First of all: this post is long, but it’s well worth reading it all (although there is a summary at the end). It aims to clarify the conceptual map that is gradually being drawn between the notions of “sharing economy,” “direct economy,” and “p2p production,” as well as taking stock of what each one brings to the table and understanding what are the requirements for them to make a real contribution against the crisis.
From the start of the crisis, the concern for small industry has been an issue for what it represents in terms of wealth and employment. A few years ago, Natalia argued on this blog that it was time to leave fabbing as a prototype, and that we had the opportunity and the need to incorporate tools and resources from the p2p mode of production to industrial SMEs in order to address the crisis. Why? Quite simply because the perspective of the p2p mode of production offered a horizon of higher productivity at a smaller scale of production. That’s why it already represents an alternative mode of production in sectors such as free software – that’s why it represents the future in the industrial sector, even if it’s still green.
Being aware of that contradiction between the urgency of the crisis that was coming and how green “pure” p2p tools were, the Garum Fundatio invited John Robb to Montevideo in 2011. The aim was to stimulate debate on what would end up being called the “direct economy“.
We thus define the direct economy as a series of production methodologies based on the binding of alternative funding schemes (such as crowdsourcing or selling in advance), the globalization of the small (producing at low cost in large facilities anywhere in the world) and the potential to increase marketing scope through the Internet. A cocktail that allows for astonishing productivity in small-scale organizations.
A turn that entailed an important loss of meaning
But beyond this brilliant idea, John, concerned by the breakdown of the American middle class, began to prioritize the most basic resilience in his proposals, incorporating low-productivity yet useful elements for generating cash and income in case of the total destruction of the market. Things like putting a chicken farm in the yard or using “sharing economy” platforms in order to transform a room, a car, etc. into a tool for generating small amounts of income.
It was from this second interpretation by John that our friends from ARssa! and SomosReding incorporated the concept of direct economy to their conceptualization of the “Route of artisan entrepreneurs“: microentrepreneurs doing arts and crafts as a way of generating additional income. Domestic production was at the forefront.
The truth is we never felt comfortable with that idea. In another post, Nat insisted on the capacity for innovation as the key for the model beyond small tools in order to strengthen resilience or a more rational use of resources. The fear of a loss of meaning of that conceptual treasure that is the direct economy was definitely present there.
The encounter with the “sharing economy”
Juan Urrutia‘s interventions were especially helpful in this sense: the direct economy – which becomes the prelude to the p2p mode of production when united with devolution – appears as an engine for the dissipation of rents, and this as a adriver of new spaces based on the logic of abundance. The “sharing economy,” as protagonist of the actual moment, was rescued as a social practice that served mainly as a driver for cultural change, but that is also capable of generating social transformation when it becomes an engine for the direct economy through collaborative funding systems such as crowdsourcing.
It’s the cider!!
But the key was the return to the original definition of the direct economy as a form of highly productive small-scale industrial production. Of course, in order to realize this we had to go out on the street and stumble upon… cider.
During the days of the meeting the “2014 Gijón of Cider” was taking place, a true showcase of the year’s productions accompanied by cider routes throughout the city. A poster at each door informed about the brand of the cider one could try, its location, the founding year, and the production volume. The productions, of more than half a million liters in many cases (e.g., over 650,000 liters for Viuda de Palacios, pictured), are impressive when compared to the world of natural beer or artisan wine. Even more if we consider that over forty llagares participated in the event!!
Our international guests were surprised and fascinated by the vivacity of a small scale industry and local market of this sort, rooted in local culture, with many established producers and so much diversity. “Diversity is the result and the claim,” we told them, but “the key is productivity.”
Insisting on the diversity of the cider industry is important because cultural diversity has to do with the ability to produce diversity among products and within each product. There would be no real culture of cider if there were only one or two companies, or if it were a very standardized product almost indistinguishable between llagares.
Not too long ago, a friend who worked in a public R & D center told us how they were creating, in order to “save” the artisan production of sausages in a Spanish region, a standard for taste, size, and composition as a precursor to a brand. Without standardization, earning scope was counterproductive because each individual producer didn’t produce enough to satisfy even a medium-sized distribution chain. Because contrary to what is often argued, low productivity makes diversity impossible. Diversity, as shown in cider, is a product of small scale industry, but it can only break free from the strictly local, sell in larger markets, and generate real wealth, through gaining scope, and that is only possible by being able to cater to new demands, and thus increasing production without substantially increasing its scale. Exactly like many of the examples of the electronic marketplace that we use in our presentations.
This is true even in sectors such as handicrafts. In the Spanish-speaking world it is common to conflate handicrafts with crafts, the tiny scale of the individual producer that works with production runs of negligible volume. But one just needs to take a look at what today is the largest market for artisans in the world, Etsy, which reached 1.2 billion dollars in sales last year, to realize that the type of artisan who succeeds in this century is that who incorporates sophisticated production tools that allow for strong productivity without giving up the individuality of their work. Scope-enhancing platforms, such as Etsy itself, would not be of much value for them if they could only serve a few customers.
What we have learned
Putting it all together, the most important thing we’ve learned so far in this long discussion is that if the “sharing economy” teaches us how to live in an economy with ever widening non-market spaces, the development of small-scale productivity implicit in the rent dissipation model is the key that deconstructs the false alternative between culturally-impoverishing product homogenization, and the socially-impoverishing search for scale for its own sake that destroys real resilience and our capacity for innovation.
So what today drives us towards a “beyond,” towards a new way of producing and sharing, is the continuum between the direct economy of high productivity and scope that is flourishing in the many KickStarters of the web, and the p2p mode of production, already consolidated in the world of software and increasingly close to the SME thanks to the ever growing industrial design and 3D-printing commons.
- The base for the new economy is the «sharing economy»
- But most importantly, the key that allows for sustainable change in economic relationships is found in increasing productivity, and that is being driven by
- the direct economy through the empowerment of industrial SMEs, promoting the productive use of the digital commons, globalizing them and multiplying their productivity, and
- the p2p mode of production in immaterial goods such as free software, and, increasingly, thanks to an ever growing industrial design commons in the production of consumption goods