Curated by: Luigi Canali De Rossi

Friday, March 6, 2009

How Peer Production And The Economic P2P Model Can Subvert The World Of Physical Production

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Is it true that the same method of peer and open production that has been dominating the world of open source software and freely available (often user-generated) content on the internet, is now also deeply influencing the way we think about designing and even making things?

Photo credit: itestro

Peer production occurs when communities of volunteers create open content that is meant to be usable, shareable, and freely redistributable by everybody.

Though this approach has proven to work great on the Web (think of Linux), is peer production ready to subvert the economic models of the physical world?

The capitalistic-based market, which is the economic system where you and I live and work inside, works pretty much this way:

"Means of production are privately owned, corporations are internally organized as hierarchies, and resources are allocated through the signals that are given through market prices. If the profit is interesting enough, corporations will allocate resources in that direction and pay the necessary staff."

Peer production instead, promotes a different system based on open knowledge, software and design communities. Members are first-hand connected with production companies, and fund their members directly. But not only. Companies indirectly support the infrastructure of cooperation of the commons on which they depend, sharing back the benefits with the open design communities.

For an in-depth view of P2P-based, peer production, and how open communities and open design work, follow Michel Bauwens, the world P2P evangelist inside this explanatory article and decide for yourself whether this an emerging reality or just a dream.


The Emergence of Open Design and Open Manufacturing

by Michel Bauwens


Readers of WE Magazine will be familiar with the emergence and proliferation of a new form of value creation, peer production (as first defined by Yochai Benkler), in which communities of volunteers (but also in fact mostly paid creators and programmers once a project is successful) create (open) content or (free) software, that is usable and accessible by everybody.

Typical for peer production is that the producers create products (with both concepts being essentially misleading in this case!) in such a form that they form a commons which can be used and modified by others, who return it improved to the same common pool. These producers can be volunteers or paid programmers or authors, often both operating as a cooperative ecology between communities and the companies that create market-based spin-offs from that same commons.

As a typical example, Linux and its derivatives come to mind, which have created a $36 billion economy.

It is very tempting to limit such emergence to the field of immaterial production, but we want to show in this article that the same method of production that has come to dominate the world of open source software and freely available (often user-generated) content on the internet, is now also deeply influencing the way we think about designing and even making things.

Before we describe this emergence, a few definitions as well as a basic explanation of why the peer production makes so much sense.


The Emergence of the Internet As Enabling Peer Production


Before the advent of the internet as a tool that can now be used by at least one billion humans, there were already three ways to conceive of production.

  1. The first is the, now almost-defunct, state-based system that was typified in the Soviet system, in which the productive resources were state-owned, and where the state organized production and allocated resources based on centralized planning.

  2. The second is of course, market-based capitalism, in which the means of production are privately owned, corporations are internally organized as hierarchies, and resources are allocated through the signals that are given through market prices. If the profit is interesting enough, corporations will allocate resources in that direction and pay the necessary staff.

  3. The third and minor form was cooperative production, in which workers or other members would own the collective capital, and have some form of internal and more democratic decision-making. However, such cooperatives would still generally operate in the marketplace and subject to the same external dynamics as corporate firms. In our context, I will therefore not consider it as a separate mode of production, but rather as a variant to the market.


Peer Production Can Be Divided in Three Distinct Processes


Peer production however is a genuinely new form of production, which is based on what I call permission-less self-aggregation around the creation of common value. It can be divided in three distinct processes:

  1. On the input side, we have voluntary contributors, who do not have to ask permission to participate, and use open and free raw material that is free of restrictive copyright so that it can be freely improved and modified. If no open and free raw material is available, as long as the option exists to create new one, then peer production is a possibility.

  2. On the process side, it is based on design for inclusion, low thresholds for participation, freely available modular tasks rather than functional jobs, and communal validation of the quality and excellence of the alternatives (I call this peer governance).

  3. On the output side, it creates a commons, using licenses that insure that the resulting value is available to all, again without permission. This common output in turn recreates a new layer of open and free material that can be used for a next iteration.

Incomplete variations on this model are possible. For example, contributors could be paid, and even work for hierarchal corporations, but still put the resulting work in the commons, where it is available for further peer improvements. In fact, for Linux and many free and open source software projects, this is the main reality, with nearly three quarters of Linux programmers being paid by companies.

This mode of production works because certain technical conditions have been created for immaterial production.

  1. First of all, contemporary knowledge workers, unlike factory workers, basically own or control their own means of production: i.e. their brain, computers, and access to the socialized network that is the internet. Since they control their own contributions, they are able to voluntarily contribute them.

  2. Because content and software can be digitally reproduced, and the cost of such reproduction is marginal once it has been produced a first time, it can be universally available through digital copying, is therefore not scarce, and thus operates outside the supply and demand tension necessary for a market.

  3. Because of the internet, it is now possible to cheaply coordinate a multitude of individuals and small groups on a global scale, without needing centralized command and control hierarchies. It is not difficult to conceive why such form of production is highly productive.


Peer Production As a Different Economic Model


Pre-capitalist modes were essentially coercive (slavery, serfdom, etc...), therefore requiring an expensive apparatus of coercion. Such fear-driven processes were very detrimental to motivation and innovation, breeding fatalism as a general attitude in such civilizations.

Capitalism on the other hand, based on self-interest and the exchange of equal value, creates a positive external motivation based on the expected return. However, in terms of motivation, it is absent when such return is not available. Innovation in a for-profit driven system can only be relative, based on the need to outcompete rivals, but staggers as soon as a monopoly situation is achieved. Finally, actors in the market look only at their own interest, and are structurally unable to take into account external factors.

In other words, the aim of the market is not to innovate per se, nor to make a good or best product, and in fact much energy in corporations is devoted to make their products sub-optimal. For example, typical for closed source or proprietary software is that you are prohibited from improving the product!!

The contrast with the dynamics of peer production could not be greater. It is based on passionate individuals, and open communities strive for absolute quality and innovation, not just relative quality or innovation. The aim of the Firefox browser for example, is to make the best possible browser on an ongoing basis, and because it is non-proprietary, it allows anyone to improve it through a great variety of plug-ins.

In practice however, most peer production allies itself with an ecology of businesses. It is not difficult to understand why this is the case. Even at very low cost, communities need a basic infrastructure that needs to be funded. Second, though such communities are sustainable as long as they gain new members to compensate the loss of existing contributors; freely contributing to a common project is not sustainable in the long term.

In practice, most peer projects follow a 1-10-99 rule, with a one percent consisting of very committed core individuals. If such a core cannot get funded for its work, the project may not survive. At the very least, such individuals must be able to move back and forth from the commons to the market and back again, if their engagement is to be sustainable.

Peer participating individuals can be paid for their work on developing the first iteration of knowledge or software, to respond to a private corporate need, even though their resulting work will be added to the common pool. Finally, even on the basis of a freely available commons, many added value services can be added, that can be sold in the market. On this basis, cooperative ecologies are created.

Typical in the open source field for example, is that such companies use a dual licensing strategy. Apart from providing derivative services such as training, consulting, integration etc., they usually offer an improved professional version with certain extra features, that are not available to non-paying customers.

The rule here is that one percent of the customers pay for the availability of 99% of the common pool. Such model also consists of what is called benefit sharing practices, in which open source companies contribute to the general infrastructure of cooperation of the respective peer communities.

Now we know that the world of free software has created a viable economy of open source software companies, and the next important question becomes: Can this model be exported, wholesale or with adaptations, to the production of physical goods?


The Expansion of Peer Production to the World of Physical Production

"The Bug is a general-purpose Linux computer designed and manufactured by Bug Labs. A completely open hardware, it can be customized with different additional modules (GPS, camera, Wi-Fi adapter, USB, etc.)" (Source: TechCrunch)

The general rule to understand these dynamics and the separation between the immaterial and material world is the following:

For any immaterial project, as long as there is a general infrastructure for the cooperation, and open and free in-put that is available or can be created, then knowledge workers can work together on a common project.

However, to produce physical goods, there are inevitable costs of getting the capital together, and there needs at least to be cost recovery. Indeed such goods are by definition rival, i.e. if they are in possession of one individual, they are more difficult to share, and also, once used up, they have to be replenished.

Because of this essential difference, we can easily see that the same process cannot be used for both aspects of production of material things.

Nevertheless, and this is a key argument: anything that needs to be produced, first needs to be designed.

And designing a physical object, whether it is a car, a solar roof or a circuit board, is an immaterial software-based process depending on collaborating brains.

So the first thing that comes to mind is a collaboration between open design communities on the one hand, and producing factories on the other hand. This is indeed what is happening and emerging on a global scale.

Eric von Hippel, in his landmark book on The Democratization of Innovation has documented massive levels of such cooperation, at many levels in the industrial world, and with some sectors, like extreme sports, mostly consisting of voluntary tinkerers associated with production workshops.

Nevertheless, we have to acknowledge that there are much greater difficulties to achieve this.

  1. First of all, there are much more serious feedback loops necessary between design and production, as real products need to be tested in the physical world.

    Also, the tools are different, and required that 3D-based design tools such as CAD / CAM be available, that video should be used to show the practicalities of usage, and much more distant real-time collaboration needs to take place. But difficult does not mean impossible!!

  2. The other main difference is that capital is needed for physical implementation and production. So open design communities need to be much more closely allied to existing players. What good is it to design an open source car, if nobody is willing to make it??

But I hope the readers can intuitively sense how much sense this approach makes, for much of the same reasons than free software and open knowledge do: the physical products can be improved by everybody, not just paid employees, and such contributors have no fundamental reason to design products sub-optimally, i.e. less good than they could be.

For this major transformation to take place however, it is also necessary to conceive of physical production in a much more modular way. This is the approach undertaken for example by Bug Labs, who offers an electronic device that can be modularly compose, with the customer choosing particular pieces that need to be put together.

So rather than imagining one community working with one company, as is done in a lot of co-design and co-creation projects, imagine rather a global community of tinkerers, but also a global community of physical production houses, that can download the design and can produce things much more locally.

Achieving such a fundamental change in the conception of how we make things, would require a fundamental redesign of the whole global supply chain, and as improbable as it sounds, it is in fact already happening.

Recall that peer to peer requires that producers can voluntarily congregate around common projects. In physical terms that means that we need such a miniaturization and distribution of physical and financial capital goods, that producers can also congregate and say, let's do this, here's my piece of capital.


The Distribution of Open Manufacturing


Manufacturing is indeed subject to the same process of miniaturization that computers once were. Consider the following underlying trends:

Mail-order machining means that you can design your own product, and a company will then deliver the item at your doorstep (spreadshirt, threadless). Desktop manufacturing means that you can design your own product, but also basically produce it yourself. This is already possible because of developments in 3D printing, whereby plastic designs can be produced with cheaper and cheaper machines.

Industry itself is increasingly using rapid and flexible manufacturing techniques, which require a fundamentally new philosophy concerning machines: not so much hyper-specialized, hyper-expensive and needing centralization, but rather conceiving as production through a universal machine that can be adapted quickly and inexpensively to new needs and processes. As such machines become smaller, more distributed and cheaper, then their available for more local production will increase dramatically.

Personal fabrication, as being developed through the FabLab communities and the RepRap, is the culmination of such a process.


P2Peering The Physical World


We see the same innovation in financial capital. After the Peak Debt breakdown, we see a strong push to make finance more available in a distributed fashion.

One of the trends is of course social lending, allowing individuals to lend to each other. Another is a strong revival of complementary currencies based on mutual credit. The advantage is that credit is created through the participants themselves, without having to depend on the more scarce official money, and that an independence is achieved from centralized banks. Complementary currencies are also known to keep more of the financial flow within local communities.

So the new picture becomes clearer: cheaper production tools, coupled with peer-to-peer financing and peer-to-peer money, allows us to conceive of physical production as occurring much closer to the point of need. Such potential re-localization is not regressive however, but high-tech, and does not create isolation, because it is equally dependent on global tinkering and open design communities that operate on the scale of the world.

So the vision becomes clearer. We already have a peer-to-peer technological and media infrastructure, and we have new organizational models based on open collaboration regarding know-ledge, software, and design. We have increasing access to more distributed machinery allowing us to conceive of more localized production of such open designs. We have much lower capital requirements, but when we do need capital for cost-recovery of physical production, we have access to much more distributed capital through mutual credit and social lending.

None of these trends is fully realized, but, though they can be conceivably derailed, there is very strong evidence that they are moving and evolving in that direction.


P2P Energy


What else do we need? Well, the missing piece is not difficult to guess, it's a distributed P2P Energy Grid!!

The rationale for distributing energy is pretty straightforward since allowing people the tools to generate renewable energy also means an independence from centralized utilities and to sustain more localized production, which is the important aspect in the context of this article.

Excess energy can be given, traded or sold, having the additional benefit that those of us who use demonstrably less energy will receive an income from those that use an excess of energy.


In Conclusion

I hope readers of this overview can now have a clearer picture of how a peer-to-peer world may be fashioned. It would consist of open knowledge, software and design communities, whose members are connected with production entities (companies, cooperatives), who fund their members directly, but also indirectly support the infrastructure of cooperation of the commons on which they depend, practicing benefit sharing, so that the benefits flow back to the open design communities.

Productive entities would be more enabled to produce locally, using energy from a peer-to-peer oriented grid, and using peer-to-peer money for the exchange of rival goods, while immaterial and culture goods would be freely exchanged and shared by the whole of humanity.

This is not an utopia, but the very necessity for the survival of our planet.

Indeed, we only do two things wrong, and we have to reverse them:

  • We think that nature is infinite, which is false, and so we practice a pseudo-abundance which destroys the planet.
  • We think that intellectual and cultural goods should be made artificially scarce, thereby crippling the sharing of innovations.

If we can overturn both, i.e. combining a recognition of the real scarcity of physical goods with the real abundance of immaterial goods, we have a new and sustainable civilization, based on peer to peer principles.

Originally written by Michel Bauwens and first published on WE Magazine on February 1, 2009 as "The Emergence of Open Design and Open Manufacturing".

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.

To know more you can visit these sections of the P2P Foundation wiki:

Photo credits:
The Emergence of the Internet As Enabling Peer Production - Natalia Lukiyanova
Peer Production Can Be Divided in Three Distinct Processes - Rafael Angel Irusta Machin
Peer Production As a Different Economic Model - Sunagatov Dmitry
The Expansion of Peer Production to the World of Physical Production - Bug Labs
The Distribution of Open Manufacturing - Vasyl Yakobchuk
P2Peering The Physical World -Ilin Sergey
P2P Energy -Zing Studio

Michel Bauwens -
Reference: WE Magazine [ Read more ]
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posted by Daniele Bazzano on Friday, March 6 2009, updated on Tuesday, May 5 2015

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