Blog Post

Open-Source Economy a Crisis for Capitalism

Michel Bauwensby Michel Bauwens

by Michel Bauwens


Engineering scarcity

Facebook is not an isolated phenomenon, but part of a much larger trend in our society: an exponential rise in the creation of use value by productive publics, or "produsers", as Axel Bruns calls them. It is important to understand that this creates a huge problem for a capitalist system, but also for workers as we have traditionally conceived them. Markets are defined as ways to allocate scarce resources, and capitalism is in fact not just a scarcity "allocation" system but also a scarcity engineering system, which can only accumulate capital by constantly reproducing and expanding conditions of scarcity.

Where there is no tension between supply and demand, there can be no market and no capital accumulation. What peer producers are doing, for now mostly producing intangible entities such as knowledge, software and design, is to create an abundance of easily reproduced information and actionable knowledge.

This cannot be directly translated into market value, because it is not at all scarce - it's over-abundant. And this activity, moreover, is done by knowledge workers, whose ranks are steadily expanding. This over-supply threatens to make knowledge workers' jobs precarious. Hence, an increased exodus of productive capacities, in the form of direct use value production, outside the existing system of monetisation, which only operates at its margins. In the past, whenever such an exodus occurred - of slaves in the decaying Roman Empire, or of serfs in the waning Middle Ages - that is precisely the time when conditions were set for major societal and economic changes.

Indeed, without a core reliance on capital, commodities and labour, it is hard to imagine a continuation of the capitalist system.

The problem is this: internet collaboration has enabled the creation of use value in a way that totally bypasses the normal functioning of our economic system. Normally, increases in productivity are somehow rewarded, and these rewards enable consumers to derive an income and buy products.

But this is no longer happening. Facebook and Google users create commercial value for their platforms, but only very indirectly. And they are not at all rewarded for their own value creation. Since what they are creating is not what is commodified on the market for scarce goods, these value creators do not receive income. Social media platforms are exposing an important fault line in our economic system.

We have to link this emerging social economy, based on sharing creative expression, with the more authentic field of commons-oriented peer production, as expressed in the open-source and "fair use" open-content economy, which one estimate said made 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 $1bn, 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.

Thus, the open-source economy destroys more proprietary software value than it replaces. Even as it creates an explosion of use value, its monetary value decreases.


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Peace's picture
Peace on 2012-04-5

Great article. Just reinforces to me the benefits of a Resource Based Economy, however, I doubt that will be what is recommended in the next article.

admin's picture
admin on 2012-04-5

Yeah, I think that's not where he's going. :-)

But here's where he's coming from:
Peer-to-Peer Governance, Production And Property: P2P As A Way Of Living


4. The Conditions for the Expansion of Peer Governance

Peer governance functions because peer production is the macro-scale coordination of a large number of micro-production teams.

Within the teams, decision-making is participative and consensual, and the global coordination is voluntarily accepted and today technically feasible. Small tribes, the victims of civilizational hierarchies, are re-enabled in the new format of affinity-based cyber-collectives.

Positively, peer governance expands the sphere of autonomy-in-cooperation to all social fields. Its promise is that production becomes a non-hierarchical process. But as I said earlier, peer governance is ‘post-democratic’ because it is non-representational.

The negative constraint is the following: peer governance requires a priori consensus on the common object. But society as a whole lacks such consensus by definition: it is a decentralized collection of competing interests and worldviews, rather than a distributed network of free agents. Therefore, for society at large, there is no alternative to a revitalized democratic political scenario based on representation.

However, just as the market can inspire itself and be reformed by P2P or partnership-based principles (as in the fair trade that is subjected to peer arbitrage), so we can have peer-informed formats of multi-stakeholder based global governance. And in any case, the sphere of autonomy, i.e. of pure governance, can substantially expand even within the structures of democratic government.

Sounds a lot like spokes, or a network of general assemblies, doesn't it? Except he wrote this in 2007.

Peace's picture
Peace on 2012-04-6

Interesting theory, but seems too limited to me, a sub-economy. Maybe a start in the right direction, but I would like to see it on a global basis.

Back to the original article. I can only speak from experience as an artist. The Internet is a big ripoff of art. It has also drenched the market with gobs of art, good and bad, reducing prices. It is an art glut.

Already copyrights and creative commons mean nothing. If it is put on the Internet it will be taken at will. I have had stuff appear in China and Russia. lol

The Internet is also an information glut, with many factual questions. People can write anything, factual or not. I spend more time validating than I do on the information itself.

There is a loss of integrity now in our world, and that includes information. That is something that needs to be regained. It has ramifications in everything. People who want a new economy, a new society, and new government must have integrity and expect it to be maintained.

I really love that people explore, think, and try new possibilities. It inspires vision to evolve.

admin's picture
admin on 2012-04-6

>> There is a loss of integrity now in our world, and that includes information.

Oh yes. Because if you modify the truth, you get a lie. And if you modify a lie, you get another lie. So as more people modify information, the number of lies increases exponentially while the number of truths stays the same.

Peace's picture
Peace on 2012-04-6

Just read the quote at the bottom of the page I was on while reading your comment.

"All paradises, all utopias are designed by who is not there, by the people who are not allowed in."
- Toni Morrison

"The ear of the leader must ring with the voices of the people. "
- Woodrow Wilson

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