New Civilization News: Marxism, Open Source and New Economy    
 Marxism, Open Source and New Economy14 comments
21 Sep 2004 @ 19:46, by Flemming Funch

Adina Levin posts Red Penguin about whether or not the open source movement is some kind of contemporary marxist thing. She has read Coase's Penguin, which is a classic paper written by Yochai Benkler, providing an economic explanation of open source software and other peer production endeavors like Wikipedia.

You know, open source software is developed mostly by people who work for free, who give their work away to the general community, and who don't seem to be much interested in profits. Is it some kind of communist conspiracy?
Marxism argues in favor of collective production and against monetary rewards out of political belief that capitalism is inherently exploitative. The way to ensure a just society is collective production where production is organized and rewards are distributed fairly through central planning. But centrally planned collective production proved inefficient and corrupt.

The first puzzle about open source peer production isn't whether or not developers have marxist political beliefs, but why it works, especially since the Marxist collective model failed miserably.

This is what Benkler explains elegantly. Coase's Penguin builds on the theory of Ronald Coase, who explained in the 30s that firms exist when the cost of separate transactions with many independent parties is greater than the price-efficiency of a competitive market. The problem Coase was trying to solve at the time was to explain the persistance and dramatic growth of centrally managed corporations, if a market is an ideal way to allocate economic resources.

Benkler solves today's version of the same problem. If money is the ideal way to incent and co-ordinate production, why are we seeing the persistence and dramatic growth of production methods that don't use money?

Benkler explains that commons-based peer production is more efficient than either firms or markets for information goods, where the costs of communication and distribution are low, and the difficult problem is allocating human creativity. When there are masses of potential contributors, and it's easy to participate in little chunks like an open source plugin or a wikipedia article, the best way match skills and work is a million little decisions by independent contributors.

Mandatory, Marxist-style collective farming doesn't benefit from these resource allocation efficiencies. Workers on collective farms have pre-defined work and can't leave. Collective farms don't gain the benefit of unique, voluntary contributions by thousands of distributed workers.

Another attribute of political marxism is an belief in mandatory equality. Peer production projects often have a meritocratic culture with dramatic inequality, where founding leaders and high-value contributors have greater prestige, influence, and sometimes financial reward. It's not considered inherently unjust that leaders of open source projects like Perl and Python have received grant, foundation, and corporate funding to do their work (although visible leaders of peer projects can also become lightning rods for criticism).

Another marxist value is opposition to a money economy. Cash is seen as a symptom of the alienation of workers from the products that result from their labors.

Clearly, the motivation of many thousands of open source, wikipedia, livejournal, and other peer content producers is non-monetary. But is it anti-monetary?

Benkler deals with the incentive question in the excellent third section of Coases Penguin. Benkler makes an astute distinction between activities where money is commonly thought to be an inverse motivation (sex), and where it is seen as complementary (sports, music). Many people who like basketball would love to be NBA stars. By contrast, most people who like sex would not like to be prostitutes.
So, a few thoughts, related to how we might more pervasively live in a different kind of econmy.

A central question there is why we indeed still do have a system that is dominated by centralized corporations, as opposed to a real free market. As she points out, Benkler, or rather Coase, said that firms exist when the cost of separate transactions with many independent parties is greater than the price-efficiency of centralized ventures. Large corporations are largely counter to a free market. They work quite a bit like communist governments, just with even greater incentives for greed, and the removal of any ideals of providing for the population or having them live in equality. And the corporations do compete with each other, and with whatever people do in a non-corporate way. But the somewhat mysterious puzzle is how come big inefficient bureaucracies actually CAN compete successfully with individuals and small groups in a free market.

Part of the secret, I think, is that capitalist ventures aren't doing what most people sort of intuitively think they're doing. A central tenet in Marxist thinking was that what is really valuable is the work that people do. The actual work that individuals put out is what the economy should be based upon, not the capital it is financed with, or the profits one might extract from it. And somehow most people seem to assume that their work output is valuable, and that's what they're being paid for, and that's what makes the economy work - that people do good work, which creates value. And of course, the economy wouldn't work if there weren't people doing good work, but it is rather far removed from what really makes the wheels turn.

Most corporations work quite a bit like a communist country did. I.e. the actual work people do has rather little to do with anything. A majority of people have figured out how to get through the day, looking like they're doing their job, without really doing much of anything. Despite western propaganda, making it look like everybody were in slave labor camps, the truth about work in for example the old Soviet Union was more in the direction that there wasn't a whole lot to do. Let's say you were a baker. It would be common to show up for work, and then around lunch time you'd run out of materials, no flour to bake with, so you'd stop working. After a long lunch, there'd maybe be something more to do, but most likely you'd go home early. It was the fault of central planning, and since you couldn't do anything about it, you just sort of made it through the day. And there was then plenty of free time to get really educated, or to drink, or whatever. None of it in very good style, but you were at least assured a living, and you probably weren't overworked. Now, a western corporation or a government job isn't all that different. It will produce a higher standard of living, albeit with much less security, and most people have figured out how to look busy all day long, and things are better planned, so one doesn't run out of paperclips in the middle of the day. But it is still the same situation that for at least 90% of the workers, what you're doing doesn't make much difference, and you're just sort of keeping up appearances, even if you're actually working quite hard. Many of you work for corporations that could fire 10,000 people if "the economy is bad", and it still wouldn't make much difference.

Now, let's say we set up a grassroots network of people who were exchanging their work for money. A very flexible and full-featured thing, allowing you to quickly find qualified workers for a job, and to always get the best work for the best price. You would be able to act on opportunities quickly, by selecting out good people, structuring attractive proposals, doing the work, and moving on to a different constellation when it is done. That kind of setup ought to be many times more efficient and competitive than corporations that are slow, bureaucratic and wasteful.

The annoying thing is that it probably isn't. And despite sounding very sensible, it would miss how things really work. Most of us are not just interested in working hard and being rewarded fairly for it. We'd much rather work as little as possible, but have a good time, and be rewarded unusually well for it. We'd rather get paid handsomely without any relation to what we actually do or don't do. And that's the point where the big centralized capitalist corporation wins out over the competition. Sofar the best of all worlds. For the people who're in the loop, at least. Most of the executives, the investors and the workers get away with being paid well, or even amazingly well, without doing much real work, and without having to be measured on their actual performance. I.e. what they do to increase the quality of life in the world.

Most of what we actually need in the world could be produced by a small percentage of us working. And a small percentage of us are indeed doing something very valuable and needed which we're inspired and excited to do. The rest are mostly passing time filling up a slot that probably didn't really need to be filled, if somebody took a bigger view on it. OK, good and useful things get accomplished too, even by people who aren't quite in it, and who're mostly looking forward to the lunch break. But really what is going on is that there are some big economic machines in motion. What makes those machines run is only to a rather small degree the quality of work done, even though some work of sufficient quality has to take place. What makes them run is to a higher degree the creative financing that allows somebody to manufacture the capital for them, without any exchange of real work. And the fact that the whole thing is so opaque that hardly anybody can understand how it really works. And then it works on how well the machine succeeds in guiding or matching the desires and whims and habits of the public.

It is about creating a value chain. Not necessarily real value, but economic value. If you own a patent which forces some people to pay you a billion dollars per year in licensing fees, you can hire 10,000 people, and it doesn't really matter what they do, and you'll still have a lot of money left over, and everybody is happy. Or you set up a manufacturing and marketing machinery that makes everybody eat your baked beans. And again, it doesn't matter much in the small what the employees are doing, as long as an acceptable quality of baked beans come out, and people feel like eating them. Everybody involved gets paid a small piece of the value produced by the big system in place.

A network of good people doing work for money can't easily compete with that, unless they can manage to set up similar kinds of value chains. Just doing work and being paid isn't quite good enough. If I look at the amount of money I need per month, and I consider making that by doing work for people I know who need something I can do, it looks pretty grim, unless I actually can do something very tangible and sought after. The more likely thing I'd do is to find somebody with a big value chain for whom the kind of money I need is very insignificant.

But now, open source, it actually works. Why? Unfortunately, to a large degree because the other things are in place. There are plenty of qualified people around who have a day job that doesn't inspire them, and which doesn't have them do much, but which pays them. So there's plenty of energy left over to do something that is actually valuable, based on one's own free choice. That wouldn't happen if one came home from a 60 hour week of manual labor, all worn out. Wouldn't happen if one had no source of income. Might happen when one is on unemployment, or while one is studying, and one's living and one's studies are paid for.

But the success of open source economics shows us a glimpse of how the world could work. People working for the common good, of their own free will, collectively doing higher quality work than one could buy for money. And somehow still being supported. They leverage this out of a capitalist economy which otherwise is totally antipathetic to such activites, and despite considerable odds against it, they demonstrate new kinds of economic relationships, and the potentially superior qualities of free organization.

But what would it take for such principles to actually replace the old, inefficient, but very powerful institutions?

They would have to not only be superior in terms of getting useful work done, which is by now well covered and documented, if certain conditions are met, but also superior in terms of generating life support value. I.e. they'd have to pay the rent and put food on the table.

One way would be to create ways for more loosely organized groups of people to capitalize their activities, and hook into common value chains. Co-operative business ventures. Maybe doesn't have to be done with dollars that come out of a bank, but maybe it can be done with other kinds of currencies. Obviously, if big value is generated for many people, there ought to be some formula for inverting that into a reward for everybody who were involved. Either way, at the same time the problem has to be solved how large heterogenous groups can communicate well, and coordinate their activities. Maybe the right kind of economic system will implicitly carry the answer to that too.

The open source approach would not be to figure out how to force somebody to pay directly for one's work. Rather, treating it as a universal problem to solve, and once one solves it, one gives the solution to anybody else who wants it.

Much harder to do with the physical world than with software, but maybe it mainly is software or blueprints that is needed. At least a little down the road. I need to have food to eat. So does 6 billion other people. What if somebody came up with ways of helping me fill that need on my own. You know, like the plans for a selfcontained hydroponic system I can have in the basement. Some nano-tech replicator would be better of course. But the point is that somebody can come up with a solution I can install locally, rather than me having to be perpetually hooked into a farming, factory, super-market system. A solution that puts the ball in my court.

Yes, currently we can't compete with big corporations and governments on many points. Because some of what we need and want requires big machinery, and because the collective activities of thousands of people better can be pointed in a particular direction with hierarchies and propaganda. However inefficient and wasteful they might be, they still has an edge over anarchic self-organization when it comes to big central projects.

But the scales tip a bit whenever a technology becomes small and cheap and virtual enough that it can end up under your personal control. Like when you were able to buy a personal computer for the first time, and you could create your own typeset newsletters, and you could program it, and then you could create websites for millions of people to see, easily and cheaply. Soon computer graphics will have gotten far enough that you might author a fairly sophisticated feature movie on your PC. Little by little, the keys are handed to you to do things on your own that you previously were dependent on corporations for. OK, you can't build your house or your car that way, or grow your food. But it is fairly inevitable that eventually you can, based on open source blueprints. Along the way some big corporations are going to try to stop you from actually using what they've sold you, but the cat will be out of the bag. If you sell LPs and I have a tape recorder, the economics of music distribution have already inextricably changed, no matter how many laws you have passed forbidding me to hit record.

A free market is good. For people to participate in a free market, they need to be free to choose, and they need some kind of tools that allow them to have something valuable to give to others. The internet and open source have opened up a bunch of areas, creating new free markets. Now we need better communication tools, to allow larger numbers of people to coordinate their actions. We initially need ways of capitalizing such networks of people. And then we need more technologies virtualized and made free. And eventually the centralized capitalist bureaucracies will go the way of their communist cousins, and crumple under their own weight, because they can't compete with well-organized free people. Will take some work, but it is probably inevitable.

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14 comments

22 Sep 2004 @ 02:37 by othomas : Gift economy, Open source
I am new to this blogging collective. It amazes me to find so much which is given to all who give only a small amount of personal information. Who pays this bill for computers and electrical power?

I have recently attended a 9 day conference on alternates to global capital. It had 60 people registered in San Miguel de Allende, Mexico: my home town. Most presenters were followers of Marxist philosophy, and their proposed solutions were some sort of socialism. I searched long and hard through the papers to find a basis in some sort of ethics. All I have fournd is rationales for a gift economy.

Question .. why did the creators of this network want to give it to us?

Thanks anyhow,
Owen Thomas, whose newciv name is othomas  

22 Sep 2004 @ 09:14 by Lance @24.19.204.182 : Who created this oracle?
>> Question .. why did the creators of this network want to give it to us?

Perhaps when it becomes a common, indispensable part of our lives, the network can be monitored, metered and billed by the packet.

Another question is who invented the Internet?  

22 Sep 2004 @ 10:50 by ming : Gift economies
It becomes easier to practice a gift economy the more ephemeral (light, cheap) the things we need are. It is harder to be altruistic if it requires a lot of hardship. But if the barrier is set low enough, most people would choose to do something nice for others.

These days there are lots of people who think they can spare a computer to be a server that provides some public service. And if it doesn't get too big, the internet conectivity is easy to donate too. The same people might not feel comfortable if it required five servers, or if the bandwidth requirements were several megabits per second. But there's a threshold below which it is easy to provide services as a gift.

I wrote this blogging software. In part because I wanted it myself. And it was not much harder to make it available to a few hundred other people at the same time. OK, I've also put a lot of work over the years into programming the facilities of NCN which is the particular "blogging collective" in question. Incidentally specifically to foster the spirit of freely working together for the common good. But the maintenance costs are so low that it is not a big issue what people actually use it for.

This server has existed in one form or another since 1995. For a period of time, I paid heavily for keeping it running: a couple of thousand dollars a month. But today that isn't necessary. For that matter, the current server and the bandwidth are donated. Donated by somebody who has a lot of servers and bandwidth, and with whom I have a bit of goodwill.

One server can do a helluva lot. There are several large non-profit sites on this server, and a few dozen commercial ones, and more than a hundred mailing lists, mail service for a bunch of people, streaming video, name services, and many other things. Like, yes, a couple of hundred blogs. Anyway, if it serves up 100,000 pageviews per day, and delivers 10,000 e-mails, that is still rather small potatoes.

Part of what keeps the internet running is many instances of the same things. People who put up servers that deliver useful services. Maybe to explore some business idea, maybe because it is fun, or important, or it makes you look cool. And some of the people who give services away might have in mind trying to charge for them later on, or leveraging them into something else. But there are enough choices available that more and more things are moving towards being free.  

22 Sep 2004 @ 11:09 by maxtobin : Love your reflections Ming
**I need to have food to eat. So does 6 billion other people. What if somebody came up with ways of helping me fill that need on my own. You know, like the plans for a selfcontained hydroponic system I can have in the basement. Some nano-tech replicator would be better of course. But the point is that somebody can come up with a solution I can install locally, rather than me having to be perpetually hooked into a farming, factory, super-market system. A solution that puts the ball in my court. **

We in the Western world are over feed and under nourished! Hydroponics will never do it, the way nature intended us to be fed is the way we must be fed!! Other wise we will find greater and greater degenerate health circumstances. "Farming factory and supermarket system" is the major contributor to the human condition~~~ we are what we eat!
Malnutrition is not just a third world problem (I saw a lot of malnourished folks in the US while I was there, and there are many here too), it is not so prevalent where the traditional food chain links grower to consumer in a short and more intimate or time honoured linkage.
The future is opened to source and organic just as we was created!!!  

22 Sep 2004 @ 12:08 by Peter Turland @82.3.32.71 : Marxism, Open Source and New Economy
Nice article Ming, you address some of the difficult issues of self interest versus common interest. Everybody uses language in a self referential way - we cannot help it. One of the best examples for this being the term 'work' if work is defined as 'The expenditure of energy, to the benefit of others that cannot be achieved by machinary and automation' then not many people actually do any 'work'. If the real 'work' was shared out amongst the (sic) working population, then we could probably achieve the same amount of *real* wealth by working only a day a week each. What makes it even crazier people would probably do the real work for nothing out of boredom. Design it, build it (or grow it) and deliver it, the rest is information and we have computers to process that information. Most people seem to spend most of their lives rushing around going no where, in terms of being any real use to society in general. I spent twenty years driving a truck so I know what I am talking about.

Peter  

22 Sep 2004 @ 14:04 by ming : Going nowhere
When I worked for a number of years in an L.A. downtown highrise, I'd look down at the freeways from out my window. And from 20 stories up it looks really non-sensical. There's a perpetual rush hour with six lanes in each direction. Most of those folks spend an hour each way getting where they're going. So, there are accountants and secretaries driving an hour east to be accountants and secretaries. And other accountants and secretaries drive an hour west at the same time, to do the same thing. What a ridiculous waste. And they're all sort of stressed and hurried and think they're working hard. Yet the sum of many of the busy things they do is about zero.  

23 Sep 2004 @ 16:27 by qmal : Opening scources
After reading this log I see your vision just a little more clearly and you are indeed far along on where and how to apply those pressures and I spoke of on the previous log. I gathered some of these ideas and visions that you speak up here from studying your NCN logs and architecture but this clarifies it considerably. The idea of an information central, and all is quite interesting ...excellent. I've previously been considering a number of things to develop personal self sustainability and possibly then, if functional, release that program to the community somehow. So this log furthers my understanding more yet. Design something and release the information that could help people build with that and spread that. I think your right when people figure out how to do everything that corporations are currently bringing to the world that the corporation as it monetary entity will just dissipate. I was saying; apply pressures in the right places. You are already and evolutionary trigger designer.  My father helped to start V I T A, Volunteers In Technical Assistance, a group of engineers and other people that design easy to build technology and then take it into the Third World. As a child I had experience and several occasions of actually doing that, going into the Third World to teach people simple technology. It was started in 1961 and they designed simple things like solar cookers that would boil water in five minutes made with aluminum foil, wood and cardboard. Ram pumps that use a lot of water flowing down to pump a little water uphill. Their current project is a low Earth satellite system to bring Internet telephone and other technologies into remote Third World areas. Their objective is not to undercut the corporate world, but just to help people, but I think it probably would do that by default. If people in the third world already have and collectively operated Internet, cell phone and other technologies it's an area the corporate world will not be able to move in so easily. Another project they did was a wind turbines with variable pitch blades, which had only 18 moving parts, it's still in development. The plans for all these things are open source. They have an infrastructure to spread them out. My mom has helped to start a 50 acre co housing community with organic farm called East Lake Commons. This is relatively successful so far. Its designers are members of NCN. I hope I will be able to contribute to the world in these areas as well in some way eventually. I will try a few things perhaps. I'd been around these ideas quite a bit and have tried some of them and the real world. I have already tried a few things like trying to bypass money with simple trade on a personal scale ,but as you say, trade gets a little difficult as far as converting it into very usable things real world, largely because there's not enough and people on board. It got a little frustrating. But I think you're correct, enough people on board, product, services and goods and that system would work quite well. When I was in business I would do a lot of trade, I would trade automotive services for variety of other services, sometimes goods. For instance say like a band that needed work on their van I would trade the work for performance at my sound stage, and then I would get a video of them, which was one of my hobbies at the time. Hard to cover overhead but everybody involved would be satisfied so it was a good thing. Have you heard of the Ithaca dollar system? Your right …taking it into the home…usable stuff you can do your self. Recently I have been examining the idea of getting off the grid. I am using part of my place here to mass raw materials that I can use possibly to develop some of these ideas and projects. And that's also why I joined global ideas bank when I heard about it. I want the book too. I have started a few projects at home like garden, green house; also I am planning a rooftop garden, and solar electric grid incorporating both car and boat. I guess the next step if I complete that would be to try to talk my neighbors in to a similar set up as well, as a plan of action. I thought about building electric cars or becoming a solar cell distributor /in installer. But I think I am way over trying to run anything like a business. With 30 or $40,000 worth solar cells on my roof I could produce more than enough power for myself and get some to my neighbors. They are already paying $400,000 for larger houses with tiny yards. They could pay 450,000 and never pay and another power bill again as well as have a cooler house and less pollution. And reduce fossil fuel dependency. Just a couple of ideas I have been thinking/ doing.
I know what you mean about going nowhere fast. The inefficiencies of the freeway and many things in society. Everywhere you look at current society there some kind of dumb energy arrangement in play. I look across the street and see houses with the huge roofs, that absorb the sun's energy all day long and the owners in turn pay to pump the heat out of their houses. Cars sitting on the freeway with their air conditioners on full are doing the same, idle energy use. The idea that we have to travel all the time to accomplish gatherment of sustaining goods and needs is almost as ridiculous. Everyone has giant refrigerators at their house with expensive defrost features. Large ovens and kitchens which release heat into the house and then the owners in turn have to pay to pump the heat out. Like building the huge roads, which soak up sun all day just because everyone has to get on the freeway at the same time. Idle energy consumptive existence matrix thing going on in a big way today. Going nowhere fast with lot of energy usage is great for the interests that structure ,support that function but it's quite ridiculous from a usability and sustainability perspective. But its convenient, what a farce and most draining and debilitating of our own energies.
Really cool Ming, your vision on open source.  

24 Sep 2004 @ 05:04 by Conversations with Dina @202.68.147.168 : Link Bytes
[trackback]: Some links,  

24 Sep 2004 @ 11:36 by ming : Ithaca Hours
It should be perfectly feasible to build an alternative currency that works. Particularly because the national currencies by their design are heavily weighted towards benefitting those who have a much bigger stock of them than they need, and most of all the people who've maneuvered themselves into having the monoply on manufacturing them. As opposed to being designed to benefit those who do good work and who desire to exchange it for other good work.

Most existing alternative currency systems and barter systems unfortunately don't accomplish much more than being an idealistic demonstration of the fact that one can make alternative currencies. In practicality they mostly end up being sort of inferior substitutes for "real" money. Something that people grudgingly will accept, in small quantities, if you really don't have any cash. Or, at best, a symbol of local pride and benevolence, like accepting rebate coupons that benefit a local school.

So, those currencies are now mostly known as complementary currencies, rather than alternative currencies. Because they aren't yet an alternative for when you need to buy a house or a new car. But I sure hope the currency designers will keep trying.

Being paid for work and exchanging for goods is only one portion of what money does. So, while several alternative currencies apparently provide superior ways of doing that, they don't yet supply alternatives to what really makes the economy run. The part about making big things happen out of nothing, without doing any real work.  

27 Sep 2004 @ 08:06 by Align With The Uni-v.e.r.s.e. @68.3.7.187 : Here, Here, and what about....
Xpertweb and C.H.A.L.I.C.E. ming? What about re-invigorating NCN with some code that networks the existing members together a la RYZE, then figuring out the "proactive money" (chalice) economical 'core' to truly power a new tribe?

The Uni-v.e.r.s.e. will do this.....eventually. You could do it quicker!  

27 Sep 2004 @ 22:14 by ming : Economic Networking
Yeah, I haven't forgotten. Waiting for the right kind of lightning to hit me, I guess.  

21 Oct 2004 @ 13:07 by Faré @192.103.2.70 : Transaction costs
The expressions that are begging to be entered is that of "transaction costs", and the more general one of "information costs". You're right that (putting aside government privileges for big firms with centralized human resources management), firms exist largely because it is inefficient for people to go look for those to whom they could work most profitably -- i.e. marketing and other administrative costs for your own proficiencies bear a cost. Becoming the salaried worker of a firm is a way to outsource these costs. You could also imaginably have an impresario or some other agency, if your proficiencies were specific enough to mandate individual marketing. In any case, government meddling (aka labor laws) certainly play a role in forcing people to remain "wage slaves", but (many) firms would exist not-withstanding, because they are mutually beneficial to all concerned.  

21 Oct 2004 @ 13:11 by Faré @192.103.2.70 : Currencies
Alternative currencies, such as e-gold.com, exist. Problem is, by mandating their monopoly currency as "legal tender", mandating accountancy and wage payment according to state regulations in said currencies, levying taxes based on such currency, prosecuting purveyors of alternative currencies (such as the "SEL" in France, and numerous examples in many countries), States enforce use of their own currencies on their territories, even though said currencies are managed in catastrophic ways (see the 1929 crisis, or more recently, the Argentinian crisis, or more generally, inflation).  

21 Oct 2004 @ 23:10 by ming : Transactions
So, essentially if there were a universal way for individuals or small groups to operate with lower transaction costs, and more flexibility and potential for reaching the right people, so they could do those transactions - then the whole picture might easily change.

I suppose the question to solve is how we can cooperate effectively, without it having to be in a corporate employer employee relationship. There obviously are some advantages in scale. But also lots of waste in the bureacracy and slow tempo. So if many people can figure out how to cooperate where it is useful, while remaining flexible, and without introducing unnecessary bureaucracy - then we might have something.

The right kind of currency might be a key component in greasing such a machinery. A currency geared specifically towards cooperation between the many. But, yeah, there are some obstacles. Not the least being that nobody quite has figured out how to do that.  

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