Towards a Value-based Quarternary Economics

We recommend the reading of Wim Nusselder’s vision of the evolution of economics towards a quarternary stage. We summarize his views, give excerpts,and offer some addtional commentary at the bottom of this entry.

This is an economics based on Robert Pirsig’s Metaphysics of Quality (Zen and the Art of Motorcycle Maintenance, Lila). It’s fourth section contains an interesting account of economic development, towards a ‘quarternary economics’. I believe it fits in with P2P theory, which is also about value-based production (in the sense of associating with people with similar values, in order to create new types of use value). Next week, I will discuss the differences in approach, but here I focus on the elements of convergence.

Here’s my 1) own short summary, 2) followed by the extensive quote, and.3) some commentary about ‘Value and P2P’; 4) a graph which attempts to fuse my own understanding, the fourfold intersubjective typology of Alan Page Fiske and the ‘type of dependence’ typology of Wim Nusselder

The primary economy is based on reciprocity, which derives from common ancestry or lineage. It is based on families, clans, tribes and exchange mostly operates through gifts which create further obligation. The division of labour is minimal and most often related to gender and age. The key question is ‘to belong or not to belong’. Social groups are based and bounded by real or symbolic lineage. Wants are defined by the community. Leadership is in the hands of the lineage leadership. Power is associated with a natural order (man are physically stronger, older people are wiser, etc.., some people are blessed by the gods,…) which cannot be challenged.

The secondary economy arises together with power monopolies which engender coercion as a means to force cooperation. We enter the domain of class societies, and production is organized by the elite in power, which holds together through the symbolic power which transforms power into allegiance. Respect for power, in the form of tribute, taxes, etc.. is normative. Distribution depends on your place in this chain of symbolic power. Wants are defined by the symbolic power with symbolic markers monopolized. The key question is: ‘to deserve power or to deserve subjection’. Social groups are bound by allegiance to power. Leadership is political and religious.

The tertiary economy arises with the entrepreneur and capitalism. It is based on ‘equivalent’, i.e. ‘fair’ exchange, which is normative. Power arises from relative productivity, relative monopoly over a needed good, and from the wage relationship, all of which create dependence. Social groups are loose, and wants are determined by advertising and mimetic desire. Cooperation is no longer correlated to belonging.

The quarternary economy is based on ‘ideological leaders’ which can frame common goals and common belonging and is based on membership and contribution. Contributing to the best of one’s ability to common goals is normative and the key question becomes: to follow an existing group or to create one’s own, i.e. to convince or be convinced. Contributions to many groups can overlap making the decision over wants a more autonomous process. Power is dependent on the power to convince, on influence, and varies depending on one’s relative place in the different groups.

– Excerpts from Wim Nusselder:

“For most of human history political economy has been the exclusive domain of political and religious leaders. A basic fact of economics is, that almost anything people want can be got more easily if (more) people co-operate. (More co-operation does not imply larger scale organizations! The best way of getting a lot of things is organizing people in a lot of small scale organizations that are usually self-sufficient, but that collectively back up each other if need be.) Leaders organize co-operation. A leader tells or shows people what they want and how to get it, if … they co-operate in a specified way. For most of human history being member of the same society meant following the same leadership.

The oldest form of economy is organized around (real or symbolic) family relationships. Genealogy provides meaning. To belong or not to belong, that is the question. Reciprocity is normative. You help someone else who needs help because you are related. Receiving help strengthens the relationship and enhances the obligation to do something in return in the future. Leadership often correlates with age and a male gender role, because it requires building a web of reciprocal relations with oneself as the ‘spider in the web’. Older males are in most societies in the best position to do (or have done) so.
The defining characteristics of such primary societies (e.g. nuclear families) is that there is supposed to be no choice whether one ‘belongs’ or ‘doesn’t belong’ to a society. ‘Given’ characteristics decide who ‘belongs’ and who is to be excluded from the benefits of ‘belonging’. These benefits include access to communal resources and sharing in the results of pooled labour. Pooling labour and allotting roles, primarily according to age and gender, allows for (limited) division of labor, specialization, economies of scale and satisfying some wants that can hardly be satisfied alone (like hunting mammoths). Primary economy can consist (simultaneously) of families (all living relatives), clans (people whose ancestry can be traced to the same remembered ancestor), tribes (people who trace their ancestry back to the same symbolic or mythological/legendary ancestor), nations (people who deduce from common history, language etc. that they must have common ancestry) and theoretically even of humanity as a whole.

A second form of economy originates (in addition to the primary form, not necessarily instead) wherever leaders enlarge their influence beyond those who automatically ‘belong’. They do so by monopolizing some kind of power. This power can be of different types. It can be magical, the ability of shamans to manipulate fear for that which is not understood. It can be military, based on weapon technology and on the ability to mobilize and organize people against other people. It can also be democratic, based on the convention to let a popularity contest determine who gets for a couple of years the law enforced right to tell others what to do (within restrictions). Coercive relations are added to family (like) relations. Additional meaning is provided by supposed virtues like ‘nobility’, ‘culture’ (in a strict sense) and ‘civilization’. To deserve power or to deserve subjection, that is the question. Enlarging society by those in power by coercing extra subjects into cooperating allows for the pooling of more resources, more division of labour, specialization, economies of scale etc. The norm is ‘fair’ distribution of the costs (e.g. by taxes) and benefits of enlarging society, i.e. distribution in proportion to virtue. Leaders recruit the resources needed to exercise power (and mostly so from those who ‘deserve’ to be taxed heaviest). They use -wherever possible- the benefits of their exercise of power to consolidate their position by maintaining and enhancing their power. That requires giving their subjects what they want, at least those they depend on for their power. The defining characteristic of this second form of economy compared to the first form is the enforcement of social boundaries (however they are defined: geographical, ethnical etc.). ‘Secondary societies’ can also have different sizes. Because of the need of leaders to monopolize power in order to stabilize their position, the coexistence of several overlapping secondary societies is never stable however. It is most stable if the size of coexisting secondary societies is clearly different (e.g. local and national) and if the type of power their leaders exercise is clearly different (e.g. religious versus military).

The third form of economy is added by a new type of leader (not political or religious any more): the entrepreneur. It is organized with exchange relationships. Productivity provides additional meaning. To produce (value for others that entitles you to remuneration) or to depend (on others for your livelihood) that is the question. Fair dealing (equivalent exchange) is normative. The defining characteristic of this third form of economy compared to the second form is, that an economic leader, an entrepreneur, does not (pretend to) lead (and organize the satisfaction of wants for) a society as a whole. The boundaries of the social group that is led by an entrepreneur are not clear-cut. That group normally consists of employees, but it can also contain suppliers, customers or others that enter into exchange relationships with the enterprise. Strong economic leaders make others dependent on what they produce (or on the income they provide by buying other people’s labor or products). It is the inequality of the mutual dependence of exchange partners that determines relative power over what the other can get and thus the limits of what he/she will want. An enterprise that is the only source of employment in a region or almost the only producer or buyer of a particular type of goods or services has a lot of power over the wants of its (potential) employees, customers or suppliers. Additional ways in which an entrepreneur can make others want what he/she wants them to want are advertising and standardization, among others. ‘Tertiary societies’ contain a lot of overlapping and complementary groups organized by different economic leaders. The boundary of such a group lies between those who are dependent but only for a few wants and those who are not dependent at all on their leader. With the rise of tertiary societies political economy is not the exclusive domain of political and religious leaders any more. ‘Tertiary economies’ can pool even more resources, enable more division of labour, specialization, economies of scale etc. than secondary ones, because co-operation doesn’t depend on the ability to feel a sense of ‘belonging together’ with those one co-operates with anymore.

The fourth type of economy is organized by ideological leaders. It is organized with relations of membership and contribution. Common goals and common interests provide additional meaning. To convince (others that your way of reaching goals or serving interests is the best way) or to follow others, that is the question. Contributing to the best of one’s ability to common goals and interests is normative. The defining characteristic of this fourth form of economy compared to the earlier forms is the voluntary choice to ‘belong’ or ‘not to belong’. Ideological leaders make their followers identify with their group by convincing them. ‘Belonging’ or ‘not belonging’ to groups depends on the strength of identification with their common goals and shared interests. ‘Quaternary societies’ contain even more overlapping and complementary groups. ‘Belonging’ to different groups at the same time is enabled by complex, multi-layered identities. Boundaries are even less clear-cut. They can be determined by asking whether someone contributes or not to the common goals and shared interests, however little.
‘Quaternary economies’ can pool even more resources, enable more division of labour, specialization, economies of scale etc. than tertiary ones, because people can participate in several different roles at the same time. One can be a specialist in one field and in other fields a layman, who can only follow what others propose to contribute to reaching common goals and serve shared interests. Our present economy is of course a mix of all these forms.”

Commentary: what can we say about value, P2P and the new process of socialization/recognition ?

The above has motivated me to think about ‘value’ in P2P’, here are some very preliminary ideas.

First of all, P2P is geared to the production of use value, without going through the intermediary of producing exchange value for a marketplace. This relates to the kind of value as discussed in economics.

But what about the value as we understand it in the ethical sphere? There are different ways to frame this. As explained above by Nusselder, the very choice of a P2P project to collaborate on, is determined by the fit between common values and personal values. Once we adhere and contribute to a project, we derive ‘value’, i.e. a more meaningfull life, from it. This value is also expressed in a more or less objective way, i.e. the proven use value interacts with the personal value that can be derived from it, and which is basically the match between the common and the singular, the collective and the individual. Two criteria are important:

the relative success of the project in the overall ‘marketplace’ of P2P projects. Is the resulting use value used or not, and to what extent? This kind of value translates in the relative reputation and recognition of the project as such, and the participating individuals partake in it

one’s relative contribution to the project itself, eventually measured through social accounting tools, adjudicates ‘reputation’ and ‘recognition’ within the project

both aspects will be associated when the internal reputation translates in an assocation between the persons involved, and the project

This is the Wisdom Game to which I refer to in my manuscript (the concept was inspired by Shumpei Kumon); it is of great importance since in a P2P environment, social recognition is no longer derived from physical power, from financial power, but precisely from this kind of reputation.

3 Comments Towards a Value-based Quarternary Economics

  1. Pingback: P2P Foundation » Blog Archive » Socially-centered P2P vs. business-centered P2P

  2. Pingback: P2P Foundation » Blog Archive » Dialogue with Wim Nusselder on Quarternary Economics and P2P

  3. Michel

    Two comments on the relationship between P2P theory and the quarternary economics of Wim Nusselder, which we featured before. My comments are in between the comments of Wim.

    Comment 1:

    Wim: “I have the impression that there are essential differences between my ‘quaternary economics’ and your ‘3rd mode of economics’ (from reading only bits and pieces on your website and only you e-mail, not the attachments).

    MB: Third refers to alternative to the market and the state, alternative to market allocation and corporate hierarchy, alternative to private and public property. But it is also seen as a quarternary economic stage, following reciprocity-based ‘equality matching’ gift economies; allegiance and tributary based agricultural civilizations, i.e. ‘authority ranking’; exchange based market economies, i.e. “Market Pricing”

    Wim: Quaternary economics does rely on unequivalent relationships between ideological leaders and consumers, folllowers, adherents of their ideas alias lay people. Not on peer-to-peer (equivalent) relationships.

    MB: P2P distinguishes equipotentiality from reciprocity. P2P projects are ‘anti-credentialist’, i.e. they are based on open participation, and it is the process of cooperation itself which acts as a filter. The selection is a posteriori, rather than a priori, as it would be in peer review. P2P relations are NOT based on reciprocity or equivalence, as everyone contributes according to his capacities and willingness, and uses on the basis of his needs. P2P is distinguished from gift economy projects that are based on reciprocity. P2P has leadership, usually a core leadership who initiated the project and embody the aim and principles of the project, and whose leadership is a consequence of their engagement and their capacity to inspire voluntary cooperation. But the leadership structure is dependent on that communal validation (otherwise people leave) and is intent on increasing participation.

    Wim: The core argumentation of my ‘economics of want and greed’ is conscious (planned, evaluated, rationalizable etc.) action is only a small part of people’s behaviour, so they will always need (or be vulnerable to) leadership to tell them what they want and how to organize it. An economy based on peer relationships requires requires a much larger proportion of conscious action than is humanly feasable for most of the people most of the time. Peer-to-peer relationsships can organize only small parts of real life economies where relatively small groups of people do focus their conscious efforts on the same type of wants (e.g. building software for a specific purpose). Your 3rd mode might be a direction to go after quaternary economics, but not a realistic, achievable goal in the foreseeable future.”

    MB: Yes, self-managed P2P projects only cover a small part of every individuals life, but overall, they could provide for a very large portion of immaterial needs, and a sizeable portion of physical needs. We’re not claiming that P2P is “everything”, but that it will be eventually be the central mode, which then remodels the other intersubjective modes of hierarchy, market, and reciprocity.

    Comment 2:

    Wim: “I define different types of economies (or elements of real life economies) by the type of leadership that organize them. I do so, because most of economics, most organizing how people get what they want, is done by some people for other people. Most of what I want and get (bread, habitation, clothing, news, communication facilities etc.) is organized by others for me and I couldn’t possibly organize most of it for myself. The parts of my wants that I consciously choose and for which I organize myself how to get it are a minuscule part of my wants. That’s true for everyone and will be true for everyone for ever. Our brains simply don’t have the capacity to be aware of all our real and potential behaviour and (in order to plan it and organize desired effects) all its real and possible consequences.

    MB: I absolutely agree

    Wim: Sure, P2P production (by definition characterized by a relative lack of leadership, isn’t it) is a radical and realizable alternative, but only for a marginal part of what we need. I can’t equally and openly particpate in the production of everything I need. If I were you, I wouldn’t present it as an alternative for other ways of organizing production, but rather as (usually) an addition that can only replace other types of production for a very limited range of wants. Production for what other wants besides open source software can be organized in this way? (I should look it up in your writings, but haven’t time to do so now.) I guess that for every example you mention at least 10 others can be found that can’t be organized in a P2P mode. How can you organize a family with (small) children P2P? Or health care that can mend a failing heart? Or the constructions of motorways andelectricity grids?

    MB: P2P does have leadership, it is not structure-less, but the leadership is distributed, more ad hoc, and open to phase changes according to the developmental stage of the project. As I have argued, P2P can be a major part of the new political economy, but not all of it. It will be supplemented by reciprocity base schemes, by reformed market behaviour, and a new role for the state. P2P will probably be dominant in the immaterial sphere, can be present wherever the immaterial design phase can be separated from physical implementation, and can expand to the physical economy if and when such physical capital is distributed, which is already the case in computer networks, expanding to the whole area of viral communicators and meshworks of devices. Distributed modes of financial capital are not an impossibility. However, as soon as money is exchanged for a product, we enter the reciprocity and exchange sphere. This is what I mean with the principle that P2P ‘will remodel the other modes of production’. They will be using P2P infrastructures, P2P modes of cooperation, etc…

    Wim: I don’t think types of economics (or modes of production) really disappear (or die). They mainly become relatively less important and are replaced for a few wants with newer ones in the course of social progress. It is not as radical as you present it if you take into account those who do not actually participate in the production but nevertheless use the results. They are being led by this smaller group of P2P producers. These are somehow trying to make others pay them for producing something (convince others to use it and somehow make a living of it) or they wouldn’t be able to put so much time and energy in it. Even if only by setting up a foundation to promote it. (-: By stressing the equivalence of relations between producers (as defining the mode of production) you disguise the unequivalent relations between those producers and non-producing consumers. So indeed, P2P production may actually not be different from quaternary economis, but only a subclass of it (or sometimes of tertiary economics?!) with limited applicability and a false claim of being a full alternative.”

    MB: So, this is a good conclusion to the difference between my approach and the one of Wim Nusseldorf. For him, P2P is a small subset of quarternary economics, for the P2P approach, it is the core of it: “for a commons-based civilization within a refoed market and state”

Leave A Comment

Your email address will not be published. Required fields are marked *