The challenge of abundance

by Michel Bauwens

I'm a little of an outsider in this crowd, but I reacted to Randolph's invitation and thought I would have a go at challenging not just capitalism 1.0, but capitalism as such. And not from a capitalism 2.0 point of view, but from a capitalism 3.0 point of view, as outlined by Peter Barnes in the book of the same name.

What I would like to do in the next few weeks is to point to a few 'challenges' that current technological affordances are creating for the system as is, such as the challenge of abundance, of openness, of the demands for participation, and from commons-oriented approaches.

Let's start with the challenge of abundance.

Once we have a technology for free-copyability, which is already there as a generalized infrastructure for large parts of humanity (even if only one sixth at present), we have a technology for the production of abundance, at least in the sphere of immaterial production.

This creates an immediate challenge. Indeed, what is a market, if not a means of allocating scarce resources, through the mechanism of supply and demand. Clearly, when a production process creates such abundance, what it produces 'escapes' the market mechanism. We can see how this is already largely happening in the world of content, more and more content has to be free (free as in free beer, not speech), and the same happens in the field of software, where free and open source software are becoming mainstream.

I happen to think that this will move generally to the whole field of designing physical products and I follow this evolution here. If these trends continue to grow, what is at stake is the continuing existence of a model of capitalism that stakes its profits on the artificial protection of scarcity through patents and intellectual property.

But even today we can see emergent models. I have outlined these here. There are essentially three main models: sharing, commons-oriented production, and crowdsourcing. In the first model, proprietary platform owners create enable sharing, and sell the derivative attention streams. It is of course the model behind YouTube and Google. The second model, is the commons-oriented model exemplified by free and open source software. Though the software is "open", companies create protected 'added value', which they can market. Finally, in crowdsourcing, production is distributed amongst produSers, who create products and designs (think Lego Factory, iStock photo), and the corporate platforms functions as an intermediary and toolbooth. In my modelling at the OSBR site cited above, I further distinguish about a dozen micro-models, depending on whether the initiative and value-creation is primary done by corporations, or, as is more and more the case, by communities.

That these models are emerging, if not thriving, should not blind us to the continued challenge of abundance, indeed, I do believe that, despite that partial monetization, more and more use value is directly created and shared between user-communities, and only a fraction of that is being monetized.

This may mean that overall, capitalism, as market mechanism, may move from center stage, to being part of a broader meta-system in which the market is a derivative mechanism. While this is not for tomorrow, I think that the premises of such a crisis of value is already emerging.

As we will see in the next installments, this is not the only challenge, as the other paradigm of openness is equally challenging.

Here are some extra citations to make us think:

In the 21st century economy, it isn't factories and it isn't people that make things. It's communities.

- Eben Moglen

...it makes less and less sense to be thinking in terms of "end-users" and to be creating knowledge-jukeboxes for them. It makes more and more sense to be designing for "end-makers"

- Willard McCarty

An increasing number of physical activities are becoming so data-centric that the physical aspects are simply executional steps at the end of a chain of digital manipulation.

- Clay Shirky

Comments

[randolfe]

Michel

Thanks for the contribution. I think it is very important to bear in mind that Capitalism itself defines a dynamic, ever evolving system. Capitalism is not static. It necessarily reinvents itself as innovation powers technology powers "productivity" (in the purely economic sense of the term).

The best example affecting many of our readers today is occurring in the world of software and open-source. As open source steadily continues its march into the enterprise, the producers of software will increasingly find themselves either redefining themselves, or being forcefully redefined by markets. Although I am less familiar with the music and movie industries, I accept that similar forces are at work there.

I look forward to forthcoming articles and I hope that we can ignite a lively discussion and debate about these topics. I know that many of the notions you bring up should (ironically) "agitate" free market fundamentalists and neo-classic economists alike.

[Brand]

"Once we have a technology for free-copyability, which is already there as a generalized infrastructure for large parts of humanity (even if only one sixth at present), we have a technology for the production of abundance, at least in the sphere of immaterial production. ...

I happen to think that this will move generally to the whole field of designing physical products and I follow this evolution here."

This article sounded reasonable at first. The capability of replicating digital media without cost means that it is increasingly difficult to derive revenue from the value inherent in the *content*. This difficulty arises from the digital storage mechanism. Ok, fine, true enough.

But then we have an awkward moment where I think we might be asked to generalize digital copying to the physical world. I think. Actually, I kinda hope not, because basically it sounds like we're talking about a Star Trek replicator system. :) Obviously a replicator-based capitalist economy would present tremendous difficulty in deriving value from *any* physical design or representation, as atoms and energy can be rearranged into physical objects at will. Even the holodeck from Star Trek exists to carry things the additional step of creating experiences solely via technology. And if we get to that level of technology, all humans will get what they want. Until the resulting overpopulation leads to competition over a restricted set of resources like water, land and air. Or until people realize they do need other people, and we *still* can't all have Heidi Klum, and there is no differentiator to win her affections aside from good looks and intangibles. :)

However, all the examples seem to be for digital content, and non-physical digital content at that. I think Moglen was misquoted, considering that the sentence prior to dismissing factories dealt solely with software (in a Linux open source context, no less). I'd disagree with Clay Shirky that the physical component of his examples is trivial. For instance, that oil deposit data didn't come from fairies. It came from guys driving around remote areas in Jeeps with heavy equipment taking readings and drilling core samples. And maybe you can pick the next drilling site based on digital data, but the data and analysis are extremely trivial compared to drilling a well.

However, let's stick with the digital domain for now. Software is developed from the knowledge and expertise of humans. You can use a statistical package to analyze core sample data, but a human has to enter a complex set of variables in order for the software to provide an answer. Thus most software is encapsulated knowledge. To the extent that people are willing to give their knowledge away for free, yes that capability can be copied by others. And yet even that isn't a complete picture, because only the encapsulation has been transferred, not the actual knowledge. The users of that well selection program won't necessarily be able to make a good selection of the next drilling site. So all the digital storage medium has really done is enabled an easy transfer a very selective *snapshot* of knowledge to others. The capitalism of such enterprises in the future will be in exchange for the valuable knowledge, for the equipment that provides input to the digital content stream, and for the equipment that can actuate something physical on the output of the digital stream.

In a certain sense, Web 2.0 has killed the garage engineer. If you can't protect your IP in the digital age, what's the point of inventing new technologies in the ol' unheated shop? Not everyone is so altruistic as to spend many weekends encapsulating their knowledge in exchange for a few atta-boys on Facebook. Thus I predict the best and brightest independent entrepeneurs will begin to refocus their efforts on things which cannot yet be copied in the digital realm.

[randolfe]

Brand

In the Star Trek fictional universe they solved that problem by the Federation not having money or currency of any type. It was supposed to be a post-economic society, though they never really delved into that much save for by comparing to the merchant and trade races.

One thing strikes me in your reasonable counter arguments: most of these same objections were raised over 20 years ago in relation to the rise of "Expert Systems". Critics charged that an expert system software package did not convey actual knowledge, only the encapsulation of the tacit heuristics enabled by that knowledge.

The problem I had with that argument was that it is irrelevant in regard to the production function. Sort of like an economic "Turing Test". If the automated shadow of knowledge contributes to the production process the same as the actual knowledge, then what is the difference aside from semantic? Not that true knowledge is irrelevant, but it may well be that what is occurring is simply more efficient transmission and use of knowledge.

I too have some difficulty overcoming physical production constraints -- both tangible and intangible -- as a practical matter. Even with digital media, I believe there are intangible physical constraints such as marketing functions, which are not entirely displaced by infinite supply.

In fact, I would posit that as supply approaches infinity, and production costs approach zero, the implicit economic search costs rise tremendously. This is the true genius of Google, for example. They are sitting squarely on the economic variable guaranteed to rise as the whole of human knowledge becomes freely accessible. With, say, a pop mp3 song, it is essentially valueless if no one ever finds it. In dry microeconomic terms, it is irrelevant if the marginal costs and total costs are zero, if the economic revenues are also zero.

[randolfe]

Another thing comes to mind when thinking about the replicator-based economy. I tend to believe that economics underlies the whole of the human condition, and that other economies exist aside from those we tend to analyze in these discussions. Economies of love, hatred, society, warfare, etc.

The likely outcome of turning on a replication machine would be the extinction of the Krell on "The Forbidden Planet".

[Brand]

I tend to think that Scott Adams had it right about holodecks and civilization. Once people could have anything they wanted, they would spend all of their time on a deserted beach with Cindy Crawford and her holographic twin sister. Which is really just a different doom than Forbidden Planet.

I do disagree with your point about Expert Systems. An expert system is mostly historical. Any predictive capacity is based on analyzing similarities to past results, as opposed to exercising reasoning and intuition about the future. I see expert systems as somewhat analagous to quant models--they tend to match well with the past (by virtue of having been tested with past events), and are highly accurate right up until the moment when their model is wrong. And then it's truly busted. :) But I don't think that LTCM or others could ever code the perfect quant model, much as I don't think a S&S expert system could ever self-educate on new products that were not similar to older products. The user network concept seems much more powerful in that context, as humans are constantly expanding and refining the data set with ongoing feedback.

[Michel Bauwens]

Thanks for the many interesting comments. However, I think that most comments underestimate the potential of peer production influencing physical production. The general argument is of course that anything that needs to be produced, needs to be designed, and that such design is not fundamentally different from collaborative software production, though it requires an iterative relationship between designers and the people doing the physical work. The issue is however, that open design can thrive on a generalized infrastructure for copying and sharing, which we already have, but that physical production needs cost recovery. However, Eric von Hippel's Democratizing Innovation has already demonstrated that such a combined model, open innovation by lead users, built-only capitalism, is emerging in many different fields already.

At http://p2pfoundation.net/Category:Design, a special section of our wiki, we monitor developments in that area closely, and in particular, there is an emergent movement applying open design to appropriate technology, while PC-centered open hardware is also moving forward.

Here's a substantial list of open design, open hardware initiative, at
http://p2pfoundation.net/Product_Hacking

Apart from that, I'm referring to the replicator questions, the key trend is that manufacturing equipment is indeed following the same trend of miniaturization than computing was earlier, and through this can emerge new models of distributed digital manufacturing. See the same design section for articles on different trends in personal fabricators, digital manufacturing, rapid prototyping, desktop manufacturing, and more.

What I'm saying is that it is a pretty open future, and that things are not settled yet.

Michel

[Daniel Aguilar]

How far do you think we are from thinking not only on economical profit but on social-profit and on earth´s well being?