Capitalism

Solving the Crisis of Extractive Capitalism

A new post-capitalist ecosystem of value creation

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By Michel Bauwens and Vasilis Kostakis

Our world is once again hurled into a deep socio-economic crisis, in which the current extractive model of value creation is facing a series of structural crises. But as the old world is dislocating, the seeds of a new one are being sown.

The peer-to-peer capacity to relate to each other over the Internet entails the emergence of what Yochai Benkler in the The Wealth of Networks called ‘commons-based peer production’ (CBPP). CBPP is a new pathway of value creation and distribution, where peer-to-peer infrastructures allow individuals to communicate, self-organize and, ultimately, co-create non-rivalrous use value, in the form of digital commons of knowledge, software and design. Think of the free encyclopedia Wikipedia, the myriad of free/open-source projects or open design communities such as Wikihouse and Farmhack.

CBPP is fundamentally different from the incumbent models of value creation under industrial capitalism. In the latter, owners of means of production hired workers, directed the work process, and sold products for profit. Such production is organized by allocating resources through price signals, or through hierarchical command. It is a system based on subordinate labor forced to sell its work power to the owners of the companies that employ them.

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CBPP is open to anyone with skills to contribute to a common project: the knowledge of every participant is pooled. These participants may be paid, but not necessarily. Precisely because CBPP projects are open systems in which knowledge can be freely shared and distributed, anyone with the right knowledge and skills can contribute, either paid by companies, clients, or not at all. In these open systems, there are many reasons to contribute beyond or besides that of receiving monetary payment.

CBPP allows contributions based on all kinds of motivations, but most importantly on the desire to create something mutually useful to those contributing. This also generally means that people contribute because they find it meaningful and useful. From the point of view of the contributing communities as well as simple users, the orientation of their work is most often on use value creation, not exchange value.

Transparent heterarchy

Of course, in CBPP many people are actually paid but, through collaboration with groups and individuals that are not, they produce commons. This means that the work cannot generally be directed by the corporate hierarchies, but through the mutual coordination mechanisms of the productive community. This is possible because CBPP is based on open and transparent systems, in which everyone can see the signals of the work of others, and can therefore adapt to the needs of the system as a whole.

CBPP projects do have systems of quality control that represent a kind of benevolent hierarchy or heterarchy. These ‘maintainers’ or ‘editors’ protect the integrity of the system as a whole and can refuse contributions that endanger the integrity of the system. However, and this is crucial, they do not coerce work. CBPP is based on: open input; a participatory process of coordinating the work; and a commons as output.

Through CBPP we observe the creation of new institutions. The first institution is the ‘productive community’, consisting of all the contributors to a project. The members of this community may be paid or may volunteer their contributions because of some kind of interest in the use value of this production.

Where profit comes in and where it does not

The second institution is the ‘entrepreneurial coalition’, which attempts to create either profits or livelihoods by creating added value for the market, based on these common resources. Contributors can be paid by the participating entrepreneurs. What is crucially important in the relation among the entrepreneurs, the community and the commons on which they depend, is whether their relation is generative or extractive.

Extractive entrepreneurs seek to maximize their profits, and generally do not sufficiently re-invest in the maintenance of the productive communities. Like Facebook, they do not share any profits with the co-creating communities on which they depend for their value creation and realization. Like Uber and AirBnB, they tax exchanges but do not contribute to the creation of transport or hospitality infrastructures.

Generative entrepreneurs do create added value around these communities. Seed-forms of commons-oriented entrepreneurial coalitions create added value on top of the commons that they co-produce and upon which they are co-dependent. In the best of cases, the community of entrepreneurs often coincides with the productive community. The contributors build their own vehicles in order to create livelihoods while producing the commons. They re-invest the surplus in their own well-being and the overall commons system they are co-producing.

For-benefit associations

The third institution created with the emergence of CBPP is the ‘for-benefit association’. Many CBPP ecosystems not only consist of productive communities and entrepreneurial coalitions, but also have separate governance institutions that support the infrastructure of cooperation and, thus, empower the capacity for CBPP. Though they often take the form of nonprofits, they do not command and direct the CBPP processes itself. For example, the Wikimedia Foundation, as the for-benefit association of the CBPP project Wikipedia, does not coerce the production of Wikipedia producers. Likewise, the free and open-source software Foundations that often manage the infrastructure and networks of the projects.

By way of contrast, traditional NGOs and nonprofits operate in a world of ‘perceived’ scarcity. They identify problems, search for resources, and allocate those resources in a directive manner to the solving of the issues they have identified. This approach arguably offers a mirror image to the for-profit mode of operating.

For-benefit associations operate from a point of view of abundance. They recognize problems and issues, but believe that there are enough contributors that desire to assist in solving these issues. Hence, they maintain an infrastructure of cooperation that allows contributive communities and entrepreneurial coalitions to engage in CBPP processes vital for solving these issues. Not only do they protect these commons through licenses, but may also help manage conflicts between participants and stakeholders, fundraise, and assist in the general capacity building necessary for the commons in particular fields of activity (for example, through education or certification).

So, this micro-economic triarchy of institutions corresponds to the three great spheres of social life: civil society with its citizen-contributors; the economic society of market entities; and the political society of the state. In this context, the for-benefit association is like the polity or even ‘state’ for CBPP, in that it theoretically and practically serves the ‘common good’ of the whole system.

Enspiral

As an example of such a CBPP ecosystem we may take the Enspiral network. A broad community of contributors are pooling their skills and creative energy to create commons, including knowledge and software. Around these commons a web of business ventures creates livelihoods for the contributors, by offering tools and services that enable creative communities like their own to address certain challenges related to democratic governance. For example, Loomio is a participatory platform for democratic decision making, while Enspiral Academy offers intensive training courses on web development.

At the time of this writing, there are about 300 people participating in an entrepreneurial coalition serving the Enspiral Foundation comprising more than 15 social business ventures, which aim to create livelihoods around ‘stuff that matters’. The individuals and the ventures make financial contributions to the Foundation, a cooperative of about 40 members, which manages the whole Enspiral network and its infrastructures. Almost half of the funds cover the operational costs of the Foundation, while the rest is invested in projects proposed by the community, through collaborative funding.

Obviously, Enspiral fits well within the parameters of our description, like many free/open-source software projects and an increasing number of open design projects that are building the world they want, within the confines of the world they want to transcend.

Note: This article is based on a working paper of the authors provisionally titled “The Ecosystem of Commons-Based Peer Production”.

Originally published here.

2017 January 14


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  • Sionna B.

    Does evonomics address the issues of tax evasion and fraud by transnational corporations? For example with the IASB and going from there?

  • Karl Fitzgerald

    I always enjoy reading your work Michel but all I can see is microeconomic improvements within the tech industry. Jared Kushner and the next generation of real estate related rent-seekers will be celebrating a wider distribution of tech-related profits so that rents can be increased more generally. Extraction in the field where we spend most of our weekly budget, housing, will continue unabated. The distributed decision making of the internet will enable more to work remotely, adding to gentrification pressures.

    • Michel Bauwens

      Hi Karl, what you see happening is happening, but resistance and new construction is also happening, and most likely, both are related, i.e. more is happeing on creating alternatives especially because the mainstream system is failing us; you might be interested in reading our analysis on value sovereign practices in peer production, see http://www.p2plab.gr/en/wp-content/uploads/2016/12/Value-in-the-Commons-Economy.pdf

      • Karl Fitzgerald

        Goodness me Michel – even more 2 dimensional analysis! How can you put your name to something that does not recognise the value of the earth, unearned incomes and economic rents? ANY benefits you make in p2p will be subsumed by higher rents. A Land Value Tax is undeniable, especially in a high tech, robotic era. I wish I had more time to debate Marxists but few have read Vol 3 Das Kapital. Try this as a quick starter http://www.arcofprosperity.org/theories-of-value/

        • Michel Bauwens

          hi karl, but that is exactly the point of value sovereignty and contributory accounting; through this practice, communities are liberated to recognize all vallue, i.e. everything they recognize as a contribution; of course, the challenge is, this can only be done to a limited degree in separate production communities, but can only be done at macro-scale, when there is a power shift politically and socially at the macro level; hence our stress on political and social organizing through assemblies and chambers of the commons; obviously, on a macro level, getting land value tax and other commons-based rents is crucial ; this is covered on our site Commons Transition in the policy proposals and views of Pat Conaty and Mike Lewis for example; and in discussions on the funding of UBI

          • Ishi Crew

            i come from the view of total theorist. theory has no value until later–noone cared about newton’s laws, darwinian evolutuion, relativity, or quantum theory until later.

            one big proponent of UBI karl winderquitst—is now teaching in qatar or one of the other oil / finace emirates in mideast (like saudi arabia). they have a UBI there, but only for citizens. most of the word is done by indians and bangladeshis sometimes living in slave conditions.

            LVT (h george) needs to be updated to include intellectual property.

            all these democratic mechanisms arent easy to use in practice—i been to many (eg occupy dc) or my local area uses variants of single transferable vote, range voting. see D G Saari ‘chaotic elections’ or S Brams on voting.the internet and software can’t solve these issues but they could be half the solution–but leave out other half. these are all ‘just say no ‘ solutions but dont give ideas about what to say yes to.thats silicon valley—dont worry be happy. half a nice day (in my area the term is knife, since u get in real trouble if you carry a gun—i carry neither)..

  • This is an aspect of the systemic issues facing us, but only a small aspect.

    Economies are very complex, many levels, many different functions, many different sets of incentives.

    On the plus side are many things:
    the power of money as an abstract symbol of value that people trust;
    the creative incentive of free markets;
    the role of creative destruction;
    the information processing and risk sharing at several levels of abstraction.

    On the negative side are several things:
    the prevalence of predatory (cheating) strategies at several levels;
    the inability of markets to assign a positive value to universal abundance of anything – now directly in opposition of the ability of fully automated systems to deliver universal abundance of a large and growing set of goods and services;
    a tendency to value money over individual life and individual liberty.

    The essence of human existence is cooperation. We are the result of some 20 levels of cooperation in action, and every one of us as individuals stands to gain far more from being cooperative than we do by being exclusively competitive. No human can grow to modern adulthood without the cooperation of many millions of people.

    Our modern focus on competition is a major threat. At a time when automation ought to be delivering security and freedom to all, it has been hijacked to deliver control to the few.

    We don’t need to take anything from anyone. Automation can deliver more to everyone, but it needs to deliver far more to those further down the distribution curve than it does to those at the top.

    Exactly how we achieve that is the great question of our age. I am confident beyond any shadow of reasonable doubt that markets will never provide such an outcome in and of their own internal incentive structures. It requires deliberate intentional action by many individuals.

    • Michel Bauwens

      the essence of the peer production model is to make cooperation the core, by mutualizing productive knowledge in a commons, to re-integrate reciprocity mechanisms in the market and exchange mechanisms, and it is in that context that ‘competition’ between various ventures will continue to occur; it is in this way the opposite model of what we have now, which is based on cooperation within the competing units, but not between them; in the peer production model, the livelihood organizations are co-dependent and cooperating with the commons and their productive communities; and to protect and sustain these commons, they need reciprocal agreements, i.e. a generative rather than a extractive mindsets; while the focus is on constructing the new; I’m not sure that there may not be reforms needed that moderate the existing hyper-inequalities such as with landed property etc ..; as Polanyi suggested money , land and money are fake commodities and should be considered as commons. Instead of automation, what we need is technological sovereignty, which may or may not opt for automation (eco-farmers are rather doubtful about ‘automation’ in their sector, and are opting for open machining instead, with machines that augment but do not replace human skills and care.

      • Hi Michael

        I kind of agree with you, and at the same time you seem to have missed entirely the systemic incentive level that I was attempting to make clear.
        What I am saying is, as long as markets have any role in what you are suggesting, then there is a deep set of systemic incentives working against you.

        At present we are all co-dependent, but the contribution of any one of us to the total is so small that in an economic sense none of us is particularly important. While that may be true at the margin, it is not true systemically – and therein lies another fundamental systemic risk of markets.

        Money is pure myth – and like all myths it has power only to the degree we believe in it.
        Land is not fake. Surface area of the planet is finite, and not unchanging (as having just lived through a 7.8 quake here in Kaikoura has forcefully demonstrated).

        My comments re automation were not intended to imply that people who want to farm should stop, quite the reverse. What automation offers is the ability for untended systems to maintain the flows of all essential goods and services should no one “want” to provide them.

        I have spent a lot of years developing a lot of skill sets, and one of those skill sets is system automation (having owned and operated a software company for the last 30+ years). I am clear that every entity (human or automatic) will develop unique ways of doing things. Humans are likely to be creative in ways that the automatics are not. That’s great.

        My concern, is that everyone experience the same degrees of freedom and security, which means that everyone must have the option of doing something other than what they are doing, and the automatic systems have to be able to step in and “pick up the slack”.

        Inside of an economic system based on markets, such systems lead to universal unemployment and poverty.

        Inside systems that are based in the values of individual life and individual liberty, both within contexts of responsible behaviour in social and ecological contexts, then it leads to an empowerment and a flowering of creativity for all.

        And there are certainly likely to be disruptions, as individuals adjust from the notion of doing what they are told, to the idea of doing whatever it is that they responsibly choose. And responsibility in such a context is an indefinitely expanding exploration of an infinite set of infinite dimensions of what might be possible and the incentives, relationships, and impacts present and likely (in a context that contains an even larger set of the impossible). So nothing simple or easy here. It seems clear when one looks deeply enough at epistemology and ontology that all any of us ever have are heuristics that are based in some sort of best guess based on some sets of past experiences, which may or may not actually be relevant to the current situation. Real novelty, or chaos, cannot be predicted by anything from our pasts (or in the case of chaos, anything at all – by definition).

        So these are interesting times.
        Many levels of understandings from the past are being overtaken by double exponential explorations of entirely new territory, while other deeper meta level understandings remain as true as they ever were.

        It is a very complex, and in many aspects entirely unpredictable, system that we find ourselves in.

        • Michel Bauwens

          Hi Ted, what you read is but a small subset of a larger totality of our work; for commons to function property, the market function must change, and so must the state form, and many other aspects of our complex reality. I can give you access to a manuscript proposing a post-capitalist strategy that aims to be more integrative, than a short article can give credit to. This is not to claim of course that we have all the answers, but then nobody does, but, we pay attention to the full gamut of human individual and collective aspects, internal and external, and as embedded in the natural world. For access to the manuscript on google doc, I would need your email address. Mine is michelsub2004 at gmail

  • Warren Gilchrist

    A post-capitalistic system requires economic organisation at a national level. I have given some thought to this and my contribution may or may not be food for thought for others. However, here is a sketch of how it might be: http://wp.me/P24BqT-4Y

  • Ishi Crew

    I never quite understood how wikipedia foundation or FB makes money. I guess there are for -profit parts of wikipedia which interact with the free encyclopedia. But the line between extractive and generative seems fuzzy—there is free stuff and stuff you buy; and volunteer labor and paid labor.
    In a sense like any business—an entrepeneur sets it up and gets to decide profit shares, and workers gets salaries also from profits (income-costs).

    FB in a sense is generative as is uber and youtube —they set up the platform, but then in a way they are done except maintenance. FB gets from ads i guess. Some FB people and youtube users i think get paid bby number of visitors, from ads.

    • Michel Bauwens

      I don’t think the line between extractive and generative is fuzzy; in the case of agriculture, you enrich the soil or you impoverish the soil; in the case of facebook, you share the profits with those who co-create it, or you don’t. Legimitate recuperation of costs and even the making of a surplus is not necessary extractive, though a lot depends on what is done with it; Majorie Kelly, in her book, The Emerging Ownership Revolution, has a five characteristics comparative scheme that helps seeing clear in the distinction. See https://wiki.p2pfoundation.net/Category:Post-Corporate#Characteristics_of_Generative_Ownership_Forms

      • Ishi Crew

        as you wrote some of the gain, or value of generative projects is not money. it may social capital, etc. but some people get this from fb or blogs too. the main difference is first pt. in that list. wikip is not aiming for only profit, maybe none. fb is. but people making cash from fb i guess are standard extractionIsts. the difference may partly be psychology. some extractors lather share profits via giving it away. my keyboard is frozen so this not well written via mouse. cant find detete key. wake money from f

        • Michel Bauwens

          it is useful in that context to distinguish use value from exchange value; in the case of fb, it is true that they offer free infrastructure for social exchange, and in that sense you could say it has generative effects; however, there is no exchange on the level of the exchange value, which is were the extraction occurs; and in order to the latter, they need to strictly control the social exchanges in a way that benefits them; so what appears to be free, comes at a cost

          • Ishi Crew

            I admit i can’t say i understand that. It seems to say FB gets money—exchange value—because it owns the site. (For uber, uber owns the site, drivers own their cars). Others just get use value or essentially a salary for driving). .
            FB is like ‘land’ –private property which can be sold. FB users are sortuh like renters, squatters or squirrels and animals (unpaid but tolerated).

            From my view thats saying there are different kinds of money or value—use, exchange, etc..
            I’m into physics a bit and to me in ‘econophysics’ there are different kinds of money as there are particles. One sees this in life—food stamps, government bonds, pensions, cash, bitcoins, green currencies…

            (My most recent paper in econophysics, called ‘Trump Econophysics’ explains econophysics and applies it to explain the trajectory of Trump presidency. (I think the editor editor changed the title; its in the peer reviewed prestigous crowdponder online journal—impact factor igher than Mt Everest). . I’m modest.
            (I’m so humble a friend suggested i apply to get the U Conn. Templeton grant for studying humility. But as the einstein and ramanujan of humility, i don’t have to study and prove it. i just know what it is.) It requires 2 references and i really dont have any.Half the people i know are sortuh illiterate so they couldnt even write me a reference.Also in my economy, i’d have to pay them 5 or 10$–and they’d have to lie about their credentials —-eg Prof ‘Guy’ Fawkes, PhF, Chief Scientist of the Rittenhouse Crew.)

            My paper is the most important economics/physics paper written since Einstein, Adam Smith, Darwin, E Verlinde ‘entropic gravity’) and other ancient lesser, mortal, primitive savages (like Ishi—see my entry in my free online book ‘wikipedia’—thats an old picture of me from when i was 5 and primitive—i evolved so now i’m modern and about 8 1/2 (see documentary about me with that name). I either created that or discovered it –can’t remember—probably after i discovered or created north america. )

            Even before he’s elected these trajectories can be calculated–in quantum theory you can predict the future from the past, or the reverse.
            So the trajectories are already known. By ‘many world’s or multiverse theory of Everett and others, we know the landscape (super(duper)strings (Susskind) or fitness (S Kauffman, sfi). In one, we end up with nuclear war. This is why in DC i reccomend people carry umbrellas. In others, america is great again, or ends up on a grait, or reunities with uK and becomes a colony, and UK becomes an empire again with Trump as emporer.)

            Use/exchange value i associate with marx though likely it originated before since he relied on ricardo, smith, etc.

            i think as for particles one can convert them to an extent—cash a check…. People who write on FB or wikip get ‘reputation’ and that can be exchanged in some contexts.

            i wonder where evonomics belongs here (or even any other web site). is it sharing, or gathering.

            (it might be if you donate (i donate a tiny bit to wikip) . they may pay for articles (likely not since most writers seem to have jobs, unlike me) but they do give people rep–eg entry on a CV . (mine is 5 years out of date, but doesnt really need changing since i haven’t done anything last 5 years—been too busy to do anything except post on fb and comment and wait for the phone to ring with a job offer based on my FB resume.

            Of course FB may be plot to get people to waste their time and remain ‘noncompetive’ and unemployable except in ‘sh-t jobs’ (graeber—–who had an article on evonomics and one on his debt to american herstory).

            Like a BIG or all the free stuff people around here in dc get —free food, cell phones, clothes, health care, place to sleep –eg on my floor or in a shelter or rent help —it makes people ‘lazy’. (Thats a 24 hour job called ‘hustling’ (orwell wrote a book on this as did wm burroughs ‘junkie’)–no time to get a job (and alot of people go to jail off and on and see it almost as a vacation from the streets). This is why some ‘lefties’ are against it–the people wouldnt have to hustle to get their opiates but they wouldnt revolt or ‘organize’ either. (J20 is overflowing with organizers —like 20 groups or more, and maybe even some alt-rights) . I may go as a tourist. Someone i know will go to sell t-shirts (‘Trump’, ‘Disrupt J20’, whatever you want. He works for a vendor for 60$/all day. But half or more of what he sells he puts in his pocket when owner isn’t looking ) .

            Evonomics may be more like ‘charity’. Its neither generative nor extractive exactly. A 3rd way, or ‘particle’. A mixture of both—‘i gave at the office’. (I notice they do ask for donations, but not ‘submissions’. )