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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Tuesday, May 27, 2008

Chapter Fifteen Excerpt

An excerpt from an extremely rough draft from the anarchist organization theory project.
Chapter Fifteen: The Social Organization of Production
E. Peer Production
F. The Social Economy and the Crisis of Capitalism

* * *

E. Peer Production

Peer production first emerged in information industries: software, entertainment, etc. But its transferability to the world of physical production is a matter of great interest. Open source hardware refers, at the most basic level, to the development and improvement of designs for physical goods on an open-source basis, with no particular mode of physical production being specified. As Stallman might put it, open source hardware means the design is free as in free speech, not free beer. Although the manufacturer is not hindered by patents on the design, he must still bear the costs of physical production. As Edy Ferreira described it,

any piece of hardware whose manufacturing information is distributed using a license that provides specific rights to users without the need to pay royalties to the original developers. These rights include freedom to use the hardware for any purpose, freedom to study and modify the design, and freedom to redistribute copies of either the original or modified manufacturing information.

In the case of open source software (OSS), the information that is shared is software code.In OSH, what is shared is hardware manufacturing information, such as hardware definition language descriptions, and the diagrams and schematics that describe a piece of hardware. ["Open Source Hardware," P2P Foundation Wiki.]

At the simplest level, a peer network may design a product and make it publicly available on an open-source basis; it may be subsequently built by any and all individuals or groups who have the necessary production machinery, without coordinating their efforts with the original designer(s). For example, Vinay Gupta has proposed a large-scale library of open-source hardware designs as an aid to international development:

An open library of designs for refrigerators, lighting, heating, cooling, motors, and other systems will encourage manufacturers, particularly in the developing world, to leapfrog directly to the most sustainable technologies, which are much cheaper in the long run. Manufacturers will be encouraged to use the efficient designs because they are free, while inefficient designs still have to be paid for. The library could also include green chemistry and biological solutions to industry challenges, for example enzymatic reactions that could be used in place of energy, and chemical-intensive processes or nontoxic paint pigments for cars and buildings. This library should be free of all intellectual property restrictions and open for use by any manufacturer, in any nation, without charge. ["Facilitating International Development Through Free/Open Source," Quoted from Beatrice Anarow, Catherine Greener, Vinay Gupta, Michael Kinsley, Joanie Henderson, Chris Page and Kate Parrot, Rocky Mountain Institute, "Whole-Systems Framework for Sustainable Consumption and Production." Environmental Project No. 807 (Danish Environmental Protection Agency, Ministry of the Environment, 2003), p. 24.]

One item of his own design, the Hexayurt, is

a refugee shelter system that uses an approach based on "autonomous building" to provide not just a shelter, but a comprehensive family support unit which includes drinking water purification, composting toilets, fuel-efficient stoves and solar electric lighting." ["Hexayurt," P2P Foundation.]

The basic construction materials for the floor, walls and roof cost about $200. [Hexayurt.Com]

One of the most ambitious attempts at such an open design project for village development is Open Source Ecology. Here's a list of the design categories and individual projects, from their Wiki:

HABITAT PACKAGE: CEB Press - Sawmill - Living Machines - Modular Housing Units - Modular Greenhouse Units - Solar Turbine CHP System - AGRICULTURE PACKAGE: Modular Greenhouse Units - Orchard and Nursery - Electric Garden Tractor - Organoponic Raised Bed Gardening - Agricultural Microcombine -Bakery -Dairy - Energy Food Bars - Agricultural Spader - Well Drilling Rig - Freeze Dried Fruit Powders - Hammer Mill - ENERGY PACKAGE: Solar Turbine CHP System - Compressed Fuel Gas - Inverters & Grid Intertie - Electric Motors/Generators - Fuel Alcohol - FLEXIBLE INDUSTRY PACKAGE: Multimachine & Flex Fab - Metal Casting and Extrusion - Plastic Extrusion & Molding - TRANSPORTATION: Open Source Car - Electric Motors/Generators - Electric Motor Controls - MATERIALS: Aluminum Extraction From Clays - Bioplastics [Main Page, Open Source Ecology]

One project that's reached the prototype stage, the Compressed Earth Block press, can be built for $5000--some 20% the price of the cheapest commercial competitor. ["CEB Phase 1 Done," Factor E Farm Weblog, December 26, 2007.]

Karim Lakhani describes this general phenomenon, the separation of open-source design from an independent production stage, as "communities driving manufacturers out of the design space":

The rise of open source software is a clear example of users innovating and developing products that can out compete traditional manufacturers. But this effect is not just limited so software. In physical products ranging from snowboards to electronic microscopes, users have been shown to be the dominant source of functionally novel innovations. Communities can supercharge this innovation mechanism. And may ultimately force companies out of the product design space. Just think about it - for any given company - there are more people outside the company that have smarts about a particular technology or a particular use situation then all the R&D engineers combined. So a community around a product category may have more smart people working on the product then the firm it self. So in the end manufacturers may end up doing what they are supposed to - manufacture - and the design activity might move to the edge and into the community. [Karim Lakhana, "Communities Driving Manufacturers Out of the Design Space," The Future of Communities Blog, March 25, 2007.]

Michel Bauwens, of the P2P foundation, provides a small list of some of the more prominent open-design projects:

The Grid Beam Building System, at http://www.p2pfoundation.net/Grid_Beam_Building_System

The Hexayurt, at http://www.p2pfoundation.net/Hexayurt

Movisi Open Design Furniture, at http://www.p2pfoundation.net/Movisi_Open_Design_Furniture

Open Cores, at http://www.p2pfoundation.net/Open_Cores and other Open Computing Hardware, at http://www.p2pfoundation.net/Open_Hardware

Open Source Green Vehicle, at http://www.p2pfoundation.net/Open_Source_Green_Vehicle

Open Source Scooter http://www.p2pfoundation.net/Open_Source_Scooter

The Ronja Wireless Device at http://www.p2pfoundation.net/Twibright_Ronja_Open_Wireless_Networking_Device

Open Source Sewing patterns, at http://www.p2pfoundation.net/Open_Source_Sewing_Patterns

Velomobiles http://www.p2pfoundation.net/Open_Source_Velomobile_Development_Project

Open Energy http://www.p2pfoundation.net/SHPEGS_Open_Energy_Project

[Michel Bauwens, "What kind of economy are we moving to? 3. A hierarchy of engagement between companies and communities," P2P Foundation Blog, October 5, 2007.]

A more complex scenario involves the coordination of an open source design stage with the production process within a large peer organization, with the separate stages of physical production distributed and coordinated by the same peer network that created the design. Dave Pollard provides one example:

Suppose I want a chair that has the attributes of an Aeron without the $1800 price tag, or one with some additional attribute (e.g. a laptop holder) the brand name doesn't offer? I could go online to a Peer Production site and create an instant market, contributing the specifications, a bunch of technical links available online about just what makes this chair so special, and, perhaps a maximum price I would be willing to pay. People with some of the expertise needed to produce it could indicate their capabilities and self-organize into a consortium that would keep talking and refining until they could meet this price -- and, if not, they might counter-offer something close. Other potential buyers could chime in, offering more or less than my suggested price. Based on the number of 'orders' at each price, the Peer Production group could then accept orders and start manufacturing....

As [Erick] Schonfeld suggests, the intellectual capital associated with this instant market becomes part of the market archive, available for everyone to see, stripping this intellectual capital cost, and the executive salaries, dividends and corporate overhead out of the cost of this and other similar product requests and fulfillments, so that all that is left is the lowest possible cost of material, labour and delivery to fill the order. And the order is exactly what the customer wants, not the closest thing in the mass-producer's warehouse. [Dave Pollard, "Peer Production," How to Save the World, October 28, 2005. ]

The most ambitious example of an open-source physical production project is the Dutch open source car.

Can open-source practices and approaches be applied to make hardware, to create tangible and physical objects, including complex ones? Say, to build a car?...

Markus Merz believes they can. The young German is the founder and "maintainer" (that's the title on his business card) of the OScar project, whose goal is to develop and build a car according to open-source (OS) principles. Merz and his team aren't going for a super-accessorized SUV—they're aiming at designing a simple and functionally smart car. And, possibly, along the way, reinvent transportation. [Bruno Giussani, "Open Source at 90 MPH," Business Week, December 8, 2006. ]

In either case, whether physical production is coordinated with the design stage or organized independently, it may take place in comparatively heavily capitalized factories (likely owned by workers' cooperatives in a post-capitalist society), by outsourcing the production of specific parts to more modestly capitalized small shops, or to even cheaper fabbers and other emerging desktop production facilities, or to a combination of some or all of the above.

Clearly, as we saw in Chapter Fourteen, the emergence of cheap desktop technology for custom machining parts in small batches will greatly lower the overall capital outlays needed for networked physical production of light and medium consumer goods.

The availability of modestly priced desktop manufacturing technology (coupled with the promise of LETS systems, mutual banks, and other forms of alternative credit) has led to a considerable shift in opinion in the peer-to-peer community, as evidenced by Michel Bauwens:

I used to think that the model of peer production would essentially emerge in the immaterial sphere, and in those cases where the design phase could be split from the capital-intensive physical production sphere. Von Hippel's work is very convincing in showing how widespread the model of built-only capitalism already is.

However, as I become more familiar with the advances in Rapid Manucturing (see http://www.p2pfoundation.net/Rapid_Manufacturing)and Desktop Manufacturing (see http://www.p2pfoundation.net/ Desktop_Manufacturing), I'm becoming increasingly convinced of the strong trend towards the distribution of physical capital.

If we couple this with the trend towards the direct social production of money (i.e. the distribution of financial capital, see http://www.p2pfoundation.net/ P2P_Exchange_Infrastructure_Projects) and the distribution of energy (http://www.p2pfoundation.net/P2P_Energy_Grid); and how the two latter trends are interrelated (see http://blog.p2pfoundation.net/combining-distributed-energy-with-distributed-money/2007/05/06), then I believe we have very strong grounds to see a strong expansion of p2p-based modalities in the physical sphere. See also Kevin Carson's book manuscript about trends in decentralized production technology (http://mutualist.blogspot.com/)
[Michel Bauwens post to Institute for Distributed Creativity email list, May 7, 2007.]

Kevin Kelly argues that the actual costs of physical production are only a minor part of the cost of manufactured goods.

....material industries are finding that the costs of duplication near zero, so they too will behave like digital copies. Maps just crossed that threshold. Genetics is about to. Gadgets and small appliances (like cell phones) are sliding that way. Pharmaceuticals are already there, but they don't want anyone to know. It costs nothing to make a pill. [Kevin Kelly, "Better Than Free," The Technium, January 31, 2008. ]

This is essentially a restatement of Tom Peter's gushy observation that the bulk of product price is "ephemera" or "intellect," rather than nuts and bolts and labor. Or as I put it, much less nicely, most of the price of manufactured goods is rent on artificial property like "intellectual property." When physical manufacturing is stripped of the cost of proprietary design and technology, and the consumer-driven, pull model of distribution strips away most of the immense marketing cost, we will find that the portion of price formerly made up of such intangibles will implode, and the remaining price based on actual production cost will be an order of magnitude lower.

In any case, there is a common thread running through all the different theories of the interface between peer production and the material world: as technology for physical production becomes feasible on increasingly smaller scales and at less cost, the less disconnect there will be between peer production and physical production. Franz Narada writes:

You [Michel Bauwens] are right that there should be a sharp distinction between cooperatives and p2p production, but at the same time it is imagineable that cooperatives work out arrangements that lead to a circulation of material goods and therefore enable mutual supply in a circular process, to some degree eliminating the need for monetary income. This economy would work in a biomorphical way, the surplus on one point being the input on others....

Once we really get a grasp of really efficient home production, the rules of the games will change drastically. In this respect I share Stefan Mertens optimism, although I hate to bring it all down to the notion or image of the fabber. There are very interesting intermediate schemes which work at community level - technologically possible, but neglected from the point of view of capitalist production. [Michel Bauwens, "Franz Nahrada: Can we produce for physical abundance or sufficiency?" P2P Foundation Blog, January 14, 2008. ]

F. The Social Economy and the Crisis of Capitalism

As Michel Bauwens describes it, it is becoming increasingly impossible to capture value from the ownership of ideas, designs, and technique--all the "ephemera" and "intellect" that Peters writes about--leading to a crisis of sustainability for capitalism. [Michel Bauwens, "Can the experience economy be capitalist?" P2P Foundation Blog, September 27, 2007.]

This system is now facing serious barriers that are a function of the finiteness of the natural resource base that is our planet, and global warming is one example of it. One of the meanings of global warming, coupled with the general trend of globalization, is that our growth-system now covers the whole planet, there is no more outside. What this means is that the limits of an extensive development are being reached....

This is no trivial affair, as the failure of extensive development is what brought down earlier civilizations and modes of production. For example, slavery was not only marked by low productivity, but could not extend this productivity as that would require making the slaves more autonomous, so slave-based empires had to grow in space, but at a certain point in that growth, the cost of expansion exceeded the benefits. This is why feudalism finally emerged, a system which refocused on the local, and allowed productivity growth as serfs had a self-interest in growing and ameliorating the tools of production.

The alternative to extensive development is intensive development, as happened in the transition from slavery to feudalism. But notice that to do this, the system had to change, the core logic was no longer the same. The dream of our current economy is therefore one of intensive development, to grow in the immaterial field, and this is basically what the experience economy means. The hope that it expresses is that business can simply continue to grow in the immaterial field of experience.

However, Bauwens writes, this is not feasible. The emergence of the peer model of production, based on the non-rival nature and virtually non-existent marginal cost of reproduction of digital information, and coupled with the increasing unenforceability of "intellectual property" laws, means that capital is incapable of realizing returns on ownership in the cognitive realm.

1) The creation of non-monetary value is exponential

2) The monetization of such value is linear

In other words, we have a growing discrepancy between the direct creation of use value through social relationships and collective intelligence (open platforms create near infinite value through the operations of the laws of Metcalfe and Reed), but only a fraction of that value can actually be captured by business and money. Innovation is becoming social and diffuse, an emergent property of the networks rather than an internal R & D affair within corporations; capital is becoming an a posteriori intervention in the realization of innovation, rather than a condition for its occurrence; more and more positive externalizations are created from the social field.

What this announces is a crisis of value, most such value is ‘beyond measure’, but also essentially a crisis of accumulation of capital. Furthermore, we lack a mechanism for the existing institutional world to re-fund what it receives from the social world. So on top of all of that, we have a crisis of social reproduction: peer production is collective sustainable, but not individually.

Thus, there are two simultaneous crises: first, the failure of artificial abundance through subsidized inputs and externalization of cost, endless supplies of natural resources for appropriation (aided by state favortism), and the availability of new markets as outlets for surplus capital and output; and second, the failure of artificial scarcity in the cognitive realm. Taken together, this means that while markets and private ownership of physical capital will persist, "the core logic of the emerging experience economy, operating as it does in the world of non-rival exchange, is unlikely to have capitalism as its core logic."

In another article, in which he develops these themes at greater length, Bauwens writes that capitalism's successor system is likely to have a significant role for markets, but that the two structural presuppositions of existing capitalism--artificial abundance of resources and artificial scarcity of information--will be replaced by the reverse.

We live in a political economy that has it exactly backwards. We believe that our natural world is infinite, and therefore that we can have an economic system based on infinite growth. But since the material world is finite, it is based on pseudo-abundance.

And then we believe that we should introduce artificial scarcities in the world of immaterial production, impeding the free flow of culture and social innovation, which is based on free cooperation, by creating the obstacle of permissions and intellectual property rents protected by the state.

What we need instead is a political economy based on a true notion of scarcity in the material realm, and a realization of abundance in the immaterial realm. [Michel Bauwens, "Peer-to-Peer Governance, Democracy, and Economic Vision: P2P as a Way of Living---Part 2," Master New Media, October 27, 2007.]

In addition, capitalism faces a crisis of realization in another regard that Bauwens does not directly address. For over two centuries, as Immanuel Wallerstein observed, the system of capitalist production based on wage labor has depended on the ability to externalize many of its reproduction functions on the non-monetized informal and household economies, and on organic social institutions like the family which were outside the cash nexus.

Historically, capital has relied upon its superior bargaining power to set the boundary between the money and social economies to its own advantage. The household and informal economies have been allowed to function to the extent that they bear reproduction costs that would otherwise have to be internalized in wages; but they have been suppressed (as in the Enclosures) when they threaten to increase in size and importance to the point of offering a basis for independence from wage labor.

The rapid growth of technologies for home production in the twentieth century, based on small-scale electrically powered machinery and new forms of intensive cultivation, have led to a major shift in the comparative efficiencies of large- and small-scale production. The comparative efficiencies of the two systems were pointed out, as we have seen, by Ralph Borsodi almost eighty years ago, and have continued since.

The result is a singularity, of sorts, in which it is becoming impossible for capital to prevent a shift in the supply of an increasing proportion of the necessities of life from mass produced goods purchased with wages, to small-scale production in the informal and household sector. The upshot is likely to be something like Vinay Gupta's "Unplugged" movement, in which the possibilities for low-cost, comfortable subsistence off the grid result in exactly the same situation, the fear of which motivated the propertied classes in carrying out the Enclosures: a situation in which the majority of the public can take wage labor or leave it, if it takes it at all, the average person works only on his own terms when he needs supplemental income for luxury goods and the like, and (even if he considers supplemental income necessary in the long run for his optimal standard of living) can afford in the short run to quit work and live off his own resources for prolonged periods of time. It will, in short, be the kind of society Wakefield lamented in the colonial world of cheap and abundant land: a society in which labor is hard to get on any terms, and almost impossible to hire at a low enough wage to produce significant profit.


Anonymous Chriswaterguy said...

Re "The rapid growth of technologies for home production in the twentieth century, based on small-scale electrically powered machinery and new forms of intensive cultivation, have led to a major shift in the comparative efficiencies of large- and small-scale production."


"a shift in the supply of an increasing proportion of the necessities of life from mass produced goods purchased with wages, to small-scale production in the informal and household sector."

This is a somewhat surprising claim to me. I know household scale tech is improving but so is all tech, and as far as I'm aware large scale is still more efficient for *most* applications. Having some good links to explain claims like this would be helpful.


June 07, 2008 8:28 AM  
Blogger Kevin Carson said...

Thanks for the comment, Chriswaterguy. I addressed the specifics of those claims in a couple of other draft chapters: Ch. 2 (empirical evidence on economies of scale) and Ch. 14 (decentralized production technology). The online version of Ch. 14, unfortunately, lacks a lot of additional material I've since added to the draft, but I should be adding an updated version in the next few weeks. You can find them under the Organization Theory heading of my sidebar.

June 07, 2008 10:47 AM  

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