Chris Anderson has done a useful exercise to estimate the value of the ‘really free economy’ (which excludes free as a gimmick and advertising-supported media), which he considers to be in the ballpark of $300 billion.

The article starts by explaining a typology of the free economy, which I think has been done better elsewhere.

See here for an alternative typology of the free economy (graphic here)

See also my own “ladder of open business models“.

Here is Chris Anderson’s calculation:

“Open source software (service and support around free software):

Whichever definition you like, there’s a lot of money to be made around free.”

Of course, money is not the only value evaluation system, and there are sections of the free economy, where no cash changes hands at all, for which we need different wealth acknowledgment systems.

To measure, this kind of ‘immaterial value’, we need a new type of ‘peer to peer metrics’, which we are monitoring via this special page.

Chris calculation also do not take into account eventual destructive effects on monetary wealth, that for example open source software may have caused to proprietary software, estimated at a loss of at $60 billion annually.

This is a well done short trailer of Jeff Howe’s new book on crowdsourcing.

I missed this new concept, which makes a lot of sense, when it came out last June.

Marc Dangeard says the venture capital model, which leaves 99% of the enterpreneurs unfunded, is largely broken, and something new is needed, which he calls the Entrepreneur Commons.

Marc:

“A not-for-profit social network of entrepreneurs providing financing for early stage company through debt guaranteed by a mutual guarantee fund. The financial risk is mitigated by the mutual guarantee fund. The risk on the “management” side is mitigated by the social network: loans are by invitation only, so you will have to be approved by your peers to get in. And the typical scalability issue faced by general partners in a VC fund (which causes the famous “funding gap”) is also resolved by the social network: the size of loans and the number of entrepreneurs involved is no longer a problem, and if anything it helps stabilize the results of the group as a whole.”

The idea is getting traction, and the Skoll Foundation is now holding a lively debate on this proposal. I urge you to read the various contributions at the bottom of the article.

For more information, I keep track of funding proposals through a delicious tag.

Here are related proposals for new types of corporate governance and funding:

Blended Value, www.p2pfoundation.net/Blended_Value

Capital Commons Trust, www.p2pfoundation.net/Capital_Commons_Trusts

Cooperative Capital, www.p2pfoundation.net/Cooperative_Capital

Good Capital, www.p2pfoundation.net/Good_Capital

LLP’s, www.p2pfoundation.net/Limited_Liability_Partnership

Open Capital, www.p2pfoundation.net/Open_Capital

Patient Capital, www.p2pfoundation.net/Patient_Capital

Trusts, www.p2pfoundation.net/Trusts

Venture Communism, www.p2pfoundation.net/Venture_Communism

Workers Capital, www.p2pfoundation.net/Committee_on_Workers_Capital

In the beginning was the Horizontal, and it was everywhere, but it was local. Then came the Vertical, and it was stronger, and became global, eventually tempered by the Diagonal. But one day, the Horizontal learned to interconnect, and it too became global, outshining the Vertical. As it became the strongest, it became tempered by the Diagonal, and learned to master the Vertical.

- Found in an artifact from Planet Earth, in the document known as the P2P Bible, date unknown

The key issue that I would like to address today is whether there is something akin to Peak Oil, regarding the balance between hierarchical relations, decentralized relations (including representative democracy), and distributed ‘peer to peer relations, respectively the Vertical, Diagonal, and Horizontal modes.

Have we reached, or are we about to reach, some kind of tipping point, let’s call it Peak Hierarchy?

This thought capsule is prompted by the rediscovery of the Theory of Power by Jeff Vail and a visionary piece by Vinay Gupta.

1.

What I get from the study of Jeff Vail is a simple, profound, but disturbing truth: for most of history, it has simply been the case, that hierarchy has trumped the more flatter forms of social organization. The choice was always stark and simple. Join the hierarchical race, or be outcompeted by the social forces that do.

Here are two quotes by Jeff Vail on the social origins of hierarchy that drives this point home.

A. Hierarchy is driven by fear and insecurity

Jeff Vail:

“One of the seeds of hierarchy is the desire to join a redistribution network to help people through bad times—crop failures, drought, etc. Chaco Canyon, in New Mexico, is a prime anthropological example of this effect. Most anthropologists agree that the Chaco Canyon dwellings served as a hub for a food redistribution system among peripheral settlements. These peripheral settlements—mostly maize and bean growing villages—would cede surplus food to Chaco. Drought periodically ravaged either the region North or South of Chaco, but rarely both simultaneously. The central site would collect and store surplus, and, when necessary, distribute this to peripheral settlements experiencing crop failures as a result of drought. The result of this system was that the populations in peripheral settlements were able to grow beyond what their small, runoff-irrigated fields would reliably sustain. The periodic droughts no longer checked population due to membership in the redistributive system. The peripheral settlements paid a steep price for this security—the majority of the surplus wasn’t redistributed, but rather supported an aristocratic priest class in Chaco Canyon—but human fear and desire for security made this trade-off possible.”

B. Hierarchy as a function of surplus production

Jeff Vail:

“The psychological impetus toward growth results in what I consider the greatest growth-creating mechanism in human history: the peer-polity system. This phenomenon is scale free and remains as true today as it did when hunter-gather tribes first transitioned to agricultural “big-man” groups. Anthropologically, when big-men groups are often considered the first step toward hierarchal organization. When one farmer was able to grow more than his neighbors, he would have surplus to distribute, and these gifts created social obligations. Farmers would compete to grow the greatest surplus, because this surplus equated to social standing, wives, and power. Human leisure time, quite abundant in most ethnological accountings of remnant hunter-gatherer societies, was lost in favor of laboring to produce greater surplus. The result of larger surpluses was that there was more food to support a greater population, and the labors of this greater population would, in turn, produce more surplus. The fact that surplus production equates to power, across all scales, is the single greatest driver of growth in hierarchy.

In a peer-polity system, where many separate groups interact, it was not possible to opt-out of the competition to create more surplus. Any group that did not create surplus—and therefore grow—would be out-competed by groups that did. Surplus equated to population, ability to occupy and use land, and military might. Larger, stronger groups would seize the land, population, and resources of groups that failed in the unending competition for surplus. Within the peer-polity system, there is a form of natural selection in favor of those groups that produce surplus and grow most effectively. This process selects for growth—more specifically, it selects for the institutionalization of growth. The result is the growth imperative.”

I have no doubt that this is true, but we have to examine, 2 other factors next to the Verticality imperative, i.e. the Diagonal and the Horizontal imperatives.

First, the strong emergence of decentralization and diagonality.

From the 19th century onwards, vertical power has become tempered and challenged by decentralization and representative democracy. There is a first argument to be made here, taken our system based on decentralized multinational corporations and representative democracy as the core of our present system. It could be argued that democratic states, and ‘democratic capitalism’, has become more competitive than pure vertical plays. Symbolic of that change is the fall of the centralized Soviet system. (the key today is to watch China, though verticality is dominant, and diagonal democracy is still weak overall in that part of the world, the question is: can the system remain competitive, especially in a knowledge-based innovation economy, if it doesn’t adapt to decentralization, and ultimately distribution?)

Second, there is also the emergence of a new form of horizontality, no longer local and disconnected and unable to compete with hierarchical forms, but able to scale globally, through the global coordination of a multitude of small teams, outside of a logic of command and control. I think this is the significance of peer to peer (and peer production specifically), and that it points to the concept of Peak Hierarchy.

In my view, we have already reached the point in history, where ‘peer to peer plays’, i.e. interconnected horizontality, outcompetes hierarchical and diagonal plays. The two examples we have are of course Linux and Wikipedia.

In other words, we have reached a point in history, a true turning point, where a new form of social organization, starts to outcompete hierarchy. (But of course, just as early hierarchy was a hybrid with the system out of which it arose, so the new early forms of p2p are hybrid forms within the dominant system)

If this is true, and I of course believe it is, then we have indeed already reached Peak Hierarchy. It should be historically situated at the mid-point between the moment that Linux became the dominant technological force in the internet, and that the Wikipedia was outreading and outproducing the Brittanica. From that moment on, faced with these undeniable examples of success, the scramble for adaptation to distributed forms of organization, to integrating participation in the very heart of hierarchy, has started to make itself felt. There has been a magnetic reversal of the poles. The chaotic attractor has become the peer to peer mode. Hierarchy is still dominant, and will stay so for a determinate amount of time, but social forces are already looking elsewhere, mostly unconsciously, but nevertheless.

This is unprecedented, and is changing the whole course of human history. Of course, it will take time to play out, see how difficult it was to realize the truth of Peak Oil, how adamantly the forces of biospheric destruction fought and are fighting back. But we can also see that it is ultimately a losing battle for them. It can also be so, because if they would win, they would destroy themselves and us, and still loose.

2.

This is where Vinay Gupta’s article comes in.

Vinay sees four trends that will change our social structure:

1> Power is about to become as cheap as information: Solar energy’s price (Nanosolar, Konarka) is coming down below 1 cent per kilowatt hour, or maybe 20% of the cheapest current grid power.

2> Computers and cellphones are going to finish their global spread. The cellphone is also fast becoming a computing platform and will empower and enable local communities worldwide.

3> Poor people are going to start getting angry. “With liberal access to information, they are going to become very, very politicized, en-masse, shortly after the arrival of the network.”

4> The entire system we currently call “government” is going to be challenged at every level.

What I want to point out is the enormous contrast between the denial and gloom and doom of the mainstream system, and the deep-rooted optimism of the peer to peer forces as represented by people and movements like Vinay Gupta and the Swadeshi movement, and there are thousands upon thousands like them (the 7,000 pages of documentation on such movements in our wiki are but a fraction of what is happening). We are no longer happy with reforming the system, and asking ‘them’ to change the policies. We are no longer satisfied with wanting a revolution, to start doing things our way ‘afterwards’, fated to replicate the very hierarchical forces we wanted to replace. We are already past that point. We are already, like the Christians in the Roman world, constructing the new world we want to live in. We are changing our subjectivities, our relational networks, and the very structures we want to live in. Just as the Roman elite could just not comprehend the new Christian mentality, neither can the current elite understand what is happening. An entirely different new world is growing and gestating within the old, not directly challenging it, but nevertheless deeply transforming it, not tomorrow or in the future, but right now.

(This is of course not to deny that there will be many defeats and pitfalls on the way!)

And for the first time in history, the new game we are playing, let’s call it the anti-monopoly game, is winning from the old game of monopoly.

This is the meaning of Peak Hierarchy: horizontality is starting to trump verticality, it is becoming more competitive to be distributed, than to be (de)centralized.

The two combined forces of Peak Oil and Peak Hierarchy, are going to dramatically change the world we will live in. It’s time to prepare ourselves to the new logic of our coming political economy and civilization.

(and you can help us do that, by supporting our fundraising drive, see our Tipit campaign on the right: we need your support to further document, research, and promote the emerging p2p alternatives)

With civil peer production I understand a project that is mostly staffed by unpaid voluntary contributors, or, if the contributors are paid, such payment is not directly related to the contributions.

For example, you can be paid as a researcher or teacher, or you can receive a pension and unemployment benefits, and use that ‘basic income’ to develop meaningful activities. Alternatively, NGO’s could allow some of their staff to freely contribute to commons-oriented projects (cfr. AKVO).

The key here, if we are to call it peer production, is that the payment is not conditionally related to the contributions, that these are not under a command relationship dependent on who is given you the income. It is my understanding that such form of peer production is often the basis of starting peer production projects. However, if it is acceptable that income received to sustain the contribution to the commons, what happens when a majority of contributors start to be paid through corporate salaries?

An important question is therefore: is the civil phase of peer production just a stage of peer production, with a tendency to become ‘corporate’?

In any case, I would argue that the more serious and lasting, and ambitious peer production projects, say Wikipedia, or Mozilla’s Firefox, are supported by for-benefit institutions, NGO’s or Foundations, that manage the overall infrastructure of cooperation, and have a core staff that supports the project.

If we look at free software and open source as instances of peer production, I think we can conclude here that the most successful projects tend to become ‘corporatized’. This can happen in two different ways. The project can be supported by a wide variety of entities, or by just one. It would seem that in the former case, such as Linux, no single company dominates the process, and some commentators have called this ‘organic’ open source.

By contrast, if it is dominated by a single entity, then the logic of cooperation would seem to be different, and in this case, say MySQL, it would be possible to argue that the contributions are so strategic to the company, that the work is likely to be directed, that the commons-oriented license is not totally free (or that larger parts of the software do not fall under it), and that it will have greater difficulty in drawing volunteers. This has been called non-organic or synthetic open source. Evidence suggests that it is much more difficult for non-organic open source to be successful, but that those projects that can draw on a diverse corporate support community are thriving (I get this from reading the above-linked analysis of organic open source).

In Oekonux, the distinction has been made between single free software, in which there is no open development but directed production, but a commons-oriented license; and doubly free software, where both conditions of voluntary contributions/open development process, coupled to the open license, are used simultaneously.

However, we must conclude that most successful peer production projects combine the usage of a volunteer community, a for-benefit institutions guaranteeing the perennity of the infrastructure of cooperation, and a ecology of businesses which in practice fund an increasingly large number of contributors. When these type of contributors become majoritarian, as in Linux, we have corporate peer production, when they are minor, as in Wikipedia, we have civil peer production.
A last hypothetical type of peer production, which I have not seen yet, is when paid government employees would create a commons, under non-directed conditions.

So to return to the original question: it would seem that it is inevitable that a institutionalization of peer production occurs, that this can happen through civil for benefit institutions, or through corporate support (and hypothetically, public support).

The reason for this in my opinion, is that peer production rests on a ladder of participation, with a core group of contributors, supported by a larger base of occasional contributors. But this essential core group, necessary for the survival of the project, cannot sustain itself without an income, and therefore, the original phase of indirect ‘happenstance’ income, ends up as being seen as unsustainable ‘in the long run’. To obtain more stable income, some form of institutional support becomes necessary, allowing members of the core to turn their ‘hobby’ and ‘vocation’, into a means oftheir own sustainability. Another hypothesis is that the very success of a project, automatically leads to an ecology of businesses practicing benefit-sharing and therefore end up co-supporting the commons from which they derivative value creation depend.

If such process is inevitable, then it becomes important to built in safeguards, so that the original characteristics of the project, i.e. voluntary contributions, participatory processes, and commons-oriented universal availability of the outcome, do not become ‘corrupted’ or undermined by the very process of obtaining such institutionalized, or ‘corporatized’ support.

construction area

“[Gwendolyn Floyd and Joshua Kauffman of Regional] gave a talk about the burgeoning field of liberation technology, synthesizing their studies from both developing world and leading-edge technological and social environments. The talk outlined their vision for how technologies liberate societies at critical developmental inflection points – including our own. They outlined our arrival at the new commons, which is the knowledge of our shared resources, and discussed the possibility of liberation coming through integration into each other and our greater ecologies. Spanning micro-democracies to the suburbanization of the internet and the “mobile phone as the new AK47,” the slides and notes are available here.”

[view at "fullscreen" (right-bottom) to read accompanying text - recommended.]

Bill St. Arnaud has started a new blog on Next Generation Democracy.

One of the first entries deals with open data mash-ups in government.

The articles mentions a new white paper by W. David Stephenson, presented here with many examples of open data mash-ups, some of which are covered in our Politics section of our wiki as well.

Quoting Stephenson:

“My argument is that government can transform itself both internally and externally, improving performance, lowering costs, and building public support and involvement, through a combination of:

I just received some crucial support from academia for my argument that government agencies should make it a policy to release, on a real-time basis, a wide range of data feeds in RSS, geospatial, and other formats, as the keystone of their e-gov reform projects. A new study from Princeton concluded that there’s nothing a government agency can do to be more responsive to the public than to follow the leads of the District of Columbia.” (they publish more than 150 real-time data feeds)!!

The report’s conclusion:

“Private actors, either non-profit or commercial, are better suited to deliver government information to citizens and can constantly create and reshape the tools individuals use to and and leverage public data. The best way to ensure that the government allows private parties to compete on equal terms in the provision of government data is to require that federal websites themselves use the same open systems for accessing the underlying data as they make available to the public at large.”

More information at p2pfoundation.net/Open_Government_Data. D.Stephenson can be reached at stephensonstrategies dot com

Via Bill St. Arnaud:

“Around the world there is growing alarm at attempts by carriers, ostensibly for traffic management reasons, to install deep packet inspection equipment, but now being used for local web ad insertion and other activities. Network neutrality is increasingly also an issue about network privacy. As such various organizations like the prestigious Max Planck institute and others are developing tools so that consumers can discover whether their carrier is doing deep packet inspection and hopefully thwart these serious potential threats to consumer privacy. To my mind this issue will never disappear because the fundamental issue is the current business model of limited competition and a presupposition that the carrier “owns” the last mile and is therefore free to do what they wish with “their” network. I have long argued that to free ourselves of these threats to Internet privacy and freedom we need a new business model where the consumer “owns” the last mile and free to connect to any service provider they wish at neighbourhood carrier neutral interconnect facility. Next generation Fiber to the Home architectures like CityNet and Burlington Vermont enable this type of capability.”

More Information:

- Free fiber to the home

- “The goal of our Glasnost project is to make access networks, such as residential cable, DSL, and cellular broadband networks, more transparent to their customers.”

- Deep packet inspection under assault over privacy concerns

What is the exact role of computer networks for development?

Here are two illuminating contributions to the question: does every human being need a computer, as a tool of personal and collective empowerment?

Two contributions from other mailing list in the p2pfoundation ecology, that shed light on this debate,

1. Franz Nahrada, of Global Villages:

“I am having a similar discussion with Francisco Proenza from GTA – the other way round (because I put video seemingly ahead of digital literacy)

What is important here is that the personal computer as a device has derived from certain accidental socieoeconomic conditions, became something seemingly universal, and is in the midlife crisis now. I would firstly argue that we should bring the argument to different levels.

* the personal computzer as a customizeable environment that allows broad interaction between human and machine – but with this it also becomes broad interaction (in fact, hypermedia interaction) with humans and with the cultural heritage. -> so we are talking about the computer as a retrieval and presentation engine combined with a communication engine. I think that combination is important.

* the role of decentalized automation in development. The computer is the ideal tool for symbolic manipulation of event-chains and simulated environments. It can control machinery and operating networks. -> so we are talking about the computer as a computer and control device, combined with a retrieval engine, presentation engine and communication engine. I think that combination is crucial. It allows for construction of a communication based control structure.

Only if every individual can theoretically own the power of the process, we have a true (p2p) association.

But I also would warn against jumping into digital literacy without setting up a broader communication structure first. The computer makes sense where it can have an impact, and that impact, to be as abstract as I can here, is NOT based only on the computers, but the world of devices and the environmental structure that make it feasible.

We have an incredible experimental case now in Peru where controversies are fueling around the lack of support for teachers who suddenly are in charge of spreading universal digital literacy.

2. Vinay Gupta, of global swadeshi:

It’s an academic point. 50% of the human race has cell phones. Cell phones are turning into little internet terminals day by day. The other 50% of the human race is buying cell phones as fast as humanly possible.

It’s a done deal. By 2020, the entire world will have cell phones that look and work a lot like computers.

Hence, whether it’s important or not doesn’t matter: it’s inevitable, and if it’s important, we’ll find out how soon enough

And, yes, all that said, I think it’s damn important – if I was some uneducated farmer in a rural area of a poor country, and I could download videos on the internet of farming techniques that would double my crops… that’s the lifeline. Same for water, for cooking, maybe even for shelter.

See my contribution here which is kind of my latest take on this. Develop the content for TV, then split it into chunks and spread it as video as the network spreads. Developing the content is key – right now, it’s *really freaking hard* to build out the basic necessities of life using instructions you find on the internet. We need to make it first possible, then easy, then ubiquitous.

All these poor people are going to have is a network. We have to make it possible for them to haul themselves out of poverty using it, like a ladder thrown into a lake.

if we’re talking 5 billion poor, 3 billion *really* poor, and 1 billion poor-like-death, we need to focus on taking what they *have* – which right now is dirt-and-nothing, and making it into a solution. I don’t know how to turn dirt-plus-nothing into a solution.

But I do know how to turn dirt-plus-internet into a solution. Here’s your rocket stove design, here’s your SODIS / solar water pasteurization, here’s your germ theory, here’s your green manures, here’s your treadle pump – ship the designs, and they’ll scavenge together the equipment which is, in many cases, nothing at all or a waste stream.

The article here is my fundamental take on all of this. I don’t know how to say it better than that: 50% of all global death, of the number of humans who leave the planet each year, is preventable with appropriate technology type interventions. The network can carry that change, if the content is ready.

But the funding is tens to hundreds of millions of dollars. We can show what is *possible* with volunteers, but making it mainstream global change is going to require money.

As Joanne Richardson once wrote, the rhizome is not characteristic of civil society-based peer production communities but a general characteristic of all power structures:

“It is naïve to invoke a rhizomatic mode of organization as a means of contestation and as an alternative to global capitalism since it has become what they have in common rather than what holds them apart.”

Alec Evans and David Steven have published a series of articles proposing a new approach for public diplomacy that can deal with contemporary global crisis such as climate change. It is a good example of how global and national institutions are called to move even further towards their own kind of participatory and ‘rhizomatic’ structures.

A recent overview article summarized their views, which they have presented in expanded form elsewhere.

Their calling for what they call ‘shared operating systems’:

“First, public diplomacy is about building shared awareness – a common understanding of an issue around which a coalition can coalesce. The task here is not simply to accumulate information, which often exists in abundance, but rather to invest in analysis, synthesis and dissemination. Are state and non-state actors using the same data? Has a common language emerged? Is there a hub for discussion and debate?

The end point is institutionalising this network’s beliefs, thinking and structures into a framework for managing a particular problem. Given the amorphous and dynamic nature of the challenges we face, this framework will seldom be a permanent one. Rather, it will involve the creation of a shared operating system that distributes our response to a risk, and is flexible enough to evolve as that risk evolves. The result should be a change in the structure of globalisation, a rewiring of our ability to act together in the face of a collective challenge.”

From a civil society point of view, this is of course fine as far as it goes, but crucial is of course, how much participation goes into the process, as, if only the elite is heard, this shared response can only be inadequate.

A more recent expanded treatment of their ideas can be found in the as yet unpublished draft document: Multilateralism and Scarcity.