Here’s a great post from a bit more than a year ago at Anomalous Presumptions (2007-02-26), which I just got around to reading:

I was responding to this key point:

[P]eer production isn’t an assault on the principles of a free society, but an extension of those principles to aspects of human life that don’t directly involve money. ….

[A] lot of the intellectual tools that libertarians use to analyze markets apply equally well to other, non-monetary forms of decentralized coordination. It’s a shame that some libertarians see open source software, Wikipedia, and other peer-produced wealth as a threat to the free market rather than a natural complement.

Since peer production is an entirely voluntary activity it seems strange to view it as a threat to the free market. (My interlocutors in the comments demonstrated that this view of peer production is alive and well, at least in some minds.) So how could this opinion arise? And does it indicate some deeper issue?

I think viewing peer production as a threat is a symptom of an underlying issue with huge long-term consequences: In peer production, the interests of capitalists and entrepreneurs are no longer aligned.

[…]

For example, Linus Torvalds is a great entrepreneur, and his management of the Linux community has been a key factor in the success of Linux. Success to an entrepreneur is coordinating social activity to create a new, self-sustaining social process. Entrepreneurship is essential to peer production, and successful entrepreneurs become rock stars in the peer production world.

A capitalist, by contrast, wants to get a return on something they own, such as money, a domain name, a patent, or a catalog of copyrighted works. A pure capitalist wants to maximize their return while minimizing the complexity of their actual business; in a pure capitalist scenario, coordination, production and thus entrepreneurship is overhead. Ideally, as a pure capitalist you just get income on an asset without having to manage a business.

The problem for capitalists in peer production is that typically there is no way to get a return on ownership. Linus Torvalds doesn’t own the Linux source code, Jimmy Wales doesn’t own the text of Wikipedia, etc. These are not just an incidental facts, they are at the core of the social phenomenon of peer production. A capitalist may benefit indirectly, for a while, from peer production, but the whole trend of the process is against returns on ownership per se.

Profit

Historically, entrepreneurship is associated with creating a profitable enterprise. In peer production, the idea of profit also splits into two concepts that are fairly independent, and are sometimes opposed to each other.

The classical idea of profit is monetary and is closely associated with the rate of (monetary) return on assets. This is obviously very much aligned with capitalist incentives. Entrepreneurs operating within this scenario create something valuable (typically a new business), own at least a large share of it, and profit from their return on the business as an asset.

The peer production equivalent of profit is creating a self-sustaining social entity that delivers value to participants. Typically the means are the same as those used by any classical entrepreneur: creating a product, publicizing the product, recruiting contributors, acquiring resources, generating support from larger organizations (legal, political, and sometimes financial), etc.

Before widespread peer production, the entrepreneur’s and capitalist’s definitions of success were typically congruent, because growing a business required capital, and gaining access to capital required providing a competitive return. So classical profit was usually required to build a self-sustaining business entity.

The change that enables widespread peer production is that today, an entity can become self-sustaining, and even grow explosively, with very small amounts of capital. As a result it doesn’t need to trade ownership for capital, and so it doesn’t need to provide any return on investment.

As others have noted, peer production is not new. The people who created educational institutions, social movements, scientific societies, etc. in the past were often entrepreneurs in the sense that I’m using here, and in their case as well, the definition of success was to create a self-sustaining entity, even though it often had no owners, and usually produced no profit in the classical sense.

—Jed Harris, Anomalous Presumptions (2007-02-26): Capitalists vs. Entrepreneurs

The only thing that I would want to add here is that it’s not just a matter of projects being able to expand or sustain themselves with little capital (although that is a factor). It’s also a matter of the way in which both emerging distributed technologies in general, and peer production projects in particular, facilitate the aggregation of dispersed capital — without it having to pass through a single capitalist chokepoint, like a commercial bank or a venture capital fund. Because of the way that peer production projects distribute and amortize their costs of operation, entrepreneurs can afford to bypass existing financial operators and go directly to people with $20 or $50 to give away and take the money in in small donations, because they no longer need to get multimillion dollar cash infusions all at once just to keep themselves running: the peer production model allows greater flexibility by dispersing fixed costs among many peers (and allowing new entrepreneurs to easily step in and take over the project, if one has to bow out due to the pressures imposed by fixed costs), rather than by concentrating them into the bottom line of a single, precarious legal entity. Meanwhile, because of the way that peer production projects distribute their labor, peer-production entrepreneurs can also take advantage of spare cycles on existing, widely-distributed capital goods — tools like computers, facilities like offices and houses, software, etc. which contributors own, which they still would have owned personally or professionally whether or not they were contributing to the peer production project, and which can be put to use as a direct contribution of a small amount of fractional shares of capital goods directly to the peer production project. So it’s not just a matter of cutting total aggregate costs for capital goods (although that’s an important element); it’s also, importantly, a matter of new models of aggregating the capital goods to meet whatever costs you may have, so that small bits of available capital can be rounded up without the intervention of money-men and other intermediaries.

The article also has an excellent coda on the way that Intellectual Protectionism threatens to give a government-backed prop to lingering capitalistic modes of production, by hobbling the emergence of entrepreneurial peer production based competition:

The conflicting incentives of entrepreneurs and capitalists come into sharp focus around questions of intellectual property. One commenter complained about open source advocates’ attacks on software patents, … the DMCA and … IP firms. These are all great examples of the divergence between ownership and entrepreneurship.

The DMCA was drafted and lobbied into existence by companies who wanted the government to help them extract money from consumers, with essentially no innovation on their part, and probably negative net social value. In almost every case, the DMCA advocates are not the people who created the copyrighted works that generate the revenue; instead they own the distribution systems that got those works to consumers, and they want to control any future distribution networks.

The DMCA hurts people who want to create new, more efficient modes of distribution, new artistic genres, new delivery devices, etc. In general it hurts entrepreneurs. However it helps some copyright owners get a return on their assets.

The consequences of patents and other IP protection are more mixed, but in many cases they inhibit innovation and entrepreneurship. Certainly patent trolls are an extremely clear example of the conflict — they buy patents not to produce anything, but to sue others who do produce something. Submarine patents (like the claimed patents on MP3 that just surfaced) are another example—a patent owner waits until a technology has been widely adopted (due to the work of others) and then asserts the right to skim revenue from ongoing use.

[…]

All of these issues, and other similar ones, make it harder for small companies, individuals and peer production projects to contribute innovation and entrepreneurship. Large companies with lawyers, lobbyists, and defensive patent portfolios can fight their way through the thickets of intellectual property. Small entrepreneurs are limited to clearings where they can hope to avoid IP problems.

Conclusion

Historically many benefits of entrepreneurship have been used to justify capitalism. However, we are beginning to see that in some cases we can have the benefits of a free market and entrepreneurship, while avoiding the social costs imposed by ensuring returns to property owners. The current battles over intellectual property rights are just the beginning of a much larger conflict about how to handle a broad shift from centralized, high capital production to decentralized, low capital production.

—Jed Harris, Anomalous Presumptions (2007-02-26): Capitalists vs. Entrepreneurs

Here’s an interesting passage I noticed in an article in the New York Times Magazine, which was mostly about companies trying to sell fancy new mattresses.

The story of our ruined sleep, in virtually every telling I’ve heard, begins with Thomas Edison: electric light destroyed the sanctity of night. Given more to do and more opportunity to do it, we gave sleep shorter and shorter shrift. But the sleep that we’re now trying to reclaim may never have been ours to begin with. It’s a myth, A. Roger Ekirch, a professor of history at Virginia Tech, told me. And it’s a myth that even some sleep experts today have bought into.

… More surprising still, Ekirch reports that for many centuries, and perhaps back to Homer, Western society slept in two shifts. People went to sleep, got up in the middle of the night for an hour or so, and then went to sleep again. Thus night — divided into a first sleep and second sleep — also included a curious intermission. There was an extraordinary level of activity, Ekirch told me. People got up and tended to their animals or did housekeeping. Others had sex or just lay in bed thinking, smoking a pipe, or gossiping with bedfellows. Benjamin Franklin took cold-air baths, reading naked in a chair.

Our conception of sleep as an unbroken block is so innate that it can seem inconceivable that people only two centuries ago should have experienced it so differently. Yet in an experiment at the National Institutes of Health a decade ago, men kept on a schedule of 10 hours of light and 14 hours of darkness — mimicking the duration of day and night during winter — fell into the same, segmented pattern. They began sleeping in two distinct, roughly four-hour stretches, with one to three hours of somnolence — just calmly lying there — in between. Some sleep disorders, namely waking up in the middle of the night and not being able to fall asleep again, may simply be this traditional pattern, this normal pattern, reasserting itself, Ekirch told me. It’s the seamless sleep that we aspire to that’s the anomaly, the creation of the modern world.

… Our peculiar preference for one well-organized hunk of sleep likely evolved as a corollary to our expectation of uninterrupted wakefulness during the day — as our lives came to be governed by a single, stringent clock. Eluned Summers-Bremner, author of the forthcoming Insomnia: A Cultural History, explains that in the 18th century, we start overvaluing our waking time, and come to see our sleeping time only as a way to support our waking time. Consequently, we begin trying to streamline sleep, to get it done more economically: We should lie down and go out right away so we can get up and get to the day right away. She describes insomniacs as having a ruthless ambition to do just this, wanting to administer sleep as an efficiency expert normalizes the action in a factory. Certainly all of us, after a protracted failure to fall asleep for whatever reason, have turned solemnly to our alarm clocks and performed that desperate arithmetic: If I fall asleep right now, I can still get four hours.

Nevertheless, while it may be at odds with our history and even our biology, lie-down-and-die is the only practical model for our lifestyle. Unless we overhaul society to tolerate all schedules and degrees of sleepiness and attentiveness, we are stuck with that ideal.

—Jon Mooallem, New York Times Magazine (2007-11-18): The Sleep-Industrial Complex

Besides grousing about one of my linguistic pet peeves — the sloppy misuse of the idiom ____________-industrial complex, the only other thing that I’d like to add is that filing the institutions that currently structure most Americans’ sleep patterns under the vague label of our lifestyle tends to obscure the issue. Depending on your age, the two main institutions that regiment your sleeping schedule are either (1) school, or (2) your job. The first has little to do with lifestyle choices; it’s something that’s forced on children by both their parents and by the government for a good 10-12 years of their lives. After a decade or more of forced training, the job you take is nevertheless a matter of adult choices. But the economic and political environment that structures and constrains those choices — and tends to favor centralized, regimented, official forms of employment not only through cultural prejudice but also through government-enforced subsidy and monopoly — deserves much more critical scrutiny than the term lifestyle conveys. In both cases, the daily schedules that we keep are no better described as an adopted style than is a straightjacket.