The idea of the commons and the future of capitalism

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Yochai BenklerHarvard Law School &Berkman Center for Internet and Society,Harvard Universityyochai_benkler@harvard.edu

Creative Commons Global Summit Seoul, Korea, October 15, 2015

Pikkety, 2014

1980s an inflection pointStress on the social environment

www.giss.nasa.gov

Stress on the natural environment

Pikkety, 2014

Mostly in the US, UK, and Angloworld; butEmerging countries seem to be followinga similar patternEurope struggling with internal North / South divide (Greece; Spain; new members) and with migration to andwithin the EU

Outcomes

99/9099.9/9999.99/99.9

90/50

50/10

Practices

99/9099.9/9999.99/99.9

90/50

50/10

CEO pay

Superstar pay

Referencegroup pay

Contingency; alt. workarrangementsDiminished bargainingpowerGlobalization& offshoring

Unemployment and underemployment

Low wages

Outcomes

OECD Report: Divided We Stand, Why Inequality Keeps Rising (2011)

Practices

99/9099.9/9999.99/99.9

90/50

50/10

CEO pay

Superstar pay

Referencegroup pay

Contingency; alt. workDiminished bargainingpowerGlobalization& offshoring

Unemployment and underemployment

Low wages

Outcomes Inst. Mechanisms

Stock options

Norms/ Experts/ compensation committees

Financialization

Tax rates: top personal; corporateCapital; international trade

Weak labor standards & laxenforcement

Deunionization; “right to work”

Reduced welfare payments reduces staying power in negotiationsExpansions of free trade rules

Immigration policy

Fed policy aimed at inflation; Austerity

Minimum wage laws

“Ideology” in the colloquial sense is displaced by “ideology” in the Gramscian sense: deregulation, free markets, “Washington Consensus” shifts from being a right wing ideology to being an accepted “expert” position

Reagan-Thatcher

Clinton-Blair

One dimension of the future of capitalism: The neoliberal trajectory:greater concentration of wealth; Oligarchic / crony capitalism born of rational investment in maintaining rents

Ike, JFK, LBJ

Nixon, Carter

Practices

99/9099.9/9999.99/99.9

90/50

50/10

CEO pay

Superstar pay

Referencegroup pay

Contingency; alt. workDiminished bargainingpowerGlobalization& offshoring

Unemployment and underemployment

Low wages

Outcomes Institutions

Stock options

Norms/ Experts/Comp. Comms.Financialization

Tax rates

labor standards & lax enforcement

Deunionization

Reduced welfare

free trade

Immigration policy

Fed policy

Min. wage

Ideas

Rational actor model:1. Incentives2. Shareholder value3. Agency theory4. Collective action; agency capture => Deregulation5. Efficient markets

Shareholder value Efficient markets Efficiency & growth primary goals, distribution will follow

A certain view of humanity and social-economic organizationtakes hold

Romer, Commentary, Fed. Res. Bank of St.Louis Rev. 2005

Hyper inflation hits at the idea of an expertly-managed progressive state

It is then translated into discrete theories of howthe world works, and from there, to practical recommendations forhow well-adjusted executives and organizations should be managed

Agency theory

Pillars of neoliberalism

● Uncertainty and complexity => economic planning impossible => Only prices in markets produce good information

– Deregulation; financialization; tax cuts; lower inflation trumps lower unemployment

● Rationality = self-interest

– Stock options; shareholder value vs. stakeholders => disinvestment in workers; contingent work

● Collective action fails => corrupts into illegitimate power => deregulation

● Liberty depends on choice in markets

● Property rights + market incentives necessary and adequate to achieve human welfare

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Commons studies● Facts, facts, and damn facts...

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Free/Open Source Software________________________________________________________________________________________________________________________________________________________________________________________

Proprietary

FOSS

FOSS

Custom Linux based

Free/Open Source Software________________________________________________________________________________________________________________________________________________________________________________________

Weber / SchumpeterTaylor/Williamson

Second Industrial Divide

decentralized

centralized

Market-based Non-market

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decentralized

centralized

Market-based Non-market

________________________________________________________________________________________________________________________________________________________________________________________1980s-90s: Privatization

Networked Information Economy

decentralized

centralized

Market-based Non-market

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decentralized

centralized

Market-based Non-market

Networked Information Economy

Citizens connect

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CC-BY

CC-NC

CC-SA

CC-ND

CC-PD

“Mine” does not mean “for sale”; Sharing does not mean erasing the self

A robust system of social exchangeindependent of market exchange; Building our own commons

An ethic of reciprocity

NOT collectivism; insistence on choice and self-authorship

Creativity, freedom of speech and thought, depend on a robust public domain

Three schools of the commons

● CPRs ● Common property regimes● Institutional Analysis and Development● Local knowledge; effective self-governance

● Information commons / open access● Open access / public domain● Growth-oriented: roads and navigable waterways;

innovation & creativity; infrastructure; education & science

● Not in the periphery, but at the core of the most advanced economies

● Global commons● Stewardship

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Uncertainty and complexity● IAD

● Uncertainty and complexity => standardized property packets are lossy

● Local institutions can provide better resource management and utilization than either central planning or property-based markets

● Information commons / innovation

● Public domain / common-based exploration allows for diverse people, using diverse resources, to apply diverse knowledge and experiment; an evolutionary model of learning; property hampers learning

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Resource space (who knows what?)

Project space(what shall we do?) Predictable, well defined diverse, uncertain, complex

Routine

KnowledgeIntensive; Innovative; Diverse insights;Tacit

High, concentrated

Exploration;experimentationinnovationoptimization

Appropria

bility

Freedom to

operate

Div

erse

mot

ivat

ions

Ince

ntiv

es

Tradeoffs

Risk

Uncertainty

Incontractible insights

Commons /Public Domain

Commons-based production

• Production based on• Utilizing inputs from a resource set in which

no one exerts exclusive rights

• Appropriating outputs without asserting exclusive property rights in them

• Can be individual or collective, commercial or noncommercial

• Examples• Classic views of science

• Trucking, as opposed to railroads

• Party in a park, instead of a backyard

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Commons-based production

● Individual or collaborative● Commercial or noncommercial

● increases the diversity of actors, motivations, transactional forms

● Important because it decentralizes authority to act, paralleling what technology/economy has done for practical capacity to act

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Commons and Capitalism

• Ostrom Commons: • Discrete, stable communities that overcome

the logic of collective action, or the systematic failure to organize absent property and markets, or states

• Open Commons; knowledge & networks

• Public domain central to innovation

• Challenge to the unique role of exclusive property in the creation of growth and welfare

• Rejection of the logic of accumulation and its dominance over all other values; embedding production in the social

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Smart grid communications: Critical Infrastructures

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Silver Spring Networks 20.00%

Itron 19.00%

Trilliant 1.00%Elster 4.00%

Aclara 6.00% Tantalus 1.00%

Landis & Gyr 17.00%

Sensus 20.00%

SmartSync 3.00%

Echelon 3.00%Unknown 6.00%

Market share by company and technology

Market share of Smart Grid CommnuicationsQ1 2012Pike Research

Mission Critical: Wireless Healthcare________________________________________________________________________________________________________________________________________________________________________________________

Market share Wireless HealthcareKalorama Information September 2011

Mobile broadband________________________________________________________________________________________________________________________________________________________________________________________

Share of iPhone data traffic Share of iPad data traffic

Source: ComScore Digital Omnivores, Oct. 2011

Mobile Payments; Access Control; Inventory Management

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Collective action● Core target of Ostrom Commons studies

● Detailed studying showing the repeated stable success of collective action

● “Well-behaved” governance models; sanctions, proceedings, stable social norms

● Knowledge commons, culturally-constructed commons, peer production: rich new grounds for empirical refutation

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Diffused Power, Degrees of Freedom

● Commons-based licensing● Rough consensus/debate & discourse● Shared normative framings● Meritocracy ● Redundant spheres of nested and

overlapping power● Formal and semi-formal institutions● Irreverence and resistance● Leadership, but limited by the other

pathways of self-governance and resistance

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Homo Economicus,Self-interest with guile

Homo Socialis: Diverse pro-socialmotivations;

Competition & Cooperation

Control in tightly coupled-systems

Self-direction, experimentation, ethical engagement in loosely-coupled systems

The Nature of Rationality ________________________________________________________________________________________________________________________________________________________________________________________

Cooperative Human Systems

Conceptual: From “rationality” modeled as universal self-interest translated into material concerns to diversity of motivations and a preponderance of prosocial humanity sensitive to conditions

Design: Cooperative human systems design based on behaviorally realistic, evidence-based design; integrating multiple disciplines, susceptible of testing and implementation

Politics: We cannot separate out “incentives” from fairness, ethics, empathy, solidarity, even as a matter of effectiveness

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Property-based incentives ● CPR studies

● “Washington Consensus” development interventions can and do muck things up.

● Lose local knowledge● Crowd out motivations● Atrophy social enforcement mechanisms

● Information commons / innovation

● Patents & Copyright systematically misallocate resources, undermine follow-on innovation

● Prices can crowd out volunteerism● => Property is one tool in the institutional toolkit,

to be used where and as appropriate, but susceptible to overuse

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Freedom in the commons● Information commons / innovation

● “Free as in free speech” => skepticism of proprietary models

● Monopoly, incumbency, market power are endemic; “free market” is a utopia, not a descriptively useful category

● Resistance to “planned economy vs. free markets” dichotomy; emphasis on self-organization alternatives

● Strong affirmative autonomy claims; self-expression and freedom to tinker

● Environmental commons

● Free markets lead to tragedy in the global commons absent a governance system

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The Commons as Idea ● People can effectively act collectively to

govern their utilization of resources● We respond to diverse motivations,

economic utility and a range of social, emotional, and rational ethical commitments

● Property and markets vs. state planning do not exhaust the means of achieving growth and material well-being

● Cooperative social action in commons can also support growth, be more efficient, and is sustainable

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The Commons as Idea ● Production and resource management are

socially embedded activities● Social embeddedness is not something

from which we need to free markets● Freedom as effective self-governance,

individual and collective● Property-based markets can undermine

freedom in both these senses● Where markets disembed production, they

can do more harm than good to both productivity and freedom

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What is to be done?

Peer cooperativism● The core of Free Software (as opposed to

Open Source) has been to build freedom into capabilities, under conditions that secure freedom to those who depend on what you build and would be subject to power were they dependent on a non-free capability

● TCP/IP, HTML, FOSS, Wikipedia, WiFi, show this is not a pipe dream

● Diaspora, Community Wireless, Firefox HTML 5 DRM implementation show it is far from easy or certain

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decentralized

centralized

Market-based Non-market

Networked Information Economy

Citizens connect

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Alienated labor?

Social contextand meaning at thecore.

Battle over the idea ofself-interested rationality as the core model of human motivation

Subverting the possibility of socially-embedded exchange as a core model of provisioning in contra-distinction to the tyranny of the margin

The “sharing economy”?Is the market adopting “embrace and extend” of the rhetoric of peer production and sharing while undermining its core?

Socially-embedded markets● High-commitment, high-performance

organizations offer a normative framing that undermines the self-interested view of “it's just business”

● Managerial and owner norms are important; there is enough slack in markets for moral commitments to make a difference

● Market outcomes will likely continue to be the dominant driver of economic security for a majority of people in the coming decades

● Will require battle of ideas; social pressure; and legal reform

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One company at a time,

But also the Fight for 15 and regulatory battles over minimum wage

Peer Pragmatism● Citizenship modeled on peer self-

governance● Rejecting pure delegation conceptions of a

republic. Building platforms for active engagement

● Skeptical, irreverent participation, committed to debate, reason, and willingness to state and defend normative commitments

● Nested, redundant, overlapping spheres of power; subsidiarity to spheres of contribution and knowledge

● Redundant pathways to invoke and avoid governance

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Peer Pragmatism● Citizenship modeled on peer governance● A progressivism aware of the fallibility of the

state● Destabilizing power concentrations● Caution about steering / paternalism● Redistribution aimed at preserving autonomy,

rather than finely tuned to secure incentives and supply predefined needs

● Investment in capabilities – education; infrastructure; health

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Peer Pragmatism● Citizenship modeled on peer governance● A progressivism aware of the fallibility of the

state● A liberterianism aware of the fallibility of

markets and the limits of mutualism● Global public goods, like climate and the

environment, global poverty and migration, war, all require government- and intergovernmental level collective action

● Effective institutions at all levels require continuous engagement, because they all unravel over time

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At a societal level, beyond “State, Market, Society”to diverse, more granular definitions

State

Market

Civil Society

The political system

Education/Academia

Established Firms OperatingIn markets

Administrative/bureaucraticgovernance

Small businessesEntrepreneurialfirms

Law

Social circles

Family

Media

State

MarketCivil Society

Innovation

State / municipal governments

Religion

Civic associations

Degrees of Freedom________________________________________________________________________________________________________________________________________________________________________________________

● Diverse systems and subsystems are coming under diverse pressures

● Each subsystem that we stabilize as a commons, organize as a cooperative human system is one dimension in which we can anchor a socially-embedded productive life

● Bobbing and weaving between systems of constraint an affordance, leveraging those that are more resistant to power, disrupting flows of power, is the practice of freedom

● The stakes are not utopia, but an achievable renegotiation of the human condition under a more socially-embedded form of capitalism