Michel Bauwens on the Sharing Economy’s Impact on Capitalism

On the Al Jazeera website, Michel Bauwens of the P2P Foundation has a terrific big-picture assessment of the impressive growth of the sharing economy and peer production, and its serious long-term implications for capitalism.   

He starts by explaining how commons-based peer production is rapidly expanding.  It is no longer confined to the familiar, robust worlds of free software, wikis, the blogosphere, and social networking in cyberspace.  Peer production has moved on to various physical realms.  It can be seen in such innovations as open source manufacturing, which has produced Wikispeed, a 100 mpg car built by a team of volunteers in just three months, and Arduino, the open-source electronics prototyping platform.  It can also be seen in various crowdsourcing and social lending platforms, such as Kickstarter (which I recently learned channeled more money to artists in 2011 than the U.S. National Endowment for the Arts).

Peer production has also spawned a whole new sector of “collaborative consumption.”  This consists of organized forms of swapping and bartering, car-sharing, CouchSurfing and other lifestyle practices and innovative markets based on sharing.  The point in most cases is to reduce one’s dependence on the market and live a more social, convivial life.  The goal is not acquisition and ownership, but access and use.

How significant are all of these developments in the aggregate?  Bauwens writes: 

Commons-oriented peer production, as expressed in the open-source and “fair use” open-content economy, by one estimate is said to make up one-sixth of US GDP. There is also no doubt that one of the key ingredients of China's success so far has been the combination of the open-source - such as the country's domestic "Shanzai" economy - together with the patent-free policies that are imposed on foreign investors. This has guaranteed an open, innovative commons for much of Chinese industry.

Even as the open-source economy becomes the default way to create software, and even as it creates companies that reach a revenue of more than $1 billion, such as Red Hat, the overall effect is still deflationary. It has been estimated that open-source annually destroys $60bn in revenues for the proprietary sector.

He continues:

Such developments are good for the planet and good for humanity, but the larger question is: are they good for capitalism?

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?

What happens if more and more of our time goes into producing use value -- a fraction of which creates monetary value -- but there is not a substantial return of income to the use value producers?

The financial crisis beginning in 2008, far from diminishing the enthusiasm for sharing and peer production, is in fact accelerating the adoption of such practices. 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.

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.

Thus we have an exponential rise in the creation of use value, but only a linear increase in the creation of monetary value. If workers have less and less income, who can buy the commodities that are offered for sale by companies? This, in a nutshell, is the crisis of value that we are facing as humanity. It is a challenge just as big as climate change or increases in social inequality.

The meltdown of 2008 was a prefiguration of this crisis. Since the advent of neoliberalism, workers' wages have been stagnating and purchasing power was maintained only by an over-extension of credit throughout society. This was the first phase of the knowledge economy, in which only capital had access to networks, which it used to create globally coordinated multinationals.

As the knowledge society grew in size, more and more of businesses' value consisted of intangible, not physical, assets. The neoliberal stock market and its speculative excesses can be seen as a way to evaluate the amount of intangible value that is added to the stock's value by human co-operation. This bubble had to burst.

The second phase of the knowledge society, in which networks are diffused throughout society and allow productive publics to be directly engaged in peer production, creates an additional layer of problems. Add to the wage stagnation and the exodus out of wage labor that peer-based use value creation causes, and we can see that the problem is not solvable within the present paradigm. Is there a solution?

Bauwens is saving his answers for the next installment in at Al Jazeera.  But he gives a hint:  "The solution involves an adaptation of capitalism to peer production, but also opens up the avenues for a transcendence of capitalism."