<nettime> Michel Bauwens: Scope, not Scale

["Patrice Riemens" <patrice@xs4all.nl>]

>From Al-Jazeera site, Independent opinion, 22 Mar 2012

http://www.aljazeera.com/indepth/opinion/2012/03/2012319125340857774.html

Scope, not scale
What do medieval monks, Cuban socialists and Wikipedia have in common?

Unsustainable economies of scale ought to be replaced by economies of
scope, argues author

Chiang Mai, Thailand - The competitive dynamics of industrial capitalism
are well-known, and they are all about scale.

Producing more of a unit enables companies to drive the unit price down
and thus outcompete the competition. Multinational corporations and global
brands now have very complex value chains, in which various parts of a
product are mass-produced in different parts of the world.

Nevertheless, the system has obvious weaknesses. One weakness is that it
tends towards monocultures, both agricultural and industrial. One example
is the dependence of the Chinese coastal economy on exports.

Because competition drives prices down, the dominant western players
changed their strategy in the 1980s. They abandoned costly western
workers, moved low-profit industrial production to low-wage countries, and
expanded the intellectual property (IP) regime using patents, copyrights
and trademarks. As Thijs Markus has written, if you want to sell $5 shoes
for $150 in the West, you'd better have one heck of a repressive IP regime
in place. Hence the need for SOPA, PIPA, ACTA and other attempts to
criminalise the right to share.

ACTA, the new SOPA?

But there is, of course, a more fundamental problem: the whole system of
globalising the advantages of scale fundamentally rests on cheap global
transportation and, thus, the continuous availability of fossil fuels.
Once the era of cheap oil ends, it is more than likely that the whole
regime will come tumbling down. Competing on the basis of scale, even if
it is still effective today, ultimately can only be played by those who do
not care about the destruction of our planet. What game can the others
play? Rising fossil fuel prices mean that innovation and competition have
to find another outlet. Actually, it's about inventing another game
altogether.

This type of economic transition has played out before.

The fall of Rome

In the late fifth century, as the Roman Empire was coming to an end,
Christian communities prefigured the values of a coming era of
relocalisation based not on an economy of scale, but on an economy of
scope - in which the cost of production becomes lower through shared
infrastructure costs.

As the Roman Empire decayed and supplies of gold and slaves became
gradually more problematic, the smarter landowners started to free their
slaves, but bound them contractually to the land as "coloni", or serfs.
Meanwhile, the increasingly taxed and bankrupted freeholders sought
protection from the very same landowners. Thus, one side of the equation
was localisation, since the system could no longer bear the global scale
of the empire. But the new post-Roman system also invented a new system of
innovation, based on the advantages of scope, not scale.

Indeed, as the cities were emptying out, the Christians invented
monasteries as a new type of agrarian knowledge centre. The Christian
Church actually functioned as a global open design community. Monks and
manuscripts travelled, and with it the many innovations of the
worker-monks. While Europe initially decayed as the remnants of the Roman
empire crumbled, eventually, after the first European social revolution in
the 10th century, this new system created the seeds for the first medieval
industrial revolution.

Between the 10th and 13th centuries, Europe started blossoming once again,
based on a unified culture of knowledge. Its population doubled and its
beautiful cities, many of which were run democratically by the guild
councils, grew again. Peer-to-peer universities were founded in Bologna in
the 11th century. This first renaissance was based on economies of scope,
a unified body of knowledge that European intellectuals and artisans could
build on. The guilds may have had their secrets, but they took them with
them wherever cathedrals were built.

Cuban innovations

The same experience happened in 1989, when isolated Cuba was no longer
able to rely on the Soviet system's advantages of scale. The Cuban crisis
of 1989 prefigured the current world situation: the country experienced
its very own peak oil situation when the Soviets abruptly stopped
delivering oil at below world market prices.

While the Cubans initially went back to using donkeys, its government
launched several interesting initiatives. It allowed some entrepreneurship
by granting more autonomy to local agricultural co-operatives, and
mobilised the population's grassroots knowledge. But perhaps most
importantly, Cuba created several agricultural institutes with the goal of
spreading local innovations. Whatever the other faults of the country's
totalitarian system, this open design experiment succeeded beyond all
expectations. As documented by Bill McKibben and a number of
documentaries, Cuba now produces more nutritious and organic food, using
less fossil fuel - because sharing knowledge created economies of scope.
Agricultural innovations could spread quickly across the country and be
adopted by everyone.

Indeed, economies of scale work well in periods of energy "ascent", when
the supply of energy increases, but work less well in periods of energy
"descent". In these circumstances, economies of scope are needed. These
types of economies are exactly what peer production (which encompasses
open knowledge, free culture, free software, open and shared designs, open
hardware and distributed manufacturing) is all about.

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 "pseudo-abundance". The system also holds
that innovations should be privatised and only available by permission or
for a hefty price, making sharing of knowledge and culture a crime, Let's
call this "enforced artificial scarcity".

Peer production methodologies are based on the exact opposite tenets. Peer
production communities believe that knowledge is a commons, for all to
share. Therefore, no innovation can be withheld from the human population
as a whole. In fact, withholding a life-saving or world-saving innovation
is seen as distinctly unethical. Peer production designs for distribution,
inclusion and small-scale fabrication. Planned obsolescence - which is a
feature and not a bug, of the current system - is totally alien to peer
production logics. In other words, sustainability is a feature of open
design communities, not a bug.

So what are the economies of scope of this new age? They come in two
flavours: the mutualising of knowledge and the mutualising of tangible
resources.

The first principle is easy to understand. When an individual doesn't know
something, it's more likely that a community - whether local or virtual -
does know. Hence, the mutualising of knowledge and "crowd-accelerated
innovation" is now a well-known feature of the collaborative economy. But
the advantage of scope is created when that knowledge is shared, and can
be used by others. With this social innovation, the cost of production
that depends on knowledge can be dramatically reduced.

Take the example of the Nutrient Dense Project. This global community of
agrarian workers and citizen scientists experiments with better nutrients
to obtain better quality food. They carry out joint research on nutrients
in various soils and climate zones, which can benefit not just the
participating community, but, potentially, the whole of humankind.
Strategies based on privatising intellectual property cannot obtain such
advantages of scope - at least, not at that level. Or take the example of
the urban homestead of the Dervaes family in Los Angeles, who managed to
produce 6,000 pounds of food annually on a tiny city plot. Because they
share their productivity innovations, many other people have learned how
to improve their own lots.

"What will the new system look like if economies of scope become the norm,
replacing economies of scale as the primary driver of the economy and
social system?"

The second principle, of sharing physical resources, is exemplified by the
trend towards collaborative consumption. The general idea is the same. I
may lack a certain tool, skill or service, but it is likely that someone
else in a community has it, and that other person could share, rent or
barter it. There's no need to all possess the same tool if we can access
it when we need it. Hence the proliferation of "peer-to-peer
marketplaces".

Let's take an illustrative example: car-sharing. Car-sharing projects can
be mutualised through the intermediary of a private company which owns the
cars (like ZipCar), through peer-to-peer marketplaces that link car users
to one another (like RelayRides), or through public entities (like
Autolib, in Paris). But they all achieve economies of scope. According to
a study cited by ZipCar, for every rented car, there are 15 fewer owned
cars on the road. Furthermore, car-sharing members change drove 31 per
cent less than when they owned a vehicle. So, in 2009 alone, car-sharing
diminished global carbon dioxide emissions by nearly half a million
tonnes.

What will the new system look like if economies of scope become the norm,
replacing economies of scale as the primary driver of the economy?

Global open design communities could be accompanied by a global network of
micro-factories producing locally, such as the ones that open-source car
companies like Local Motors and Wikispeed are proposing.

This would require organisations to organise our material activities in
order to minimise the "common costs" of the various networks and not just
in terms of sharing knowledge. In other words, who will play the role that
the Catholic Church and its roaming monks played in the Middle Ages? This
was not just an open design community, but an effective material
organisation giving leadership to a whole continent-wide cultural sphere.
Do we have a potential peer-to-peer version of this that can operate
globally? The answer will be for a future contribution.

Michel Bauwens is a theorist, writer and a founder of the P2P
(Peer-to-Peer) Foundation.


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