Michel Bauwens is a Belgian Peer-to-Peer theorist and active writer, researcher and speaker on the subject of technology, culture and business innovation. Michel is director and founder of the Foundation for Peer to Peer Alternatives (‘P2P Foundation’), a global organization of researchers collaborating in the exploration of peer production, governance and property. Currently living in Chang Mai, Thailand, Michel is a prolific author, including his seminal thesis The Political Economy of Peer Production, and co-producer of the TV documentary Technocalyps with Frank Theys.

Hi Michel, it's a pleasure to host you for a conversation. Let’s start from the fundamentals - what do you mean by Peer-to-Peer? 

You probably remember—especially your generation—when Napster came out, it was called peer-to-peer. And the reason was that instead of depending on central servers, every computer could actually talk to each other independently. So peer-to-peer, where every computer is a peer. When you apply this principle to people, you understand we can have a Peer-to-Peer social system. 

A Peer to Peer (P2P) social system is a system that allows any peer to freely communicate, interact and organise with other peers. There is a theory, called Dunbar’s number, which says that we can interact with peers and solve problems with 150 people maximum. That’s the amount of people we can remember and trust; it’s a question of brain capacity. Historically, as soon as humanity scaled, we created hierarchical systems to manage communication costs. When you have more than 150 people, you cannot talk to everybody, you have to streamline the communication. 

“A Peer-to-Peer social system is a system that allows any peer to freely communicate, interact and organise with other peers”

Now we have a technology that allows P2P to scale at a global scale. You can be both in a physical territory—working within our village and factory—and at the same time we can work on a virtual territory, which is global in scope, with like-minded people who believe in the same things and want to do something together. 

This doing something together is what you name peer production? 

Peer production is the capacity to not only communicate, but actually make things together. This making can be immaterial—like free software, open design, and encyclopaedias—but, as soon as we have shared logistics and accounting systems, we can actually go to the physical level. We can start imagining networks of factories that would make things locally, but at the same time be connected at the global level for the learning, size, technology and design. This is something I call cosmo-local production, whereby everything that is light is globally shared and everything that is heavy is as local as possible. 

“Cosmo-local production, whereby everything that is light is globally shared and everything that is heavy is as local as possible”

Another fundamental aspect is the relation between P2P and the commons. If you look at the capacity of peers for interacting with each other, you can either scale it with a P2P market—like a platform that allows people globally to trade and exchange with each other—or in a commons form, that is creating shared resources together. That’s what I actually mean with peer production: a global capacity to create and manage shared resources together. As soon as we start seeing this capacity of commoning, we can imagine all new ways to organize our resources and our economies. 

How does this relate to the work you are leading at the P2P Foundation? 

Our job is to observe and analyse the emergence of this digital commoning and how it’s changing global structures and global habits. We have been doing it for 15 years. We are an observatory, so we look at Peer-to-Peer practices in every field of human activity and we try to see how it works, how it emerges and how states and markets are adapting to it. 

We try to root our thinking in this realistic scheme. We don’t say how things should be, but we look at seed forms of social innovations and how they carry a different logic than the mainstream system, and from that observation and  analysis we then try to build a theory, which is actually a theory of human emancipation. We see this as a means to an end. How can we use this new capacity to solve some of the global issues, like  the use of material resources? 

This is an interesting question. Let me reformulate: does commons-based P2P production represent a better tool to solve the biggest challenges of our time, like climate change and pandemics?

Let me tackle the COVID aspect later. I think the biggest challenge nowadays is the ecological challenge: the combination of overuse of resources, climate change and biodiversity crisis. I have a vision of history in terms of waves between extractive regimes and regenerative reactions. When a civilization is competing with others, it’s always overusing its local resource base. That’s the whole of human history for the last 5000 years. And, everytime this happens, you see the commons remerge as a way of re-establishing some kind of harmony between a civilization and its surroundings. 

You have to see commoning as mutualization. Here we can give an example from COVID. If we patent the vaccine, it’ll be very expensive and it’ll not reach everyone, because price will be determined by private ownership and they need to make a profit. So, it’s absolutely vital if we have a vaccine, to have an open vaccine, which can be peer produced everywhere.

Say that the actual production cost of a vaccine is 10 dollars, but if you privatize its price could be anything between 500 and 3,000 dollars. Without subsidies for the poor, that would mean a lot of unnecessary deaths. So, you can see how important mutualization is as a response to the crisis.

So by fostering mutualization, we would find ourselves with a better societal structure to solve our greatest challenges? 

The first concern is about thermodynamics - how can we create a global infrastructure that produces for human needs within planetary boundaries? That’s a bit the idea expressed by Kate Raworth with the Doughnut Economy. What me and people working with me are saying is that we can do this by adopting a cosmo-local vision, which is about globally cooperating around technology and relocalizing a huge part of our production capacity, because we spend 3 times as much energy on transport than on production.

By shifting production to the local level, you can save up to ¾ of resource use. That’s even without thinking about mutualization, that’s just relocalization. When you combine relocalization with mutualization, maybe we can reach 80%. There are already some studies showing these figures, for example in agriculture. We can have the same amount of food at a much lower cost to nature. Therefore, I see peer production and commoning as a vital, transformative infrastructure to achieve these needs. 

“I see peer production and commoning as a vital, transformative infrastructure to achieve these needs”

How does P2P relate to the framework of the circular economy?

Circularity implies that your output is my input, but for this to realize I need to know what your output is. If you want to have a circular infrastructure, the ability to share those material processes is going to be vital. I wrote a report on this called P2P Accounting for Planetary Survival. It looks at the innovation in the blockchain space, and  explains why it is problematic in its current design, but still a very important civilisation advance. 

The reason is that the internet is an internet of communication, but blockchain is an internet of transactions. As humanity, today we are able to do what we call stigmergy, which is mutual coordination at a global level for the production of immaterial goods. We can make softwares, open designs, Arduino, but we cannot do this yet for the production of material goods. However, once we have distributed ledgers and shared accounting, we can basically start building ecosystems which share logistics; that’s what the blockchain brings in the conversation. Theoretically now we can not only adjust to signals in terms of software and knowledge, but we can actually react to physical signals, through our shared accounting systems. 

When you talk about shared accounting systems, what do you refer to? 

I look at three forms of accounting that are emerging today. One is called contributive accounting, the second is flow accounting, and the third is called thermodynamic accounting. 

Let’s have a look into them.To start with, contributive accounting?

If you have a peer production community—a community that decides to share its knowledge, at the very least— you are going to have a community of contributors, some paid while some not paid. All of them are working together, contributing to this common, but only few people have access to the market. This creates a problem of equity and fairness, which is that a whole bunch of people will create value together, but only some people can realize that value and make a living. So, the response to this problem is to create new forms of accounting that not only take into account commodity labour—salaries and stuff—but look at actual contributions. 

To do so, the peer production community will tend to create a membrane around itself and say: inside our membrane we decide what value is, and that value can be non-market value, and we can recognize all contributions that matter to our project. Of course, we still need classic monetary flows, because that’s how our system works, but we are going to translate and redistribute the external flows into an internal flow that is different. We can have new kinds of cryptocurrencies with different rules that re-distribute money differently than the market commodity money would do. This is a form of accounting that is emerging right now. We have done a study about this called P2P value, where we looked at 300 peer production communities: about 70% of them were working on these kinds of new accounting rules. 

I can see the key function of this type of accounting as a pathway to fairly distribute all the individual value contributions. What about flow accounting?

If you look at classic accounting—double-entry accounting—it’s essentially a narcissistic accounting, because it looks at what comes in your company, what goes out and allows you to see what you keep, what you accumulate in capital and profits. What it doesn’t see is the ecosystem, what in neoclassical economics are called ‘externalities’.  But externalities are actually what matters: social and environmental positive and negative factors that influence society and our life. And double entry accounting doesn’t see that, it doesn’t exist. 

“Double-entry accounting is essentially a narcissistic accounting”

An example of flow accounting is Resources-Events-Agents (REA) accounting, which doesn’t have double entry, and it rather gives you a view of where your transactions fit in the ecosystem. In this way, you suddenly see the whole ecosystem. This is very important if we want to manage our economy in balance with the environment, because we can consider that environment for how we manage things. 

And thermodynamic accounting?

A French engineer, called Francois Grosse, made a study for the French company Veolia about the circular economy and he calculated that if we don’t manage to keep the growth of material resources under 1% a year, we are exponential in our use of resources. So we have to be under this 1%. Right now this is not visible anywhere, because we believe the market price will somehow tell us about this, but it doesn’t. There have been dozens of studies that show that market pricing doesn’t reflect the ecological reality. To solve that, we need a view of matter and energy flows into our accounting systems.

“Market pricing doesn’t reflect the ecological reality”

Any project that has tried to do that?

Yes, it’s a project called r3.0, Reporting 3.0. Their proposal is to have a Global Threshold and Allocation Council: a council of scientists—a bit like the WHO if you like—that monitors resource availability and capacity.  For example, it would monitor how much copper we have, how much copper we can find, and what is the bio-circularity of copper. Imagine it does that for all the chemical elements, and then you can bring the figures down to your context: your region, your bio-region, your city, your company, your co-op. Suddenly, you have a context-based sustainability accounting that allows you to produce within those planetary boundaries.

My vision is that we have three levels in this new economy. One is a level of mutual coordination, so we can see what other people are doing and we can adapt our behaviour in real time to the real vision of the world as it is. Second, we need to change because non-renewable sources need to be replaced, so we have generative market mechanisms that are embedded in these shared systems that bring in balance and fairness into our market systems. 

Pardon the interruption, when you talk about generative market mechanisms, what do you have in mind?

I give you an example to make this clear. We have Fishcoin, which is a crypto-currency that reflects the reproduction of the fish. With this cryptocurrency, we cannot use fish at a higher rate than the fish are capable of reproducing themselves to a steady state. So suddenly, you have intelligent money that does tell you how the real external situation is. That’s a good example of non narcissistic accounting, because you can see the ecosystem. 

That’s a fantastic idea. 

The third level is the planning level. If you have a system with global thresholds in allocation, you can have a global organism that would defend biodiversity and the resource base of the planet, and that could say ‘this is how much you can spend’. You can be totally free within those limits, but you cannot go beyond these limits. This would be a global, multilateral, meta-institution, like the IMF and World Bank, that has important planning functions in how we would produce in the future.

At this stage, this is just a vision. But many people are working on this, many of these things exist and are being experimented with, many prototypes exist, some of which are already working together. These are the seed forms of a potential future global-local economy that corresponds to the criteria of Kate Raworth in the Doughnut Economy: producing within planetary boundaries for human needs. 

Let’s stay on a political economy level and the institutions required to scale a P2P, commons-based production system. What’s the role of the state in this story?

This is the way I see it. The current system is really based on capital accumulation. Basically, you look at the future, how much money you can make, then you invest and that’s how you accumulate power in our society. The market is the centre of value creation, and then you have the State, which manages the meta-system and all the institutions that are needed for markets to function. Civil society doesn’t have a proper role, if not voting every four years. It’s not the centre in the system we have today. 

We have a system I would call Capital-State-Nation: the market, the state, and the nation, which is what we consider our community. I use three different terms, because I believe that civil society is productive. We have at the core a productive civil society, where citizens are commoners, because they actually produce value. They need a market that works for them, and that’s what I call a generative marketplace, and they need a state that works for them, and that’s called the partner state. 

The key issue here is value. We have a value regime that only recognizes extractive wealth. In order to create value, exchange value, you need to extract value from people and nature, and then you can have a surplus and manage that surplus. People that are not playing the game are at a huge disadvantage. For instance, if you are an organic farmer, you're going to earn a lot less money than an industrial farmer because you are willingly paying for all the externalities that industrial farmers are pushing out.

That means that in the current society generative work is either not recognized or is financed by taxation or philanthropy. It’s a derivative, marginal sphere in our society, and that creates a huge imbalance. People who want to do good are actually marginal in our society. The key is to change that. But, here is the problem: we don’t control society, we don’t control values, so how do we do that? 

“People who want to do good are actually marginal in our society”

Yes, how do we do that?

My answer is that we first need to start doing this at small scales, accumulate power and then work our way up. That’s the basic idea. We work from seed forms, we connect the seed forms, we connect the patterns, we create sub-systems and gradually we re-enforce this generative part of our society. 

Bernard Lietaer was a Belgian economist, who co-designed the Euro and was director of the Central Bank in Belgium, and he wrote a book called ‘The Mystery of Money’. In this book, he describes that money before capitalism had a dual function. We had Yin and Yang currencies, extractive and generative currencies. For example in Bali, which is not far from where I live, there was a watershed system and people got some kind of currency that recognized their work on the watershed system, which coexisted with the national money. The reality is that we need both. As humans, we can’t live without extracting from nature. At the same time, we need to care for biodiversity, we need to protect animal species, such as the bee population. We need to find ways to finance generative work, so that people that do good things can be rewarded. 

“We need to find ways to finance generative work, so that people that do good things can be rewarded”

Can ideas like universal basic income play a role here? 

Yes, basic income fits into that picture. The basic income is the idea that we recognize that all citizens are contributing and therefore we give them a basic income for all that they already do for society. I am in favour of basic income for that reason. Another strategy is to create these different currencies. And, so the key here would be our ability to also consider this as a form of wealth that we can use in our lives. The difficult part here is: how do we exchange all these local currencies that are emerging to make them stronger? 

Another concept I am focusing on is what I call circular finance.

Circular finance?

Yes, and it’s very important. In France, you have a community land trust movement, called Terre de liens. They have 75 million euro capital and they buy land on the market, put it in a trust and then make an ecological movement with organic farmers, who can use the land for a cheap rent and do their organic farming. In 2016, they published an interesting report looking at the positive externalities they were creating. For example, if you are an organic farmer, you don’t pollute the water. Only for France this means that the state and its water de-pollution agencies save 300 million euro per year. 

The idea of circular finance is to say: let’s recognise that. Let’s make an agreement where the agencies give 50% of what they are saving to a fund, and let’s have a distributed ledger, like a public accounting system where these organic farmers can verify and legitimate their positive externality, such as the carbon they take out of the air. In this way, we create a positive feedback loop between generative activities and the ability to finance them. These kinds of reforms are going to be key to create a new value regime. And that’s a question that we cannot solve by just doing stuff on our own, we need to become political, make policy formulations, and influence political movements. Of course, we are nowhere near where we need to be to do this. 

A good example today is COVID-19. There is a steep market failure and a steep state failure in dealing with the pandemic. We have a huge mobilization of maker movements, to make all these alternative medical devices, but we don’t have institutional processes that allow hospitals to actually accept these designs. It’s very complicated, because all our ecosystem is not geared to this. So, we need to reform and we need to have some kind of Bologna regulation for makers. 

What is the Bologna regulation?

The Bologna Regulation for the Care and Regeneration of the Urban Commons is an innovation in Italy that allows citizens to create collectives to take care of urban commons. 250 cities have this regulation in Italy, which has already mobilized one million people. In this way, you don’t have anymore the problem that urban commoners don’t know how to do, what to do, and whether it’s legal or not - it just works. When I talk about Partner State, I refer to this kind of institutional reform. In this particular context, the city sees itself as a partner, an enabler and an empowerer of commons-oriented civic initiatives. We need similar structures in order to achieve public commons cooperation protocols. 

“The city sees itself as a partner, an enabler and an empowerer of commons-oriented civic initiatives”

That’s extremely interesting. On the one hand, you want to show the innovation power of P2P on a small scale, what you name seed forms and work to scale them bottom-up. On the other, you highlight the need for supportive conditions at the broader institutional and political level.

Exactly. You need two things together: creativity and power. Today capital has the power to drive creativity and to decide what can be made and what cannot be made. So, you cannot just socially innovate if you don’t have power as well. You have to be realistic, so the idea is that you start with pre-configurative activities and organising a sub-system within society that accumulates power in order to challenge the normative power. Of course, we are not there yet, but it doesn’t mean we cannot do anything. This is called interstitial politics. You look everywhere for where the openings are; there are always possibilities where nobody is looking and we can change something. You have to systemically advance all the niches where change is possible and gradually extend your reach.

“Today capital has the power to drive creativity and to decide what can be made and what cannot be made”

In your work, you also extensively focused on the role of co-ops. Why are co-ops relatively scarce even though there are plenty of arguments showing that they might be actually more performing than capitalist enterprises? 

There are actually more people employed in co-ops than by multinationals, so they are not as rare as you might think. They are actually the largest employer in the world. Since they are not geared towards capital accumulation, they accumulate much slower than capitalist enterprises, so they grow slower. They are not favoured by the system, they don’t get so much capital, which favours capitalist enterprises structurally. 

I am for co-ops, but they have two issues that have been identified already since the beginning of 20th century, which are: managerialism and worker capitalism. Worker capitalism is the fact that in order to survive in a capitalist society, you have to behave in a capitalist way. Mondragon is a really nice example of a co-op, much better than a capitalist enterprise, but they also end up behaving like a capitalist.

For instance, when they expand to Poland, the Spanish workers don’t want to dilute their ownership so they are gonna hire them just as workers and there is going to be a strike of Polish workers against Mondragon. So they are still behaving only for themselves, even though it is not absentee shareholders but worker shareholders, they still get into this kind of competitive logic. Managerialism instead means that they tend to create a managerial elite, which slowly tends to become autonomous and create a passive membership.

If you are in favour of co-ops, but you identify these problems, what is your solution? 

I argue for open co-ops, which structurally integrate the idea of the commons in the co-op. It’s a kind of legal agreement that your co-op is going to produce commons, no matter what. There is a beautiful example of a housing co-op in south Quito, Ecuador, where they work with poor people so that people who have no money give 100 hours a year to the co-op. With those hours, they clean the ravines in Quito, which are very dirty and make them into public parks. That’s good for them, because they create a public park next to their housing co-op, which is very nice to have, but at the same time the public park is for everybody, so they produce for the public good as well. 

“I argue for open co-ops, which structurally integrate the idea of the commons in the co-op”

This is the basic idea of an open co-op, which is more specifically engaged in doing good than a classic co-op. Personally I prefer multi-stakeholder co-ops, because then you have different stakeholders that can create a system that works for everyone. I am not against worker co-ops, but I think multi-stakeholders co-ops are a better solution at this stage.

An example of such a co-op is the recently established digital platform for apartment rentals, FairBnB. Differently from the already established AirBnB, part of the fee people pay for renting apartments and houses on the platform is destined to local community projects.

Yes, that’s a good example and I fully support them. Of course, the general issue here is that because they are doing this, they create less financial capital for themselves, so this is the perennial issue of doing good in this system. It illustrates the difficulties of doing this, but it’s the way forward and we need to find ways to strengthen ourselves and also have more economic and political power. 

Nowadays, if you are a capitalist company, you are responsible for financial capital. If you harm the financial capital, you can go to jail. You must have a responsible management of your finance. But you can harm nature and humans without problem. We need an accounting system which obliges companies to also protect the natural and social capital. 

“We need an accounting system which obliges companies to also protect the natural and social capital”

Any example here?

The Economy for the Common Good, from Christian Felber. He looked at European constitutions, and found that all of them say that the economy should serve the common good. But the common good is not something metaphysical, it’s something that we can decide together as the people: what is the common good for us? They arrived at an impact accounting system that has 17 clusters of positive and negative impact, and the idea is to judge companies based on this impact.

That would change everything, because that would mean that you don’t have to abolish enterprises, but they would be judged completely differently. You would have taxes that depend on your positive impact, so the more positive impact you have the less taxes you would have to pay. The less positive impact you have, the more taxes you pay. 

If we are ever to have a new balance of power in our society, these are the ideas we should be pushing. But the key is—and this is also a critique to the Left—to recognise as a society that value doesn’t only come from the market. We have to recognize non-market value, so that people can be rewarded for generative activities. Only in this way we can change the underlying values regime, so what’s now alternative becomes the norm, and what is now the norm becomes an exception. 

“We need to recognise non-market value, so that people can be rewarded for generative activities”

That’s a very clear message - to identify value differently and to create generative conditions through a new accounting framework and financing system. 

Every big change in civilisation has been a mutation of consciousness as well. Look at the end of the Roman Empire; for Rome work was slaves, was a negative value. Once you have the Christians and the Catholics taking over, you have ora et labora.  It means actually labour is good, labour is how you express the divine in the world. And so the medieval system is completely different from the roman system, because it’s another value regime. We are now moving from a commodity-labour regime—where value comes from the commodity—towards a contributory value regime, where we recognise all contributions, and we value all contributions.

That’s also a solution for many of the women's movements concerns that care work is not recognized. I always say that commoning is caring, and caring is commoning. Peer production is based on the idea that you care for the common object and you want to make something together. It’s an open contributory system, motivated by care and based on passionate engagement. You first choose your passion, you look at the skills that you have, and then you join some kind of project that allows you to use these skills and express your passion. Everything flows from that free contribution. Right now this is a subset that works for free software, but I argue it should be the new economy. 

“Commoning is caring, and caring is commoning”

A non-capitalist system?

I call it post-capitalism. It doesn’t mean there is no capital; it means that the accumulation of capital is no longer the primary object. 

At last, what does it mean for an individual to be an agent of change and a commoner involved in creating this new economy?

I am trying to practice what I preach, which is a bit of a circular reasoning: I am peer-producing knowledge about peer production. And, I follow in my work the same principles that I am advocating for: I am following my passion, I am contributing to a common, and then I need somehow to make a living, through workshops, lectures, and working with a team of people. I am suffering from the same marginality issues as every other commoner. We work in the marginal society and we do our best. 

It’s both something that brings you happiness—because you are following your passion—-but at the same time it’s also sacrifice; which means you make something holy - that’s the original word for sacrifice. You sacrifice for the common good. But I don’t want to give the impression that I am only doing that. I think the key to a happy life is the convergence of the personal and the collective.

“The key to a happy life is the convergence of the personal and the collective”

You don’t make yourself unhappy for the collective; you try to find a way that you can be happy for the collective, so that there is a convergence between your personal interest and the collective interest. Because then it’s more sustainable. What is dangerous for me in activism is the sacrificial element, because then you think you are right, but you become bitter. You become a victim of sad passions, like Spinoza would say. You need to stay with positive passions and see activism as an outflow of a surplus, rather than a fight for scarcity.

June 2020

A conversation between Michel Bouwens and Emanuele Di Francesco

Useful links:

• P2P Foundation

• Fishcoin

• r3.0 (Redesign, Resilience, Regeneration)

• Fairbnb.coop

• Economy for the Common Good