A few days ago, we pointed to a remarkable presentation by Frank Pasquale, who showed how the new ‘netarchical’ corporations like Google, Facebook, Uber or AirBnB are taking over more and more former ‘state’ and ‘governmental’ functions, replacing democratically accountable public power (however feeble that accountability can sometimes be), by what he calls ‘Functional Governance’. This effect is strengthened by the emergence and fast growth of the tokenized economy, which is a different attempt to arrive at the same result. A good way to look at the token economy is to see it as an attempt by developers and the creative class to recapture market value away from shareholders, and create some kind of neo-guild system through distributed platforms. Tokens indeed allow market value to be captured directly by those who design and work on the platforms. However, it is important to stress that most token-based projects do not in any way challenge the extractive functioning of the market economy, and are, despite their distributed design, subject to power law dynamics. What is not understood is that merely equal structures, designed as competition for scarce resources, actually naturally evolve (power law concentration, i.e. at each iteration, those that are stronger gain more advantage) toward oligarchy, as all those who ever played the game of Monopoly should understand readily. So the effect of the centralized netarchical platforms and the so-called ‘distributed’ anarcho-capitalist structures such as Bitcoin and many (but not all!) other token-based blockchain applications, lead to the same effect: unaccountable and undemocratic private ‘money’ power is strengthened.

They are in effect becoming ‘corporate sovereigns’ with transnational power that dwarfs the power of progressive cities and declining nation-states. Surely, the authoritarian solutions of the emerging national-populists are not the right response to this, and similarly, we believe that left-populist attempts that merely want to revive a more welfare-oriented nation-state are not the right response, especially in the context of global environmental crisis.

In some paradoxical sense, we believe there is a silver lining to this because these practises shed new light on an old debate between the emancipatory traditions of the left, namely the discussion on the ‘withering away’ of the state.

In the 19th century already, anarchists claimed that the state should be abolished forthwith, to be replaced by the ‘free association’ of collectives representing free producers. But the marxists argued, in my view correctly, that in any unequal society, abolishing the systemic role of the state in maintaining equilibrium, is simply a recipe for replacing public power with the raw power of a privately militarized ruling class (paramilitary militias, etc.. ). While anarchists imagined that the homeless would squat empty housing without police opposition, the reality is more likely to be that they would be murdered by paramilitaries in employ of the owner class.

Hence the idea of the withering away of the state. In this scenario, the working class movements would either gradually (the social-democratic version) or more forcefully and directly, take over state power, but with the clear aim of gradually replacing state functions (this was expressed by Marx in his two-stage theory, whereby socialism is still marked by both the logic of exchange and the role of the state, and only the second stage is characterized by a complete disappearance of a separate state function).

Ironically, the paradox today is that this more radical scenario is now echoed in the tactics of the corporate sovereigns AND the libertarian inspired token economy! Through the superior efficiency of their model of ‘privatized mutualization’ ( i.e. private platforms that efficiently bring together supply and demand), their control over user data and capacity to nudge human behavior, as well as their ability to directly syphon ‘surplus value’ through these platforms, they are performing formerly public functions (think about ridesharing competing with public transport or deregulated house-sharing replacing regulated hotels, etc..). The whole world is becoming a shopping mall, with free speech and other rights eroded through the absolute rights of private property.

A “withering of the State” is no longer the sole province of utopian scenarios. In fact, the invasive and deregulatory practises of netarchical platforms show what a dystopian dismantling of the State looks like. In contrast, at the P2P Foundation we contend that there is a way to hack this process toward better futures, futures where emancipatory forces can increasingly take over bureaucratised state functions while solving environmental and equity issues in the process. Indeed, civic initiatives, concerned about the social and environmental equilibrium of urban life, are also showing functional governance at work! Precisely because cooperative forms of governance and ownership can retain the surplus for their own development and to create livelihoods for their contributors, they show promise to outcooperate netarchical platforms, especially if they can form cooperative eco-systems.

We outlined such a scenario in our recent report, Changing Societies through Urban Commons Transitions.

As we discovered in our mapping and study of 500 urban commons in the Flemish city of Ghent, nearly all provisioning systems (mobility, housing, etc.) are now covered by still marginal, but growing emerging commons-centric alternatives. In Ghent and the Flanders, as in other cities and regions of Europe, there is a tenfold increase of commons-based initiatives in the last ten years. However, unlike the private platforms, they are undercapitalized, and often fragmented.

How can this fragmentation be solved ?

Here is our proposal:

  • Imagine that for every provisioning system, there exists open source software depositories needed to organize such provisioning, a kind of github for MuniRide and FairBnB type solutions
  • In order to finance and scale these solutions, we propose alliances of cities, cooperatives, and even unions, to create the material conditions for global scaling of peer to peer and commons-based solutions
  • Locally, say at the city or bioregional levels, the local versions of these coalitions create multi-stakeholder owned and governed platform cooperatives. These platform coops use the global software depositories but adapt and change them to the local contexts and necessities, but also contribute on making the common codebase better and better, adding more and more functionalities over time. Note that all the platform surplus can now be re-invested, not as dividends for remote owners, but in the common development of the infrastructure and in better livelihoods for all contributors.
  • The fourth level then, is not just exchange, but actual production. Indeed, at this stage urban commons are distributing differently but not producing the goods themselves. However, we envisage a cosmo-local production system, in which the global commons described above, are matched with local and redistributed production through microfactories, which are also open cooperatives, i.e coops that do not just capture value from their own members, but are committed to create commons that benefit the wider community.

I have no doubt that in these endeavours, we can learn a lot from the development of the private platform and extractive token economies, as we can redesign the tokens for contributory justice, while also being conscious of reducing the human footprint on nature. The good news is that cooperative mutualization can achieve that. Mutualization of physical infrastructures is the golden way to reducing the human footprint, and it can be combined with more just distribution of rewards, while also guaranteeing the full sharing of knowledge.

The key to success, in our opinion, is to think trans-locally and transnationally!

To summarize the spatial or geographic logic of our approach:

  • Local, urban, bioregional initiatives produce and exchange for social need close to their user base
  • But they use trans-local and trans-national knowledge bases
  • Participants produce locally, but can organize trans-national and equitable knowledge-guilds and global transnational entredonneurial coalitions

The role of progressive majorities at the nation-state level is to strengthen these local and trans-national infrastructures, and to create enduring socially just and environmentally balanced provisioning systems that, through their functional — but in this case also democratic — ‘commons governance, can outperform private, extractive, transnational power structures. In order to do this, the state has to be transformed into a partner state, that insures the meta-governance at the territorial level. A ‘partner state’ is not a transition which requires a magical transformation of the current state apparatus from one day to the next. It could take the form of a progressive coalition’s growing commitment to endorse and facilitate functional governance arrangements that are participatory, democratic and managed through public-commons governance arrangements. The Partner State also applies to any interstitial area of governmental structure, at every level, where sympathetic functionaries and politicians can be found to support commons-oriented alternatives; think of Partner towns, cities, bioregions or larger transnational structures To the degree that cooperative and public-commons forms of provisioning are initiated and grow, we will succeed in a withering away of bureaucratic and authoritarian state functions, by more democratic forms rooted in civil society participation.

But note that we stress the role and function of new trans-national structures beyond the nation-state in this process of transformation.


  1. classical industrial capitalism can be considered to be a three-in-one integrated structure of capital-state-nation, to which the double-movement logic uncovered by Karl Polanyi applied:
  2. Meaning that, whenever the market function ‘freed’ itself from state and civic regulation, it destabilized society, leading to popular mobilizations to re-embed the market into society
  3. However, with trans-nationalized capital, nation-state regulation is now enfeebled, and both right-wing national populism and left-wing social populism have failed to show a way forward
  4. Then it follows that to substantively re-balance our societies, we need counter-hegemonic power at the trans-national, trans-local level

The good news is that these powers are emerging:

  • Global open source communities and other global productive communities based on peer to peer dynamic and the commons are on the rise;
  • Global entrepreneurial coalitions have formed around these open source knowledge bases, and a growing fraction of these are consciously generative coalitions, seeking to generate support for the commons and the livelihoods of the commoners
  • Global coalitions of cities (and coops, unions, ethical capital) can perform the common good function at this trans-national level, creating global trusts that underwrite these new commons-based global infrastructures

This is Functional Governance 3.0, a withering of the state that is democratically accountable beyond the nation-state level.

Photo by Nathan Laurell

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