Curated by: Luigi Canali De Rossi

Monday, March 6, 2006

P2P Economics: A Design Vision For A Commons-Based Distributed Marketplace

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Michel Bauwens concludes his major essay on P2P economics by looking at the opportunities that would lead the economics of peer to peer to become increasingly important forces in the emerging new rich marketplaces created by information surplus, distributed technology, and by those instances where the process of design may be separated from the process of physical production.

Photo credit: Kirsty Pargeter

As he writes:

  1. "Huge capital outlines for production can co-exist with a reliance on P2P processes for design and conception.

  2. P2P can arise wherever financial capital can be distributed. Initiatives such as the ZOPA bank point in that direction. Cooperative purchase and use of large capital goods are a possibility. State support and funding of open source development is another example.

  3. P2P could be expanded and sustained through the introduction of universal basic income.

Is this really possible?

What are the economic and political thought foundations on which this vision can be realized?

What are the pros and cons of raising the status of P2P to one of a widely supported economic mode of production?

These and others are the challenging questions that Michel Bauwens attempts to answer and clarify in this timely, well researched and radically independent look at the future of peer to peer as a truly potentially transformative force for our society, in sociological, political and economic terms.

Photo credit: Andriy Doriy

P2P and the Market: The Immanence vs. Transcendence of P2P

P2P and the Market

P2P exchanges can be considered in market terms only in the sense that individuals are free to contribute, or take what they need, following their individual inclinations, with a invisible hand bringing it all together, but without any monetary mechanism.

They are not true markets in any real sense: neither market pricing nor managerial command are required to make decisions regarding the allocation of resources. There are further differences:

  1. Markets do not function according to the criteria of collective intelligence and holoptism, but rather, in the form of insect-like swarming intelligence. Yes, there are autonomous agents in a distributed environment, but each individual only sees his own immediate benefit.

  2. Markets based on 'neutral' cooperation, and not on synergistic cooperation: no reciprocity is created.

  3. Markets operate for the exchange value and profit, not directly for use value.

  4. Whereas P2P aims at full participation, markets only fulfill the needs of those with purchasing power.

The disadvantages of markets include:

  1. They do not function well for common needs that do not involve direct payment (national defense, general policing, education and public health).

  2. In addition, they fail to take into account negative externalities (the environment, social costs, future generations).

  3. Since open markets tend to lower profit and wages, they always give rise to anti-markets, where oligopolies and monopolies use their privileged position to have the state 'rig' the market to their benefit.

P2P and Capitalism

Despite significant differences, P2P and the capitalist market are highly interconnected. P2P is dependent on the market and the market is dependent on P2P.

Peer production is highly dependent on the market for peer production produces use-value through mostly immaterial production, without directly providing an income for its producers. Participants cannot live from peer production, though they derive meaning and value from it, and though it may out-compete, in efficiency and productivity terms, the market-based for-profit alternatives.

Thus peer production covers only a section of production, while the market provides for nearly all sections; peer producers are dependent on the income provided by the market. So far, peer production has been created through the interstices of the market.

But the market and capitalism are also dependent on P2P. Capitalism has become a system relying on distributed networks, in particular on the P2P infrastructure in computing and communication. Productivity is highly reliant on cooperative teamwork, most often organized in ways that are derivative of peer production's governance. The support given by major IT companies to open-source development is a testimony to the use derived from even the new common property regimes.

The general business model seems to be that business 'surfs' on the P2P infrastructure, and creates a surplus value through services, which can be packaged for exchange value. However, the support of free software and open sources by business poses an interesting problem.

Is corporate-sponsored, and eventually corporate managed, FS/OS software still 'P2P'?: Only partially.

If it uses the GPL/OSI legal structures, it does result in common property regimes. If peer producers are made dependent on the income, and even more so, if the production becomes beholden to the corporate hierarchy, then it would no longer qualify as peer production. Thus, capitalist forces mostly use partial implementations of P2P. The tactical and instrumental use of P2P infrastructure, (collaborative practices) is only part of the story. In fact, contemporary capitalism's dependence on P2P is systemic.

As the whole underlying infrastructure of capitalism becomes distributed, it generates P2P practices and becomes dependent on them. The French-Italian school of 'cognitive capitalism' stresses that value creation today is no longer confined to the enterprise, but beholden to the mass intellectuality of knowledge workers, who through their lifelong learning/experiencing and systemic connectivity, constantly innovate within and without the enterprise.

This is an important argument, since it would justify what we see as the only solution for the expansion of the P2P sphere into society at large: the universal basic income. Only the independence of work and the salary structure can guarantee that peer producers can continue to create this sphere of highly productive use value.

Does all this mean that peer production is only immanent to the system, productive of capitalism, and not in any way transcendent to capitalism?

P2P and the Netarchists

More important than the generic relationship that we just described, is the fact that peer to peer processes also contribute to more specific forms of distributed capitalism.

The massive use of open source software in business, enthusiastically supported by venture capital and large IT companies such as IBM, is creating a distributed software platform that will drastically undercut the monopolistic rents enjoyed by companies such as Microsoft and Oracle, while Skype and VoIP will drastically redistribute the telecom infrastructure.

In addition, it also points to a new business model that is 'beyond' products, focusing instead on services associated with the nominally free FS/OS software model.

Industries are gradually transforming themselves to incorporate user-generated innovation, and a new intermediation may occur around user-generated media. Many knowledge workers are choosing non-corporate paths and becoming mini-entrepreneurs, relying on an increasingly sophisticated participatory infrastructure, a kind of digital corporate commons.

The for-profit forces that are building and enabling these new platforms of participation represent a new subclass, which I call the netarchical class. If cognitive capitalism is to be defined by the primacy of intellectual assets over fixed capital industrial assets, and thus on the reliance of an extension of IP rights to establish monopolistic rents, (as the vectoral capitalists described by Mackenzie Wark derive their power from the control of the media vectors) then these new netarchical capitalists prosper from the enablement and exploitation of the participatory networks.

It is significant that Amazon built itself around user reviews, eBay lives on a platform of worldwide distributed auctions, and Google is constituted by user-generated content.

However, although these companies may rely on IP rights for the occasional extra buck, it is not in any sense the core of their power. Their power relies on their ownership of the platform.

More broadly, netarchical capitalism is a brand of capital that embraces the peer to peer revolution, all those ideological forces for whom capitalism is the ultimate horizon of human possibility. It is the force behind the immanence of peer to peer. Opposed to it, though linked to it in a temporary alliance, are the forces of Common-ism, those that put their faith in the transcendence of peer to peer, in a reform of the political economy beyond the domination of the market.

Photo credit: Robert Redelowski

Transcendent Aspects of P2P

Indeed, our review of the immanent aspects of peer to peer, on how it is both dependent and productive of capitalism, does not exhaust the subject. P2P has important transcendent aspects which go beyond the limitations set by the for-profit economy:

  • peer production effectively enables the free cooperation of producers who have access to their own means of production

  • and the resulting use-value of the projects supercedes for-profit alternatives

Historically, though forces of higher productivity may be temporarily embedded in the old productive system, they ultimately lead to deep upheavals and reconstitutions of the political economy. The emergence of capitalist modes within the feudal system is a case in point. This is particularly significant because leading sectors of the for-profit economy are deliberately slowing down productive growth (in music; through patents) and trying to outlaw P2P production and sharing practices:

  • peer governance transcends both the authority of the market and the state

  • the new forms of universal common property, transcend the limitations of both private and public property models and are reconstituting a dynamic field of the Commons

At a time when the very success of the capitalist mode of production endangers the biosphere and causes increasing psychic (and physical) damage to the population, the emergence of such an alternative is particularly appealing, and corresponds to the new cultural needs of large numbers of the population.

The emergence and growth of P2P is therefore accompanied by a new work ethic (Pekka Himanen's Hacker Ethic), by new cultural practices such as peer circles in spiritual research (John Heron's cooperative inquiry), but most of all, by a new political and social movement which is intent on promoting its expansion.

This still nascent P2P movement, (which includes the Free Software and Open Source movement, the open access movement, the free culture movement and others) which echoes the means of organization and aims of the alter-globalization movement, is fast becoming the equivalent of the socialist movement in the industrial age.

It stands as a permanent alternative to the status quo, and the expression of the growth of a new social force: the knowledge workers.

In fact, the aim of peer to peer theory is to give a theoretical underpinning to the transformative practices of these movements. It is an attempt to create a radical understanding that a new kind of society, based on the centrality of the Commons, and within a reformed market and state, is in the realm of human possibility.

Such a theory would have to explain not only the dynamic of peer to peer processes proper, but also their fit with other inter-subjective dynamics. For example, how P2P molds reciprocity modes, market modes and hierarchy modes; on what ontological, epistemological and axiological transformations this evolution is resting; and what a possible positive P2P ethos can be.

A crucial element of such a peer to peer theory would be the development of tactics and strategy for such transformative practice.

The key question is: can peer to peer be expanded beyond the immaterial sphere in which it was born?

The Expansion of the P2P mode of production

Given the dependence of P2P on the existing market mode, what are its chances to expand beyond the existing sphere of non-rival immaterial goods?

Here are a number of theses about this potential:

  1. P2P can arise not only in the immaterial sphere of intellectual and software production, but wherever there is access to distributed technology: spare computing cycles, distributed telecommunications and any kind of viral communicator meshwork.

  2. P2P can arise wherever other forms of distributed fixed capital are available: such is the case for carpooling, which is the second most used mode of transportation in the U.S.

  3. P2P can arise wherever the process of design may be separated from the process of physical production. Huge capital outlines for production can co-exist with a reliance on P2P processes for design and conception.

  4. P2P can arise wherever financial capital can be distributed. Initiatives such as the ZOPA bank point in that direction. Cooperative purchase and use of large capital goods are a possibility. State support and funding of open source development is another example.

  5. P2P could be expanded and sustained through the introduction of universal basic income.

The latter, which creates an income independent of salaried work, has the potential to sustain a further development of P2P-generated use-value. Through the 'full activity' ethos (rather than full employment) of P2P, the basic income receives a powerful new argument: not only as efficacious in terms of poverty and unemployment, but as creating important new use-value for the human community.

However, as it is difficult to see how use-value production and exchange could be the only form of production, it is more realistic to see peer to peer as part of a process of change. In such a scenario, peer to peer would both co-exist with and profoundly transform other intersubjective modes.

A Commons-based political economy would be centered around peer to peer, but it would co-exist with:

  • A powerful and re-invigorated sphere of reciprocity (gift-economy) centered around the introduction of time-based complementary currencies.

  • A reformed sphere for market exchange, the kind of 'natural capitalism' described by Paul Hawken, David Korten and Hazel Henderson, where the costs for natural and social reproduction are no longer externalized, and which abandons the growth imperative for a throughput economy as described by Herman Daly.

  • A reformed state that operates within a context of multistakeholdership and which is no longer subsumed to corporate interests, but act as a fair arbiter between the Commons, the market and the gift economy.

Such a goal could be the inspiration for a powerful alternative to neoliberal dominance, and create a kaleidoscope of 'Common-ist' movements broadly inspired by such goals.

end of Part III (of three)

Part I: P2P-Based Economy: The Political Power Of Peer-To-Peer Networks

Part II: P2P Economic Potential As An Alternative Production Approach

Originally published as: "The Political Economy of Peer Production"
on January 12th 2005
Arthur and Marilouise Kroker, Editors

For more information:

Pluralities/Integration monitors P2P developments

A longer manuscript and book-in-progress on the subject

The Foundation for P2P Alternatives


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About the author:
Michel Bauwens (1958) is a Belgian integral philosopher and Peer-to-Peer theorist. He has worked as an internet consultant, information analyst for the United States Information Agency, information manager for British Petroleum (where he created one of the first virtual information centers), and is former editor-in-chief of the first European digital convergence magazine, the Dutch language Wave. With Frank Theys, he is the co-creator of a 3 hour documentary TechnoCalyps, an examination of the 'metaphysics of technology'. He taught and edited two French language anthologies on the Anthropology of Digital Society.

Although a student of Ken Wilber's integral theory for many years, he has recently become critical of aspects of the Wilber-Beck movement, and is a powerful voice for a non-authoritarian peer-to-peer based integral society.

Michel is the author of a number of on-line essays, including a seminal thesis Peer to Peer and Human Evolution, and is editor of P2P News
He now lives in Chiang Mai, Thailand, where he created the Foundation for P2P Alternatives and maintains a blog.

He has taught courses on the anthropology of digital society to postgraduate students at ICHEC/St. Louis in Brussels, Belgium and related courses at Payap University and Chiang Mai University in Thailand.

Michel Bauwens -
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posted by Robin Good on Monday, March 6 2006, updated on Tuesday, May 5 2015

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