Wha do you need to know about peer production

Widely received in social sciences has been the idea of peer production, a term popularized by scholar of law and economics, Yochai Benkler, to explain collaborative arrangements for the development of free and open source software and Wikipedia (Benkler 2006).

According to Benkler, open source software represented “a new modality of organizing production”.

To describe this new reality, Benkler uses the term “commons-based peer production”, which is characterised as “radically decentralized, collaborative, and nonproprietary; based on sharing resources and outputs among widely distributed, loosely connected individuals who cooperate with each other without relying on either market signals or managerial commands”.

The newness of that modality though is not, that “agents operae on a decentralized, nonproprietary model”, but the “increase in the importance and the centrality of information produced in this way”.

Benkler argues that social software production had become exponentially more feasible and widespread with the rise of a ubiquitous information infrastructure, which has fundamentally altered the economics of distributed, large scale information production and dissemination.

Social software used for peer production

Once expensive physical machines, distribution systems, and coordinating overhead bureaucracies were required for such production. But cheap Internet-based communication and highly distributed ownership of relatively cheap ICT systems have eradicated costs to set up and, combined with social software production, operate such collaborative efforts.

top 10 list of social softwares

Until Internet-based collaboration emerged, the term peer was used in the context of information production mainly in academic circles in the form of peer review.

The term peer is deeply rooted in English social software and legal history.

The Magna Carta, composed in the 12th century, prescribed that “Earls and barons shall not be amerced except through their peers…”

History of the peer to peer production

The concept of peers refers to ‘equals’ or persons of the same standing. One of the first documented uses of the term peer production though happened to be a letter to the editors of the scientific journal Physics World titled “End of peer production”, in which the author criticised the state of the academic peer review system.

The term peer was then picked up by technology circles to describe an emerging technology that allowed equal nodes in a network of computer clients to communicate with each other without the need for relaying central servers.

These peer to peer meaning technologies became widely prominent with the rise of Napster and similar sharing networks.

Eventually, the term peer was used in a paper by Eric S. Raymond, a seasoned free/open source software developer who had developed an interest in reflecting on The Magna Carta.

His 1998 article Cathedral and the Bazaar was the first or at least the first influential analysis of the organisational principles and peculiarities of free/open source software development. In the subsequent paper Homesteading the Noosphere, Raymond used peer to peer describe fellow developers in an open software project or community, e.g., in the form of “reputation among one’s peers”.

Academic years for social software

The term then spilled over to traditional academic institutions. The Berkman Center for Internet & Society, which is now presided by Benkler, published a research paper by David Bollier entitled The Power of Openness, which argued that the “open source revolution” was driven by “alternative economics” based on a “gift culture” and “voluntary behaviour” by peers.

Steven Weber also used the term peer in his paper on the Political Economy of Open Source, but again only to describe fellow developers in software communities. It was Benkler who coined the term peer production, or more precisely commonsbased peer production, to describe that new, emerging type of cooperation, production, and community.

Benklers life

Benkler analyses the economic foundations of peer production and argues that its viability is based on lower transaction costs (2002).

“Peer production emerges, as firms do in Coase’s analysis, because it can have lower information opportunity costs under certain technological and economic conditions”.

Benkler sees the peer production model at work for several types of informational products and services, ranging from the production of content (the web itself as sort of an encyclopaedia, Wikipedia, and older projects like NASA Clickworkers, Everything2.com, Kuro5hin), relevance and accreditation (Amazon’s user reviews, Google’s PageRank, Slashdot) to value-added distribution.

In the two main analytical section of his paper, Benkler tries to answer the questions as to why peer production has emerged as a form of production next to firms and markets; and why contributors voluntarily contribute to such informational commons despite their often lamented, alleged tragedy.

Benkler’s theoretical point of departure is transaction costs economics, and he basically applies Coase’s way of reasoning the existence of the firm to peer production as an “important mode of information production”.

Coase argued in a rather non-Marxist way that firms exist because the transaction costs for coordinating agents, efforts, and resources within a firm by hierarchical command Theoretical Foundations would be lower for some goods than by buying them on the market with its price system which however required some product specificity.

Benkler argues that a peer production system has advantages over firms and markets in uncertainty reduction and “allocation efficiencies gained from the absence of property” (Benkler 2002, p. 406). Briefly worded, peer production has information gains and allocation gains over markets and firm-based hierarchies.

Benkler carves out the information gain argument by modelling modes of production — i.e., firm-based hierarchies, markets, peer production — as “information-processing systems”. Knowledge-based work is based on individuals. However, “specification and pricing of all aspects of individual effort as they change in small increments over the span of an individual’s full day, let alone a month, is impossible”.

Agents, i.e., individuals, would be much better at identifying where they are needed and where their talents are of use. “The widely distributed model of information production will better identify who is the best person to produce a specific component of a project, all abilities and availability to work on the specific module within a specific time frame considered.

A second economic advantage next to these information gains are “potential allocation gains enabled by the large sets of resources, agents, and projects available to peer production”. Benkler again uses a model to drive forward his argument.

Based on it, he argues that the “productivity of a set of agents and a set of resources will increase when the size of the sets increases toward completely unbounded availability of all agents to all resources for all projects”. In a world of peer production, any of the countless individuals potentially willing to voluntarily contribute to any project can decide for which of the endless projects she is best suited and most needed.

The second question of the paper asks what motivates persons to voluntarily contribute to a commons system. Benkler argues based on a review of various types of literature and again some logical modelling that contributors are driven by the pleasure of creation and possibly also by “indirect appropriation mechanisms” such as reputation gains, consulting contracts, or a broadening of their skill set with potential effects on the job market in the future.

Furthermore, Benkler identifies a second set of risks for the viability of peer production. A failure of the integration process, in which all these tiny contributions are assembled to a coherent outcome, would demotivate contributors.

In Sharing nicely, Benkler applies the idea of non-market and non-hierarchical based cooperation to the “domain of sharing rival material resources in the production of both rival and nonrival goods and services”.

Benkler distinguishes “shareable goods” from club goods and common-pool resources. The latter two by definition are not “individually owned goods”.

The key characteristic of these shareable goods is that they “have excess capacity and are available for sharing”. For Benkler, the form of production that is used for a particular good depends on a rather simple formula:

“The combined effect of the motivational effects and the transaction costs of each system will determine, for any given good or use, whether it will most efficiently be provisioned through the price system, a firm, a bureaucracy, or a social sharing and exchange system”.

The transaction costs of social software exchange differ from market exchange. Both require substantial setup costs, but for social exchange, marginal transaction costs are lower as it only requires a lower “degree of precise information about the content of actions, goods, and obligations, and [less] precision of monitoring and enforcement on a pertransaction basis“.

The second factor, motivation, is nurtured by social-psychological returns that are “neither fungible with money nor simply cumulative with it”, but could on the contrary be diminished monetary rewards.

In the last main section of the article, Benkler argues that “sharing is a common and underappreciated modality” of production.

He sees his peer to peer theory as “an attempt to create a radical understanding that a new kind of society, based on the centrality of the Commons, and within a reformed market and state, is in the realm of human possibility”.

Bauwens’ explicit normative and policy goals apparently differ from Benkler’s more moderate stance. While Benkler sees peer production as complementary to other modalities of production, Bauwens is more of an activist, and assumes that peer production would “overhaul our political economy in unprecedented ways” and help create a “powerful alternative to neoliberal dominance”.

The “nascent peer to peer movement … is fast becoming the equivalent of the social software movement in the industrial age”. In a more recent article, Bauwens introduced the idea of a Partner state with a reconceptualisation of the state’s core tasks.

A partner state would act as an enabler and facilitator of peer production activities.

Independent of one’s political and ideational preferences, Bauwens remixing of states and networks is intellectually fascinating. It has “attracted” veteran network and netwar scholar David Ronfeldt to discuss and compare Bauwens ideas of peer to peer and the partner state. So much for an overview of and introduction into the existing body of literature on peer production.

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