Date: Fri, 28 Feb 2003 20:31:29 +1100
From: Steve Wright <pmargin-AT-froggy.com.au>
Subject: Re: AUT: Open Source (was: parecon)


Hi all.

While we're on the subject, has anyone an opinion on

Coase’s Penguin, or, Linux and The Nature of the Firm

Yochai Benkler

www.benkler.org/CoasesPenguin.PDF ?

I know he conflates open source and free software, and he is wary about the
applicability of this 'new mode of production' beyond the realms of
'information' and 'culture', but I found it an interesting read all the same
...

The abstract is below.

_____

Abstract

For decades our common understanding of the organization of economic
production has been that individuals order their productive activities in
one of two ways: either as employees in firms, following the directions of
managers, or as individuals in markets, following price signals. This
dichotomy was first identified in the early work of Ronald Coase and was
developed most explicitly in the work of institutional economist Oliver
Williamson. In this paper I explain why we are beginning to see the
emergence of a new, third mode of production, in the digitally networked
environment, a mode I call commons-based peer production.

In the past three or four years, public attention has focused on a
fifteen-year-old social-economic phenomenon in the software development
world. This phenomenon, called free software or open source software,
involves thousands or even tens of thousands of programmers contributing to
large and small scale projects, where the central organizing principle is
that the software remains free of most constraints on copying and use common
to proprietary materials. No one "owns" the software in the traditional
sense of being able to command how it is used or developed, or to control
its disposition. The result has been the emergence of a vibrant, innovative
and productive collaboration, whose participants are not organized in firms
and do not choose their projects in response to price signals.

This paper explains that while free software is highly visible, it is in
fact only one example of a much broader social-economic phenomenon. I
suggest that we are seeing the broad and deep emergence of a new, third mode
of production in the digitally networked environment. I call this mode
"commons-based peer production," to distinguish it from the property- and
contract-based modes of firms and markets. Its central characteristic is
that groups of individuals successfully collaborate on large-scale projects
following a diverse cluster of motivational drives and social signals,
rather than either market prices or managerial commands.

I explain why this mode has systematic advantages over markets and
managerial hierarchies when the object of production is information or
culture, and where the physical capital necessary for that
production—computers and communications capabilities—is widely distributed
instead of concentrated. In particular, this mode of production is better
than firms and markets for two reasons. First, it is better at identifying
and assigning human capital to information and cultural production
processes. In this regard, peer production has an advantage in what I call
"information opportunity cost." That is, it loses less information about who
the best person for a given job might be than either of the other two
organizational modes. Second, there are substantial increasing returns, in
terms of allocation efficiency, to allowing larger clusters of potential
contributors to interact with large clusters of information resources in
search of new projects and opportunities for collaboration. Removing
property and contract as the organizing principles of collaboration
substantially reduces transaction costs involved in allowing these large
clusters of potential contributors to review and select which resources to
work on, for which projects, and with which collaborators. This results in
the potential for substantial allocation gains. The article concludes with
an overview of how these models use a variety of technological and social
strategies to overcome the collective action problems usually solved in
managerial and market-based systems by property, contract, and managerial
commands.




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