There’s a lot of hidden discussion going on through various list such as list-en, our p2presearch list, and others, which often are not seen by too many people.

Here is such a contribution by Stan Rhodes, the context being a dialogue with Christian Siefkes Peerconomy proposals, and whether his effort sharing scheme are a market. But beyond the specifics of this technical debate, this contribution helps in understanding the important concept of Vested Commons, which Stan proposes as the main structure of the coming p2p society (or as he calls it, Utilicontributism).

Stan Rhodes:

“I maintain that he does not understand that his weighted labor system has a market in the distribution pool. To paraphrase what I’ve said before, the market in the peerconomy system, as in all economic systems with a market, enables the exchange of product ownership and services, which are evaluated and priced. The money in the system, as in all systems, is just a unit of value that exists as debit and credit (value owed and value given). Contributions are tied to benefits with the distribution pool. So, market and money are the distribution pool, but Christian does not see it. At this point, I can only offer my analysis, and let people dig in and judge for themselves.

I see money much as E.C. Riegel did. Money is a cooperative agreement. It’s relative. To quote Riegel, “Money is a receipt for value, expressed in terms of a value unit, and is a transferable claim for an equivalent value, to be determined by competitive exchange, in which the issuer is an active vendor, whose issue conforms to the customs of a convention of participants in the monetary system.” The “customs of a convention” in Christian’s case is the structure of the distribution pool and associated voting.

I do not think Christian’s characterization of systems is accurate, either. First, the free market and capitalism are not synonymous. Without getting into a large discussion of the semantics, we must tease out principle and practice. The “capitalism” of today, in practice, has hardly any free market aspects to it, so I’m not going to use it as a term at all. Further, as I have said above, Christian is creating a free market (supply and demand in a weighted labor system is still supply and demand). Effort sharing occurs in any cooperative business that is meeting demand.

The claim that market exchange is “how to turn money into more money” is simply bogus. I’m going to assume he means a free market for the sake of discussion. A free market has buyers and sellers in cooperative agreements–mutual consent–on the values of their goods and services. Inherent in this concept is that there is no coercion or misinformation. That’s basically it, the free market in a nutshell.

One of the big problems, of course, is that there IS coercion and misinformation, meaning the free market is not a perfect market, and doesn’t achieve pareto efficiency (basically, the maximum social benefit possible for the allocation of resources across that population of participants). Joseph Stiglitz and others identified, for example, the problems of information asymmetry. Along with that is the problem of externalities.

However, the free market is a principle, and the practice is how we design a socioeconomic system that is pareto efficient, or at least, evolves in that direction.

I put forth the claim that the only way to work toward this free market is by creating rival and nonrival commons. (A rival good is anything that’s use prevents others’ use. A nonrival good does not have this rivalry.)

If we were to create a fantasy system that is democratic, equitable, and sustainable, we’d need to start with the concept that all human beings on Earth, in principle, are equal stakeholders. They should each have equal “share,” or %, of all material assets: 6.6 billion equal shares (although obviously, that number needs to begin shrinking). When a shareholder uses rival resources–material assets–beyond their “share,” they should compensate all other shareholders equally for their “resource trespass.” The concept, simply, is the more you use, the more you pay. It’s the responsible thing to do!

With nonrival commons–information–use must be open for all. This is another discussion in itself, so I’m going to continue under the big assumption that nonrival goods are open to all. As Patrick Anderson would point out, use of information does carry a rival cost (energy and matter), and that falls in the domain of the rival commons. However, the information itself is not scarce, and must be open to all to create a free market. After all, how can we maximize social benefit by creating scarcity where there is none? A person’s “share” of everything nonrival IS everything nonrival! Now, “use” from here on out will only apply to the use of rival goods.

A system of rival and nonrival “vested” commons, with everyone as equal stakeholders (that’s the “vested” part), captures all externalities of the current system. The governance of these commons must be democratic, and must be build to evolve toward “democratic efficiency.”

So, there’s the pie-in-the-sky ideal, in my view.

When it comes to work, I’m all for effort sharing. However, I think this is a “business” problem. The problem with businesses currently is that most are designed structurally and legally to maximize profit, rather than being social-purpose based. Add in our sham of a money system and you have the economic crisis we have today. Increasing awareness of the conflict between profit and social benefit, and the systemic pressure to choose profit, has led a lot of people to question the corporate model. Particularly the megacorporation. They question it for good reason!

A number of people have identified this problem independently. For example, In Creating a World Without Poverty: Social Business and the Future of Capitalism, Muhammad Yunus writes of the problem of the “profit-maximizing business (PMB)” versus the “social business.” Unfortunately we’ve legally empowered the profit-maximizing business into quite a formidable beast.

It is with Chris Cook, Muhammad Yunus, and others (and me) that we begin to hit the practical implementation of a new socioeconomic system. And actually, I think Kleiner is approaching this too, but I would argue that Marxist analysis does not recognize how relative the relationships are. Perhaps that is my misunderstanding of Marxist theory, but I will save that discussion with Kleiner for another time.

The purpose-driven business / social business / open corporate / businesstrust / whatever-you-want-to-call-it aligns all parties toward the social function of the business. You do that by having the assets held in a sort of trust structure, where an agreement/charter defines some scope of allowable use. The business can then use the assets–essentially, renting them–and that rent goes to the investors/owners of the assets proportionate to their shares. Anyone involved in the business can invest money or labor or “money’s worth” (as Cook calls it) for some share, and investors can sell their shares. Basically, price paid beyond rent cost is investment. Investors make a reasonable return, although not very high (and the various limits can be define in the charter). The asset is protected, and the business is accountable to the scope of use. This is particularly interesting when it comes to assets like land, because it’s a potential “answer” to the problem we’re having here in the States (property bubble + food + environmental issues). You can create a propertytrust LLC, or as Cook calls them, a Community Land Partnership. I’m currently working on linking these interests together because of this real–but not realized–alignment.

If that was hard to follow, I apologize. I need to make a series of graphics to explain it (I’ve made some, but they suck, and I don’t like Chris Cook’s either). You can read more about what he proposes on www.opencapital.net, although he needs to put out some updated information. I should have given him more guff at the conference for not having better figures, but we were having too good a time.

If you network all asset “trusts” together within a democratic republic (no central, established governance; my preference) or federation (central, established governance) model that agrees upon the scope of use of those assets (defined by something like a “rights and responsibilities” constitution), you essentially have a vested commons. That commons “rents” use of assets to businesses, and the cost of use is paid evenly to the stakeholders, i.e. the global population is compensated fairly for the use of their equity. To use the community land partnership as an example, a republic composed of those constituent organizations can make the “one Earthling, one equal share of land” a reality.

If everyone is renting from everyone equally, then those who use the most pay the most. They are compensating others for their overuse (use beyond their entitlement or “fair share”) of resources. This models equity and sustainability properly in the socioeconomic system, although obviously there must be at least some layers of governance holding it together.

To return to effort sharing, in a proper free market, credit is used as an expression of need or desire. Those who need the most–those who use the least rival goods, the poor–are paid the most. The system’s feedback loops ensure the worse off are the most empowered to improve their “lot.” The demand of those needs and desires is met by the supply created by purpose-driven businesses, very likely consisting of those with the needs (again, the poor). Here, we will see the continuing emergence of peer production–I’m going to define this as “voluntary, purpose-driven participation in production”–because people are no longer coerced (or coercing others, or both) into their current socioeconomic “roles” in the system. They solve the problems they want to, and they rank them both by credit created for a purpose, and by their own time investment. Efforts in such a system are usually shared (there still may be 1-person efforts and disagreements on how to do something), and competition is emulsified in cooperation because rival goods are held in a state of equity. I call this socioeconomic model “utilicontributism,” because use is balanced with contribution: it’s only fair!

Granted, if you earn a lot by working hard, or by having special skills that are in high demand, you could use more resources than the average person. “Work hard, play hard,” right? However, playing hard doesn’t necessarily mean resource use, and I think a lot of us could argue that truly, resource use doesn’t have much to do with playing hard–and having fun–at all. Thus, I don’t think this “problem” is much of a problem. The issue is balanced: they can only play as hard as they’ve earned.

To revisit the peerconomy one last time, I think aspects of it are the present or future (the aspects that touch or cover peer production), but I also think it takes the constituent parts of the free market, and shuffles them a little while renaming them. There are egalitarian communities that use effort sharing as explicitly valued in time and, I think to some extent, a primitive form of weighing labor, even if it’s unwritten. As a matter of scale, this sort of mental auctioning and bookkeeping makes the most sense with small groups. These groups have created a local free market! The “money” is mental: it’s value owed and value paid, as accounted for by the members in their brains. The problem of trying to scale weighted labor beyond a small group of people is that an accounting system is needed, which Christian has created. Without even looking at the efficiency and cheat-ability problems of the peerconomy proposal that I have brought up before, my point is this: pull back the curtain, and the same free market mechanics are there. I think most economists would agree, they have to be. Money is a relationship, and the free market is an egalitarian / equitable / democratic ideal.

The question is, how do we get to an ideal free market from here? The answer to that is emerging, but the implementation is not inevitable. The whole of human history shows that the collapse of a power structure does not guarantee the creation of a better one in its stead. What’s crystal clear is that, if we as a society or species were aiming for the free market ideal, we’ve surely failed. And I think if we weren’t aiming for it, we should be.”