealth of Networks and still hold to it (citing a current paper in Strategic Organization).

I first introduced the term “peer production” a few months before I completed the first draft of Coase’s Penguin, in a 2001 piece in the Communications of the ACM entitled “The Battle Over the Institutional Ecosystem in the Digital Environment.”  I concluded that essay with the words: “We are in the midst of a pitched battle over the spoils of the transformation to a digitally networked environment and the information economy. Stakeholders from the older economy are using legislation, judicial opinions, and international treaties to retain the old structure of organizing production so they continue to control the empires they’ve built or inherited. Copyright law and other intellectual property, broadcast law, spectrum-management policy, and e-commerce law are all being warped to fit the size of the hierarchical organizations of yesteryear. In the process, they are stifling the evolution of the distributed, peer-based models of information production and exchange.”

Power, and how technology intersects with institutions to shape it, was always the central theme of my analysis.  My job talk, which I gave at several law schools in 1995-1996, resulted in a publication in Telecommunications Policy in 1998 entitled Communications infrastructure regulation and the distribution of control over content.  I opened the theoretical framework section with: “The confluence of three lines of theoretical writing: the political economy of communications, institutional economics, and the economics of path dependency, suggests a feedback effect among technology, institutional framework, and organizational adaptations, that produces a historically contingent, but robust, distribution of power over the knowledge environment of a society. Different societies, introducing the same technology at different times and within different institutional parameters, are likely to experience different social distributions of the capacity to affect information flows.” The rest of the paper describes an interaction and lock-in process whereby battles over control, played out in technological design, regulation, and organizational strategy result in more or less concentrated control over information and knowledge production, and offers examples from then-live, still-critical debates over spectrum commons (now 5G transition) and common carriage of last mile Internet access infrastructure (now net neutrality).

This framework was an application to communications policy of a framework I had earlier developed to property law, focused on a re-interpretation of the Homestead Act of 1862 as an effort by labor advocates in the 1840s and 1850 to use the public domain (the West) to decommodify land and labor, and how it failed.  The central point of Distributive Liberty: A Relational Model of Freedom, Coercion, and Property Law  was that market relations were expressions of power relations structured by institutional choices around control of productive resources.  I turned to studying the Internet after that piece precisely because I realized that it was the space in which power over resources, the means of production, and the freedom to use them was being fought for the coming decades.  And that is, after all, precisely what Cory’s novel is about.

This basic commitment to studying how legal and regulatory choices, primarily around commons vs property, as well as internal design of other institutional mechanisms that shaped control of the information environment by shaping power in markets was my whole focus in the years before Coase’s Penguin:  Overcoming Agoraphobia: Building the Commons of the Digitally Networked Environment (1998) (the history of radio regulation as jostling by powerful businesses to control the industry at the expense of amateurs and smaller stations replicated in the choice between spectrum auctions and spectrum commons), The Commons as a Neglected Factor of Information Policy (1998), Intellectual Property and the Organization of Information Production (1999), Free as the Air to Common Use: First Amendment Constraints on Enclosure of the Public Domain (1999) (which attacked the constitutionality of the DMCA and DRM, and explained how the new enclosure movement and in particular DRM shifted power to centralized, commercial producers), and From Consumers to Users: Shifting the Deeper Structures of Regulation Towards Sustainable Commons and User Access (2000).  All these papers were about battles, from early radio to unlicensed wireless, patents and copyrights to DRM (and other papers I wrote during the same period on EULA enforcement, data exclusivity, etc.), waged by powerful market actors to shape the institutional and organizational environment of markets to allow them to extract higher rents and exclude competitors, both market and non-market.

In Wealth of Networks, right in the introduction about the role of technology in human affairs, I say:

Different technologies make different kinds of human action and interaction easier or harder to perform. All other things being equal, things that are easier to do are more likely to be done, and things that are harder to do are less likely to be done. All other things are never equal. That is why technological determinism in the strict sense—if you have technology “t,” you should expect social structure or relation “s” to emerge—is false. Ocean navigation had a different adoption and use when introduced in states whose land empire ambitions were effectively countered by strong neighbors—like Spain and Portugal—than in nations that were focused on building a vast inland empire, like China. Print had different effects on literacy in countries where religion encouraged individual reading—like Prussia, Scotland, England, and New England—than where religion discouraged individual, unmediated interaction with texts, like France and Spain. This form of understanding the role of technology is adopted here. Neither deterministic nor wholly malleable, technology sets some parameters of individual and social action. It can make some actions, relationships, organizations, and institutions easier to pursue, and others harder. In a challenging environment—be the challenges natural or human—it can make some behaviors obsolete by increasing the efficacy of directly competitive strategies. However, within the realm of the feasible—uses not rendered impossible by the adoption or rejection of a technology—different patterns of adoption and use can result in very different social relations that emerge around a technology. Unless these patterns are in competition, or unless even in competition they are not catastrophically less effective at meeting the challenges, different societies can persist with different patterns of use over long periods. It is the feasibility of long-term sustainability of different patterns of use that makes this book relevant to policy, not purely to theory. The same technologies of networked computers can be adopted in very different patterns. There is no guarantee that networked information technology will lead to the improvements in innovation, freedom, and justice that I suggest are possible. That is a choice we face as a society. The way we develop will, in significant measure, depend on choices we make in the next decade or so (pp. 17-18).

The entire part three of the book is a catalog of policy and political debates and battles that we were engaged in at the time precisely over whether powerful market actors would succeed in bending the technological-economic ecosystem to their interest or not.  Again, from the introduction:

If the transformation I describe as possible occurs, it will lead to substantial redistribution of power and money from the twentieth-century industrial producers of information, culture, and communications—like Hollywood, the recording industry, and perhaps the broadcasters and some of the telecommunications services giants—to a combination of widely diffuse populations around the globe, and the market actors that will build the tools that make this population better able to produce its own information environment rather than buying it ready-made. None of the industrial giants of yore are taking this reallocation lying down. The technology will not overcome their resistance through an insurmountable progressive impulse. The reorganization of production and the advances it can bring in freedom and justice will emerge, therefore, only as a result of social and political action aimed at protecting the new social patterns from the incumbents’ assaults. It is precisely to develop an understanding of what is at stake and why it is worth fighting for that I write this book. I offer no reassurances, however, that any of this will in fact come to pass. (p. 23)

My primary mistake in my work fifteen years ago, and even ten, was not ignoring the role of power in shaping market patterns, but in understating the extent to which the new “market actors who will build the tools that make this population better able…” will themselves become the new incumbent market actors who will shape the environment to increase and lock-in their power.  That is certainly a mistake in reading the landscape of power grabs, and I have tried to correct over the intervening years, most recently by offering a map of what has developed in the past decade in my 2016 Daedalus piece Degrees of Freedom, Dimensions of Power, whose abstract reads:

The original Internet design combined technical, organizational, and cultural characteristics that decentralized power along diverse dimensions. Decentralized institutional, technical, and market power maximized freedom to operate and innovate at the expense of control. Market developments have introduced new points of control. Mobile and cloud computing, the Internet of Things, fiber transition, big data, surveillance, and behavioral marketing introduce new control points and dimensions of power into the Internet as a social-cultural-economic platform. Unlike in the Internet’s first generation, companies and governments are well aware of the significance of design choices, and are jostling to acquire power over, and appropriate value from, networked activity. If we are to preserve the democratic and creative promise of the Internet, we must continuously diagnose control points as they emerge and devise mechanisms of recreating diversity of constraint and degrees of freedom in the network to work around these forms of reconcentrated power.

Others who have worked on peer production, most explicitly and comprehensively Vasilis Kostakis and Michel Bauwens identified that threat and theorized it in detail. Mayo Fuster Morell early saw the difference between firm-hosted and community hosted peer production, and how they differed fundamentally on the power dimension.  And many others identified and criticized the specific threats of the newly-emerging powerful actors before I did, not in the context of peer production: pretty much everyone who worked on privacy, a topic that was long a blind spot for me; Introna and Nissenbaum on the politics of search engines in 2000; Niva Elkin Koren and Michael Birnhack The Invisible Handshake in 2003 on the emerging alliance between these new companies and the rising security state were very early, and later Siva Vaidhyanathan’s Googleization of Everything.

Coase’s Penguin, and like it Sharing Nicely in 2004, were efforts to develop a fully internal-to-the-economics-profession account of peer production and sharing.  The effort to speak across disciplines, and in particular to develop a case for a given proposition fully within the mainstream of the then-very-much-still “queen of the social sciences,” required selection and translation.

When I started working on this in 2000, the idea that it was even possible for a large collection of individuals to coordinate and achieve effective outcomes without price signals or hierarchy was practically inadmissible in that discipline.  Early efforts were focused very heavily on software specifically, and what made it special to allow FOSS to develop.  I saw that as a mistake, and developed a framework that, even taking all the standard assumptions of mainstream economics (and Coase by then was as mainstream as it gets), peer production (and sharing) was possible, and likely more efficient and innovative under certain conditions—which happen to obtain now.  I combined transactions costs theory, advances in the empirical study of prosocial motivation, and information economics to provide a reasonably good explanation of why peer production could emerge now, and why sharing of certain classes of goods could emerge now.  But, as I wrote in Sharing Nicely, “Technology does not determine the level of sharing. But it does set threshold constraints on the effective domain of sharing as a modality of economic production.”

These papers indeed did not integrate the power and political economy with the internal-to-economics arguments because they were written as building blocks, and specifically as building blocks that could be accepted even by those who would reject a power analysis but accept a mainstream economics argument.  But, as I tried to show earlier, once I integrated these building blocks into Wealth of Networks, I certainly did identify the attractive patterns as a possibility space that would be a battlefield over the distribution of power, and would only be won through the persistent application of political mobilization around the politics of technology and technological adoption.

And let’s not forget this all started as a comment on Cory’s Walkaway.   Anyone who reads that book as a story that does not put power at the heart of the question of whether technology will turn to a utopian or dystopian future, power in its most raw sense of violent enforcement of property rights by owners against potential users, can’t possibly have read the same book I did.  And he just wrote no less eloquently about the way power relations shape technology which locks in power in the very real life context of DRM in browsers.

Photo by bmjames

The post Of Penguins and Power: Yochai Benkler defends Peer Production appeared first on P2P Foundation.

“If we are to preserve the democratic and creative promise of the Internet, we must continuously diagnose control points as they emerge and devise mechanisms of recreating diversity of constraint and degrees of freedom in the network to work around these forms of reconcentrated power.”

Abstract

“The original Internet design combined technical, organizational, and cultural characteristics that decentralized power along diverse dimensions. Decentralized institutional, technical, and market power maximized freedom to operate and innovate at the expense of control. Market developments have introduced new points of control. Mobile and cloud computing, the Internet of Things, fiber transition, big data, surveillance, and behavioral marketing introduce new control points and dimensions of power into the Internet as a social-cultural-economic platform. Unlike in the Internet’s first generation, companies and governments are well aware of the significance of design choices, and are jostling to acquire power over, and appropriate value from, networked activity. If we are to preserve the democratic and creative promise of the Internet, we must continuously diagnose control points as they emerge and devise mechanisms of recreating diversity of constraint and degrees of freedom in the network to work around these forms of reconcentrated power.”

The full article is available here.

Photo by abraham.williams

The post Essay of the Day: Degrees of Freedom, Dimensions of Power appeared first on P2P Foundation.

Procomuns 2017

The post Procomuns 2017: development of proposals and strategies for the Commons collaborative economies appeared first on P2P Foundation.

For those who find it more convenient to read, I’ve created a transcript of this video.

Yochai Benkler: Well, I stand in the uncomfortable position of being between you and a dance party…you’re very patient. I don’t have any modes other than serious, so, this is what’s it’s going to have to be.

First of all, I have to tell you it’s exhilarating to be here. It’s exhilarating to see a new generation throwing itself at this set of challenges, of how we build the world together, that I’ve been playing with for the last quarter-century.

It’s also exhilarating, perhaps, I have to say, more than anything else, is to see how many women there are here, which didn’t used to be the case.

And this is…and it’s tremendous to come and learn and listen, and I really appreciate it.

I came here without preparing on purpose, so that I could soak, over the last couple of days, what I hear. But I actually want to try to turn it back into a question; a set of tensions and questions in this enormously diverse coalition of people, so that you can then use it to reflect on your own practices.

And I…It looks to me like essentially what you have here is a combination of people who are brought together by a recognition of a transformative moment in digital network communications; but also in response to two moments of crises (if you can talk about things that have been occurring for decades as crises). And the first and obvious one is climate change and the environment; and the second is the continuous increase in inequality, both within the most advanced economies and globally – and the ways in which that inequality is beginning to place tremendous pressure on our democracy, and our capacity for peace.

Nowhere is this clearer today than someone like me, from the US, or like you, from Europe, as you see these major democracies teetering on a xenophobic moment in the teeth of large-scale loss of security of the middle class and working class, and the turn, in some cases towards an effort to find equality but in other cases towards an effort to blame another”, and to externalize xenophobically on an other.

And so, the task we have today, as well as rebuilding an economy, is also finding a way to have an economy that is – that not only provides enough stewardship for the environment, but is also sufficiently participatory in general, that we can re-stabilize a decent living and a decent projection for how to live a life for the majority of the population, so that we can re-stabilize our sense of democracy.

There are, I would say, three dimensions of tension that organize the different groups that I’ve seen here, alongside these two dimensions of concern, or crisis.

The first is the concern with the power of hierarchy; the power within an organization to be controlling. This is the concern with the bossless organization, this is the concern with participatory governance. Some aspect of the “cooperativist” work certainly central to the commons, is the concern with positional power.

A second is the concern with the power of property, which we see very powerfully in the context of cooperativism and the effort to essentially accept property as it is, but, try to redistribute it. But the problem is, of course, that property is always an organization force for oligarchy; the re-creation of power around who owns it. And so there you’re beginning to see a real tension between the commitment to commons, and the commitment to redistribute property, which is, I think, creating some real tensions. We saw it, a little bit yesterday towards the end, in the session on cooperatives when Marguerite asked, “What about the commons” and the question was, “Well, I don’t know, um…they’ll have to wait.”

And the third, which underscores or underwrites everything is the tyranny of of the margin. The need to constantly compete in the market and find yourself in a context where you have to compete, you have to survive, you have to return returns-on-investment; and this ends up postponing the ethical commitment, because you can’t live with it. And that’s different from the power within the organization, it’s different than the power through property because it affects everyone, both the property owners and not. And again, nowhere was this clearer than yesterday in the panel on investment models and VCs (edit: venture capitalists), and the clash between the entrepreneurs who were driven by an ethical commitment to build something that will change the world, and the need to raise money in the VCs who have investors to return to. It’s a real tension that you’re going to have to solve. It was also clear in a more micro-level in the story about cooperatives, and trying to move a VC-funded to a cooperative model, and the tension between the early actors and the late actors.

So this tyranny of the margin is a real constraint that we have to find a way how to break out of. And the critical thing that I want to leave (if nothing else) you – and I’m not leaving yet, don’t worry, you can’t start dancing – is: the commitment to the commons, intellectually and practically, institutionally, is central to your ability to negotiate these tensions, and I’ll try to explain why.

So, roll back 25 years. What happened to us in the networked information environment, is for the first time since the Industrial Revolution, the most important input into the core economic activities of the most advanced economies came to be widely distributed into the population. It began with computation, and storage, and communication, then moved to sensing; yesterday, when we talked about fabrication, it’s beginning to move towards fabrication – so you had a decentralization of material capital that was central to production in some of the most advanced economic areas in the most advanced and richest economies. Alongside network communications that dropped transaction costs to a very low level.

The first generation of practices that took advantage of this dramatic change is social production, both peer production and individual social production. We saw it with free and open source software, we saw it with Wikipedia, we saw it with the free culture movement, we saw it with citizen journalism, core aspects of what used to be an industrial information and cultural economy turned into a social production economy that began to seriously compete with the core aspects and destabilize power.

After that first round, you began to see traditional political mobilization also being transferred, and that was around the late 2000s-early 2010s, the emergence of leaderless organizations and, obviously, Occupy, Indignados, and the response around the world, perhaps probably most importantly motivated by the Arab Spring, of the emergence of the leaderless organization as an alternative to the longer-term political association.

Only after that, did we see the same economic characteristics being hacked by market-oriented organizations to build platforms that we see – that, let’s call them, that generally came under the sharing economy. But it’s the same exact transaction cost model, it’s the same exact capital distribution that built it. But the problem is that these organizations, at least some of them, weren’t committed to reversing some of these core dimensions of power. So, if you think at the simplest level of one of the earliest ones that’s barely on the border, Zipcar. Beautiful model, but committed only to this aspect of sharing assets in order to limit stress on the environment. Ends up relatively easily, being translated into becoming a division of Avis, because it’s not committed around the question of commons on the property, only the general conception of the commons on the environment. Not committed to avoiding the structure of hierarchy in the actual management of the organization, not committed to building a commons-based model that resists the tyranny of the margin.

And, obviously, I know that you, over your own trajectory, have moved from seeing Uber as a central aspect of the story, to Uber being something that is not, perhaps, what you want to imagine yourselves being. And again, this is critically defined by the way in which you orient yourself towards these three dimensions of power – because when you look at critiques of Uber, what are they? They are critiques about the re-emergence of hierarchy and the immediate use of algorithms to control the drivers. They are about the power of property to extract all of the rents from the drivers and maximize the return to the investors, and they are about the tyranny of the margin that forces potential competitors to the side. So, it’s not that there’s nothing. And Blabla car is not the same as Uber, and it’s not just about getting people to drive for money. But, it sucks the air out of much of the air.

And so, I’m using these examples to suggest to you that controlling what you do, or designing what you do, in response to these three dimensions of power, and preserving your models in this way is to be resilient to the reemergence of power becoming central.

So what does that mean as a practical matter? For cooperatives – this, I really pulled out of that last round of the panel yesterday – there’s a real temptation to build co-ops first and foremost to make sure that people can make money, and say “the commons can wait”, because, how do we make money in the commons. I think that’s a mistake, because the idea of the commons has been central to our ability to define an alternative to the rising prominence of the rational actor model in the neoliberal framework. If we spent forty years, maybe even fifty, learning at the academic level, at the policy level, at the practical habits of mind level, that we should all treat each other as self-interested  and self-maximizing individuals; that that’s how we build organizations that are efficient, that that’s how we allow people to pursue their own happiness without being too constraining. The commons has become a central cluster of ideas that says, “No, that’s false. We can come together without relying on exclusive property; we can come together without relying on corporate hierarchy or on state hierarchy, by building models of collaborative governance, and by embedding our production in social relations instead of building outside of them, instead of building only in companies and states and markets hierarchies of both sides, we can actually do something together. Without that core intellectual framework, without that core set of ethical commitments, you lose your North Star.

So for the cooperatives, sometimes it’s hard. It sometimes means that only some aspects can be in the commons, and not others: your basic platform, your protocol for how you do things. What components can be in the commons as a core aspect of the design, have to be in the commons and there has to be a continued commitment. Nothing in free software has ever said that people can’t make money from free software. They shifted to service models, they shifted to models based on selling machines. Whatever it was, it was around a core commitment pertained to the commons.

Blockchain; decentralized cryptocurrencies – if you focus only on one dimension of reproduction of centralization, the crypto structure and the decentralized technology, but ignore the ways in which a layer of organizational concentration can happen because you’ve built the assumption that everybody’s a self-interest maximizer, attacker, you open yourself up to re-concentration at the higher level. Whether it’s miners in the case of Bitcoin, or whether it’s Uber in the case of ride-sharing and double-sided market, it doesn’t matter. It’s not enough to build a decentralized technology if you don’t make it resilient to re-concentration at the institutional, organizational or cultural level. You have to integrate for all of them.

Well, I’m done then! Just this last word. There are, if not tribes, certainly families among you. You come to this festival with a certain set of commitments that make you excited, and a certain degree of openness that opens you to the person across the hall. Benjamin Franklin, the grandfather of the American Revolution, is said to have said, “If we do not hang together, then surely we must each hang separately”. So, you need to hang together. But hanging together and keeping together means not just accepting the other for who they are, but actually accepting that tension as creative. Saying, you’re focused on this, but I also really need for you to also do that. You’re focused on getting money to people, but I really need you to find a way in which it’s consistent with an environmental commitment. You’re really focused on undermining hierarchy, but I really need you to be committed to there not being a property-based model around which an oligarchy can emerge, even though you’ve changed the organization rules. Or, I really need you to not be pushing us into an investment model that will stick me into the margin so that it doesn’t matter how much I commit to my cooperative, it doesn’t matter how much I commit to my ethics; I’ll be either driven out of the market or I’ll be driven to change my model.

If you need to go a little slower, go a little slower. But build it so that it is ethically coherent from the start, is attentive to all these dimensions of failure, and resilient to all of these modes of failure, so that at the end of the day, you can actually build something else. Because in the universe of what we see today as these threats and these crises, these are quite fundamental to how we organize our economic life together, quite fundamental to our ability to maintain a democratic society, the kind of commons-based, cooperative, sharing economy that accepts that people are sometimes self-interested, but often cooperative. Sometimes really focused on keeping body and soul together, but often very focused on creating a real soul, and a real connection. It’s the most important alternative to these two models that have dominated us for two hundred years, the market seeking for the self, and the state seeking its control. And so, if you want to build it together, you have to build it together. And if you want to build it together, you have to be attentive to all these tensions and all of those modes of failure, and work on solving them together, rather than just saying, “I’ll optimize on one, I’ll optimize on another…”, it’s a multi-system problem and you’re going to have to have a multi-system solution.

Good luck!

The post Yochai Benkler (Harvard University) – Closing Remarks OuiShare Fest 2016 appeared first on P2P Foundation.