Can Capitalism Survive Open Source Abundance?

I read a couple of fascinating opinion pieces by Michel Bauwens on Aljazeera (because I love my country, but I hate its news media) about the emergence of networks as apolitical economic forces.

In part 1, Bauwens talks about Facebook as an example of a growing phenomenon of people working together producing useful things in order to gain the value of their usefulness rather than for a wage. This idea of people producing things without a clear and quantifiable profit is difficult to adjudicate in a capitalist market system:

It is important to understand that this creates a huge problem for a capitalist system, but also for workers as we have traditionally conceived them. Markets are defined as ways to allocate scarce resources, and capitalism is in fact not just a scarcity “allocation” system but also a scarcity engineering system, which can only accumulate capital by constantly reproducing and expanding conditions of scarcity.

As a student of economics, I have found a number of things in our supposedly perfect capitalist market system that I do not agree with, but I have never really thought of capitalism as a system that deliberately creates scarcity where there was none before. As a filthy scumm pirate, to me artificial scarcity is like the Axis of Evil. In the past, I have associated the creation of artificial scarcity with ignorance or malice on the part of entrenched industry players. Blue Gold: World Water Wars is a good example of the practice of creating scarcity where it didn’t once exist, at the expense of other people, for no other reason than to generate profits for large multinational corporations. I had not previously considered the idea that this is not simply the work of bad players, or a bug in the system, but instead it is a feature of the capitalist platform. This new idea, that capitalism is a platform for the perpetuation of scarcity rather than a mechanism for efficient allocation to offset scarcity, to me at least, is an original thought.

Part 1 then goes on to talk about open source and open design as a means for creating commons-based economic models, where new ideas are poured into a shared pool of assets:

We have to link this emerging social economy, based on sharing creative expression, with the more authentic field of commons-oriented peer production, as expressed in the open-source and “fair use” open-content economy, which one estimate said made up one-sixth of US GDP.

When I think about open source vs. proprietary software, I often default to the ages-old comparison of Linux and Microsoft Windows. Doing this paints a picture that Linux, as a movement, targeted Microsoft and has failed to impact the market for Windows desktops in a meaningful way. This conveniently [for Microsoft and anyone else in the business of selling shrink-wrapped software] ignores the commercial Unix market that was all but destroyed by Linux. The Internet facilitated the creation of software that has value represented by usefulness and saleability. While you can make money from selling Linux, Linux actually displaces monetary value by providing significantly more usefulness than revenue. The value of Linux is the money that it frees up, not in the money that it generates. The commercial Unix market shrank dramatically once Linux came on the scene because companies spent less on their infrastructure. This reduction in costs is largely what drove ISP’s and web hosts to build and grow businesses in while facing intense competition in the field.

Disruptive Innovations happen all the time, and most of the Big Biz vs. Teh Internetz drama (Net Neutrality, SOPA et. al.) stems from industries trying to convince the world they are no longer obsolete (see: landline phones, newspapers, music, etc.) What I hadn’t considered before is that the “network effect” of connecting people via the Internet could create new patterns of consumption where people work together to make better use of products and services:

What will happen with capitalism given social media-based exchanges, commons-based production of software and hardware, and collaborative consumption, on an increasingly massive scale? …This is not just a problem for the increasingly precarious working class, but also for capitalism itself, which is seeing its opportunities for accumulation and expansion dry up.

Accumulation and expansion is an essential piece of capitalism. It’s the manifest destiny of “growth at all costs” that fuels these boom->bust cycles:

I feel that a critical flaw in using money as the only way to value things is that when the only tool that you have is a dollar, everything looks like a commodity. Likewise, when you measure the value of a nation only by its Gross Domestic Product, your valuation method is set up to ignore the things that capitalism isn’t good at delivering, like meaning and happiness. To me this is a major failing of our modern interpretation of capitalist system, since we invest so much in terms of time, money, and politics, in the idea that working hard and buying things will make us happy when it actually doesn’t.

Part 1 then wraps up by calling this rise of networks a crisis for capitalist societies:

Not only is the world faced with a global resource crisis, it is also facing a crisis of intensive development, because value creators are increasingly income-less. The knowledge economy turns out to be a pipe dream, because what is abundant cannot sustain market dynamics.

That snippet stopped me cold. For a couple of years now, I have been trying hard to get my head around this very large idea that the life my father lived, of getting a good university education that leads directly to a good upper-middle-class job (and the gooey suburban predicament that comes with it) is gone and might never have existed in the first place. It’s the idea that “Designed by Apple in California” is a non-starter because the Information Economy isn’t about movies, music and microcode, it’s always been [and always will be] about Real Actual Work(tm).

Real Actual Work(tm) is a term I made up to describe making things and helping people. Real Actual Work(tm) is a category of activities that yields a useful or enjoyable asset, or a service which provides a direct, measurable and quantifiable benefit to a person or a group of people. I think this distinction is important because I believe that too much emphasis is placed on the profits generated by corporate middlemen, lawyers and petty bureaucrats. Monopoly rents, regardless of their form or profitability are not nearly as important as making things or helping people.

In part 2 the author talks about the “Open Software Economy” and how people go about doing the Real Actual Work(tm) that goes into making things like Linux:

In commons-oriented peer production… core value creation occurs through contributors to a shared innovation pool, a commons of knowledge, software or design. The contributors may be volunteers or paid employees. Importantly, even paid contributors add to the common pool. Why? Because shared innovation makes an enormous difference in costs (give a brick, get a house), and it is also hyper-competitive…it doesn’t matter whether you are a “commonist” free software developer, or a capitalist shareholder of IBM. Both sides benefit and they outcompete or “outcooperate” traditional proprietary competitors.

The environment for this abundance of cooperative+competitive “commons-oriented peer production” is basically the opposite of capitalist-centric economics which is dominated by supply and demand. Supply and demand are how you allocate scarce resources. Once a resource becomes abundant, like digital media in a massively connected Internet age, supply and demand go out the window.

It is at this intersection between the traditional capitalist-centric view of economics, and the commonist-centric view of peer production, where we see the problem with Facebook. In the open source community, the community (network) comes together around problem solving (the product). In social networking, the network (community) IS the product (problem solving). We are trading out time and attention to Facebook in exchange for the infrastructure that helps us effortlessly maintain our weak personal connections to each other. The Facebook business model is based on selling access to the infrastructure AS a commodity, rather than providing the infrastructure as a means of enabling the production of a commodity. Facebook is a remarkable force for social change, but it’s commercial DNA often makes it the wrong tool for the job:

To improve the situation in social media, we need peer-producing communities to create their own social media infrastructure – as Occupy is now undertaking with its ambitious Global Square project, whose aim is to ultimately replace Facebook with a civic network.

Not only does the author recommend replacing Facebook with purpose-built “civic networks”, he recommends replacing for-profits and non-profits with a new breed of “civic enterprise”:

But in peer production, we need a further hack as well. Instead of associating with shareholding companies, why not create our own entities: ethical company structures, in which the commons values are embedded within its legal structure, and do not have to be imposed from the outside? In other words, where the “invisible hand” needs not be theorised as an outside force, but is a clearly active “visible hand” that drives each individual, but commons-oriented, enterprise

This, to me, is another original thought. It’s the idea that the advent of open source as a business and civic-enterprise model could require a new form of organization that is different from both the traditional capitalist for-profit, and the quasi-socialist non-profit. Both for-profits and non-profits seem to fall short of enabling the kind of large cooperation that makes open source work:

Today, we assume that value is created by for-profit companies and conceive of civil society as a “remainder” category: it’s what we do when we come home, exhausted after our paid work. This is reflected in the language we use to describe civil society, when we call them non-profits or non-governmental.

Civic enterprise seems to be different than the non-profit social enterprise. In my studies into public administration I have learned that non-profit organization, as a discipline, seems to focus on fixing the failures of business and government, rather than doing innovative things. When you look at large non-profits, especially those focused on medical research, they often look and act like the companies and agencies that they are cleaning up after. Neither government nor business seems to be able to find a cure for breast cancer, and so social enterprises have stepped in, which is good, but in doing so, they seem to have adopted the same money driven, top-down, central planning approach as their government and business predecessors, rather than adopting new approaches that do more with less. It seems that either by coincidence or causation, government and business use similar approaches (centralized management) and have sort of dissolved and congealed into this weird symbiosis:

…the social democratic welfare state has increasingly become a corporate-welfare state, in which the gains are privatised and the losses socialised. In other words, the state has become an extension of the corporation and is less and less a servant of the citizenry.

In theory, the non-profit is the citizenry’s first line of defense. Non-profits rely on neither business, nor government to keep running so there should be at least some measure of protection against the gravitational pull of government/corporate corruption. I for one, am not convinced, because of the non-profit’s use of the same leadership and management techniques that led government and business into co-dependence.

I am intrigued by Bauwen’s idea of the civic enterprise. I am intrigued by the idea of using networks of citizens to cooperate their way through problems, and having those networks serve as a check and balance against abuses of and by the corporate welfare state:

Occupy and open-source models illuminate a new possible reality, in which the democratic civic sphere, productive commons and a vibrant market can co-exist for mutual benefit:

* At the core of value creation are various commons, where innovations are open for all to share and to build upon;
* These commons are protected through non-profit civic associations, which empower that social production;
* Around the commons emerges a vibrant commons-oriented economy comprised of ethical companies, whose legal structures tie them to the values and goals of the commons communities, not to creating private profit.

Where these three circles intersect, citizens decide on the optimal shape of their provisioning systems.

all the cool kids are on google+, u jelly?

i got an invite to google+ and it’s pretty cool, mostly because it’s populated by my hacker/tech friends. this means that my stream (the G+ version of the news feed) is mostly stuff i’m interested in and comment on.

facebook is basically everyone i’ve ever met and several people i haven’t met poured into a single bucket. it can create some interesting intersections, like my aunt commenting on a piece of art that my friend made, but for the most part i have a group that i am active with, a larger group that i am a passive observer of, and a small group that i am actively ignoring because all they do is play facebook games.

the signal to noise ratio will probably decrease if/when the rest of the world starts using it, but for now it’s like an alternate feed for all of my hacker buddies who are too paranoid for facebook. it also does circles, which seems to use my two tiered friend model (nerds vs. normals) as a feature instead of a bug, like it is in facebook.

will i stop using facebook? i’m not sure. it’s nice to keep tabs on people i know but don’t interact with often, and twitter seems to be the right tool for following people i don’t really know. google chat already serves as my “hacker hotline” since a lot of my technical pals are google fanboys like me, so adding social networking to that is a win in my book. hopefully the circles feature will help me add context to the noise.

i have yet to use huddle or hangouts, hopefully i will have time and opportunity when i am done with the summer semester.