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Interestingly, however, there is one last bastion of economic activity that proved remarkably resistant to the triumph of the market: firms, companies and, later, corporations. Think about it: market-societies, or capitalism, are synonymous with firms, companies, corporations. And yet, quite paradoxically, firms can be thought of as market-free zones. Within their realm, firms (like societies) allocate scarce resources (between different productive activities and processes). Nevertheless they do so by means of some non-price, more often than not hierarchical, mechanism!

they are the last remaining vestiges of pre-capitalist organisation within… capitalism

The miracle of the market, according to Hayek, was that it managed to signal to each what activity is best for herself and for society as a whole without first aggregating all the disparate and local pieces of knowledge that lived in the minds and subconscious of each consumer, each designer, each producer. How does this signalling happen? Hayek’s answer (borrowed from Smith) was devastatingly simple: through the movement of prices

The idea of spontaneous order comes from the Scottish Enlightenment, and in particular David Hume who, famously, argued against Thomas Hobbes’ assumption that, without some Leviathan ruling over us (keeping us “all in awe”), we would end up in a hideous State of Nature in which life would be “nasty, brutish and short”

Hume’s counter-argument was that, in the absence of a system of centralised command, conventions emerge that minimise conflict and organise social activities (including production) in a manner that is most conducive to the Good Life

Hayek’s argument was predicated upon the premise that knowledge is always ‘local’ and all attempts to aggregate it are bound to fail. The world, in his eyes, is too complex for its essence to be distilled in some central node; e.g. the state.

The idea here is that, through this ever-evolving process, people’s capacities, talents and ideas are given the best chance possible to develop and produce synergies that promote the Common Good. It is as if an invisible hand guides Valve’s individual members to decisions that both unleash each person’s potential and serve the company’s collective interest (which does not necessarily coincide with profit maximisation).

Valve differs in that it insists that its employees allocate 100% of their time on projects of their choosing

In contrast, Smith and Hayek concentrate their analysis on a single passion: the passion for profit-making

Hume also believed in a variety of signals, as opposed to Hayek’s exclusive reliance on price signalling

One which, instead of price signals, is based on the signals Valve employees emit to one another by selecting how to allocate their labour time, a decision that is bound up with where to wheel their tables to (i.e. whom to work with and on what)

He pointed out simply and convincingly that the cost of subcontracting a good or service, through some market, may be much larger than the cost of producing that good or service internally. He attributed this difference to transactions costs and explained that they were due to the costs of bargaining (with contractors), of enforcing incomplete contracts (whose incompleteness is due to the fact that some activities and qualities cannot be fully described in a written contract), of imperfect monitoring and asymmetrically distributed information, of keeping trade secrets… secret, etc. In short, contractual obligations can never be perfectly stipulated or enforced, especially when information is scarce and unequally distributed, and this gives rise to transaction costs which can become debilitating unless joint production takes place within the hierarchically structured firm. Optimal corporation size corresponds, in Coase’s scheme of things, to a ‘point’ where the net marginal cost of contracting out a service or good (including transaction costs) tends to zero 

As Coase et al explained in the previous section, the whole point about a corporation is that its internal organisation cannot turn on price signals (for if it could, it would not exist as a corporation but would, instead, contract out all the goods and services internally produced)

Each employee chooses (a) her partners (or team with which she wants to work) and (b) how much time she wants to devote to various competing projects. In making this decision, each Valve employee takes into account not only the attractiveness of projects and teams competing for their time but, also, the decisions of others.

Hume thought that humans are prone to all sorts of incommensurable passions (e.g. the passion for a video game, the passion for chocolate, the passion for social justice) the pursuit of which leads to many different types of conventions that, eventually, make up our jointly produced spontaneous order

Valve is, at least in one way, more radical than a traditional co-operative firm. Co-ops are companies whose ownership is shared equally among its members. Nonetheless, co-ops are usually hierarchical organisations. Democratic perhaps, but hierarchical nonetheless. Managers may be selected through some democratic or consultative process involving members but, once selected, they delegate and command their ‘underlings’ in a manner not at all dissimilar to a standard corporation. At Valve, by contrast, each person manages herself while teams operate on the basis of voluntarism, with collective activities regulated and coordinated spontaneously via the operations of the time allocation-based spontaneous order mechanism described above.

In contrast, co-ops and Valve feature peer-based systems for determining the distribution of a firm’s surplus among employees.

There is one important aspect of Valve that I did not focus on: the link between its horizontal management structure and its ‘vertical’ ownership structure. Valve is a private company owned mostly by few individuals. In that sense, it is an enlightened oligarchy: an oligarchy in that it is owned by a few and enlightened in that those few are not using their property rights to boss people around. The question arises: what happens to the alternative spontaneous order within Valve if some or all of the owners decide to sell up?

And they have to be, because an undemocratic institution would also discourage contributions by the community of participants.

Hence, an increased exodus of productive  capacities, in the form of direct use value production, outside the existing system of monetization, which only operates at its margins.

Where there is no tension between supply and demand, their can be no market, and no capital accumulation

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, there is no return of income for these value creators

This means that social media platforms are exposing an important fault line in our system

If you did not contribute, you had no say, so engagement was and is necessary.

⁃   At the core of value creation are various commons, where the innovations are deposited for all humanity to share and to build on ⁃   These commons are enabled and protected through nonprofit civic associations, with as national equivalent the Partner State, which empowers and enables that social production ⁃   Around the commons emerges a vibrant commons-oriented economy undertaken by different kinds of ethical companies, whose legal structures ties them to the values and goals of the commons communities, and not absentee and private shareholders intent of maximising profit at any cost

the citizens deciding on the optimal shape of their provisioning systems.

Today, it is proto-mode of production which is entirely inter-dependent with the system of capital

Is there any possibility to create a really autonmous model of peer production, that could create its own cycle of reproduction?

contribute

and whose mission is the support of the commons and its contributors

In this way, the social reproduction of commoners would no longer depend on the accumulation cycle of capital, but on its own cycle of value creation and realization

Phyles are mission-oriented, purpose-driven, community-supportive entities that operate in the market, on a global scale, but work for the commons.

peer production license, which has been proposed by Dmytri Kleiner.

Thijs Markus writes  so eloquently about Nike in the Rick Falkvinge blog, if you want to sell $5 shoes for $150 in the West, you better have one heck of a repressive IP regime in place.

Hence the need for SOPA/PIPA , ACTA'S and other attempts to criminalize the right to share.

An economy of scope exists between the production of two goods when two goods which share a CommonCost are produced together such that the CommonCost is reduced.

shared infrastructure costs

2) The current system beliefs that innovations should be privatized and only available by permission or for a hefty price (the IP regime), making sharing of knowledge and culture a crime; let's call this feature, enforced 'artificial scarcity'.

1) Our current system is based on the belief of infinite growth and the endless availability of resources, despite the fact that we live on a finite planet; let's call this feature, runaway 'pseudo-abundance'.

So what are the economies of scope of the new p2p age? They come in two flavours: 1) the mutualizing of knowledge and immaterial resources 2) the mutualizing of material productive resources

how does global governance look like in P2P civilization?

Consider an alternative to syndication. I’ll call it reverse syndication. Instead of selling my content to you, what say I give it to you for free? Better yet, I pay you to publish it on your site. The condition: I get to put my ad on the content. I will pay you a share of what I earn from that ad based on how much audience you bring me.

That model values the creation of the audience

If content could travel with its business model attached, we could set it free to travel across the web, gathering recommendations and audience and value as it goes

She searched Google for “embeddable article” and up came Repost.us, already created by entrepreneur and technologist John Pettitt. Repost very cleverly allowed embeddable articles to travel with the creator’s own brand, advertising, analytics, and links.

First, he found that the overlap in audience between a creator’s and an embedder’s sites generally ran between 2 and 5 percent. That is to say, the embedders brought a mostly new audience to the creator’s content.

Instead, Pettitt found that click-through ran amazingly high: 5 to 7 percent — and these were highly qualified clicks of people who knew what they were going to get on the other side of a link

I call this creditright. We need a means to attach credit to content for those who contribute value to it so that each constituent has the opportunity to negotiate and extract value along the chain, so that each can gain permission to take part in the chain, and so that behaviors that benefit others in the chain can be rewarded and encouraged

Each creator’s ads traveled with its content — though that wasn’t necessarily optimal, because an ad for a North Jersey hairdresser wouldn’t perform terribly well with South Jersey readers brought in through embedding.

key factor in its failure: Repost could find many sites willing and eager to make their content embeddable. It didn’t find enough sites to embed the content.

But the embedders got nothing aside from the free use of content — content that was just a link away anyway

Our ultimate problem in media is that we do not have sufficient technical and legal frameworks for alternate business models.

That formula was the key insight behind Google: that links to content are a signal of its value; thus, the more links to a page from sites that themselves have more links, the more useful, relevant, or valuable that content is likely to be

Silicon Valley’s: Those people are your fans who are bringing value to you by sending you audiences and by contributing their creativity, and you’d be wise to build your businesses around making it easier, not harder, for them to get and share your content when and how they want it.

And so, we came to agree that we need new technological and legal frameworks flexible enough to enable multiple models to support creativity.

Hollywood’s side: People who download our content without buying it or who remix it without our permission — and the platforms that facilitate these behaviors — are stealing from us and must be stopped and punished.

Imagine you are a songwriter. You hear a street poet and her words inspire you to write a song about her, quoting her in the piece. You go to a crowdfunding platform — Kickstarter, Indiegogo, or Patreon — to raise money for you to go into the studio and perform and distribute your song. Another songwriter comes along and remixes it, making a new version and also sampling from others’ songs. Both end up on YouTube and Soundcloud, on iTunes and Google Play. Audience members discover and share the songs. A particularly popular artist shares the remixed version on Twitter and Facebook and it explodes. A label has one of its stars record it. The star appears on TV performing it. A movie studio includes that song in a soundtrack. There are many constituents in that process: the subject, the songwriter, the patrons, the fans, the remixer, the distributor, the label, the star, the show, the studio, and the platforms. Each contributed value.

Each may want to recognize value — but not all will want cash. There are other currencies in play: The poet may want credit and fame; the songwriter may want to sell concert tickets; the patrons may want social capital for discovering and supporting a new artist; the remixer may want permission to remix; the platforms may want a cut of sales or of subscription revenue; the show may want audience and advertising; the studio will want a return on its investment and risk.

I’ve suggested they would be wiser to seek another currency from Google: data about the users, helping build better services for readers and advertisers and thus better businesses

We will need a way to attach metadata to content, recording and revealing its source and the contributions of others in the chain of continuing creation and distribution.

We need a marketplace to measure and value their contributions and a means to negotiate rewards and permissions

We need payment structures to handle multiple currencies: data as well as money

And we need a legal framework to allow the flexible exploration of new models, some of which we cannot yet imagine.

It took many more years for society to develop principles of free speech to balance the economic and political interests of those who would attempt to control a new tool of speech.

We must reimagine the business of media and news from the first penny, asking where value is created, who contributes to it, where it resides, and how to extract it

Thus, we need new measures of value