Internet

This and other questions are addressed in “The Weightless Marketplace:  Coming to Terms with Innovative Payment Systems, Digital Currencies and Online Labor Markets,” a just-released report that I wrote for the Aspen Institute’s Communications and Society Program. The report distills the more salient points raised at a three-day conference last August that brought together leading players in banking, financial services and online labor platforms.   

Most of the conference participants are in the business of inventing or adapting to new types of digital payment systems or data-based services. They include major players like JP Morgan Chase, Intuit and VISA as well as upstarts such as Bitcoin, ID3 and the identity-management service Personal.

The basic story in digital markets is the ongoing elimination of “friction” in making transactions – reducing the barriers of geography, time and transaction costs. Hence the title “the weightless marketplace.”  “Reducing economic friction” has been the story of the World Wide Web from its beginnings, of course, but the trend is now reaching new levels of intensity and disruption.  My role, as rapporteur, was to represent the diverse points of view while providing my own interpretive synthesis. 

Perhaps the most fascinating points of discussion revolved around Bitcoin.  Notwithstanding the controversy surrounding it, Bitcoin’s basic functionality and soaring popularity have some serious implications for banks, credit card companies, PayPal and other payment systems. Peter Vessenes of the Bitcoin Foundation noted that digital technology can move value to anywhere in the world, at any time, using just 100 bytes of data.  And it can do it at very little cost – much less than the per-transaction charges levied by credit cards, for example.

Critics charge that Bitcoin facilitates illicit transactions, money laundering and terrorist activity, not to mention tax evasion.  Vessenes replied that Bitcoin is “way less anonymous than cash” – because the permanent global ledger of transactions for each Bitcoin is accessible and can be used to help identify buyers and sellers.  Another reason that Bitcoin is controversial is that it represents a potential threat to the sovereignty of nation-states, because it could undermine their monetary and fiscal policies.  That’s why regulation of Bitcoin is inevitable, many agreed.

But apart from Bitcoin’s fate, the larger question may be how existing banks and financial companies will respond to the coming “democratization of money.”  Several factors are fueling this trend, according to Gartner, the consulting firm:  individual access to massive, high-speed flows of information, the proliferation of mobile computing (smartphones, tablets, etc.), the rise of the cloud, and the social commons of highly specialized communities of interest.

Save Medialab Prado!

For people who care about socially engaged, commons-minded tech innovation, there are few institutions in the world as bold and courageous as Medialab Prado, in Madrid.  For the past ten years it has been a technology lab, an interdisciplinary forum, a space that welcomes public participation, a hub for citizen activism, and a host of provocative workshops and conferences.  And yes, the Medialab Prado has also been deeply engaged with the commons paradigm as an important way of shaping a better, more socially constructive future. 

Now, after a decade of fantastic work as a pioneering social/technological laboratory, the Madrid city council is threatening to let a giant telecom corporation, Telefónica, take over its new building.  The municipal government – apparently clueless about the international stature and significance of Medialab – is in talks to let Telefónica use the brand new building that MLP moved into less than a year ago. Telefónica wants to open its own startup incubator there. The move  would cast Medialab into limbo, without any assurance of appropriate space in a suitable location or adequate funds.  

Many of us who participate in the international tech, P2P, commons or activist worlds are appalled at this recent turn of events.  Doesn’t the Madrid political establishment recognize the immense value that Medialab Prado has for the city and Spain (and the rest of the world)? 

Doesn’t it realize that Medialab is a magnet for the most exciting thinkers, technologists and social activists – a place that elevates Madrid’s reputation and Spain’s leadership in cultural and tech circles?  After citizen uprisings in so many countries around the world, does the Madrid political establishment not appreciate the need to explore new models of social outreach and public engagement, as Medilab Prado does?

It’s clear that there is a great deal of momentum for developing new forms of online deliberation and decisionmaking.  I’ve discussed LiquidFeedback in the past and how open networks are making it inevitable that we will soon have some major shifts of authority and governance to online platforms. 

Now comes word of a crowdfunding campaign underway for Loomio, “a user-friendly tool for collaborative decision-making: not majority-rules polling, but actually coming up with solutions that work for everyone.”  We must be in a Cambrian explosion of rapid evolution!

The Loomio project is driven by a small team in Wellington, New Zealand that is trying to take its prototype to a new level entirely.  The platform provides a way for participants to start a discussion on any topic and bring a variety of perspectives into the open.  Then anyone can propose a course of action with which people can agree, disagree, abstain or block.  With enough agreement, a proposal can be developed and a deadline set for achieving group goals.  Here is a video describing how lots of people can have a complex discussion and make decisions.  

Michel Bauwens of the P2P Foundation recently published a short essay noting that the economic fruits of peer production in today’s world tend to be captured by capitalists – whereas what we really need is a system to enable capital accumulation for and by commoners themselves.  To that end, Bauwens embraces the idea of a Peer Production License, as designed and proposed by Dmitri Kleiner.  

The idea is to emancipate online commons from the control of capital and corporations, and to enable cooperatives working within the market system to reorient themselves to the larger common good, and not just their members. Bauwens’ essay, originally published on the P2P Foundation blogfollows below:

The labor/p2p/commons movements today are faced with a paradox.

On the one hand we have a re-emergence of the cooperative movement and worked-owned enterprises, but they suffer from structural weaknesses. Cooperative entities work for their own members, are reluctant to accept new cooperators that would share existing profits and benefits, and are practitioners of the same proprietary knowledge and artificial scarcities as their capitalist counterparts. Even though they are internally democratic, they often participate in the same dynamics of capitalist competition which undermines their own cooperative values.

On the other hand, we have an emergent field of open and commons-oriented peer production in fields such as free software, open design and open hardware, which do create common pools of knowledge for the whole of humanity, but at the same time, are dominated by both start-ups and large multinational enterprises using the same commons.

Thus, we need a new convergence or synthesis, a ‘open cooperativism’, that combines both commons-oriented open peer production models, with common ownership and governance models such as those of the cooperatives and the solidarity economic models. What follows is a more detailed argument on how such transition could be achieved.

Michel Bauwens, Founder of the P2P Foundation, has recorded four short videos describing the FLOK Society’s pioneering research project in Ecuador.  FLOK stands for “Free, Libre, Open Knowledge,” and the FLOK Society is a government-sponsored project to imagine how Ecuador might make a strategic transition to a workable post-capitalist knowledge economy. As Research Director of the project, Michel and his team are exploring the practical challenges of making commons-based peer production a widespread, feasible reality as a matter of national policy and law. 

The four videos – each four to six minutes in length – are a model of succinct clarity.  Here is a short summary of each one, which I hope will entice you to watch all of them (links are in the titles below):

Part I: The FLOK Society

Bauwens explains the significant of the FLOK Society project as “the first time in the history of mankind that a nation-state has asked for a transition proposal to a P2P economy.” He asks us to “imagine that for every human activity, there is a commons of knowledge that every citizen, business and public official can use.”  This regime of open, shareable knowledge would move away from the idea of privatized knowledge accessible only to those with the money to pay for copyrighted and patented knowledge.  The system could be adapted for education, science, medical research and civic life, among other areas. 

The FLOK Society project is actively looking for what it calls the “feeding mechanisms” to enable and empower commons-based peer production.  For open education, for example, open textbooks and open educational resources would help people enter into this alternative regime.  However, there are both material and immaterial conditions that must be addressed as well. 

One material condition is proprietary hardware, for example.  If open systems could replace the existing lock-down of proprietary systems, all users could spend one-eighth of what they are currently paying, on average.  Moreover, eight times more students could participate in creating and sharing, said Bauwens, which itself would yield enormous gains.  As for "immaterial conditions" that need to change, innovations like “open certification” are needed to recognize the skills of those who learn outside of traditional institutions, as in hacker communities.

The Principles of LiquidFeedback

Several years ago some software programmers in Berlin came up with a new software platform to let diverse groups of people self-organize themselves to make democratic decisions online.  The program, LiquidFeedback, gives everyone a chance to participate without the need for physical assemblies or in-person voting. 

The program was first used by the German Pirate Party, but it has been also been used by citizen associations, cooperatives and even corporations to elicit the collective sentiment of groups of people, including for binding votes. The idea behind the program is to avoid the classic problems of representative democracy and hierarchies.  As we all know, elected leaders are often happy to ignore or misrepresent the will of the people if it helps them stay in power.  LiquidFeedback was intended as something of an antidote.

Now, the programmers behind LiquidFeedback, the Public Software Group of Berlin, have published a book, The Principles of LiquidFeedback, describing the philosophical, political and operational details of the software system. The authors – Jan Behrens, Axel Kistner, Andreas Nitsche and Bjorn Swierczek – bill their book as “a must-read for anybody planning to make online decisions or to build online decision platforms and is also interesting for anybody interested in the future of democracy in the digital age.”

At a time when elections, legislatures and other democratic processes do a poor job at representing the will of the people, LiquidFeedback is a welcome experiment in demonstrating a better way. It is not seen as a substitute for representative democracy, but more as a complement to it.  I blogged about the program in 2012 and concluded that it “clearly shows the potential for re-imagining more open, legitimate and responsive forms of governance.” 

LiquidFeedback empowers any accredited member of a group to propose a new initiative; make suggestions about it; create alternatives to the proposed initiative; and vote on a final proposal.  Discussion generally takes place on other platforms, however, outside of LiquidFeedback. But the authors warn that "in the real world it is not possible to implement a secret electronic voting system whose functionality can be verified by the voters." Liquid Feedback uses open ballots.

For a while, Couchsurfing had an amazing run, connecting travelers with hosts and helping strangers become friends.  Until around 2011, it was a way-crazy gift-economy for hospitality on a global scale, with more than five million members (now seven million) in 90,000+ cities.  Who would have thought that a loose non-market community could ever get so big while retaining its ideals and ethical stance?

Alas, Couchsurfing’s popularity created some new problems of its own, and the site was plagued by some dubious management decisions, technical challenges, and the lack of funds.  At Medium.com, Roy Marvelous explains what happened in 2011:

Basically, Couchsurfing owed tax money (its tax-exempt status as a non-profit was not approved), it needed far more investment in servers and it needed to hire more engineers to reprogram the site to make it scalable. And apparently, the only viable solution was to become a for-profit, sell a portion to venture capitalists and have it run by professionals.

The problems were real but I’ll be blunt: Couchsurfing was stolen from its members. This was code, content & community built by the members, for the members. None of those volunteers, working for free under the false pretense that Couchsurfing would stay non-profit, received any equity in this new corporation. Why couldn’t there have been another way? I would have donated money. I would have been happy with advertising. They could have moved Couchsurfing HQ to Berlin or Chang Mai or Santiago rather than be based in San Francisco, one of the most expensive cities in the world.

The moment Couchsurfing was sold, it stopped becoming a community and started becoming a service, not unlike Yelp or Meetup or Facebook. And herein lies the problem: Couchsurfing now has an identity-crisis.

After the Internal Revenue Service refused to grant Couchsurfing tax-exempt nonprofit status – formally known as “501(c)(3)” status under the tax code – Couchsurfing decided to become a “Certified B Company,” or “for-benefit” corporation.  As Marvelous points out, this was apparently the only way to move forward.  (But is this true?)  By 2012, Couchsurfing had raised more than $22 million in venture capital money and it was on its way to becoming another profit-oriented corporation in the “sharing economy.”  (The so-called sharing economy, it should be noted, is less about sharing than about micro-rentals of things that previously could not be marketized.)

Morozov on the Maker Movement

The New Yorker recently featured an interesting overview of the Maker movement – a welcome bit of exposure for a subculture that is nearly invisible to the mainsteam.  It’s refreshing to see the hacker ethic given some due recognition and reportage – and more, serious political and economic analysis.

Alas, the analysis has its limits because it is served up by the ubiquitous scourge and skeptic of all things digital, Evgeny Morozov.  Morozov has carved out a franchise for himself by providing well-written, reflexively negative critiques of the digital world.  Morozov excels at penetrating analysis and he deserves credit for original reportage and historical research.  But he tends to wallow in the “dark side” of the digital universe, conspicuously avoiding or discounting the positive, practical alternatives. 

Almost every piece of his that I’ve read seems to conform to this narrative arc:  “You are being so screwed by digital technologies in so many ways that you can’t even imagine.  Let me expose your naivete.”  Then we are left to splutter and stew in the dismal scenario that is sketched -- and then Morozov exits.  He is rarely willing to explore alternative institutions or movement strategies that might overcome the problems that he limns. 

Still, I must thank Morozov for pointing out some important truths in his survey of the Maker world. Besides suggesting the wide extent of the movement, he does a nice job exposing the sly propagandizing of Chris Anderson, Kevin Kelly and Stewart Brand.  These are among the leading tech gurus who rhapsodize about the coming era of individual freedom and progressive social change that 3D printing, fablabs and hackerspaces are ushering in.      

Morozov revisits the history of the Arts and Crafts movement of the early 1900s, which in its time touted  amateur crafting as a force for personal autonomy and liberation. The idea was that do-it-yourself craft projects would help overcome the alienation of industrial production and provide a basis for political transformation.  As some critics at the time pointed out, however, the real problems were economic inequality and corporate power – something that the craft ethic and individual projects could never overcome on their own.

Now that free market dogma has become the dominant narrative about value – and yet that narrative is neither credible nor readily displaced -- we are descending deeper and deeper into a legitimacy crisis.  There is no shared moral justification for the power of markets and civil institutions in our lives.  Since the 2008 financial crisis, the idea of “rational markets” has become something of a joke.  There are too many external forces propping up markets – government subsidies, legal privileges, oligopoly power, etc. – to believe the textbook explanations of “free markets.”

This is a serious quandary.  We’re stuck with a threadbare story that few people really believe -- the “magic of the marketplace” advancing human progress and opportunity – and yet it is simply too useful for elites to abandon.  How else can they justify their entitlements?  These are among the themes explored in an astute new book, The Ethical Economy:  Rebuilding Value After the Crisis  (Columbia University Press, 2013), by sociologist Adam Arvidsson and entrepreneur/scholar Nicolai Peitersen. 

The implicit “social contract” that people have with the reigning institutions of society is coming apart.  As the authors note:  “Three decades of neoliberal policies have separated the market from larger social concerns and relegated the latter to the private sphere, creating a situation where there is no society, only individuals and their families, as Margaret Thatcher famously put it, and no values, only prices.”  Meanwhile, the catastrophic ecological harm being caused by relentless consumerism and economic growth is becoming all too clear, especially as climate change inexorably worsens.

Our “value crisis” is tenacious, say Arvidsson and Peitersen, because we have “no common language by means of which value conflicts can be settled, or even articulated.”  Few people believe in “free markets” and government as benign, mostly responsible influences any more; there is simply too much evidence to the contrary.  And who believes that the Market/State as constituted can solve the many cataclysms on the horizon?

Arvidsson & Peitersen’s ambitious goal is to outline a scenario by which we might come to accept a new, more socially credible justification for socially responsive production and governance.  They want to imagine a “new rationality” that could explain and justify a fair, productive economics and civil polity.  A tall order! 

While I don’t agree with all of their arguments, they do make a penetrating critique of the problems caused by neoliberalism and offer some useful new concepts for understanding how we might imagine a new order.  The Ethical Economy provides a bracing, sophisticated look at these issues.

Readers of my blog may recall the announcement several months ago of Michel Bauwens’ appointment to head a strategic research project for the government of Ecuador. Under the auspices of the Free/Libre Open Knowledge (FLOK) Society Research Project, Bauwens and a small team have embarked upon an ambitious effort to imagine how to “remake the roots of Ecuador’s economy, setting off a transition into a society of free and open knowledge.” 

The Project is now seeking the help of people around the world who are engaged in transformative social change inspired by open knowledge, co-operation, and the building of commons.  Here is a lengthy excerpt from the FLOK Society’s letter:

Our aim is to finalize proposals to be presented at a conference in April 2014, which will bring together the President, government officials, civil society participants, and global experts on the commons. The project received its impulse from IAEN Rector Carlos Prieto, Project Leaders Xabier E. Barandiaran & Daniel Vázquez, and Research Director Michel Bauwens.

Here is the link to the FLOK Society project: http://www.floksociety.org

The project seeks the involvement and input of local civil society, but also includes an explicit appeal to the global co-operative and commons movements to assist us with advice and policy proposals. It is our belief that the Ecuadorian people will be inspired by the best of what is happening abroad, in all countries of the world. Hence our appeal to you, global co-operators and commoners.

If you are engaged in transformative social change that is inspired by open knowledge, co-operation, and the building of commons for the well being of all, we ask you to send us information and benchmark proposals on leading local or global initiatives in your area of expertise.

Imagine a society that is connected to open knowledge commons in every domain of human activity, based on free and open knowledge, code, and design that can be used by all citizens along with government and market players without the discrimination and disempowerment that follows from privatized knowledge.

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