How to Move from an Extractive to a Generative Economy?

One of the big, unanswered questions in our political economy today is “what constitutes value?”  Conventional economics sees value as arising from market exchange and expressed as prices. A very simple, crude definition of value.

But how, then, to account for the many kinds of value that are intangible, social or ecological in nature, and without prices – activities such as child-rearing and eldercare, ecological stewardship, online peer production, and commoning?  There is an urgent need to begin to make these forms of value explicitly visible in our political economy and culture.

Two new reports plunge into this complicated but essential topic.  The first one – discussed below -- is called “Value in the Commons Economy:  Developments in Open and Contributory Value Accounting,” The 49-page report by Michel Bauwens and Vasilis Niaros focuses on socially created value on digital networks. It was co-published yesterday by the Heinrich Boell Foundation and P2P Foundation. 

Another important report on how to reconceptualize value – an account of a three-day Commons Strategies Group workshop on this topic – will be released in a few days and presented here.

The P2P Foundation report declares that “society is shifting from a system based on value created in a market system (through labor and capital) to one which recognizes broader value streams,” such as the social and creative value generated by online communities.  The rise of these new types of value – i.e., use-value generated by commoners working outside of typical market structures – is forcing us to go beyond the simple equation of price = value.

Michel Bauwens and sociologist Adam Arvidsson call this the “value crisis” of our time.  Commons-based peer production on open platforms is enabling people to create new forms of value, such as open source software, wikis, sharing via social networks, and creative collaborations.  Yet paradoxically, only a small minority of players is able to capture and monetize this value.  Businesses like Facebook, Google and Twitter use their proprietary platforms to strictly control the terms of sharing; collect and sell massive amounts of personal data; and pay nothing to commoners who produced the value in the first place.

This is highly extractive, and not (re)generative.  So what can be done?  How could open platforms be transformed to bolster the commons and serve as a regenerative social force? 

The P2P Foundation report is a welcome splash of clarity on a topic that is often obscured by deceptive terms like the “sharing economy” and mystifications about the structural realities of digital cooperation. 

The Bauwens/Niaros report starts with a section analyzing the theoretical nature of the “value crisis” we are experiencing, before moving on to three powerful case studies of alternative value-systems pioneered by the Enspiral network, Sensorica and Backfeed.  The report concludes with a series of policy recommendations for changing the economic and political infrastructure. 

The Value Crisis

The real roots of the “value crisis” stem from the fact that “contemporary capitalist value-practices are no longer able to determine what value is,” write Bauwens and Niaros.  Stock market valuations are notoriously unable to attribute a reliable (financial) value to a company because so much value resides in social intangibles – the goodwill of consumers, brand reputations, and social sharing.  Stock analysts can try to add up the resale value of factory buildings, equipment and office furniture, but there is no reliable, consensus method for assigning a value to all the social beliefs and activities that make a company valuable.

Such a delicious irony!  Contemporary capitalism loves that it can freely appropriate software code, personal data, user-generated information, videos, etc. – a shareable cultural abundance that the world has never seen before.  Yet investors have great difficulty in monetizing and commodifying this value.  It is hard to make abundant social value artificially scarce and therefore saleable.

So we have the spectacle of commoners having trouble protecting the use-value that they create, which businesses are aggressively trying to channel into extractive market production and consumption.  (“Extractive” because companies want this value for free, and don’t want to reward the social communities.)  And yet even with their great extractive powers (lots of capital, copyright laws, terms of service contracts, etc.), large companies are finding that it is difficult to develop reliable flows of profit.

Toward Value Sovereignty

The focus of the P2P Foundation report is how to move from an extractive digital economy to a regenerative one.  Hence the focus on how three digital communities are trying to protect their “value practices” and create a “value sovereignty” beyond the pressures of capitalist markets.  These communities are trying to achieve a “reverse co-optation” by generating value flows from the old economy to the new, and by developing new value-accounting systems to properly honor social contributions.

One such project is Enspiral, a highly participatory, mission-driven coalition of entrepreneurs and other entities, many of them based in New Zealand.  “Enspiral calls itself an ‘open cooperative’ because of its commitment to both the production of commons and an orientation to the common good,” write Bauwens and Niaros. One of its innovations is the use of “capped returns,” which puts a limit on how much an investor in the Enspiral infrastructure can receive in return.  As the report notes:

….the shares issued by a company would be coupled by a matching call option which would require the repurchase of the shares at an agreed upon price.  Once all shares have been repurchased by the company, it will be free to reinvest all future profits to its social mission. Through this mechanism, external and potentially extractive capital is ‘subsumed’ and disciplined to become ‘cooperative capital.’”

Sensorica is an open collaborative network that is experimenting with new ways to combine commons and market forms.  It has an elaborate “value accounting system” for keeping track of its members' contributions to market-based projects. This system is then used to allocate revenues in proportion to each member’s role. Is Sensorica a new kind of (market-driven) co-op or a new type of (mission-based) commons?  Maybe a hybrid.

A third case study looks at Backfeed, a production community that relies on the blockchain ledger as an infrastructure for decentralized production.  Backfeed is more of an aggregation of individuals working together to sell to markets, than a commons.  Still, the cooperative organizational structure has the potential for making it capable of acting as a “value sovereign” community. Many others are exploring how the blockchain might enable cooperative control over a community's resources, whether for sale in the market or for internal use-value.

Policy Recommendations

The P2P Foundation report concludes with a series of policy recommendations that would help protect the kinds of value regimes described in the case studies.  It proposes open cooperatives to create new types of livelihoods and the use of “reciprocity-based licensing” to protect against value capture by capitalist enterprises and foster solidarity among generative coalitions.  The report also calls for open supply chains and common network resource planning to help promote an open source “circular economy”(e.g., “design global, manufacture local”).  

Bauwens and Niaros envision new sorts of political collaboration to provide a counter-power to the old economy and advocacy for peer production communities.  Local “chambers of commons” and “commons-oriented entrepreneurial associations” are needed, not to mention new forms of transnational collaboration, they urge.

At a time when the political left has trouble moving beyond Keynesian economic models and the management of neoliberalism’s many crises, Bauwens and Niaros point to some new models of commons-based peer production that could help transform the terms of engagement.